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Feb. 9, 2005

Special Edition

Governor Doyle Outlines 2005-07 Budget
Governor Jim Doyle unveiled his $52.5 billion operating budget for the 2005-07 biennium to members of the Wisconsin Legislature last night, which starts the months-long debate on how the state will proceed over the next two-year cycle.

In the address, Doyle outlined his priorities and agenda going in to the 2006 gubernatorial race which focuses on education, health care, job creation and property taxpayers. The biggest announcement came with Doyle outlining a two-year property tax freeze that Doyle says will “prevent $900 million of property tax increases and save the average homeowner more than $330 in the next two years.”

Highlights of the Governor’s budget include the following:

Property Tax Relief:

• Provides for a two-year property tax freeze, which will exempt technical colleges, TIF districts and debt service.

• Provides $700 million in increased school equalization aid and $150 million in levy credits to freeze property taxes.

• Allows counties to enter into revenue sharing agreements with municipalities or other counties to encourage economic growth.

• Provides $11.5 million to local municipalities that host power plants and other utility property.

• Creates a bonus payment program for municipalities and counties that hold their 2005 levy increases at or below 85% of the levy limit. Those eligible will receive bonus payments of $10 million.

• Limits growth in statewide property taxes to the rate of new construction.

• Provides $380 million GPR to maintain base level funding for the shared revenue program.

Tax Policy

• Modifies the single sales factor apportionment for computer software, intellectual property and services.

• Redefines the custom software exemption

Transportation:

• Provides for a $10 increase in the registration fee for automobiles as well as adjustments to the light truck registration fee.

• Provides for a $10 increase in the title fee.

• Increases the car rental tax from 3% to 5%, which will be dedicated to funding tourism.

• Provides an additional $97 million over the biennium for maintenance.

• Provides $370 million for the Marquette Interchange reconstruction project ($213 million will be funded with 20-year general obligation bonds).

• Provides $68 million in rehabilitation funds for the southeast Wisconsin freeway system.

• Provides $64 million for Major Highway projects.

• Increases the Freight Rail Preservation program by $6.5 million.

Economic Development:

• Provides $5 million over the biennium for a Training Assistance Grant program.

• Provides an additional $1.3 million for the Wisconsin Manufacturing Extension Partnership.

• Provides $5 million for a new super employment and economic development zone program.

• Creates a $2 million grant program for biofuels to increase the use of agricultural products and waste materials as energy sources.

• Provides $25,000 each year of the biennium for the development of rural business enterprises or for rural economic development.

• Provides additional funding to match private donations raised by Forward Wisconsin.

• Modifies development zone programs by removing limit on the number of zones and, instead, limit tax credits available for the program, and by allowing credits on all Wisconsin income taxes.

• Dedicates revenues from increased fees imposed on certain rental vehicles for tourism promotional spending.

State Operations:

• Recommends a decrease of 1800 state jobs.

• Allows state agencies and the UW system to offer domestic partner benefits.

Health Care

• Creates a Health Care Quality and Patient Safety Board attached to the department to enable better measurement of health care quality, reduce medical errors and improve patient safety. Provides $10 million from the Patients Compensation Fund.

• Maintains MA eligibility and benefits.

• Provides for base funding of MA Senior Care and BadgerCare with GPR and new revenue sources.

• Creates a six percent assessment on gross revenues of HMOs that accept Medicaid and BadgerCare recipients and provides an estimated 7.6 percent increase in capitation payments.

• Increases assessment on licensed nursing home beds form $75 to $125 per bed per month.

• Transfers $168 million from the Patients Compensation Fund for MA budget.

• Reduces MA Prescription Drug Costs by reducing the reimbursement rate for brand name drugs from AWP minus 13 percent to AWP minus 16 percent, lowering the dispensing fee from $4.38 to $3.88 per prescription, and other measures.

• Authorizes up to $130 million in revenue bonds for MA costs.

• Restructures pharmacy drug coverage under the Health Insurance Risk Sharing Plan (HIRSP).

Natural Resources

• Establishes a new air emission fee structure, and uses existing new source review fees to fund a $1.7 million air permit IT initiative

• Sets a specific performance measure of attaining the new 8-hour ozone standard by June 15, 2010.

• Replaces the tracking of federal air permit issuances with an air management compliance metric.

• Eliminates sunset for vehicle environmental impact fee used for Brownfields program funding and other environmental programs

• Establishes performance measures to assure water regulation permits comply with Public Trust Doctrine.

Miscellaneous

• Consolidates 144 agency attorneys and legal support staff in DOA within three divisions for:

  • Drafting administrative rules and related technical support

  • Contract review and standardization

  • Support on health, business, finance and labor matters 

• Provides $23,700 each year of the biennium for renovations of the Dane County Expo Center.

• Re-estimates shared revenue utility payments to $34,498,400 in FY06 and $40,714,400 in FY07.

The Wisconsin State Legislature will now have its turn at the budget. First, the Joint Committee on Finance will review the proposal and make modifications, before sending it on to each house of the legislature. The Joint Finance Committee is expected to take the proposal on the road for public hearings throughout the state during the month of March before deliberating in Madison.

See the next edition of The Hamilton Consulting Group Political Tidbits for additional information on Governor Doyle’s budget and an in-depth analysis.

Political News

Press Releases
State Rep. Kreuser Says GOP Would Have Applauded Tommy Thompson if He Gave Identical Speech: Kreuser Press Release, Feb. 8, 2005

Doyle’s Change of Heart on Property Taxes Just in Time for Valentine’s Day: Schulz Press Release, Feb. 7, 2005

Timing Appropriate: Governor Talks Budget on Fat Tuesday: Kedzie Press Release, Feb. 8, 2005

News Articles
Budget would increase vehicle fees: Milwaukee Journal Sentinel, Feb. 9, 2005.

Doyle: Cap property tax: Wisconsin State Journal, Feb. 9, 2005.

Doyle calls for tax freeze: Appleton Post-Crescent, Feb. 9, 2005.

Mayoral candidates say tax freeze could affect city services: La Crosse Tribune, Feb. 9, 2005.

Nursing homes to take a hit: Madison Capital Times, Feb. 9, 2005.

Cut 200 administrators, UW told: Madison Capital Times, Feb. 9, 2005.

School funding law change included in Doyle's budget: Janesville Gazette, Feb. 9, 2005.

Gov. Jim Doyle delivers budget address: Wisconsin State Journal, Feb. 8, 2005.

Doyle budget includes no tax increases: Milwaukee Journal Sentinel, Feb. 8, 2005.

Doyle seeks $850 million boost for schools: Milwaukee Journal Sentinel, Feb. 8, 2005.