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The Wisconsin State Budget Update
Final Action by
Legislature and Governor
The Hamilton Consulting Group
July
25, 2003
©
2003 The Hamilton Consulting Group
On July 24,
2003, Governor Doyle signed the biennial budget bill as
2003 WI Act 33
(426 page PDF file). As
expected, the Governor made substantial use of his veto authority making a
total of 131 vetoes to the budget bill adopted by the
Legislature. (See the Governor's
veto message. In addition, see the
Legislative Fiscal Bureau's summary of the Governor's partial vetos.) In total, the vetoes reduce all funds appropriations by $315
million, increase the size of the general fund balance to $205 million, and
reduce the structural deficit by over $258 million. Major veto decisions
include the elimination of the GOP sponsored plan to freeze local property
taxes and substantial revisions to the transportation budget. (A summary of
veto highlights is included below.)
Governor Doyle’s
proposed budget was introduced on February 20, 2003 as Senate Bill 44. In
total, the Governor’s plan laid out his recommendations for spending
roughly $49 billion over the next two fiscal years (July 1, 2003 – June
30, 2005). As promised, the Governor did not propose to increase general
fund taxes. Instead, he relied on a number of “one-time” revenues,
borrowing, and state agency spending cuts to deal with the estimated $3.2
billion general-purpose revenue (GPR) budget deficit.
On June 4, 2003, after
seven weeks of voting on various elements of the bill, the Republican
controlled Joint Finance Committee (JFC) concluded its action and rolled all
of its changes into Senate Substitute Amendment 1 to SB 44. On June 18-19, the
Senate completed its work, making some changes to the JFC version. On June
19-20, the Assembly passed the Senate version with one amendment that was concurred on by the Senate early the week of June 23.
The summaries below
identify some of the major funding provisions contained in the Governor's
original budget proposal, compared to action taken by the Legislature. These
summaries are arranged by subject area according to topics monitored by The
Hamilton Consulting Group. (Note that other provisions not reported on here
may affect your organization.) JFC modifications to SB 44 are included
within the summary paragraphs, while Senate and Assembly changes
– through
adopted SSA 1 to SB 44
– are noted below the graphs in bold.
Additionally, changes made by the Governor's vetoes are noted in bold.
In addition to providing
a full summary of highlights of the Governor's July 24 vetoes, The Hamilton
Consulting Group has noted vetoes that affect particular item summaries by
placing a summary of the specific veto in a text box below the affected
budget provision summary.
Note:
The links to papers go to the Legislative Fiscal Bureau’s (LFB) analysis and
discussion points on the particular topic. Included in the LFB papers are
various alternatives to the Governor’s recommendations. Those alternatives
that were adopted in lieu of the Governor’s recommendations are noted.
Frequently, motions were developed and adopted in lieu of the Governor’s
recommendation or LFB alternatives. Links to those motions are provided as
well, although for a complete understanding of the issue, the LFB paper
should be referenced.
Major Veto Items
Major Fiscal Items
Business and General Tax Matters
Transportation
Health Care
Economic Development
Environment
Energy/Utilities
Financial Institutions
Miscellaneous
Major Veto Items
Budget
links:
Major Veto Items:
-
Deleted levy limits on counties, municipalities, and technical college
districts.
-
Restored funding for 4-year old kindergarten.
-
Deleted expansion of the Milwaukee Parental Choice program.
-
Deleted expansion of the Charter Schools program.
-
Deleted $1 million in GPR funding for ethanol production subsidies
resulting in a total of $1.9 million program revenue being available each
year.
-
Increased the transfer from the petroleum inspection fund to the general
fund from $7.6 million per year to $20.7 million to be transferred in
fiscal year 2003-04.
-
Vetoed changes to the Stewardship program to restore total bonding
authority to $572 million and maintain current law.
-
Eliminated all use of GPR supported bonds for transportation funding.
-
Reduced biennial appropriations for Major Highway Development and
Rehabilitation Programs by $173 million ($91 million in State
Rehabilitation, $20.5 million in Major Highway Development, and $61
million in the Southeast Rehabilitation).
-
Transfers $175 million from the transportation fund to the general fund
rather than a $30 million transfer contained in the bill as passed by the
Legislature ($100 million in ’04 and $75 million in ’05).
-
Deleted the provision that would have transferred sales tax revenue from
the sale of automobiles from the general fund to the transportation fund
beginning next biennium.
-
Vetoed the sunset on the transfer of $60 million in FY05 from the
transportation fund to general school aids. As a result, the base budget
for the 2005-07 biennial budget will include $120 million transfer from
the transportation fund to general school aids (base transfer of $60
million per year).
-
Reduced GPR funding for graduate medical education by $3 million in FY 04.
-
Reduced GPR funding for rate increases for nursing homes by $7.0 million
over the biennium. As a result, the rate increases will be reduced to an
estimated 2.6% per year.
-
Deleted the provision that would have provided an income tax credit for
nursing home expenses paid by private pay residents.
-
Reduced funding for prescription drug reimbursement rates by a total of $3
million GPR in FY 05 across the Medical Assistance, BadgerCare, and
SeniorCare programs. Essentially establishes a reimbursement rate of AWP
– 13% as opposed to AWP – 12%.
-
Eliminated the requirement that agencies cut 31 attorney positions and
instead allow agencies to cut any vacant position, attorney or
non-attorney, to meet the overall reduction of 31 positions.
-
Deleted the provision that prohibits the Public Service Commission from
requiring utilities to perform additional energy conservation or
efficiency programs, or ratepayers to pay additional funds due to
transfers from the public benefits fund.
-
Vetoed the provisions that would have allowed municipal employers to
unilaterally change its employee health care plan to the public employer
group health plan offered by DETF or a plan substantially similar to that
plan.
-
Partially vetoed provisions modifying the cost sharing formula that would
have required employees working between 50 and 70 percent FTE to pay for
half of their insurance premiums. The partial veto maintains that the
proportion of cost will be determined through collective bargaining and
compensation plans, but keeps the statutory formula in place if the
bargaining process or compensation plan process fails to obtain agreement
on what portion part-time employees would contribute to their health
insurance. Also vetoed the exclusion for the University of Wisconsin
Hospitals and Clinics Authority.
