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Oct. 10, 2008

The American dollar is getting stronger and gas prices are falling!!  Okay, every cloud needs a silver lining as most of the world remains nervous about staggering economies.

Economists are looking for a signal that things have bottomed out, but many think we still have some problems to work out before we can begin the turnaround. The bailout/rescue may have been helpful, but the markets have not responded positively as of yet. 

Below in Tidbits we discuss the prognosis for Wisconsin, as well as make note of our namesake’s efforts to lift our country out of a similar situation. DHS Budget requests, transportation projects and an application to make Wisconsin home to the largest biomass-fueled power plant in the Midwest are also highlighted.

Also, a new Update by Hamilton Consulting's Andy Cook outlines five cases recently accepted by the Wisconsin Supreme Court.

Policy Developments

State Economy to be Slow in 2008 and 09
Growth in Wisconsin’s economy will remain slow throughout 2008 and 2009 as the national economy continues to weaken, according to the new Economic Outlook report released by the Department of Revenue.

The Wisconsin economy will slow its pace of growth during 2008 and 2009 following the national economic trend. However, the outlook projects 2009 to be the weakest income growth year as opposed to the department’s previous report in May. The report cites the slump in the housing sector and the tightness in credit markets, combined with high food and gas prices, for the downturn in the economy.

DHS Budget Request Builds on BadgerCare Plus and Family Care
Agency budget requests, which were due to the Department of Administration Sept. 15, are now being reviewed for inclusion in the Governor’s budget bill. The requests include estimates of the costs to continue or improve current agency services or create new programs or services.

Department of Health Services Sec. Timberlake identified five priority budget areas in her request for the department, which include:

• Continue to build on BadgerCare Plus and Family Care.

• Provide financing for the Childless Adults coming on line on a limited basis in January 2009, with full implementation starting April 1, 2009.

• Provide financing for the continued expansion of the Family Care program. The request anticipates coverage to over 75 percent of the state by the end of the current biennium, and the department continues to work towards full statewide expansion.

• Continue transformation from a passive payer of claims to an active purchaser of quality and value.

• Continue BadgerCare Plus pay-for-performance efforts and adopt a proposed new initiative to develop a nursing home pay-for-performance program.

The bulk of these priorities are funded in the department’s request under the base reestimate for Medical Assistance/BadgerCare Plus. Total GPR requested for cost-to-continue in these program areas is $4.18 billion over the biennium, which represents a $580 million GPR increase over the current budget.

Homeland Security Report Outlines Wisconsin Emergency Preparedness
Gov. Doyle recently accepted a report from Brigadier General Don Dunbar, Adjutant General of Wisconsin and Wisconsin’s Homeland Security Advisor, on Wisconsin's overall homeland security readiness. The report outlines the efforts Wisconsin is taking to prevent and respond to potential emergencies and reviews some of the major events such as the summer floods and winter storms that hit the state this past year.

• Communities continue enhanced regional collaboration in both emergency planning and response. The State continues to work with first responders to share critical information when needed.

• Homeland Security funding. In the last year, Wisconsin received a 10 percent reduction in federal homeland security funding, from $17.8 million in FY 2007 to our recent award of $16 million.

• Training. In 2007, more than 5,000 first responders and local officials participated in emergency management training courses and more than 7,000 people participated in emergency management exercises across the state.

• Public health preparedness. Public health officials at the state and local level continue to work to develop effective emergency plans and procedures. Many of those plans were used this spring to address the threat of contaminated wells and the spread of mold following the massive flooding in southern Wisconsin.

Power Plant to become Largest Biomass Plant in Midwest
Xcel Energy recently announced that it will submit an application to the Public Service Commission of Wisconsin (PSCW) to install pioneering technology at the Bay Front Power Plant in Ashland, Wis. to allow it to generate electricity from biomass in all three operating units. When complete, the Bay Front Power Plant will be the largest biomass-fueled power plant in the Midwest and one of the largest in the nation.

