Political Tidbits

Wisconsin political news for clients and colleagues.

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June 13, 2007

An important phase of the budget process has been completed as the Legislature’s Joint Committee on Finance has reported out its version of the biennial budget for fiscal years July 1, 2007 to June 30, 2009. The bill was reported out without recommendation as the split committee voted 8 to 8 on a motion to recommend passage.

As noted below, we anticipate a lengthy process going forward and we will follow its progress and report on major developments. Neither House is expected to do much other legislating until the budget issues are resolved.

Policy Developments

State Budget Update
Joint Finance Action
On Friday, June 8, the Wisconsin Legislature’s Joint Committee on Finance (JFC) completed its work on the 2007 State Budget proposal and forwarded the document to the full Legislature on a tie (8 to 8) vote. The JFC version of the bill, SB 40, will move to the Senate where it is expected to be acted upon later this month. (While JFC deadlocked on the motion to recommend passage as amended, the Committee did vote unanimously to introduce and adopt a substitute amendment, which will be the version advanced to the Senate.)

In our May 15 issue of Tidbits, we discussed the state budget process, including a listing of the eight “new” major funding sources recommended by Governor Doyle. We provided more detailed information on those funding sources in our June 1 edition. Seven of the eight new funding sources remain in the substitute version developed by the Joint Finance Committee. All remained in the budget when voting to remove the new or increased fees or taxes failed on 8 (Republican) to 8 (Democrat) votes. The seven are:

Real estate transfer fees
Hospital tax
Cigarette Tax
Motor Vehicle Registration fees and other Transportation fees
Tipping Fees
Oil Company Tax
Transfer from the Patient’s Compensation Fund

(It should be noted, however, that the vehicle registration fees are included in both Democrat and Republican budget plans.)

The Governor’s proposed increase in vital records (birth, death, marriage) fees was rejected on a 14-2 vote.

Timing Going Forward
The Democrat and Republican caucuses in both Houses have begun meeting this week. The respective caucuses will receive briefings on the JFC version of the budget bill by members of the Legislative Fiscal Bureau and will begin strategy discussions and deliberations on proposed amendments. Senate leadership has imposed a “close of business day Wednesday” deadline for submission by members of proposed amendments to the JFC substitute amendment.

It is expected to take the bill drafters in the Legislative Reference Bureau seven days to draft the substitute amendment, meaning that any Senate floor action could not commence until Monday, June 18, at the very earliest. There is, however, expected to be substantial program debate in the caucuses, and Senate action on its version of the budget may not occur until the end of June.

Meanwhile, the Assembly is expected to be crafting its own version of the budget while the Senate deliberates, since its version will be significantly different from the version proposed by the Governor and the version expected to be adopted by the Senate - particularly as it relates to new or increased fees and taxes. The Assembly is not likely to take any official action, however, until after July 4^th.

Conference Committee
All of this, of course, is necessary to and setting the stage for a Conference Committee between the two Houses - a committee that will be expected to do some tough negotiating and arrive at some agreements that can garner a majority vote in both the Senate and the Assembly and be signed by the Governor.

While the current biennium and fiscal year officially end on June 30, 2007, Wisconsin government does not shut down, and the state continues to operate under the 2005-07 budget framework, with appropriate adjustments made after the new biennial budget is finally approved.

Comments Filed on DNR Mercury Rule; Study Finds DNR’s Rule Doubles Costs
June 11 was the deadline for filing comments on DNR’s controversial mercury rule. Industry comments focused on those provisions that exceed the EPA’s Clean Air Mercury Rule (CAMR). Generally, DNR's proposed rule tracks CAMR for the first two phases – resulting in a 69 percent reduction in mercury emissions from utility coal-fired units by 2019. But a final, Phase III (2020 and beyond), requires a 90 percent reduction.

In addition, the proposed rule allows only limited trading of reductions to achieve compliance in Phases I & II, and bans trading altogether under Phase III (i.e., each unit must hit the 90% target)Industry comments, such as those filed by Wisconsin Manufacturers & Commerce (WMC), highlighted a recent study by the Center for Energy and Economic Development (CEED).

The CEED Mercury Cost Study found that DNR trading restrictions and the 90 percent target would increase the cost of operating coal-fired generation facilities in Wisconsin by $450 million between 2010 and 2020, or more than twice the cost of EPA’s CAMR. Industry notes that these costs will substantially increase electric rates but produce little or no environmental benefits. They assert the incremental reductions under DNR’s rule from the Wisconsin utilities will do little to reduce mercury found in Wisconsin’s lakes and streams, which mostly comes from air deposition from global mercury emissions.

Legislative Committee Fails to Pass Compromise on DNR Interstate Pollution Rule
On June 13, the Joint Committee on Review of Administrative Rules (JCRAR) failed to pass a compromise relating to EPA’s Clean Air Interstate Rule (CAIR). The party-line 5-5 vote on the motion, in effect, ended the Legislative review of the rule.

CAIR is EPA’s program to reduce ozone and particulate matter pollution across the eastern United States, and includes a model emission trading program and an emissions allocation scheme to divvy-up emission allowances among utilities. (Each NOx allowance allows a utility to emit one ton of NOx.) DNR chose to change EPA’s allocation scheme that penalizes existing coal plants by provideing windfall allowances to natural gas facilities. The CEED Mercury Cost Study found that CAIR would increase electric rates in Wisconsin by over $4 billion dollars even without DNR’s revised allocation scheme.

