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July 1, 2005

After another all night session by a legislative body, the State Senate has approved its version of the 2005-07 State Budget. (See amendment details below.) While the Assembly has not publicly announced its schedule, that body is likely to return next week to address the changes adopted by the Senate. While it is impossible to predict the reaction of all 60 Republican members of the Assembly to Senate changes, it is clear that the leaders of the Republican-controlled Legislature want to avoid a conference committee and will try to iron out differences before the Assembly takes the floor next week.

For the most part, the Joint Finance version remains intact. The Senate did reduce all state agency budgets by an additional 2.3 percent, but placed $96 million of the $100 million saved in the Joint Finance Committee’s supplemental GPR appropriation that could be made available to agencies throughout the biennium. The Senate also reduced the UW Madison administration budget by an additional $1 million GPR  in a symbolic move in reaction, in large part, to the questions surrounding the Barrows situation.

The next Tidbits is expected to include the legislative wrap-up of the State Budget before its return to the Governor. In the meantime, a wish for a very HAPPY 4^th OF JULY from all of us at the Hamilton Consulting Group.

Policy Developments

Senate Supports Budget with Three Amendments
The State Senate voted 17-16 early this morning to concur in the State Budget adopted by the Assembly on Wednesday, June 22. (Please see June 24 Tidbits.) Seventeen Republicans voted in favor of concurrence while all 14 Democrats and Republicans Mike Ellis and Rob Cowles voted no. While the Senate adopted three amendments, the overall package is not substantially different than that adopted by Joint Finance in early June. (Please see June 10 Tidbits.)

Following is a brief summary of the amendments adopted with links to the actual language and the Legislative Fiscal Bureau (LFB) summary for two of the amendments.

Amendment 19 - defines pheasants as poultry.

Amendment 29 (LFB Summary) - Technical.

Amendment 50 (LFB Summary) - Key Republican amendment.

• Reduces each State agency’s largest GPR state operations appropriation by an amount equal to 2.3% of the agency’s total GPR state operations appropriation for a total reduction of $50 million annually. Places $58 million in 2005-06 and $38 million in 2006-07 in the Joint Committee on Finance’s GPR appropriation for supplementation of state agencies who may request reallocation or restoration of cuts from Joint Finance.

• Requires non-represented state employees (including UW faculty and academic staff) to pay the first 1.5 percent of earnings as employee contributions to the State Retirement System—rather than having the State pay the employee’s share as is currently the case. (State savings of $42.2 million all funds, including $19.1 million GPR over the biennium.)

• Restores statutory authority for early childhood excellence program, but no funding.

• Deletes changes to sales tax retailers discounts, thus restoring current law. ($7.3 million GPR revenue reduction compared to engrossed AB 100.)

• Eliminates the current state income tax deduction for adoption expenses and instead provides a nonrefundable state adoption expenses credit beginning in tax year 2006. (Net effect of $12.8 million GPR revenue reduction over the biennium.)

• Creates a refundable individual income tax credit ($100 per eligible pupil) at an eligible private school or home school (excluding Milwaukee Parental Choice program). (Begins in FY 2006-07.) ($14.6 million GPR revenue reduction in FY 2007.)

• Provides a negative tertiary aid exclusion for certain costs under general school aids.

• Reduces funding to UW Madison for administrative expenses by $500,000 in each year of the biennium.

• Places limits on expenditure of general fund revenues and changes the name of the “budget stabilization fund” to the “taxpayer protection fund.”

• Changes the transfer from the Transportation Fund to the MA Trust Fund instead of the General Fund and reduces GPR funding for MA and increases SEG funding for MA by the same amount.

• Clarifies the rental vehicle license registration and titling fee pass-through and specifies that a regional transit fee be identified as a separate item on a customer’s receipt.

Compared to the Assembly-passed version of the budget, the Senate Republican Caucus Amendment: Reduced GPR tax collections by $34.7 million; generated $19.1 million GPR savings ($42.2 million all funds) in state pension contributions; and. cut agency spending by an additional net $5 million over the biennium.

The bill now returns to the Assembly for action on the Senate amendments. Speaker Gard did not set a date but reaffirmed that the Assembly will not meet until after the 4^th of July.

Supreme Court Upholds PSC Decision in Power Plant Case
The Wisconsin Supreme Court, in its ruling released on Tuesday, held that the state Public Service Commission (PSC) acted properly and legally when it voted to approve Wisconsin Energy's (WEC) project in November 2003.

In an appeal to the Supreme Court, bypassing the Court of Appeals, various parties sought review of the decision by Dane County Circuit Judge David Flanagan who had vacated the PSC’s decision to approve construction of the two coal-fired units in Oak Creek. Specifically, the Court supported the PSC’s determination that WEC’s application was “complete.” In reaching this conclusion, the Court held that:

• PSC's determination of completeness is judicially reviewable.

• PSC reasonably concluded that WEC's application contained two distinct site alternatives.

• WEC's application contained all necessary information relating to DNR permits.

• WEC's application contained all necessary information relating to transmission line agreements.

