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Aug. 1, 2003

On Thursday, July 31, Governor Jim Doyle signed landmark tax policy legislation known as the “Single Sales Factor” means of determining multi-state corporations’ tax liability. (See below.) Beginning in 2006, the state will weigh the sales factor in tax apportionment more heavily than payroll and property and eventually the payroll and property factors will be phased out and sales will be the single factor in determining the tax liability of corporations who do business in other states as well as Wisconsin. All of our neighboring states currently weigh the sales factor more heavily than Wisconsin does. This new tax policy, passed by a Republican dominated legislature and endorsed and signed by a Democrat Governor, is aimed at encouraging business expansion and location in Wisconsin. 

Although the budget has been signed, the tax freeze remains in the news and, as reported below, the Legislature may be back in another extraordinary session to address the veto question. The Legislature and the Administration are also gearing up for what promises to be a very active Fall Session. The pace in Madison has barely slowed down. Tidbits will, however, take a week off next week but will return the following week with more summer politics and policies.

Wisconsin Politics

Legislature Will Attempt Override of Property Tax Freeze Veto
On July 28, Sen. Tim Carpenter (D-Milwaukee) announced, with some conditions, that he plans to vote with Senate Republicans in favor of overriding the Governor’s veto of the GOP-drafted property tax freeze provision in the 2003-05 biennial budget. (On Thursday July 24, 2003 Governor Doyle signed – with vetoes – the 2003-05 State Biennial Budget as 2003 WI Act 33. For a summary of veto highlights, please see The Hamilton Consulting Group’s Wisconsin State Budget Update.)

Following the Governor’s action on the budget bill last Thursday, Sen. Majority Leader Mary Panzer (R-West Bend) announced that the Senate will vote on whether or not to override the Governor’s property tax freeze veto. The Senate is expected to call an Extraordinary Session sometime soon for this purpose. To override a gubernatorial veto, two-thirds of the members of both Legislative houses must vote for the override. If all the Republicans from both houses vote for the veto, the Senate will need override votes from four Democrats, and the Assembly will need override votes from seven Democrats. Sen. Carpenter is the only Democrat so far to publicly announce his intention to vote in support of the override. This is likely, however, to make for a very difficult political decision for several other Democrats.

Doyle Announces Interchange Repair Plan
On July 28, Gov. Doyle announced a new plan for rebuilding the Marquette Interchange that is intended to save the state money. The original plan for the Interchange overhaul, recommended by the Department of Transportation, was estimated to cost between $550 million and $1 billion; Doyle’s plan is projected to cost $810 million. (See Governor Doyle’s fact sheet outlining the plan and its expenses.) The project is expected to begin in 2004.

George Recall Election Stayed
The Election to Recall State Sen. Gary George (D-Milwaukee) was postponed on July 28 by Dane County Circuit Judge Mary Ann Sumi. Sen. George’s lawsuit against the State Election Board alleges that the Board improperly ordered the Recall Election. The primary for the Recall Election was originally scheduled for August 19. Following Judge Sumi’s decision Monday, the August 19 primary is now stayed pending a hearing and the court’s decision in the case. If Judge Sumi allows the election to go forward, she will announce a new date for the primary.

Recount Upholds Special Election Results
On June 28, Republican Assembly candidate Jackie Szehner (Stevens Point) filed for a recount of last week’s election for the 71^st Assembly District seat, which was narrowly won by Democrat Louis Molepske (Stevens Point). The election night count showed Szehner captured 2,490 votes, while Molepske captured 2,628 votes. (Most remaining votes reportedly went to Green Party candidate Amy Heart and Democrat write-in candidate Jo Seisner.) The recount showed the number of votes for Molepske was unchanged, while Szehner’s numbers went down (from 2,490 to 2,488).