-
Expanded the newly created Group Insurance Board drug purchasing pool so
that it is available to all Wisconsin residents. Under the bill, access
was limited to employers and self-employed individuals. Also deleted the
January 1, 2005 implementation date and encouraged the Group Insurance
Board to develop and expand the program as soon as possible.
-
Deleted the provisions requiring the creation of a task force to study the
private employer health care program. Maintained funding of $105,500 GPR
in FY 04 and $210, 900 GPR in FY 05.
-
Vetoed the provision that would have reduced the rate of refunds to
Wisconsin Native American tribes related to excise taxes on cigarettes
sold to non-Native Americans from 70-30%.
Major Fiscal Items
Transportation Fund and
Shared
Revenue/School Aids
Governor
– Transfers $500 million from the Transportation Fund for Shared Revenue
($400 million) and School Aids ($100 million). Partially restores base
funding for transportation with new transportation revenue bonding
authority of $1.2 billion overall, with $331 million for expenditure this
biennium. Fully funds shared revenue in 2004, at $1.1 billion, with an $80
million reduction in 2005. Eliminates requirement that state fund 2/3 of
school costs and provides $125 million in school aids over current base.
JFC
– Approved the
Governor’s transfers for shared revenue and school aids. Provided an
additional $90 million in school aids and $20 million in shared revenue.
Used $182 million in federal tax relief for shared revenue funding in
2003-04. Restored base funding for major state highway projects, and
non-Marquette SE WI projects. Deleted $438 million in transportation revenue
bonding over the next six years. Used $377 million in GPR supported GO
bonding to offset the impacts of one-time transfers from the
transportation fund. (See
Motion 457 and
Motion 709.)
See
related vetoes under
Transportation
Medical Assistance
Governor
– Relied on $434 million in enhanced federal funding via Intergovernmental
Transfers (IGT) to essentially maintain current law benefits and
eligibility under major health assistance programs (Medical Assistance, BadgerCare, SeniorCare). Later revised recommendation to capture similar
amount via long-term care federal waiver request, which is still being
pursued.
JFC –
Essentially maintained
current benefits and eligibility in the major health programs. Utilized
$434 million in enhanced federal revenue as a starting point but cut $65
million in new spending initiatives in long-term care programs pending
actual receipt of federal waiver dollars. Budgeted $151 million of total
$331 in Federal Tax Relief funds. MA funding ultimately relies on
obtaining $218 million in additional federal support through the long-term
waiver request. (See
Motion 178.)
See related vetoes
under
Health Care
Patients Compensation
Fund
Governor
– Transfer $200 million from the Patients Compensation Fund to support MA
provider payments and other MA benefits.
JFC
– Delete proposed transfer of funds from the Patients Compensation Fund.
Instead, provided $200 million GPR for MA benefits funding in 2003-04.
(See
Motion 709.)
State Government
Spending
Governor –
Reduce state
government operations and other base reductions by approximately $500
million.
JFC – Generally approved Governor’s recommended reductions
but further reduced state spending by a rough estimate of $300 million.
Overall, the committee reduced total spending (all funds) by $545 million
compared to the original bill. Established a three-year freeze on state
spending (FY 2004,05,06), which provides that total GPR appropriations for state
operations may not exceed the total appropriated in FY 03.
Tribal Gaming Revenues
Governor
– Included $237 million in increased revenue resulting from estimate of
renegotiated tribal gaming compacts.
JFC – Included new revenues at $80 million less than proposed
based on actual signed compacts. Approved the Governor’s recommendation to
offset this loss by restructuring retirement fund obligation bonds. (See
LFB
Paper 131 and
Paper 132.)
Property Tax
Governor
– Impact of eliminating requirement to provide 2/3 funding for schools and
other local government provisions created an estimated average increase in
property taxes of 9.5 percent. (See
LFB memo on property taxes.)
JFC – Approved elimination of two thirds funding. Provided
additional school aid and shared revenue funding (noted above). Imposed a
three-year freeze on local spending.
Cities, villages, towns and counties are prohibited from
increasing their total levy in 2003, 2004 and 2005 by any more than
the percentage increase in equalized value due to new construction.
Technical college districts are limited to 2.6 percent. (See
Motion 709.)
Veto
eliminated local property tax freeze.
(See
veto message.)
HMO Tax
Governor
– Created a 1 percent gross receipts tax on Health Maintenance
Organizations to generate $80 million. Would use part of these funds to provide HMO MA
rate increases of 6.1 percent to maintain current fee-for-service
equivalent discount.
JFC
– Deleted proposed tax. Provided $22 million GPR to fund base contracts.
No rate increase approved. (See
Motion 178.)
Business and
General Tax Matters
Assessment of
Manufacturing Property
Currently, assessment of manufacturing property is done at the state level,
with GPR funding. The Governor recommended shifting this assessment function
to local governments, where local money would cover the cost of the
assessment programs. (See LFB
Paper 685 on the Governor’s recommendation.)
The JFC did not adopt
this recommendation; instead they kept manufacturing property assessment at
the state level (for consistency in evaluations, methods, etc.) and provided
funding of one-half GPR and one-half local money. (See
Motion 149, adopted 12-4 in lieu of alternatives.)
Sales Tax Enforcement
The committee approved the Governor recommendation to strengthen enforcement of the sales and use taxes
by creating a periodic reporting system (from DOR to DOA) listing out-of-state sellers who refuse to collect and remit Wisconsin sales and use taxes.
Listed vendors, and their affiliates, would be banned from entering into
state contracts to provide goods or services. The Governor estimates that
implementing these procedures would generate additional revenue of $5.4
million in 2003-2004 and $7.2 million in 2004-2005. (See
Paper 351.)
Replace Tax Appeals
Commission
The Governor recommended replacing the Tax Appeals Commission (TAC), an
independent agency, with the Office of the Commissioner of Tax Appeals (OCTA),
under DOA. Although the offices would perform relatively the same functions,
the Governor would downsize the commission – from 3 commissioners to 1, and
3 support staff to 1, for an estimated savings of $317,700 GPR per year.
(See
Paper 352.)
JFC rejected the
Governor’s proposal and adopted
Motion 257, which retains the TAC with 3 commissioners, and 2
support staff.