In addition, the Court concluded that the PSC's approval of WEC's CPCN application was not contrary to law or unreasonable; and that the PSC did not exceed its authority or act irrationally when it reduced the mitigation payments from WEC to the City of Oak Creek.

The four-member majority concluded that the Public Service Commission's decisions should be given deference in any judicial review, and that those decisions should not be reversed unless it could be proven that the PSC acted irrationally in granting the permit.

[The legal challenge to the Oak Creek project prompted lawmakers to introduce a bill to address problems identified by Flanagan in his ruling. AB 441 was passed with a 74-22 vote by the Assembly on June 14 and a 24-8 vote in the Senate on June 23. The bill is awaiting action by Gov. Jim Doyle.]

Enrolled Bills Awaiting Governor’s Action
There are 24 bills that have passed the full Legislature and currently awaiting action by the Governor while he awaits the return of the budget bill. Included among those bills are:

AB-107. Daily deadline for filing certain documents for recording by register of deeds.

AB-259. Provider organizations subject to health care liability requirements.

AB-277. General air pollution control permits. (Jobs Creation II).

AB-437. Requiring the conveyance of property to a public utility for the construction of electric transmission lines.

AB-441. Applications for certificates of public convenience and necessity for certain electric generating facilities.

SB-55. Increases limits on designation of enterprise development zones.

Wisconsin Politics

Attorney Sostarich Receives 18-Month License Suspension for Kickback Scheme
Mark Sostarich, the attorney who plead guilty for his involvement in a kickback scheme with former State Sen. Gary George, has been suspended from practicing law for 18 months.

The Supreme Court reviewed a referee’s recommendation as to discipline for Attorney Sostarich, and concluded that a retroactive suspension of 12 months, which was recommended by the referee, is not sufficient discipline for the serious misconduct committed in this matter. The Court did, however, agree that the suspension should be retroactive to the date on which Sostarich's license to practice law was summarily suspended based on the criminal conviction. (Sostarich is former Chair of the State Democratic Party.)

Federal Developments

Senate Passes Bi-Partisan Energy Bill
The U.S. Senate on June 28 passed H.R. 6 – a comprehensive, bipartisan energy bill – by a vote of 85-12. The bipartisan Senate energy bill contains key provisions to increase production, increase conservation, diversify fuel supply and employ new technologies.

The bill now moves to the House-Senate Conference Committee where the two chambers will need to work out their differences to reconcile the Senate bill with a less costly energy measure passed in April by the House.

The Senate measure places more emphasis on encouraging the development of alternative and renewable sources of energy than does the House measure. The Senate bill is silent on the House's provision to partially shield producers of methyl tertiary butyl ether, or MTBE, from lawsuits arising from the gasoline additive, which has been found to contaminate ground water. A dispute over MTBE helped kill the 2003 energy bill.

President Bush has said he would like a bill to be passed and on his desk in August.

O’Connor Retires from Supreme Court
Justice Sandra Day O'Connor has announced her retirement after 24 years on the U.S. Supreme Court. In a short statement she said her resignation will be effective on the naming of her successor and added it was a “great pleasure indeed” to serve on the court.

Justice O’Connor was considered a moderate and often cast the deciding vote. This week she played that role in the Court’s decision on the Ten Commandments. She also sided with the majority in the 1992 case to uphold the Roe vs. Wade ruling on abortion. President George W. Bush now has his first opportunity to appoint a justice to the top US court - one who will likely be more conservative.

Political News

Senate passes its own version of budget: Milwaukee Journal Sentinel, July 1, 2005.

Senate approves state budget; will go to Assembly after changes: Racine Journal Times, July 1, 2005.

Great Lakes tap tightens: Milwaukee Journal Sentinel, July 1, 2005.

State trims price increase sought by Wisconsin Power & Light: Milwaukee Journal Sentinel, July 1, 2005.

Budget shell games hurt only the taxpayer (opinion): Sheboygan Press, July 1, 2005.

We Energies wins in court: Racine Journal Times, June 29, 2005.

Ruling strikes Oak Creek's deal with utility: Milwaukee Journal Sentinel, June 29, 2005.

Senate short on votes for budget: Milwaukee Journal Sentinel, June 29, 2005.

Lawmakers seek curbs on seizure of property: Milwaukee Journal Sentinel, June 29, 2005.

Doyle risks voter wrath: Manitowoc Herald Times, June 29, 2005.

Madison Weekly: Budget moves forward: Appleton Post-Crescent, June 27, 2005.

When will UW learn? (opinion): Milwaukee Journal Sentinel, June 27, 2005.

State support for UW on the wane (opinion): Sheboygan Press, June 27, 2005.

Assembly plan would abolish all local smoking-ban ordinances: La Crosse Tribune, June 25, 2005.

Group touts law that protects at-risk newborns: Wausau Daily Herald, June 27, 2005.

Shaken baby bill should be passed (opinion): Wisconsin Rapids Tribune, June 27, 2005.

GOP Follows Ideology Down Dumb Road On Contraception: Madison Capital Times, June 25, 2005.

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