The biomass used at Bay Front comes primarily from waste wood from area forest harvest operations. Local independent contractors secure the waste wood and transport it to the plant where it is used to generate electricity. The plant currently uses just over 200,000 tons of waste wood each year. When the project is complete, the plant will use an additional 185,000-250,000 tons per year, and be able to generate enough renewable electricity to serve 40,000 homes.

$17 Million for Transportation Enhancement Projects
Awards totaling $16,965,153 will help fund 47 transportation, bicycle, and pedestrian projects throughout the state of Wisconsin. The projects are part of the Transportation Enhancement and Bicycle and Pedestrian Facilities projects. The projects range in cost from $25,600 to develop a bicycle and pedestrian plan in Rice Lake, to $1,320,000 for a bicycle/pedestrian trail in the city of Madison. A complete list of statewide recipients is available on the WisDOT Web site.

Wisconsin Supreme Court Accepts New Cases for 2008-09
The Wisconsin Supreme Court voted last month to accept 17 new cases for the 2008-09 term.  Please see the Hamilton Consulting Update for synopses of five cases accepted that involve products liability, medical malpractice, Wisconsin Lemon Law, and strict liability issues.  The full list of the cases can be found at the Wisconsin Supreme Court’s website.

Supreme Court on Wheels
The Wisconsin Supreme Court moved its proceedings to Oshkosh this month, conducting hearings in six cases on October 7 and 8. The visit marks the first time the high court has sat in Oshkosh.

This trip is part of Justice on Wheels, a program begun in 1993 to make the court’s work more accessible to the people of the state. The Oshkosh visit marks the court’s 20th Justice on Wheels trip.

Wisconsin Politics

State Polling Roundup
A Rasmussen Reports automated poll of 700 likely Wisconsin voters taken October 6 shows Obama leading McCain 54 percent to 44 percent. The poll of 500 likely Minnesota voters taken October 7 shows Obama leading McCain 52 percent to 45 percent.

In Wisconsin's 8th Congressional District, Democrat incumbent Steve Kagen leads Republican challenger John Gard, according to a SurveyUSA poll. Kagen gets 54 percent with Gard coming in at 43 percent.

For an overview of the Wisconsin 2008 Elections, go to Hamilton Consulting Group's Updates.

Federal Developments

Bush Signs Great Lakes Compact
On Friday, October 3, 2008, President Bush signed into law the Great Lakes-St. Lawrence River Basin Water Resources Compact, an eight-state water management agreement to protect the nation's largest fresh surface water resource from depletion.

The proposal won final congressional approval on a 390-25 House vote. The compact was signed by the eight Great Lakes governors of Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania and Wisconsin. Interstate water compacts require consent by Congress and the president.

In December 2005, following a nearly five-year negotiation, the governors of Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania and Wisconsin reached agreement on the Compact. The eight Great Lakes States reached a similar, good faith, agreement with Ontario and Québec in 2005, which the Provinces are using to amend their existing water programs for greater regional consistency.

Bailout Bill Includes Energy Incentives/Mental Health Parity
By a 263-171 vote, the House passed a $700 billion financial rescue bill that includes tax extenders, an alternative minimum tax fix and higher limits for accounts insured by the FDIC.  The Senate approved the package, 74-25.

The bill establishes the Troubled Asset Relief Program. The Treasury will have $700 billion to buy up troubled mortgages, securities and related assets that have undermined the nation's financial architecture.

In addition, the bill included extensions for valuable renewable energy and energy efficiency tax credits. The Senate added numerous tax incentives to the bill including a one-year extension of the Production Tax Credit (PTC) for wind and biomass plants, and an eight-year extension of Investment Tax Credit (ITC) for solar, tidal, geothermal and other types of renewable power. Both were scheduled to expire at the end of 2008.

Also part of the bill, a new federal mental health parity provision requires employers offering mental health and substance abuse benefits to cover those benefits at the same level they cover physical illnesses. The new law includes employers that self-fund their health care expenses and excludes small employers with between 2-50 employees.

The bill requires parity in co-payments, deductibles, coinsurance, out-of-pocket expenses, limits on doctor visits and hospital stays, and annual and lifetime limits on coverage.

