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June 10, 2005
The Joint Committee on Finance (JFC)
worked into the wee hours of the morning before completing its
work on the state budget at 6:15 am. (Please see Budget
Wrap-Up below which was
prepared by
Pat Osborne and other members
of the Hamilton Consulting Group government relations team—also in
the wee hours of the morning.)
As
one might expect, numerous aspects of the final product will be
characterized (spun) differently depending upon one’s position and/or
perspective. For example, did JFC adopt “a dramatic $458 million increase in
school funding” or did JFC “dramatically decrease the $940 million increase
in school funding” proposed by Governor Doyle? The debate on this and other
issues now moves to the full Legislature which is expected to make few, if
any, changes to the JFC package and to add its stamp of approval before July
1. Next week will be devoted to putting JFC’s action into bill draft form
while the members of both houses and both caucuses will spend considerable
time being briefed on the package and discussing the provisions in their
respective caucuses.
Floor debate is expected to commence in the Assembly on June 22, to be
followed by Senate action and leadership in both houses intended to meet the
July 1 deadline. The Governor gets another shot at the budget after the
Legislature’s final action and he can sign, veto, or, sign with specific
item vetoes, which is the most likely scenario.
The budget action taken by the Republican-dominated Joint Finance Committee
came, not on the eve, but the early morning of the 2005 State Democrat
Convention and will, undoubtedly, be a topic of much discussion in Oshkosh
over the weekend.
Policy Developments
JFC Wraps Up Budget Action
At 6:15 this morning, Friday, June 10, the Joint Finance
Committee completed its action on the proposed two-year budget
plan. The original proposal was submitted by Governor Doyle on
Feb. 9 of this year. Committee action will be introduced as a
substitute amendment to AB 100 and is expected to be taken up by
the Assembly on June 22. Legislative leaders announced on Thursday
they expect to pass the budget bill through both houses by July 1.
The
final product was approved on an 11-5 vote, with 11 Republicans voting for
and all four Democrats and Republican Sen. Cowles voting against.
Medical Assistance Funding: Major pieces of the budget balancing act
began to take shape on Wednesday, when the JFC unanimously approved an
infusion of $392 million GPR to shore up base funding and retain eligibility
and benefits for the state’s major health care programs; Medical Assistance,
BadgerCare and SeniorCare. The GPR funding approved by the JFC replaced the
Governor’s various recommendations to fund MA with revenue bonding, transfer
from the Patient’s Compensation Fund, an increase in the nursing home bed
tax and a new HMO gross revenue tax. (See
Motion #870 and article below).
K-12 Funding: Action on the major health care support programs set the
stage for Thursday’s action on K-12 school funding, which resulted in a
roughly a $387 million GPR reduction in general and categorical school aids
compared to the Governor’s proposal. Under the Finance action,
Motion #906 (General School Aids) and
Motion #896 (Categorical Aids) school aid funding is increased by
roughly $355 million GPR as opposed to the $742 million GPR increase
recommended by the Governor. In addition, the revenue limit per pupil
adjustment was reduced to $120 in FY 06 and $100 in FY 07.
Transportation Funding: The Finance Committee approved the Governor’s
proposed increases (generally 2 percent each year) in general transportation
aids (LFB
Paper #725), mass transit operating assistance (LFB
Paper #726), elderly and disabled transportation aids (LFB
Paper #727), major highway development funding (LFB
Paper #747), and state highway maintenance (LFB
Paper #748). In addition, the committee adopted an omnibus
transportation motion (Motion #1300,
Part 1,
Part 2) encompassing 43 separate items. Highlights of the omnibus motion
include:
-
Approved the Governor’s transfer of $268 million from the transportation
fund to the general fund, with offsetting general fund supported GO
bonding to fund transportation projects.
-
Deleted over $200 million in transportation fund transfers to non-DOT
agencies included in the Governor’s proposal; including the permanent
deletion of $60 million per year transfer from the transportation fund for
K-12 pupil transportation aids.
