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Feb. 13, 2009
Consensus amongst party leaders was the theme this week as the U.S. House
and Senate agreed upon a nearly $800 billion stimulus package, which is
heading to the floor for passage. In Wisconsin, the Governor and legislative
leaders agreed on a pre-budget bill that will go to the floor next
week. While both bills will be poured over as budget watchers try to sort
out the details, critics are questioning whether the measures will give the
economy the boost it so desperately needs.
Now that
details of the stimulus package are out, it appears Governor Doyle is ready
to deliver his budget address on Tuesday of next week. Even with the help
from the Feds, however, the Governor is very clear that there will be
significant cuts in his proposal and pain will be felt statewide.
For more
information about what is in the Governor’s proposal and in the Federal
stimulus package, please see below.
Wisconsin Developments
Governor Unveils Budget
Repair Bill – Passage Expected Next Week
Whether it is a budget
adjustment bill, a stimulus package, or a combination, details
of the Governor’s pre-budget bill came out this week. The bill,
which has support of legislative leadership, will be fast
tracked. As of Friday morning the bill’s language had yet to be
released, but it is expected the bill will go to the Joint
Finance Committee early next week, and be approved in the Senate
and Assembly as early as next Wednesday.
The centerpiece of the bill is the hospital
assessment, a provision that has been on the Governor’s front burner for two
years, and is currently supported by the Wisconsin Hospital Association.
Through implementation of a tax on hospital revenues, the hospitals will
receive a Medicaid rate increase, and the state will clear $300 million in
GPR over the next biennium.
In addition to the hospital assessment, the new
bill has tax credit changes that augment and streamline the process for
angel and venture investors and new Wisconsin businesses who are looking for
help growing or starting their business.
The bill also instituted new tax policies,
including combined reporting, a provision that over the next two and a half
years will result in over $200 million in taxes assessed on corporations by
changing the way certain businesses file their taxes. The Governor's
proposal also added the streamlined sales tax which brings Wisconsin in line
with many other states in regard to what items or services receive a sales
tax exemption.
In addition to new tax policies, the bill takes
aim at the foreclosure crisis in Wisconsin by instituting a number of
measures. These measures are said to provide protections for tenants of
properties under foreclosure, allow the Wisconsin Housing and Economic
Development Authority to refinance certain subprime loans, protect against
foreclosure scams and strengthen oversight of mortgage loan originators
among other things.
All in all, the pre-budget bill is estimated to
close the deficit by $700 million in the next biennium. The Governor will
detail plans for the entire 09-11 State Budget on Tuesday of next week.
Senate Passes Wage and Lien
Legislation
Senate floor action on Tuesday, Feb. 10 saw passage of two bills affecting
Wisconsin businesses.
SB-1, which increases the
minimum wage to $7.60, was passed
18-14. Those opposing the bill, including employers in the state,
have concerns about the increase which would raise the minimum wage
nearly 17 percent. The last increase was in 2006.
SB-2, making payment of unpaid
wages a priority when a company goes out of business, was passed
17 to 15. The bill would put a cap of $10,950 on ex-workers' wage
claims and triple the current limit of $3,000. Republican senators voted
against the change, saying it would make it harder for businesses to
obtain credit, especially in the recession.
Autism Bill Advances
The Senate Committee on Public Health voted unanimously on passage of
Senate Bill 3, as amended by
Senate Substitute Amendment 1, which embodies the Governor’s additions
to the bill. The bill is now expected to be referred to the Joint Finance
Committee.
A companion bill in the
Assembly (AB-15)
will have a public hearing on Feb. 19 in the Assembly Committee on
Insurance.
Other Committee Activity
SB-16, permitting a mother to breast-feed in any public or private
location, was recommended for passage (5-0) by the Senate committee on
Public Health, Senior Issues, Long-Term Care, and Job Creation. The bill is
now available to be scheduled for floor action.
AB-3, placing restrictions on the use and sale of fertilizer containing
phosphorus and other turf fertilizer and providing a penalty, was
recommended for passage by the Assembly Committee on Natural Resources. The
bill is now available to be scheduled for floor action.
AB-38, which would exclude gains
from a Wisconsin business from taxable income, has been referred to the
Assembly committee on Jobs, The Economy & Small Business.
