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May 30, 2003

The Joint Finance Committee tackled some significant budget issues over the past few weeks, approving, for example, omnibus motions on transportation and medical assistance. (See below) They’re struggling, however, in their attempt to finalize the details on some major outstanding fiscal policies. Issues still on the table include the proposed local property tax freeze, school aid and the Patients Compensation Fund.

 While the budget writing committee has missed several deadlines for completion of their work, it’s still plausible the Legislature can complete its work by the end of June. Joint Finance has scheduled their next and possibly final meeting for Monday, June 2^nd. The Hamilton Consulting Group will provide Tidbits subscribers an overview of the final JFC package once they complete their work.

Wisconsin Politics

Doyle Cabinet Complete with New DFI Secretary

Gov. Jim Doyle has named Lorrie Keating Heineman Secretary of the Dept. of Financial Institutions. The long awaited appointment rounds out the Doyle Administration. Keating Heineman, Oshkosh, has been involved in the banking and securities industries for over 18 years and most recently served as an investment advisor with Virchow Krause Wealth Management. She will officially start her duties on August 18, 2003. In the meantime, Patricia Struck will continue as acting secretary.

Gaming Compact Case Ends Back in State Court

Panzer v. Doyle, the court case relating to the state gaming compact controversy, was sent back to the state Supreme Court on Thursday, May 29^th. The case was previously passed from state court to the federal court.

U.S. District Judge John Shabaz said the federal court has no jurisdiction over the case. "Defendants' principal basis for removal...does not withstand scrutiny," Shabaz wrote. Although a procedural victory for Republicans Doyle said the decision would not affect the outcome and would ultimately hurt Wisconsin taxpayers.

Lassa, Plale Elected to Senate; New Committee Assignments

Two new State Senators were sworn in Thursday, May 8, during separate ceremonies. Both are former Assembly Democrats and both were elected in the April 29^th special election.

State Representatives Julie Lassa (D-Plover) and Jeff Plale (D-South Milwaukee) easily defeated their opponents in the May 6 Special Election. Republicans still hold an 18-15 majority in the Senate, while their majority in the Assembly is at 58-39, with 2 vacancies.

Gov. Doyle has issued an executive order calling for a special election for the open Assembly seats vacated by Lassa and Plale. The primary will be June 24^th and the general election will be July 22.

In related developments, Senate Democratic Committee assignments were revised as follows.

• Sen. Robson has been removed from and Sen. Lassa has been added to the Agriculture, Financial Institutions and Insurance Committee.

• Sen. Carpenter has been removed from and Sen. Lassa has been added to the Joint Committee for the Review of Administrative Rules.

• Sen. Meyer has been removed from and Sen. Plale has been added to the Economic Development, Job Creation and Housing Committee.

• Sen. Hansen has been removed from and Sen. Plale has been added to the Joint Audit Committee.

In another special election, Lena Taylor (D-Milwaukee) will succeed former Rep. Antonio Riley in the 18^th Assembly District. Riley resigned his seat to become Executive Director of the Wisconsin Housing and Economic Development Authority.

Legislature Approves State Employee Contracts

The controversy over the status of state employee contracts ended on May 6 with both houses granting approval. Doyle signed all 19 contracts into law on Wednesday, May 7. As the Governor signed the bills into law, he indicated, however, that 2,900 state jobs would have to be eliminated, which may ultimately lead to layoffs. 

State employees negotiate contracts with the Department of Employee Relations (DER), which is required to maintain close contact with the Legislature and the Joint Committee on Employment Relations (JCOER). In all, the contracts cover 31,146 state employees.

Former Lawmaker Selected as Top Tourism Official

On April 30, 2003, Gov. Jim Doyle announced the appointment of former state Representative Jim Holperin as Secretary of the Dept. of Tourism. Holperin, who served northern Wisconsin in the Assembly from 1983-1994, replaces Kevin Shibilski, who abruptly resigned in mid-April. Holperin officially began his duties on May 12.

Governor Appoints Regents

Governor Jim Doyle appointed Eileen Connolly-Keesler and Charles Pruitt to the

University of Wisconsin System Board of Regents. The Governor also appointed Beth Ann Richlen as a new student member of the Board.

Connolly-Keesler of Neenah is the executive director of the Oshkosh Area Community Foundation. Pruitt of Shorewood is a partner of the A.B. Data Group, a direct marketing and data processing firm. Richlen is a senior at the University of Wisconsin-Stevens Point.

Policy Developments

Committee Headed Towards Completing Action on Budget

It was reported today that the Republican legislative leaders may have reached an agreement regarding the local property tax freeze and the shared revenue portions of the budget bill. The committee is scheduled to meet on Monday, June 2^nd, to take final action on the shared revenue provisions of the budget.