-
Substantially modified funding for the Marquette Interchange to fund the
remainder of the project with additional SEG funding of $61 million SEG
and use of two-year bonds instead of relying on 20-year bonding.
-
Reduced transportation revenue bonding for major highway development by a
total of $192 million.
-
Lapsed $31 million from the petroleum inspection fund (PECFA) to the
general fund per the Governor’s recommendation. In addition, the motion
reduces the PECFA fee from three cents to two cents effective May 1, 2006,
deletes $49 million in authorized but unused PECFA bonding authority, and
directs Commerce to submit a proposal to phase out the program in the next
biennium. This in effect reduces the amount of “tax” paid at the pump by
one penny per gallon.
-
Deleted the Governor’s proposed increases in vehicle registration fees.
-
Approved the Governor’s proposal to increase vehicle title fees.
-
Creates a new three-county Regional Transit Authority in Southeastern
Wisconsin (Kenosha, Racine and Milwaukee counties). Allows RTA to impose
up to $2 in vehicle rental fees. The Dept. of Revenue would administer the
rental fee and can retain 2.55 percent of the fee revenue.
-
Provides $1.3 million to complete the license plate rebasing by June 30,
2010. Also provides funding for a new Gold Star license plate for persons
who have had an immediate family member die in combat while serving in the
U.S. Armed Forces.
General Fund Taxes: The Finance Committee also took action on an omnibus
motion relating to 19 general fund tax items.
Motion #1400 dealt with tax related items included in the Governor’s
budget, but also included a number of new tax items. All total, the motion
reduces GPR by roughly $30 million this biennium. However, several of the
tax changes are phased in over time and are estimated to reduce GPR by $134
million in FY 2007-09, $226 million in FY 2009-11, and $276 million in FY
2011-13 and thereafter. Highlights of the omnibus tax motion include:
-
Health Savings Accounts: Approved federal treatment of HSA’s (AB 4
modified to first apply to tax years beginning Jan. 1, 2005).
-
Deduction for Health Insurance Premiums: Adopts the provisions of AB 6 as
passed earlier this year by the Joint Finance Committee.
-
Creates a sales tax exemption for services provided by temporary help
companies.
-
Phases in full income tax exclusion for social security benefits over 5
years.
-
Provides a nonrefundable credit for HIRSP Assessments under the insurance
premium tax, the corporate income and franchise tax, and the tax on
investment income paid by Wisconsin based insurance companies equal to a
portion of the HIRSP assessment paid by the insurer. Annual offset is
capped at $2 million in FY 07 and $5 million each year thereafter. Credit
first applies to tax years beginning Jan. 1, 2006 and could be carried
forward for fifteen years against future tax liability.
Property Tax Freeze: Under
Motion #897, the finance committee deleted the Governor’s proposed
property tax controls and instead adopted a modified version of enrolled
AB 58 to establish municipal, county and technical college levy limits.
The levy limits under the motion would sunset after three years.
Other Budget Highlights: Highlights of previous action taken by the
Finance Committee include the following.
-
Deleted the Governor’s proposal to consolidate state attorney positions in
the Department of Administration, but cut 13 positions and related
funding. (LFB
Paper #110)
-
Adopted funding for air permit streamlining activity and established
segregated air permit fees in response to 2003 WI Act 118 and to address
federal concerns regarding operation of the delegated federal air program.
(LFB
Paper #565 and
Motion #179)
-
Repealed the Smart Growth Law and associated grants to local government
for comprehensive planning assistance. Lapsed $4 million in funding to the
general fund. (Motion
#442)
-
Approved reformation of the HIRSP program by transferring the program from
DHFS to a private, non-profit entity to be administered by a HIRSP Board
of Directors. (Motion
#775).