AB-40, companion to SB-2, and
AB-41, companion to SB-1, haves been referred to the Assembly committee
on Labor.
Senate Judiciary Committee Passes Tort
Bill; House Committee Holds Public Hearing on Companion Bill
The Assembly Committee on Consumer Protection heard testimony this week on
Assembly Bill 6, which would overturn the Wisconsin Supreme Court’s July
2008 decision in
Below v. Norton.
In Below, the
Wisconsin Supreme Court ruled that the economic loss doctrine - which seeks
to preserve the distinction between contract and tort claims - barred a
common-law tort claim for intentional misrepresentation in the sale of
residential real estate.
AB-6, sponsored by Rep. Mark
Radcliff (D-Black River Falls), would amend Wis. Chap. 895 by adding a tort
cause of action for an intentional misrepresentation made by the seller of
residential real estate. AB-6 would give a buyer who alleges fraud or
intentional misrepresentation the ability to recoup not only the economic
value of the home, but also punitive damages.
The Civil Trial Counsel of
Wisconsin (CTCW) opposed the bill. Citing the reasons by the Supreme Court
in its majority’s decision, the CTCW stated that buyers already have
statutory and contractual remedies under current law.
The Senate companion bill,
SB-9, this week was passed out of the Committee on Judiciary, Corrections,
Insurance, Campaign Finance Reform, and Housing.
Federal Tobacco Tax Increase to Cut
State Revenues
The
Legislative Fiscal Bureau has issued
its analysis on the impact of federal SCHIP legislation recently signed
by President Obama. The federal legislation will provide additional revenues
to support Wisconsin's BadgerCare Plus program. In addition, the federal
excise taxes on cigarettes and tobacco products will be increased
significantly, beginning April 1, 2009, which will likely lead to decreased
purchases of these products and reduced revenues from state excise taxes on
tobacco.
Current budget projections
estimated state tax revenues on cigarettes and tobacco products at $606.5
million this fiscal year, $601.4 million in 09-10, and $596.3 million in
10-11. The increase in federal taxes is estimated to reduce consumption by
4.4 percent resulting in reduced state tax revenue of $6.7 million this
fiscal year and $52.7 million over the next biennium.
Federal Court Strikes Down Wisconsin’s
Minimum Markup Law
Wisconsin’s long-time minimum markup law was struck down Wednesday by a
federal judge. In his ruling, U.S. District Court Chief Judge Rudolph Randa
ruled that the law is unconstitutional because it violates the federal
Sherman Act.
The ruling stemmed from a
lawsuit filed by Flying J, a company that sells gasoline in Wisconsin. Until
Wednesday’s decision,
Wisconsin’s Unfair Sales Act made it illegal to sell retail gasoline
without marking it up at least 9.18 percent over the local wholesale price.
The decision comes a month
after the Dane County Circuit County Court in Madison ruled that the minimum
markup law did not violate the state constitution. The federal ruling,
however, now prevents the state from enforcing the requirement against
anyone in the state.
Federal Developments
Congress Strikes Stimulus
Package Deal – Total Cost is $789 Billion
Leaders in the U.S. House and the Senate this week agreed on a
stimulus bill, covering 1,071 pages, worth $789 billion. Three
Republican senators broke ranks with their colleagues in
reaching a deal with the Democrats, giving the Democrats the 60
votes needed to pass the bill. (Those Republicans were senators
Olympia Snowe (R-Maine), Susan Collins (R-Maine), and Arlene
Specter (R-Pennsylvania)).
There are reports that the
bill will be voted on today by both the Senate and House, less than 48 hours
after the bill was introduced.
The key elements in the
package include:
-
Increased funding for
transportation infrastructure, including an estimated $550 million for
roads and bridges
-
$87 billion in increased
support of Medicaid to be distributed equally among the states based on
the Medicaid formula
-
$276.3 billion in tax
cuts
-
A $400 tax credit for
low-and middle-income workers ($800 for couples)
-
No repayment requirement
for a $7,500 credit for first-time home buyers.
-
Limited tax breaks for
interest on new car loans and sales taxes
-
Offering physicians
$64,000 if they show they have computerized their medical-records
systems; including Medicare penalties for physicians and hospitals who
aren’t using electronic health records by 2014.