Current Wisconsin law requiring insurers to cover a minimum level of mental health and alcohol and other drug abuse treatment (AODA) remains in effect. Earlier versions of the federal legislation contained language to preempt state insurance mental health and substance abuse insurance coverage laws.

Extensions of the tax credits were attached to the economic rescue bill by the Senate last week. The House passed the bill and it was immediately signed into law by President Bush.

A Hamiltonian Economic Program?
When Alexander Hamilton took office as secretary of the Treasury in 1789, the United States of America was in financial crisis. The federal government and the states together owed a staggering $79 million, or more than $2 trillion in present-day money, with an annual interest bill of $4.5 million – triple the foreseeable national income.

Working without a historical blueprint, Hamilton engineered an innovative response. The Treasury borrowed money from the banks and used it to buy government bonds, lifting the market price. He also told banks to accept bonds as collateral for loans to securities brokers, with the government guaranteeing the collateral.

Over 200 years later, the current secretary of the Treasury, Henry Paulson, is spearheading a $700 billion bailout of the U.S. financial industry as the economy reels from the credit crisis sparked by the national real estate slump and spiraling mortgage failure rates. Hamilton’s actions in 1792 are much like what Paulson is doing now.

As Secretary of the Treasury, Hamilton's term was marked by bold innovation, statesmanlike planning, and masterful reports. Will history repeat itself?

Political News

Budget-cutting priorities of next state Legislature: Manitowoc Herald Times, Oct. 9, 2008. The Herald Times Reporter invited Lasee and Zigmunt to answer four questions to give Lakeshore area residents and opportunity to know more about the two men's perspectives on various issues.

Kagen leads Gard in 8th District race, poll finds: Green Bay Press-Gazette, Oct. 8, 2008. A Capitol Hill publication gives incumbent Democrat Steve Kagen the edge in his rematch with Republican John Gard.

Milwaukee, Green Bay are two of nation's top four markets for presidential ads: Milwaukee Journal Sentinel, Oct. 8, 2008. State ranks sixth among battlegrounds in TV spending.

Judge says he'll likely run for Wis. Supreme Court: Manitowoc Herald Times, Oct. 8, 2008. Randy Koschnick of Jefferson County says he's leaning toward running against Chief Justice Shirley Abrahamson.

Appleton's Steve Kagen, Suamico's John Gard show differences on health care policies: Appleton Post-Crescent, Oct. 8, 2008. Candidates face off in De Pere for second debate

McCain, Palin to visit state Thursday: Milwaukee Journal Sentinel, Oct. 6, 2008. Agenda includes stop in Waukesha.

Debate tests positive for negative lapses: Milwaukee Journal Sentinel, Oct. 6, 2008. Kagen, Gard meet in Appleton.

Kind 'torn’ over bailout vote; challengers critical of pork: La Crosse Tribune, Oct. 3, 2008. Wisconsin’s senators split on the revised plan, passed Wednesday night. Herb Kohl voted for it, while Russ Feingold was among the 25 no votes.

Kagen, Gard ads head in wrong direction (opinion): Appleton Post-Crescent, Oct. 3, 2008. Gentlemen, we've said this before and, unfortunately, we're having to say it again. Stick to telling us what you're going to do if elected, not what you'd like us to believe about the other guy.

Upcoming Fundraisers

Oct. 13

• Sen. Alberta Darling, Delafield

• Rep. Dan Meyer, Rhinelander

• Rep. Frank Lasee, Green Bay

• Tom Tiffany, Antigo

Oct. 14

• Tara Johnson, La Crosse

• Sen. Alberta Darling, Whitefish Bay

Oct. 15

• Keith Ripp, Madison

• Trish O'Neil, Lodi

Oct. 16

• Rep. Jeff Mursau, Gresham

• Rep. Kevin Petersen, Waupaca

• Rep. Frank Lasee, Two Rivers

Oct. 17

• Jessica King, Fond du Lac

Oct. 21

• Rep. Kitty Rhoades, Madison

Oct. 22

• US Rep. Paul Ryan

Oct. 23

• Jo Egelhoff, Appleton

• Lou Ann Weix, Howard

For details, go to Hamilton Consulting Fundraiser Calendar.