Previously, key Assembly Republicans announced a tax freeze package. The package was presented by Speaker Gard on May 22^nd. If passed, the package will freeze ALL Wisconsin property taxes (residential, commercial, etc.) for two years. Key highlights of this initial proposal include:

• No new tax on increased valuation

• A freeze on the property tax levy for all taxing units for two years

• Accommodation for new construction and growth under the freeze

• The ability for local units to suspend the freeze if their voters approve the additional tax increases by referendum

• Shared revenue funding

Although Senate Republican’s weren’t fully on board with the Assembly GOPs package at the time they introduced it, reaction statements showed that Senate Republicans would support a tax freeze, as long as it was one that “embraces reasonable growth.”  (See, Senator Darling’s statement, and Majority Leader Panzer’s statement.)

JFC Addresses Medical Assistance through Omnibus Motion

On Tuesday, May 27, the Joint Finance Committee adopted an omnibus motion (Motion # 178) on medical assistance. The main components of the motion include:

• Provides base funding for MA, BadgerCare and SeniorCare.

• Deletes roughly $65 million in spending on new initiatives in long-term care and disabled services to reflect uncertainty of obtaining enhanced federal funding.

• Utilizes $151 million of the total $333 million Wisconsin is expected to receive under the Federal Tax Relief Act (HR 2) to support MA Benefits.

• Increases the nursing home bed tax from $32 to $75 per month, compared to $116 per month recommended by the Governor.

• Eliminates the proposed 1% gross receipts tax on HMO’s, which would have generated roughly $80 million over the biennium.  Provided $22 million base GPR, but failed to fund HMO managed care rate increases of 6.1% annually necessary to maintain the current discount at 11.4% of fee-for service equivalent costs.

• Increases the SeniorCare enrollment fee from $20 to $30 and the copay for brand name drugs from $15 to $20.

• Restores $22.4 million GPR to reimburse pharmacies for prescription drugs under MA, BadgerCare and SeniorCare at the average wholesale price (AWP) less 12%, rather than the 15% recommended by the Governor.  (Current law = AWP less 11.25%)

• Provides $19.4 million ($8m GPR/$11m FED) to partially fund the Graduate Medical Education Program, or roughly one-third of current state/fed funding of $56 million.  The Governor proposed to cut all funding for GME this biennium.

• Provides $42 million state/fed funds to fully fund intensive in-home services for autistic children in adopting the Governor’s revised recommendation.

Transportation Package Endorsed by JFC

On May 16, the Republican-led Joint Finance Committee (JFC) adopted, by a party-line 12-4 vote, an omnibus transportation package (Motion 457) aimed at helping to “stimulate economic growth and jobs in Wisconsin.” The proposal keeps 99 statewide road projects and the Marquette Interchange on the current time schedule. 

The proposal is similar to the one put forward by Gov. Jim Doyle in that it shifts approximately $500 million to the general fund to help support funding for shared revenue and school aids. The JFC version, however, uses general obligation bonding rather than transportation revenue bonds to offset the transfers to the general fund and to restore base funding for the state highway program to ensure that the above referenced projects are completed on time. 

The Committee also included new and enhanced sources for the transportation fund, which is currently funded almost exclusively by gas taxes and vehicle registration fees. These include increases in title and registration fees and, beginning on July 1, 2005, 20 percent of the sales tax collected on the sale of new vehicles in the preceding calendar. (Details of JFC’s budget actions will be provided by The Hamilton Consulting Group after deliberations conclude, which is now expected early next week.) 

Assembly Okays Bill to Lower Blood Alcohol Level

By a 72-23 vote, the Assembly passed the controversial 0.08 blood alcohol bill, AB-88., as amended by Assembly Amendment 1. The major impetus behind the swift action was a July 15^th federal deadline for remaining eligible to receive $154 million in federal dollars. Despite lowering the legal limit, the amended bill softens penalties for first-time drunken drivers arrested with blood-alcohol levels between 0.08 and 0.099 percent.

In a May 29th Pioneer Press article, WisDOT attorney John Maassen noted he was satisfied that the bill meets the federal requirements. However, it is unclear whether the Governor will sign the amended bill that some believe weakens other drunk driving enforcement provisions.

Identity Theft & Environmental Audit Bills Pass Assembly

On Thursday, May 29, the Assembly unanimously passed the identity theft bill (AB-288)., as amended by Assembly Amendment 2,. The bill, authored by Rep. Mark Gundrum, strengthens the State’s identity theft law and encourages tougher enforcement of identity theft crimes. The bill will now go to the Senate.

That same day the assembly also passed, by a vote of 68-29, the environmental management bill (AB-228), as amended by Assembly Amendment 1. The bill, among other things, would provide civil immunity relating to environmental violations.

Senate and Assembly Set to Meet Next Week

The Senate is tentatively scheduled to reconvene on Tuesday, June 3^rd and among other bills will consider AB-1 (pay to play) and SB-113 (energy impact reports). The Assembly is also scheduled to convene on Tuesday.

PSC Releases PTF 2 Environmental Impact Statement

On April 30^th the Public Service Commission, in conjunction with the DNR, announced their release of a joint draft environmental impact statement for the proposed WE Energies coal plant to be located in either Oak Creek or Caledonia near an existing WE Energies plant. On May 19 and 20, the PSC held public comment hearings regarding the EIS in Oak Creek, Caledonia, and Franksville, Wis.