-
Approved the Governor’s recommendation to lapse $35 million from the
Public Benefits fund to the general fund, plus lapsed an additional $2
million in FY 06. (LFB
Paper #100)
Joint Finance Adopts Solid Base Funding for MA
The Joint Finance Committee unanimously endorsed an omnibus motion (Motion
#870) relating to funding for the state Medical Assistance, BadgerCare
and SeniorCare programs. All total, the committee provided an infusion of
$392 million GPR to shore up base funding and preserve eligibility and
benefits for the state’s largest health care support programs.
In
previous action, the Committee had dug itself a $310 million funding hole by
deleting revenue bonding ($130 million) and one-time transfer from the
Patient’s Compensation Fund ($180 million), which the Governor had
recommended to fund MA. The adoption of Motion #870 made good on the
Committee’s earlier commitment to find a way to restore that funding. In
addition to replacing borrowing and a one-time transfer with base GPR, JFC
also rejected the Governor’s proposed bed tax increase and HMO gross revenue
tax. In stark contrast to last session, the Committee action puts MA funding
on a solid foundation going forward. Highlights of the omnibus package
include:
-
Deleted nursing home bed tax increase, provided a 1.4 percent rate
increase each year, and directed that all current bed tax revenue be
deposited in the MA trust fund.
-
Deleted HMO gross revenue tax and associated partial rate increase. Also,
codified federal standard that requires the state to pay HMO’s that serve
MA or BadgerCare recipients an actuarially sound rate.
-
Deleted Governor’s proposed reductions in pharmacy reimbursement and other
prescription drug changes and restored $17 million GPR ($40 million all
funds) over the biennium.
-
Approved the Governor’s recommendation to provide prenatal care and
delivery services to non-qualified immigrants under BadgerCare.
-
Retained current law eligibility and cost sharing in the SeniorCare
Program.
-
Provided $5 million GPR ($12 million all funds) to fund rate increases for
outpatient hospital services over the biennium.
Joint Finance Adopts Privatization of HIRSP
On Monday June 6, the Joint Finance Committee approved
Motion #775 on a 13-2 vote, with Reps. Pocan and Colon voting against,
and Rep. Jensen absent. Under the motion, the administration of the state’s
high-risk health insurance program known, as HIRSP, would be transferred
from the Department of Health and Family Services (DHFS) to a new, private,
nonprofit organization governed by a 13-member board of directors. Board
members are to be nominated by the Commissioner of Insurance (OCI) and would
be subject to Senate confirmation.
The
motion provides broad authority for the new HIRSP Board to make benefit,
eligibility, cost containment, administrative and other changes to the
program. Eligibility for coverage under HIRSP is generally retained and
HIRSP would continue to serve as the state’s “acceptable alternative
mechanism” to meet federal HIPAA requirements. Benefit design is to be
determined by the board, but policies are subject to OCI approval and may be
rejected if the design is not comparable to a typical individual health
insurance policy offered in the private market.
Program funding would continue to be allocated on a 60/20/20 basis, with 60
percent of program costs funded by premiums charged to enrollees, 20 percent
funded by assessments on insurers and 20% funded by medical provider
discounts. Under the motion, this same 60/20/20 split would apply to all
program costs including premium and deductible subsidy costs. Under current
law, subsidy costs are treated separately from the basic 60/20/20 split and
instead are allocated 50/50 among insurer assessment and provider discount.
Governor Signs SB 78
On Tuesday, June 7,
Gov. Doyle signed SB 78, which requires identification for the purchase
of ingredients used in the production of methamphetamine and limits the
amount a person can purchase in a 30-day period.
Products with pseudoephedrine – a key ingredient in the production of meth –
will be placed behind a pharmacist’s counter. The bill requires that
pseudoephedrine can only be sold by a pharmacist or someone working under
the direction of a pharmacist.