IRC Code Update
The JFC adopted DOR’s recommendations to update Wisconsin’s tax code to
include changes to the Federal tax law enacted since Dec. 31, 2002. Under these changes,
projected individual income tax revenue would decrease by $1.8 million in
2003-04, and $400,000 in 2004-05. Corporate and business income tax revenue
would decrease by $250,000 in 2003-04, and $650,000 in 2004-05. (See
Paper 353, Alternative 1, unanimously adopted.)
HMO Tax
The Governor’s recommendation to adopt a 1 percent gross receipts tax on
HMOs was deleted by adoption of DHFS omnibus motion on medical assistance.
(See
Motion 178, below under “Health Care.” See also
Paper 386 on the HMO tax.)
Individual and
Corporate Income and Franchise Taxes
Under the 2001-03 biennial budget, corporations doing business in the Beloit
Development Opportunity Zone (BDOZ), a designated area of the City of
Beloit, were made eligible for certain tax benefits. The
motion adopted allows
businesses other than corporations, within the BDOZ, to claim those same tax
credits. The motion is estimated to result in a minimal increase in amounts
of tax credits claimed during the 2003-05 biennium. (See
Motion 142,
adopted unanimously.)
Transportation
On Friday, May 16th
the Joint Finance Committee adopted a major transportation package (Motion
457) on a party line 12-4 vote. The proposal keeps 99 statewide road
projects and the Marquette Interchange on the current time schedule.
The proposal is similar to the plan put forward by Gov. Doyle in
that it shifts $500 million from the transportation fund to shared revenue
($400 million) and
school aids ($100 million). The JFC version, however, uses $377 million general
obligation bonding rather than transportation revenue bonds to restore the
Governor’s recommended cuts in the state highway program and to maintain
base funding for transportation projects.
The Committee also included some revenue enhancements for the
transportation fund, which is currently funded almost exclusively by gas
taxes and vehicle registration fees. These include increases in title and
registration fees and, beginning on
July 1, 2005,
20 percent of the sales tax collected on the sale of new vehicles in the
preceding calendar year.
Highlights of the package are summarized below.
State Highway
Rehabilitation and Major Highways Programs
JFC action restores base level funding for the State Highway Programs.
Increases funding for rehabilitation by $166 million and by $42 million for
major highways over the biennium compared to the Governor’s proposal. (See
also
Paper 760.)
Veto reduced funding
by $91 million for rehabilitation and $20 million for major highways. (See
veto message.)
Southeast
Wisconsin Freeway Rehabilitation
The Governor proposed $79 million in SEG and FED in each year of the
biennium and $85 million in new transportation revenue bonds in FY 05.
(Biennial total of $244 million – all of which would be allocated
to the Marquette Interchange project.)
(See also
Paper 761.)
Under the JFC
proposal, base funding is restored at $95 million per year, plus an
additional $50 million in FY 05, earmarked for the Marquette Interchange.
Transportation revenue bonding of $85 million in FY 05 is eliminated and
replaced with $100 million in existing transportation fund supported general
obligation bonding authority. (Total funding of $95 million in FY 04 and
$245 million in FY 05 or a biennial total of $340 million.) Of these amounts,
$49 million per year would be allocated to southeast Wisconsin freeway
projects other than the Marquette Interchange. Consequently, total funding
for the Marquette Interchange would be $46 million in FY 04 and $196 million
in FY 05 or $242 million over the biennium.
Veto reduced funding
for SE WI rehabilitation by $61 million over the biennium. (See
veto message.)
Transportation
Revenue Bonding
The omnibus JFC motion reduces the total amount of long-term bonds over a
six year period (2003-09) by $437.8 million compared to the $1.16 billion in
transportation revenue bonding authority in the Governor’s proposal. Debt
service would be reduced by $143.8 million over this same time period.
In this biennium, the
Governor proposed increased use of transportation revenue bonding to provide
$191 million in FY 04 and $242 million in FY 05 to help fund rehabilitation,
major highway and Marquette Interchange projects. Associated debt service
costs in the transportation fund would increase by nearly $8 million in FY
04 and over $33 million in FY 05. (See also
Paper 738 and
Paper 739.)
Under the JFC plan, proposed increases in transportation revenue bonding are replaced
with $377 million in GPR supported general obligation bonds. The JFC
proposal also includes the use of $100 million in existing transportation
fund supported general obligation bonding, and authorizes an increase of
over $6 million each year in transportation revenue bonds. GPR debt service
would increase by over $8 million in FY 04 and over $29 million in FY 05.
Compared to the Governor’s proposal, transportation fund debt service would
be reduced by a net $8 million in FY 04 and $33 million FY 05.
The JFC motion also
provides for a dedicated revenue source to pay debt service on the general
obligation bonds. Beginning July 1, 2005, 20 percent of the sales tax
collected on the sale of new vehicles
in
the preceding
calendar year would be deposited in the transportation fund, which is
estimated at roughly $48 million. Starting with the next biennium, sales tax
revenue would be used to pay debt service on the general obligation bonds
used for transportation, which is estimated at $44.5 million per year once
all the bonds are issued.
The Senate modified
the proposal to reduce 20 percent to 10 percent. (SA
1
to
SA 119.)
Veto eliminated all
GPR supported bonding and deleted future transfer of sales tax revenue from
the general fund to the transportation fund. (See
veto message.)
Transportation
Fund Transfer to General Fund/Shared Revenue/School Aids
The omnibus JFC motion maintains the transfer of $530 from the
transportation fund to the general fund with important modifications. In
essence, the JFC plan uses $100 million in existing transportation
fund supported general obligation bonding plus $377 million in new GPR
supported general obligation bonding to offset the impacts of one-time
transfers out of the transportation fund of $530 million for shared revenue,
school aids and general fund support.
Over the 2003-05
biennium, the Governor proposed transferring $30 million from the
transportation fund to the general fund, $400 million to fund municipal
shared revenue and $100 million to K-12 school aids. All of the transfers
were intended to be one-time measures with the exception of $60 million in
FY 05 for school aids, which the Governor’s plan would have maintained as a
permanent draw on the transportation fund.