Doyle Announces Grant for Manitowoc
On July 25, Gov. Doyle announced that the City of Manitowoc would receive $60,000 from the Department of Commerce. The funds will assist the City’s effort to offer the former Mirro Company plant, closed earlier this year, to new businesses interested in locating in Manitowoc. The Mirro Company closing resulted in severe job loss in Manitowoc, and the city hopes to remedy the problem by bringing in a new business that could offer jobs to former Mirro employees.

Policy Developments

Governor Signs Single Sales Factor
On July 31, Gov. Doyle signed SB 197 as Act 37, Laws of 2003, at a bill signing ceremony at the Harley-Davidson headquarters in Milwaukee. (See the Governor’s press release.) The bill, commonly known as the ‘single sales factor’ apportionment bill, changes the basis for computing income for tax purposes for Wisconsin businesses. Under current law, the income tax of a Wisconsin business is computed by a formula including three factors: a sales factor (50%), a property factor (25%), and a payroll factor (25%). Under the new law, property and payroll factors will be phased out over four years and the sales factor will eventually be increased to 100 percent beginning in tax year 2008. The change in the law is intended to provide incentives for businesses with operations in Wisconsin to expand within the state, as they would no longer experience a tax increase for creating new jobs or expanding facilities.

Similar legislation regarding the ‘single sales factor’ concept has passed the Assembly on numerous occasions, but has never been voted on in the Senate. Passage of the current version of the bill, authored by Sen. Cathy Stepp (R-Sturtevant), is intended to pave the way for economic growth in Wisconsin and may also signify a positive push forward for other economic development related legislation to be considered in the fall floor period. Both the Republican-controlled Legislature and the Democratic governor have publicly announced support of an upcoming agenda committed to growing Wisconsin’s economy. Passage of SB-197 reflects a supportive climate for bipartisan consideration of economic development initiatives anticipated in the coming fall floor period.

Job Creation Committee Hearing
On Tuesday, August 5, the Senate Select Committee on Job Creation will hold its first public hearing. (For details, see the public hearing notice.) The focus of the hearing will be on regulatory reform; testimony will be by invitation. Members of the Committee so far include: Sen. Cathy Stepp (R-Sturtevant) and Sen. Ted Kanavas (R-Brookfield) as co-chairs, and Sen. Joe Leibham (R-Sheboygan). Democrats have not yet officially named any members to the Select Committee.

Fox River Cleanup Announced
Governor Doyle recently announced that the Wisconsin Department of Natural Resources (WDNR) and the Environmental Protection Agency (EPA) had released the Record of Decision (ROD) for cleaning up two sections of PCB-contaminated sediment along the Lower Fox River in Green Bay and Little River, Wisconsin. The ROD was signed by the two government agencies on June 30, 2003, and released to the public on July 28, 2003. According to the Governor, the cleanup could begin as early as summer 2004. (For further information on the Lower Fox River cleanup, see Region 5 EPA’s Update on the issue.)

Governor Signs ID Theft Bill
On July 24, Governor Doyle signed AB 288, as 2003 Wisconsin Act 36 relating to identity theft. The bill, authored by Rep. Mark Gundrum (R-New Berlin), is aimed at persons engaged in identity theft. It expands the current crime of identity theft by broadening the definition of “personal identification document” to include several new types of documents under the prohibition. The bill also creates a new crime, prohibiting the unauthorized use of identification documents or information belonging to a corporation, partnership, association, government, or government agency.

UW System Loses Two Top Officials
Last week, two University of Wisconsin System Chancellors resigned their posts, leaving for jobs in other states. (UW-Milwaukee Chancellor Nancy Zimpher stepped down on July 22, and UW-Stevens Point Chancellor Tom George on July 25.) Zimpher heads to Ohio and George to Missouri for their new positions as President of the University of Cincinnati and Chancellor of the University of Missouri-St. Louis, respectively.

Both UW officials will receive substantial salary hikes at their new jobs, although neither has stated that the salary increases caused them to leave Wisconsin. Although it is not confirmed that UW System salaries are lower than the norm, the upcoming biennium will not be a good time for the UW System to raise salaries. The UW System, like other state agencies, faces a substantial funding cut as part of the 2003-05 budgets’ efforts to address the state’s financial deficit. (See a related news article.)