Legislature to Meet Next
Week
The State Assembly has set an ambitious
calendar for next Tuesday, June 14, and may also meet on Thursday,
especially if the Democrat minority uses procedural measures to delay final
consideration of certain bills. Among the 21 bills and resolutions to be
addressed by the State Assembly are:
-
AB 441 re electric generating facility applications for public
convenience and necessity;
-
AB 437 re conveyance of public property to utilities for construction
of transmission lines;
-
AB 259 re provider organizations subject to health care liability
requirements;
-
AB 207 re health care “conscience clause” exemptions;
-
AB 156 re allowing certain counties to create TIF districts;
-
AB 193 re TIF changes for Kenosha.
The
senate is expected to meet on the floor next Wednesday. The calendar has not
been set.
Wisconsin
Politics
Democrats to Meet in Oshkosh/Bayh
to Keynote
The 2005 State Democratic Party Convention begins later today
at the Park Plaza Hotel and Convention Center in Oshkosh. U.S.
Sen. Evan Bayh of Indiana, a potential 2008 presidential
candidate, will deliver the keynote address at 8:44 tonight.
Others who will address the Convention include Governor Doyle (who
will also introduce Senator Bayh), Lieutenant Governor Lawton,
State Senate and Assembly Democrat leaders, members of the
Congressional delegation and Attorney General Lautenschlager. The
Convention will also adopt the party’s platform and elect a new
party chair.
WisPolitics, as it did at the Republican Convention, will conduct a
straw poll of delegates on several topics including 2008 Democrat
presidential candidates and 2006 Democrat AG preference. We will report the
results of the poll in next week’s edition of Tidbits.
Political News
State
budget panel rejects $10 increase in vehicle registration fees:
Milwaukee Journal Sentinel, June 10, 2005.
Democrats’ state convention starts today: Appleton Post-Crescent,
June 10, 2005.
Legislators roll out plan to protect Medicaid: Milwaukee Journal
Sentinel, June 9, 2005.
Details
emerge in Republicans' plan for balanced budget: Milwaukee Journal
Sentinel, June 9, 2005.
Smoking ‘ban’ bill takes state in wrong direction (opinion):
Appleton Post-Crescent, June 8, 2005.
Pseudoephedrine pills available only from pharmacists: Baraboo News
Republic, June 8, 2005.
Republicans Wrapping Up Work On Rewriting Doyle's State Budget:
Madison Capital Times, June 7, 2005.
Panel OKs
some changes, nixes others for voucher, charter schools: Janesville
Gazette, June 7, 2005.
State mandates have always been a bipartisan activity (opinion): La
Crosse Tribune, June 7, 2005.
What Happened to State's 'electric Crisis?': Madison Capital Times,
June 7, 2005.
Gas markup has outlived any purpose it ever served (opinion):
Appleton Post-Crescent, June 7, 2005.
District attorney won't prosecute ethanol plant complaints:
Janesville Gazette, June 7, 2005.
Local control goes both ways at Capitol: La Crosse Tribune, June 6,
2005.
Only one nominee, and that's to send a message: Wisconsin State
Journal, June 6, 2005.
Markets
becoming new focus of efforts in China: Milwaukee Journal Sentinel,
June 6, 2005.
Unemployment
eases a bit, but job figures disappoint: Milwaukee Journal Sentinel,
June 4, 2005.
'Boot camp'
conference to drill entrepreneurs: Milwaukee Journal Sentinel, June
4, 2005.
Stem cell funding will stay intact: Appleton Post-Crescent, June 4,
2005.
Nonsensical changes to W-2 (opinion): Milwaukee Journal Sentinel,
June 5, 2005.
Upcoming Fundraisers
Saturday, June 11
-
Sen. Tom Reynolds (R-West Allis),
Milwaukee
-
U.S. Rep. Mark Green (R) Gubernatorial
candidate, Ashland
-
U.S. Rep. Mark Green (R) gubernatorial
candidate, Hayward
Sunday, June 12
Monday, June 13
-
U.S. Rep. Ron Kind (D), Eau Claire
-
Rep. Jean Hundertmark
(R-Clintonville), New London
Wednesday, June 15
Monday, June 20
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