Under the JFC proposal,
all of these transfers would be retained but the school aid appropriation
would be sunset at the end of the biennium like the other transfers. On a go
forward basis, the sunset of these transfers would result in $245 million in
uncommitted transportation fund revenue going into the 2005-07 biennium.
Under the JFC plan, these funds would be used to replace the bonding used in
the 2003-05 biennium for state highway rehabilitation and major highway
projects, with the balance being divided among southeast Wisconsin
rehabilitation, Marquette Interchange and the major highway development
appropriations. Accordingly, $128 million would be allocated to state
highway rehabilitation, $64 million for major highway, and $53 million for
the Marquette Interchange.
Veto eliminates the sunset on the transfer of $60 million in FY05 from
the transportation fund to general school aids. As a result, the
base budget for the 2005-07 biennial budget will include $120 million
transfer from the transportation fund to general school aids (base
transfer of $60 million per year). (See veto
message.)
State Highway
Maintenance and Traffic Operations
Maintenance program activities include the installation of traffic signals,
highway lighting, highway signs, pavement markings and intelligent
transportation systems. JFC deletes $18.7 million in two-year increases
proposed by the Governor. It also deletes $7.4 million annually the Governor
included in the program base. (See also
Paper 762.) JFC also deleted language that allows these activities to be
funded from the state highway rehabilitation program, and converts the
maintenance fund SEG appropriation from a biennial appropriation to a
continuing appropriation.
Local Transportation
Programs
The JFC plan maintains base level funding for local transportation programs,
which represents a decrease in funding compared to the Governor’s proposal
to provide 2.5 percent inflationary increases (See also
Paper 755.) Compared to the Governor, funding for local road aids is
reduced by $18.7 million; mass transit is reduced by $4 million; and, the
local roads improvement program is reduced by $4.3 million.
Title & Registration Fee Increases
The JFC motion includes the $10 increase in title and registration fees
proposed by the Governor but moves the effective date to October 1, 2003 (as
opposed to January 1, 2004 assumed in the Governor’s proposal) to increase
transportation fund revenues by $12 million in FY 04. (See also
Paper 737.)
Revenue Re-estimates
After the Governor’s
proposal was introduced, federal funding estimates were increased and
estimates of transportation fund revenues were decreased. JFC utilizes this
additional net $95.5 million in updated revenue estimates to help fund its
transportation proposal.
Enhanced Mobility
In a separate motion, JFC established a $6
million grant program for traffic marking enhancements for elderly drivers
and pedestrians if the state receives federal incentive grant funding linked
to having a 0.08 blood alcohol level intoxicated driving law. (See
Motion 471.)
License Plate Program
The JFC adopted alternative reduced
funding for the license
plate replacement program by $513,200 SEG annually. (See
Paper 770. Alternative 1 adopted 14-2.)
Oversize/Overweight Vehicle
Permit Surcharge
The Governor proposed extending the sunset date of the 10 percent surcharge
on oversize/overweight permit fees from June 30, 2003, to June 30, 2005,
which would increase estimated transportation fund revenue by $403,700
annually. (See
Paper 772, Governor’s position adopted.)
Commuter Rail System
Development Grant Program
JFC's motion precludes funding for a light rail system
from the commuter rail grant program created under the bill.
(See
Motion 527,
adopted 14-2.)
Veto removes restrictions
related to light rail system. (See veto
message.)
0.08 Blood Alcohol Content
JFC deleted the Governor's proposal to lower the BAC level from 0.1 to 0.08.
Instead, JFC is relying on the passage of
AB 88 (which has already passed the Assembly) to reduce the BAC level.
The BAC change must be signed into law by July 15, 2003 to qualify for
federal incentive funds this year. (See
Paper 773, amended alternative 3 adopted 15-1.)
Health Care
DHFS –
Medical Assistance – Republican Omnibus Motion
The Governor’s original medical assistance budget was built to maintain
current law eligibility and benefits under Wisconsin’s major health care
programs; Medical Assistance, BadgerCare and SeniorCare. Given projected
enrollment and medical cost increases, maintaining these programs at current
service levels would require significant funding increases in GPR and associated
federal matching funds. Faced with a GPR deficit, the Governor’s proposal
was funded with a number of new revenue sources, including: (a) $434 million
in Federal Intergovernmental Transfer (IGT); (b) $200 million transfer from
the Patients Compensation Fund; (c) a 1 percent gross receipts tax on HMO’s
estimated at roughly $80 million over the two-year period, and; (d)
increasing the nursing home bed tax from $32 a month to $116 month to
essentially leverage additional federal funding of roughly $150 million over
the biennium.
Shortly after
introduction, it became apparent that the federal government was not likely
to approve the Governor’s proposal to retroactively claim IGT funds. The
Administration then developed a federal waiver for enhanced federal support
for long term care and disabled services; that waiver and associated funding
is still being pursued. On May 21, the Administration recommended that the
Joint Finance Committee assume that Wisconsin will receive $434 million in
enhanced federal support through a combination of the waiver request they
were still pursuing and funding for states included under the Federal Tax
Relief Act of 2003 (P.L. 108-27.)
The Joint Finance
Committee, faced with politically unpopular new revenue sources and
uncertainty surrounding the Governor’s proposal(s) for enhanced federal
funding, made substantial changes to the MA budget. On a party line 12-4
vote the committee adopted a Republican sponsored
Motion 178. Democrats introduced an alternative proposal (Motion
497), which was rejected 4-12. Summarized below are selected
provisions of the MA package that passed, with comparative commentary on the
Governor’s proposal and the alternative advanced by Democrat members of the
committee.
-
Provides base funding
for MA, BadgerCare and SeniorCare. Maintains base funding for the state’s
major health care programs consistent with Governor’s recommendations
(dollar estimates revised) and the Democrat package. (See
Paper 375 [MA],
Paper 376 [BadgerCare], and
Paper 377 [SeniorCare].)
-
Deletes roughly $65 million
in spending on new initiatives in long-term care and disabled services to
reflect uncertainty of obtaining enhanced federal funding. Consistent with
the Governor’s revised recommendation and the minority package – except
that JFC Democrats would have authorized DHFS to fund the new initiatives
through a 14 day review process in the event federal waiver funding was
secured. (See also
Paper 379.)