Federal Developments

Bush Cabinet Members Visit Wisconsin
On July 29, three key members of Bush’s economic team visited Wisconsin. U.S. secretaries John Snow (Treasury), Don Evans (Commerce) and Elaine Chao (Labor) made stops in Wausau, Wauwatosa, and Green Bay, carrying the message of the President’s job and economic growth policies. The message, however, was skeptically met by some Wisconsin citizens who continue to be concerned about the loss of manufacturing jobs and other concerns. (See a related news story.)

Prescription Drug Import Bill Passes House
Late in the night of July 24, the U.S. House of Representatives voted in favor of HR-2427, the Pharmaceutical Market Access Act, which would enable pharmacists, wholesalers, and qualifying individuals to import FDA-approved prescription drugs into the United States from certain countries. (The bill passed the House by a vote of 243-186.) The bill is aimed at reducing the cost of drugs for consumers by allowing countries with lower drug production costs, such as Canada and Europe, to enter the market and compete with U.S. drug manufacturers. Opponents expressed concerns about the ability to assure quality control and the potential for tainted or altered drugs entering the country.

On July 25, U.S. Rep. Paul Ryan (R-D1) announced he voted for the bill, and U.S. Rep. Tammy Baldwin (D-D2) announced her support as well. U.S. Rep. F. James Sensenbrenner Jr. (R-D5) also announced his vote for the bill. U.S. Rep. Mark Green (R-D8) voted against its passage. (Rep. Green did not issue a press release regarding his vote on this bill.)

Political News

New tax law a boost for business: Appleton Post-Crescent, Aug. 1, 2003.

Taxes would rise 5.9% for average home: Milwaukee Journal Sentinel, July 31, 2003.

Property taxes could rise $1B: Madison Capital Times, July 31, 2003.

Lawmakers seek veto override: Appleton Post-Crescent, July 30, 2003.

Bush Cabinet members coming to city: Green Bay Press-Gazette, July 28, 2003.

Democrat says he'll vote to override Doyle's veto: The Janesville Gazette, July 29, 2003.

Cory J. Nettles: Gov pursues regulatory reform that doesn't hurt quality of life: The Capital Times, July 30, 2003.

Cabinet members get earful on job losses: Appleton Post-Crescent, July 30, 2003.

Businesses, protesters greet official Bush tax tour: Green Bay Press-Gazette, July 30, 2003.

Economic news gives mixed message: Marshfield News-Herald, July 30, 2003.

Senate Democrat favors override of veto: Milwaukee Journal Sentinel, July 29, 2003.

Fox cleanup success hinges on state (opinion): Appleton Post-Crescent, July 30, 2003.

Transportation budget took huge hit, critics say: Marshfield News-Herald, July 30, 2003.

Mills eager for PCB resolution: Green Bay Press-Gazette, July 29, 2003.

Fox Cities on cleanup fast track: Appleton Post-Crescent, July 29, 2003.

Lawmakers glad Fox River cleanup is progressing: Appleton Post-Crescent, July 29, 2003.

Judge grants stay of Milwaukee senator's recall: The Janesville Gazette, July 29, 2003.

Governor unveils plan for Marquette Interchange repairs: The Janesville Gazette, July 29, 2003.

Local concerns await Bush team: The Wausau Daily Herald, July 28, 2003.

UW fears money could spur more resignations: The Janesville Gazette, July 28, 2003.

Imported drug bill goes through risky back door (opinion): Appleton Post-Crescent, July 27, 2003.

Upcoming Fundraisers (For more information, see Fundraising Calendar.)

Thursday, July 31:

• St. Sen. Ted Kanavas (R-Brookfield), Milwaukee, 6:00p.m.

• St. Rep. Tom Lothian (R-Williams Bay), Lake Geneva Yacht Club, 6:00p.m.