Regulatory Reform Hearing

On May 15^th the Senate and Assembly Committees on Economic Development held a joint hearing on regulatory reform in Wisconsin. Discussion focused on streamlining existing regulations, such as permit application and approval processes, rather than changing underlying environmental standards in order to promote economic growth in Wisconsin.

The hearing was heavily attended. Economic development and business representatives consistently testified that Wisconsin’s regulatory processes are a burden and significant deterrent to economic development in Wisconsin. See WMC’s May 15th report calling for regulatory reform to create jobs.

Nettles Announces Commerce FEMA Program

Department of Commerce Secretary Cory Nettles announced that Commerce has adopted a Federal Emergency Management Agency (FEMA) program for the rapid assessment of damage to buildings and structures after a tornado, flood or similar disaster in Wisconsin.

Lautenschlager Lobbies Congress on Law Enforcement Grants

Attorney General Peg Lautenschlager announced she had written to members of the Wisconsin Congressional delegation urging their opposition to Bush Administration plans to eliminate critical law enforcement grants to Wisconsin communities in the name of funding additional Homeland Security measures. Such measures, she said, could be more effectively made “without sacrificing the safety of Wisconsin communities.” (See Attorney General Lautenschlager’s May 2 letter, warning big federal cuts to local law enforcement grants would adversely affect every Wisconsin community).

Federal Developments

Senate Energy Bill Debate Will Resume After Holiday Recess

The Senate is expected to resume work next week on the energy bill, authored by Energy and Natural Resources Chairman Domenici. Senate supporters expect the proposal to pass sometime this summer. Domenici and Senate Majority Leader Frist are hoping for final passage by mid-June.

Bush Signs $350 Billion Tax Cut Package, Jobless Extension
President Bush signed a $350 billion package of tax cuts and funding for the states. Today, Bush also signed legislation making federal unemployment benefits available through December. The program was scheduled to expire May 31, but Congress passed an extension last week.

Hearing on Stock Options in the House

The House Financial Services Capital Markets Committee announced it will hold a hearing Tuesday, June 3^rd, on stock options accounting legislation known as the Broad-Based Stock Option Plan Transparency Act of 2003 HR 1372. The Act would direct the SEC to require enhanced disclosures of employee stock options and would require a three-year study on the economic impact of broad-based employee stock option plans to be reported to the House Financial Services Committee and the Senate Banking Committee. It would also require comparability of all stock option-related information available to a company's employees and would offer a summary of the stock options granted to the five most highly compensated executive officers of the company, including any outstanding stock options of those officers.

Family Leave Act for State Employees Upheld by Supreme Court

Today, May 30^th, the Supreme Court upheld the right of state workers to get time off to care for children or ailing relatives, rejecting an attempt to scale back a federal law guaranteeing 12 weeks of family leave. The court's majority opinion concluded that Congress was within its rights to mandate that states give their own workers the same benefits that the federal Family and Medical Leave Act grants to private sector employees.

New Democrat Coalition Releases Its Technology Agenda

The New Democrat Coalition has released its annual technology agenda. The comprehensive agenda includes ideas for boosting the economy, improving education, promoting innovation and ensuring the nation continues its international lead on high technology.

Political News

Republicans feud over property tax: Milwaukee Journal Sentinel, May 30, 2003.

Property tax freeze lambasted by officials: Wisconsin State Journal, May 30, 2003.

New drunken driving limit backed: Appleton Post-Crescent, May 30, 2003.

Judge sends gambling suit to state Supreme Court: Milwaukee Journal Sentinel, May 30, 2003.

Conscience’ bill moves forward: Appleton Post-Crescent, May 30, 2003.

State Assembly OKs lowering DUI level to 0.08%: Milwaukee Journal Sentinel, May 29, 2003.

Committee approves 7% increase in health care funding: Milwaukee Journal Sentinel, May 29, 2003.

Streamlining regulation (opinion): Milwaukee Journal Sentinel, May 29, 2003.

Identity theft needs expanded definition (opinion): Appleton Post-Crescent, May 29, 2003.

GOP fights program's teen birth control: Milwaukee Journal Sentinel, May 28, 2003.

Legislators fund key health programs (opinion): La Crosse Tribune, May 28, 2003.

Manufacturing group: State regulations hurt job base: Wisconsin Rapids Daily Tribune, May 25, 2003.

Doyle appoints financial leader: Appleton Post-Crescent, May 24, 2003.

Millions at stake in drinking debate: Green Bay Press-Gazette, May 20, 2003.

JFC unveils transportation plan: Daily Reporter, May 19, 2003.

Seatbelt effort begins: Oshkosh Northwestern, May 19, 2003.

GOP tries to balance transportation fund: Appleton Post-Crescent, May 17, 2003.

Upcoming Fundraisers

Monday, June 2:

• U.S. Sen. Russ Feingold, Wauwatosa, 5:00 p.m.

Saturday, May 31:

• Scott Walker, Milwaukee County Exec., Milwaukee, 5:30 p.m.