-
Utilizes $151 million
of the total $333 million Wisconsin is expected to receive under the
Federal Tax Relief Act (P.L. 108-27) to support MA Benefits. The Democrat
package would have utilized the full $333 million to support MA benefits –
consistent with the Administration’s May 19th recommendation. (See
Paper 379.)
-
Increases the nursing home bed tax
from $32 to $75 per month, compared to $116 per month recommended by the
Governor. (Democrat package proposed $75 per month). Under the adopted
change, the increased bed tax revenue would leverage roughly $66 million
in federal funding compared to $150 million under the higher bed tax
proposed by the Governor. (See
Paper 400.)
Veto
reduced
GPR funding for rate increases for nursing homes by $7.0 million over the
biennium. As a result, the rate increases will be reduced to an
estimated 2.6% per year. (See veto
message.)
The Senate included a provision to
provide a refund able tax credit on $43 per month for tax year 2003 for
bed assessments paid after July 1, 2003. Credit is estimated to cost $4.4
million per year once it is fully implemented. (See
SA 119.)
Veto deleted
the provision that would have provided an income tax credit for nursing
home expenses paid by private pay residents. (See veto
message.)
-
Eliminates
the Governor’s proposed 1 percent gross receipts tax on HMOs, which would
have generated roughly $80 million over the biennium. Provides $22 million
base GPR, but fails to fund HMO managed care rate increases of 6.1 percent
annually necessary to maintain the current discount at 11.4 percent of fee-for
service equivalent costs. Democrat package would have similarly
eliminated the HMO tax, but would have provided an additional $30 million GPR to fund HMO rate increases at 6.1
percent as proposed by the Governor. (See
Paper 386.)
In later action, the JFC adopted Motion 638 to direct that
savings beyond estimates, for prior authorization and supplemental rebates
for drugs, be used for HMO rate increases. (See
Motion 638.)
Provision vetoed. (See veto
message.)
-
Increases
the SeniorCare enrollment
fee from $20 to $30, the co-pay for brand name drugs from $15 to $20, and
the deductible from $500 a year to $850 for individuals with income above
200 percent of the federal poverty level (FPL). The Governor proposed
increasing the enrollment fee to $25 for individuals with income up to
200 percent of the FPL and to $30 for individuals above 200 percent of the FPL. He also
proposed increasing the deductible from $500 to $750 for individuals
between 200 and 240 percent of the FPL, and to $850 for individuals above 240
percent of
the FPL, with no proposed increase in co-pays. The Democrat package would
have retained current law in all three categories at a cost of roughly $9
million GPR over the biennium. (See
Paper 387 and
Paper 388.)
Veto restored $15 co-pay for brand
mane drugs. (See veto
message.)
-
Restores $22.4 million
GPR to reimburse
pharmacies for prescription drugs under MA, BadgerCare and SeniorCare at
the average wholesale price (AWP) less 12 percent, rather than the 15 percent
recommended by the Governor. (Democrat package also proposed AWP – 12
percent)
(Current law = AWP less 11.25 percent) (See
Paper 389.)
-
Provides $19.4 million
($8 million GPR/$11 million FED) to partially fund the Graduate Medical Education
Program, or roughly one-third of current state/fed funding of $56 million
for GME direct and indirect costs.
The Governor proposed to cut all funding for GME this biennium. The
Democrat package would have restored half of current funding ($12 million
GPR and $16.6 million FED). (See
Paper 390.)
Veto Reduced GPR funding for graduate medical education by $3 million in
FY 04. (See veto
message.)
JFC funding was provided for direct GME
costs only. The Senate modified the provision to require DHFS to use $2
million of the total 8 million GPR (and associated federal match) for
indirect GME costs. (See
SA 121.)
Veto limits funding
to direct GME costs only. (See veto
message.)
Private Employer
Health Care Coverage Program (PEHCCP)
The Governor recommended $210,900 GPR annually to support staffing in the
Department of Employee Trust Funds for the Small Business Insurance Pool.
JFC created a task force, appointed by the Assembly Speaker and the Senate
Majority Leader, to provide recommendations for statutory changes to the
program by Jan. 1, 2004. Funding for staff was placed in the JFC
appropriation pending recommendations and reduced by $105,000 in FY 04 to
reflect that positions would remain vacant the first half of the fiscal
year. (See
Motion 304,
adopted 12-4; also see
Paper 310.)
Veto deleted
the provisions requiring the creation of a task force to study the private
employer health care program. Maintained funding of $105,500 GPR in FY 04
and $210, 900 GPR in FY 05. (See veto
message.)
DHFS – Wisconsin
Health Insurance Risk Sharing Plan (HIRSP)
In lieu of the Governor’s recommendation, JFC adopted
Motion 408, relating to the Wisconsin Health Insurance Risk
Sharing Plan (HIRSP), by a 14-2 vote. (See also
Paper 415.) The motion does the following:
-
Adopts the Governor’s
recommendation to delete all GPR funds (approximately $10 million per
year) used to help fund HIRSP.
-
Approves the
Governor’s recommendation to fully fund the HIRSP program with SEG funds.
However, the motion rejects the Governor’s recommendation to change
allocation of the costs to: 58 percent policyholders, 21 percent insurers,
and 21 percent providers. Instead, the motion retains the current
allocation of 60 percent policyholders, 20 percent insurers, and 20
percent providers.
-
Reduces the
Governor’s projected funding for both HIRSP benefits and HIRSP
administration to reflect updated estimates of 5 percent increase in
program enrollment per year.
-
Adopts
the Governor’s recommendation to authorize DHFS to pay subsidies for
low-income policyholders for prescription copay and premium costs, and
approves the Governor’s recommendation to allocate these costs evenly
between insurers and providers.
-
Adopts the Governor’s recommendation to repeal current requirement that
the HIRSP plan administrator be the MA fiscal agent, and provides
that the HIRSP plan administrator may be selected through a competitive
bidding process. The motion modifies this recommendation, however, by
adding a requirement that DHFS prepare a request-for-proposal (RFP) for
selection of a plan administrator within 6 months of the bill’s
effective date and submit the RFP to the JFC before soliciting bids.
Veto eliminated timeline and JFC review of RFP. (See veto
message.)