Under DNR’s rule, all Wisconsin investor-owned utilities see fewer allowances. For example, Wisconsin Public Service Corporation (WPS) estimates that changes to EPA’s allocations will cost their customers between $1.5 and $2.0 million annually. On the other hand, DNR provides a windfall to the Whitewater Cogeneration Facility owned by Cogentrix Energy, an independent power producer out of Charlotte, North Carolina.

The industrial ratepayers compromise position was offered by Rep. LeMahieu as a motion at the June 13 JCRAR meeting. The motion was supported by all Republicans and opposed by all Democrats, causing it to fail.

Missouri Supreme Court Rules Against City of St. Louis in Lead Paint Nuisance Case
The Missouri Supreme Court ruled on Tuesday, June 12, that the city of St. Louis is not entitled to damages from the makers of lead paint. City officials had claimed that several paint manufacturers distributed the paint knowing it was "highly toxic and posed a real and serious health threat, particularly for children." Lead paint was widely used in homes around the country before it was banned by the federal government in 1978 and has been linked to serious illnesses, mainly among children.

The Court, on a 4-3 decision, upheld the concept of traditional causation, holding: “Any attempt to find liability absent actual causation is an attempt to connect the defendant with an injury or event that the defendant had nothing to do with. Mere logic and common sense dictates that there be some causal relationship between the defendant’s conduct and the injury or event for which damages are sought.”

"The Supreme Court has spoken, and there isn't ambiguity in what they said," said Tom Graves, general counsel for the National Paint and Coatings Association, which filed a brief in the case. "It's a slam-dunk. You have to prove actual causation."

St. Louis is one of a number of cities, including Milwaukee, and states around the country seeking repayment for the cost of cleaning up lead paint in old homes.

The results reached in the Missouri case differ dramatically from the Thomas (“risk contribution”) case rendered by the Wisconsin Supreme Court in 2005.

Task Force Reviewing State IT Projects
The Speaker’s Task Force on Failed Information Technology Projects held its first meeting this week regarding IT projects that have cost taxpayers nearly eighty million dollars.

State Auditor Jan Mueller spoke to the committee and said inadequate planning and oversight have led to cost overruns and missed deadlines in state IT projects. The task force heard from various state departments, including some that have had IT projects abandoned.

The task force is comprised of sixteen public and private sector members with a wide background of experience and expertise in IT projects. The next meeting of the task force is July 16.

Governor Doyle Announces Government Accountability Board Nominations
Gov. Jim Doyle recently announced his nominations to the Government Accountability Board. The board was created under Special Session Senate Bill 1 to serve as an independent, non-partisan Government Accountability Board with funding and independent authority to investigate and seek prosecution.

The nominees will now proceed to the Senate and Assembly to receive confirmation.

The six nominees are:

The Honorable Michael W. Brennan of Marshfield, former Clark County Circuit Court Judge
Chief Judge Thomas Cane of the Wisconsin Court of Appeals – District III, of Wausau
The Honorable David G. Deininger of Monroe, former Wisconsin Court of Appeals – District IV Judge
The Honorable William Eich of Madison, former Chief Judge of the Wisconsin Court of Appeals – District IV
The Honorable James Mohr of Eagle River, former Vilas County Circuit Court Judge
The Honorable Gerald C. Nichol of Madison, former Dane County Circuit Court Judge

Wisconsin First in Overall Healthcare Quality
For the first time in the four years that they have been compiling the data, the U.S. Agency for Healthcare Research and Quality ranked and released composite scores to the respective states. This year Wisconsin was listed as first in the overall quality of Health Care, when measured against the remaining 50 States and the District of Columbia.

Wisconsin scored a high of 65.76 overall, just ahead of Minnesota which scored a 62.77.

Wisconsin, as a state, has traditionally scored well with respect to the health care quality of its populace. Wisconsin’s worst category was home health care where the score was only a 25, but the state ranked very high in both ambulatory care and nursing home care. In the hospital care category Wisconsin ranked first in the nation.

The scores were compiled after looking at 129 quality measures in four different care settings. The report is based upon surveys and information on file at the Centers for Medicaid and Medicare respectively.

Wisconsin Politics

Mark Green Nominated for Ambassador Post
President Bush has nominated former Rep. Mark Green, R-Wis., to become ambassador to the African nation of Tanzania. Green is well-suited for the position, having worked as a volunteer teacher in Kenya and has served on the House International Relations Committee.

U.S. Sen. Russ Feingold and Rep. Tom Petri have both expressed their support. Green’s appointment requires Senate confirmation. He is currently a lawyer at the firm Godfrey & Kahn.

Political News

Up-and-down revenue reason for caution (opinion): Appleton Post-Crescent, June 12, 2007.

State is No. 1 in health care: Milwaukee Journal Sentinel, June 12, 2007.

Budget heads to Legislature with GOP pushing for fewer taxes: Janesville Gazette, June 11, 2007.

Highlights of what's included in state budget passed by committee: Janesville Gazette, June 11, 2007.

What will survive budget battle? Milwaukee Journal Sentinel, June 9, 2007.

Tommy Inc.: Milwaukee Journal Sentinel, June 9, 2007.

6 nominated for state accountability board: Milwaukee Journal Sentinel, June 9, 2007.

White House nominates Green to be ambassador to Tanzania: Wausau Daily Herald, June 6, 2007.

Thompson to rethink plan: Milwaukee Journal Sentinel, June 6, 2007.

While budget committee nears end of work, real fight awaits: Janesville Gazette, June 5, 2007.

Hospitals wary of tax plan: Milwaukee Journal Sentinel, June 4, 2007.