-
Unprofitable small
businesses with annual receipts less than $5 million can recoup taxes
paid in the past five years (up from two years)
-
$750 million for farm
subsidies
Energy Company Sues New York Over
Carbon Trading Compact
A New York-based energy company, Indeck Corinth,
sued the Governor of New York and the state’s Environmental Protection
Agency over their decision to enter into a cap-and-trade program with nine
other Northeastern states. The states that have entered into the
Regional Greenhouse Gas Initiative (RGGI) are required to cap
greenhouse gas emissions from their power sector and reduce emissions 10
percent by 2018.
The lawsuit alleges that New York entered into RGGI without the consent of
the State Legislature, and thus is a violation of the separation of powers
under the New York Constitution.
The complaint further alleges that by entering into RGGI the state:
-
Imposed an unauthorized tax on the energy
company;
-
Lacks the Congressional authorization
constitutionally required for multi-state compact in violation of the
United States Constitution;
-
Arbitrarily discriminated against the energy
company;
-
Enacted regulations that are inconsistent
with the federal Public Utility Regulatory Policies Act and regulations
of the Federal Energy Regulatory Commission.
The lawsuit, if successful, could have ramifications for Wisconsin.
Currently, Wisconsin has entered into discussions with other Midwest states
to potentially adopt a similar regional cap-and-trade system. Known as the
Midwestern Greenhouse Gas Reduction Accord, Wisconsin, along with five
other states and one Canadian province, are crafting a model rule that would
significantly restrict the amount of greenhouse gas emissions in the
Midwest.
For more information about the Midwestern
Accord and other regional greenhouse gas compacts, please visit
http://www.midwestenergysecurity.org/.
EPA Withdraws Petition from Supreme
Court in Mercury
Emissions Case
Last year the EPA petitioned the Supreme Court of the United States to
review a lower court decision that struck down the
Clean Air Mercury Rule (CAMR) (EPA
v. New Jersey, U.S., No. 08-512, petition for certiorari filed
10/17/08).
CAMR, issued in 2005 by the Bush administration, set up a trading system to
reduce mercury emissions. In vacating the rule, the U.S. Court of Appeals
for the District of Columbia Circuit held that EPA ignored the “plain text”
of the
Clean Air Act (CAA) and ruled that the agency was required to set strict
limits on mercury emissions from all coal-fired power plants.
In its petition, the EPA argued that Section 7412 of the CAA (or also known
as Section 112) grants the agency broad authority to regulate hazardous air
pollutants when such regulations are deemed “appropriate and necessary.”
Under Section 112 of the CAA, EPA is required to list hazardous air
pollutants that should be regulated for health reasons. Congress amended
this section in 1990 in an effort to eliminate much of EPA’s discretion in
the process of listing sources of hazardous air pollutants.
When it drafted CAMR, EPA removed electric utility steam-generating units
from the Section 112 list of sources of hazardous air pollutants to allow
power plants to trade emissions allowances to cut back mercury emissions.
Last week, in a sharp reversal from the Bush administration, the Obama
administration filed a motion to withdraw the EPA’s appeal of the lower
court’s decision. In its motion, the EPA stated that it decided to “develop
appropriate standards to regulate power-plant emissions under Section 7412
and therefore does not seek review of the lower ruling.”
News
Doyle: Federal
stimulus bill great for Wisconsin, but budget cuts still needed:
Wisconsin State Journal, Feb. 13, 2009.
Obey: Stimulus will help: Wausau Daily Herald, Feb. 13, 2009.
Local officials seek their share of federal stimulus funds: Green
Bay Press-Gazette, Feb. 13, 2009.
Stimulus package to mean $3.5 billion for Wisconsin, Doyle says:
Milwaukee Journal Sentinel, Feb. 12, 2009.
Wisconsin's hospital tax would trigger federal funds: Appleton
Post-Crescent, Feb. 12, 2009.
Close corporate
tax loophole (opinion): Wisconsin State Journal, Feb. 12, 2009.
Doyle, legislators announce spending cuts to trim deficit: Milwaukee
Journal Sentinel, Feb. 11, 2009.
Lawmakers urged
to slow foreclosures: Milwaukee Journal Sentinel, Feb. 11, 2009.
Upcoming Fundraisers
Feb. 16, 2009
Feb. 17, 2009
Feb. 19, 2009
For
details, go to
Hamilton Consulting Fundraiser Calendar.
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