Department of
Workforce Development – Economic Support and Child Care
On May 20th, the committee unanimously adopted a TANF Omnibus
funding
Motion 156 covering these papers: 845, 846, 850, 851, 852,
853, 855, 856, and 857. The motion included the following highlights:
-
Approves the
Governor’s recommendation to separately appropriate funding for W-2
services and W-2 administration (currently, there is no distinction
between the two for funding purposes). Reduces funding for both W-2
services and W-2 administration by amounts that slightly exceed the
Governor’s recommended reductions – the total cost savings of this item
total roughly $44.8 million for the biennium. (See
Paper 846.)
-
Approves the Governor’s recommendation to provide
additional funding for W-2 cash benefits, wages, and stipends to reflect
recent increases in W-2 case benefits caseloads, and projected increases
in these three areas over the next 18 months. (See
Paper 847.)
- Rejects the Governor’s
estimated cost savings in each year of the biennium from reducing funding
for direct child care services in 2003-04. Adopted motion increases
funding for child care subsidies by $527,400 over the biennium. (See
Paper 850.)
Pharmacy Purchasing Pool
The Governor recommended that all government employers (including local
government units) that provide or are required to provide health insurance
coverage to their employees be required to create and participate in a
common purchasing pool for pharmacy benefits that uses a preferred list of
covered prescription drugs by January 1, 2005. The JFC motion requires only
that the pool be created, and State government employers be participating in
the pool, by January 1, 2005. Under the motion, local government units would
be authorized to participate, but not required. Additionally, the motion
authorizes small employers to participate in the pool. (Motion
710
was adopted unanimously in lieu of alternatives to
Paper 304.)
Veto
expands access to purchasing pool to all WI residents.
(See veto
message.)
Patients Compensation
Fund
JFC deleted the Governor’s proposed transfer of $200 million from the
Patients Compensation Fund to support MA provider payments and other MA
benefits. Instead, the committee adopted a motion that provides $200 million GPR for MA benefits funding in 2003-04. (See
Paper 378 ;
see also
Motion 709.)
DHFS –
Assistant Area Administrators
The Governor proposed to delete 3.5 DHFS assistant administrator positions.
Instead, JFC adopted motion 206 to eliminate all DHFS assistant administrators (the
remaining 15 positions). (See
Motion 206, adopted 12-4.)
Public Employer Group
Health Insurance/Group Health Insurance Payments
The committee approved the Governor’s recommendation to lower the amount of
State contribution to state employee health care coverage plans, except that
the committee specifically authorizes the Group Insurance Board to make
modifications to the operation of the Standard Plan. (See
Paper 303, Alternative 1 adopted 15-1.)
Public Employer Group
Health Insurance
JFC adopted a provision that allows counties, municipalities, school
districts and technical college districts to unilaterally convert their
group health insurance coverage provided to nonprotective service employees
to the state health plan or other health care coverage plan, including a
self insured plan, that is substantially similar to the state plan.
Employers decision to convert health coverage would be a prohibitive subject
of bargaining starting with contracts made after the effective date of the
bill. (See Motion 709.)
Vetoed the provisions that would have allowed municipal employers to
unilaterally change its employee health care plan to the public employer
group health plan offered by DETF or a plan substantially similar to that
plan. (See veto
message.)
Group
Health Insurance Payments for Part-time State Employees
JFC adopted a provision that would
require employees at halftime to three quarter employment (0.50 to 0.74 FTE)
to pay 50 percent of their health insurance premium. Requirement is
made as a prohibited subject of bargaining and would first apply to
represented employees when current contracts expire. Generates $21 million GPR saved and GPR revenue over the biennium. (See
Motion 709.)
The provision was
modified in the Senate to exempt permanent or project employees of the UW
Hospitals and Clinics Authority. Those employees would continue to be
eligible for current coverage. (See
SA 121.)
Partially vetoed provisions modifying the cost sharing formula that would
have required employees working between 50 and 70 percent FTE to pay for
half of their insurance premiums. The partial veto maintains that the
proportion of cost will be determined through collective bargaining and
compensation plans, but keeps the statutory formula in place if the
bargaining process or compensation plan process fails to obtain agreement on
what portion part-time employees would contribute to their health
insurance. Also vetoed the exclusion for the
University of
Wisconsin Hospitals and Clinics Authority. (See veto
message.)
Economic
Development
Funding for Forward
Wisconsin
JFC approved the Governor’s recommendation to reduce $95,000 annually plus
cut an additional $60,000 annually in funding for Forward Wisconsin (a
total reduction of $310,000 GPR over the biennium). (See
Motion 59, adopted 14-2; see also
Paper 215.)
Rural Economic
Development Program
JFC approved the Governor’s recommendation to delete $50,000 GPR annually
from the Rural Economic Development (RED) program plus an additional
$237,700 GPR in 2003-2004, but increased expenditure authority for the RED
repayments appropriation by $237,700 PR in 2003-2004. (See
Paper 216, Alternative 2 adopted 12-4.)
Minority Business
Development Program
The adopted alternative approves the Governor’s recommendation to delete
$25,000 GPR annually from the MBD grant and loan program. (The current base
level funding for MBD is $279,200 GPR and $317,200 PR). Further, the
alternative authorizes reducing GPR funding by an additional $254,200 in
2003-2004, and increases expenditure authority for the MBD repayments
appropriations by $254,200 PR in that year. (See
Paper 217, Alternative 2 adopted 12-4.)
Further, adopted Motion
803 that requires Commerce to make an annual grant of $100,000 from the
Wisconsin Development Fund (GPR funded) to the Wisconsin Minority Business
Opportunity Committee as matching funds for federal grant money. (See
Motion 803, adopted unanimously.)
The Senate added a
provision requiring Commerce to develop, by rule, a statewide uniform
process for certification of minority businesses. (See
SA 121.)
Veto eliminated the
Senate provision for a statewide uniform process.
(See veto
message.)
Certified Capital
Companies Administration Lapse
The Governor made no recommendation as to this lapse. However, the adopted
alternative would require that any year-end balance left in the CAPCO
administration appropriation fund would lapse to the general fund as
“GPR-Earned” money. (See
Paper 219, Alternative 1 adopted 16-0.)
Wisconsin Development
Fund – Grants for Plant Closing
The adopted JFC motion requires Commerce to allocate $1 million in 2003-2004
for grants from the Wisconsin Development Fund for individuals, communities,
and businesses that are affected by a plant closing on or after February 1,
2001. (See
Motion 322, adopted 15-1.)
Partial vetoes removed
references to any 12-month time period, the number of jobs eliminated and
the limit on grants.
(See veto
message.)
Main Street
Program/Manufacturing Extension Grants
Adopted JFC motion moves $100,000 GPR annually from the Main Street program
to a new GPR appropriation for grants for the Wisconsin Manufacturing
Extension Partnership. (See
Motion 208, adopted 14-2.)
Administrative
Services Lapse
The adopted alternative approves the Governor’s recommendation to decrease
expenditure authority for PR administrative services appropriations by
$449,000 PR and 8.4 PR positions per year of the biennium. However, the
alternative authorizes Commerce to develop a plan to reallocate all or a
portion of the lapse and submit the plan to the Secretary of Administration
for approval. (See
Paper 218, Alternative 2 adopted 16-0.)
Environment
Consolidated
Brownfields Grant Program
The committee rejected the Governor’s proposal to repeal four existing
brownfields-related programs within the DNR and Commerce, and consolidate
all brownfields programs into one program,
administered by the DNR. Instead, the motion retains Commerce’s brownfields
grant program ($7 million/year), DNR’s green space program ($500,000/year), and DNR’s site assessment grant
program ($1.7 million/year), and repeals DNR’s sustainable urban development zone program. The
motion also restores $308,400 annually and 2.5 positions to Commerce
for administration of Commerce’s brownfields grant program. Additionally, the motion
provides that DNR and Commerce grant applications received between October
2002, and January 2003 may be reviewed and funded using 2003-04 money.
(See
Motion 121, adopted 12-4, in lieu of
Paper 573.)
On June 3rd, JFC adopted another
motion relating to brownfields funding that alters Motion 121, above, by
providing further funding ($230,300) and 3 positions for DNR’s
administration of brownfields operations. (See
Motion 353,
adopted 12-4.)
Vehicle Environmental
Impact Fee
The committee rejected a vehicle environmental impact fee increase proposed
by the Governor (from $9 to $10.50), but extends the Dec. 31, 2003
sunset of the fee until Dec. 31, 2005. (See
Motion 122, adopted 12-4; see also
Paper 572.)
PECFA – Revenue
Obligation Authority
JFC approved $94 million in additional revenue bonding for the PECFA program
as opposed to $115 million recommended by the Governor. In addition, the
Committee transferred $12 million ($6 million each year) from the petroleum
inspection fund to the general fund. (See
Paper 220, Alternative 4 adopted 12-4.)
The JFC also approved the
Governor's proposal to allocate $6.3 million from the petroleum inspection
fund for the DOT Vehicle Emission Inspection Program in 2004-05.
The Senate modified
the provision to transfer the inspection fund money to the General
Transportation Fund rather than to a newly created appropriation in DOT.
(See
SA 121.)
Veto increased the transfer from the petroleum inspection fund to the
general fund from $7.6 million per year to $20.7 million to be transferred
in fiscal year 2003-04. (See veto
message.)
Environmental Improvement Fund
– Clean Water Fund Program
JFC increased revenue obligation bonding authority, decreased general
obligation bonding authority, and caps the “present value subsidy” of the
Clean Water Fund Program at $55.1 million. (See
Paper 330, Alternative 5 adopted, 13-3.)
Vetoes restore
existing bonding authority and present value subsidy limit.
(See veto
message.)
Agricultural Chemical
Cleanup Program (ACCP)
JFC adopted a motion that increases the fertilizer surcharge amount (which
primarily funds the ACCP), and reduces the ACCP reimbursement for cleanup
costs incurred prior to January 1, 2004. Additionally, the motion approves
the Governor’s recommendation to eliminate the minimum balance requirement
(previously $2 million) for the ACCP account. Finally, the motion provides that DATCP may not
inspect for agricultural contamination before it determines there is
probable cause to suspect contamination, or before it determines either that
there are available ACCP funds for reimbursement of cleanup costs or there
is reason to believe the discharge poses a significant health risk. (See
Motion 241, adopted 16-0; see also
Paper 152.)
Veto increased the
tonnage surcharge cap to $0.86 and eliminated the inspection limitation.
(See veto
message.)
Environmental Repair
Bonding Authority
The JFC adopted alternative rejects the Governor’s proposal to add $6
million annually (from $41 to $47 million) to DNR’s general obligation
bonding authority for use in remedial action for contamination cleanups.(See
Paper 574, Alternative 3 adopted 12-4.)
Recycling Fund
Transfer/Tipping Fee Exemption
The JFC adopted a motion that exempts from the recycling tipping fee,
sludges, river sediments, or dredged materials containing PCBs relating to
remediation of contaminated sediments. Additionally, the motion
approves the Governor’s proposal to transfer $3 million in 2003-04 from
recycling fund to the general fund, and creates further transfers of $4
million SEG in 2003-04, and $6.6 million SEG in 2004-05 from the recycling
fund to the general fund. The motion also adds provisions for exemption from
the tipping fee. (See
Motion 118, adopted 12-4 in
lieu of
Paper 575.)
Recycling Market
Development Board
The committee approved the Governor’s recommendation to lapse $1.2 million
PR to the general fund each year from RMDB loan repayments appropriation
account. But the committee recommends further savings by modifying this
lapse to include the RMDB Fund’s July 1, 2003 balance and all revenues
deposited in the appropriation during the biennium (an estimated $2.1
million). Additionally, the committee lapses all RMDB loan repayments to the
general fund. (See
Paper 221; Alternative A2, 3b adopted 9-5, Alternative B1 adopted 11-3.)
Warren-Knowles Gaylord
Nelson Stewardship 2000 Program
JFC adopted several controversial motions that reduce bonding authority from
$572 million to $327million, and requires DNR to sell $20 million of
public land each year of the biennium, or otherwise submit a plan to the
committee explaining why they were unable to sell this amount. (See
Motion 268, adopted 11-5, and
Motion 280,
adopted 12-4, in lieu of
Paper 529.)
Vetoed changes to the Stewardship program to restore total bonding
authority to $572 million and maintain current law. (See veto
message.)
Clean Sweep Grant Program
The committee’s motion transfers administration of the Clean Sweep Program (CSP)
from DNR to DATCP. Also creates a $30 licensure fee for household
pesticides. But, deletes
both fee increases suggested by the Governor (the fertilizer tonnage fee
increase and the commercial feed inspection fee increase). (See
Motion 513, adopted 16-0 in lieu of
Paper 570; see also
Paper 571.)
DNR Air Program
Funding
The Governor’s proposal to delete $1,085,100 PR annually, and 11.5 PR air
management positions was adopted by the committee. (See
Paper 576.)
Asbestos Inspections
Fees
Alternatives adopted by JFC increases the statutory
maximum combined inspection and construction permit fee to $400 or $750,
depending on the size of the removal project. DNR is also authorized to charge for
laboratory testing of nonresidential asbestos demolition and renovation projects. (See
Paper 577, Alternative A1, B6, C1 adopted 16-0.)
Waterway and Wetland Permitting
JFC deleted the Governor’s recommendation to provide $275,000 annually to
fund limited-term employee staff to assist processing of waterway and wetland permits. (See
Paper 560, adopted alternative 4.)
Energy/Utilities
Public Benefits Fund
For 2004-05, the Governor proposed diverting $20 million from the Public
Benefits Fund for county and municipal aid payments and $7.1 million for
earned income tax credits. JFC modified that proposal to increase the Public
Benefits Funds contribution to earned income tax credits by $2.37 million.
(See
Paper 116, alternative 2 adopted,
14-2; also see
Paper 115.)
By motion, JFC provided
$17.6 million in 2003-04 from the balance in the Public Benefits Fund for
shared revenue payments. (See
Motion 709,
paragraph 13) In addition, JFC prohibits the Public Service Commission (PSC) from requiring utilities or rate
payers to pay additional funds due to the transfer of money from the public
benefits fund. (See
Motion 810.)
Veto eliminated
provisions prohibiting PSC from requiring utilities perform additional
energy conservation or efficiency programs or ratepayers to pay additional
funds due to transfers from the public benefits fund.
Ethanol Grant Program
Under current law, a total of $2.9 million per year is provided in grants to
ethanol producers. ($1.9 million tribal gaming revenue and $1 million GPR
funded). The Governor proposed eliminating $1 million GPR. JFC provided an
additional $1 million in tribal gaming revenue and later provided $1 million
GPR to provide a total of $3.9 million per year. (See
Motion 750 and
Motion 193.)
Veto deleted $1 million in GPR funding for ethanol production subsidies
resulting in a total of $1.9 million program revenue being available each
year. (See veto
message.)
Financial
Institutions
Mortgage Banking and Licensed Financial Services
The committee rejected the recommendation to require the Department of
Financial Institutions (DFI) to develop and maintain an internet-based
system through which mortgage bankers, mortgage brokers, and loan
originators could apply for, renew, and pay for an operating license. (See
Paper 342, alternative 2 adopted 13-3.)
LLC Filing
Requirement
JFC adopted alternatives require domestic LLCs to file an annual report with
the DFI. Currently, only LLCs foreign to Wisconsin are required to file an
annual report. The adopted alternatives provide that domestic LLCs will pay
a $25 filing fee per year, and that those fees will fund processing of the
reports. However, any fee revenue left over at the end of the year will
lapse to the general fund. (It is estimated that this provision will create
PR revenues sufficient to support DFIs review program, with funds left over
to lapse to the general fund). (See
Paper 343, alternatives 1a, 1b, and 4 adopted 13-3.)
Miscellaneous
Department of Administration – Homeland Security
The Governor recommends that
the Office of Justice Assistance, under the Department of Administration, be
responsible for the receipt, and expenditure of federal aid for State
homeland security. The
committee adopted a modification of this recommendation that
designates the Division of Emergency Management, under the Department of
Military Affairs, be in charge of applying for contracts, receiving and
expending federal aid for State homeland security. Additionally, JFC provides that the Governor may not
authorize expenditure of any federal funds for State homeland security
unless the expenditure is first approved by the JFC. (See
Paper 121; Alternatives 2 & 3 adopted 13-3.)
Office of the Commissioner of Insurance (OCI)
The Governor proposed to transfer a total of
$436,400 from segregated accounts in OCI (Patients Compensation Fund, Local
Government Property Insurance Fund, and State Life Insurance Fund) to the
general fund. JFC deleted the proposed SEG fund transfers and instead reduced the
agency’s general program operations budget by $436,400. (See
Paper 457, Alternative D.1
adopted.)
The Governor’s proposal to lapse $1.2 million
from the OCI general program operations account to the general fund was
approved by JFC.
Department of Administration - Attorney Transfers to the Department
The Governor recommended
consolidation of most state agency attorneys into DOA. 23 attorney
positions would be deleted. JFC rejected the transfer of attorney positions
and voted to eliminate 31 (mostly vacant) by Jan. 2, 2004, instead of 23 attorney
positions. The Governor also proposed deleting three DNR attorney positions. JFC action deletes a total of eight DNR attorney positions. (See
Motion 552 and
Motion 525;
see also
Paper 105.)
Veto eliminated the requirement that agencies cut 31 attorney positions
and instead allow agencies to cut any vacant position, attorney or
non-attorney, to meet the overall reduction of 31 positions. (See veto
message.)
DATCP – Consumer Protection
The Governor’s proposal to transfer certain consumer protection functions
from DATCP to the Department of Justice was deleted by JFC. Additional
position cuts were included as part of the JFC motion. (See
Motion 483,
adopted 12-4; see also
Paper 156.)
To receive further
information on these or other political/policy issues in Wisconsin, contact
a Hamilton Consulting Group lobbyist at (608) 258-9506, or email:
Jim Hough:
hough@hamilton-consulting.com
Bob Fassbender:
fassbender@hamilton-consulting.com
Pat Osborne:
osborne@hamilton-consulting.com
Andy Franken:
franken@hamilton-consulting.com
Amy Boyer:
boyer@hamilton-consulting.com
The Hamilton Consulting Group
www.hamilton-consulting.com
10 E. Doty St., Suite 500
Madison, WI 53703
Phone: 608/258-9506
Fax: 608/283/2589
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