2001-03 Budget Reform Bill - Major Initiatives

2001- 03 Budget Repair Bill – Major Initiatives

(July 10, 2002)

According to the Fiscal Bureau, there were 320 items that had to be reconciled by the Budget Repair Conference Committee. After nearly 3 months of negotiations, the committee reached a compromise agreement on July 3. The table below lists only some of the major differences that were resolved in committee.

The Senate passed the Conference Committee Report on July 3^rd by a 17-16 vote. All Democrats, except Gubernatorial Candidate Gary George, voted for the plan, with all Senate Republicans voting against it. The Assembly passed the committee measure on July 8 by a 50-47 vote. All Republicans voted for the measure except Gundrum, Kreibich, Lasee, Leibham and Nass.. All Democrats voted against the bill.

Many legislators found the plan inadequate because it failed to address the underlying fiscal underpinnings that gave rise to the $1.1 billion biennial deficit. According to the Legislative Fiscal Bureau, the approved plan would result in a $2.87 billion deficit for 2003-05. This estimate assumes current commitments, caseloads and populations estimates, with no assumptions on growth for these areas, including revenue, or for such items as state employee compensation.

The primary reason that the budget proposal fails to address the structural deficit, while at the same time balancing the budget for this biennial budget cycle, is the Legislature's use of tobacco settlement funds. In a one-time fix, the budget plan relies on using over $800 million in tobacco securitization revenue as the major initiative to address the deficit. Add that to the $450 million in tobacco securitization proceeds used in the initial 2001-03 budget, and all of the tobacco money is spent.

The bill now goes to Governor McCallum who can exercise one of the most powerful veto pens in the nation.

For more details, go to Fiscal Bureau Comparative Summary of Assembly, Senate and Conference Committee Recommendations. (Warning: this is a 381 page PDF document)

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Major Funding & Tax Initiatives
Local Government
Energy
Environment
Economic Development
Financial Institutions
Health Insurance & Health Care Cost
Transportation
Miscellaneous Provisions

Major Funding & Tax Initiatives
Governor	Joint Finance	Assembly	Senate	Conference Committee
University of Wisconsin System
Proposed a $50 million reduction to general program operations for this biennium.	Adopted a $60 million reduction to general program operations.	Adopted a $65 million reduction in general program operations, and another $30 million in other cuts.	Adopted a $20 million reduction in general program operations.	Adopted a $27 million reduction in general program operations and $17 million in other appropriation cuts.
State Employee Early Retirement Plan
Current Law.	Current Law.	Current Law.	Provides for an early retirement incentive program for certain state employees. The plan would apply to over 17,000 state employees and would generate roughly $60 million in savings this biennium based on the assumption that 6,000 eligible employees (35%) would elect the early retirement option.	Current Law.
Sales Factor Apportionment Formula
Current Law.	Beginning on Jan. 1, 2004, the sales factor will represent 55% of the apportionment formula. Payroll and property factors will then each represent 22.5% of the apportion formula. (Now, each factor accounts for one-third in formula.)	Same as Finance.	Current Law.	Current Law.
Local Government \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
Shared Revenue Funding (Current law provides about $1 billion per year to Local Government)
Reduces funding by $350 million in 2002, another $360 million in 2003, and total elimination of $1 billion in 2004.	No reduction in 2002. Reduces funding by $250 million 2003, and another $500 million in 2004.	Same funding levels as Finance, with additional changes in the distribution formula. .	Maintains current law funding levels (i.e., $1 billion per year).	Assembly position with several modifications including: no cuts in shared revenue aid payments or changes in the distribution formula for 2003; establishes a funding level of $999.7 million in 2004 and thereafter ($40 million annual reduction compared to current law); provides up to $45 million for consolidation incentive payments beginning in 2004; deleting the creation of a separate utility aid appropriation; and deleting the proposed indexing of the county and municipal aid.
Levy Limits
Prohibits any local government from increasing its operating levy greater than the percentage increase in inflation and the percentage increase in population unless the electors adopt a resolution allowing the levy limit to exceed the formula.	Replaces the municipal adjustment to the inflation measure based on population with an adjustment set at a percentage equal to 60% of the percent change in the jurisdiction’s equalized value due to new construction, less improvements removed, between the year before the year of the levy and the previous year, but not less than 0% nor greater than 2%.	Same as Finance.	Current Law.	Current Law.
Utility Shared Revenue
Phases out shared revenue (see above), including the utility portion, over the next two years with the third year being completely phased out.	Deletes the Governor’s recommendations and changed from a value based formula to a capacity based formula. Eliminates general structures (office buildings, payment centers, etc) from the formula and property eligible for sharing. Provides incentive aid if a plant is built on or adjacent to a brownfield or existing site, it total production capacity is at least 50 megawatts and is not nuclear.	Same as Finance.	Current Law.	Current Law.
Energy \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
Public Benefits Funding
Earmarks over $22 million from public benefits funding (energy conservation and efficiency and renewable resources grants) to pay for energy costs for UW System, Health & Family Services, and Military Affairs.	Same as Governor plus an additional $1 million for UW System.	Same as Joint Finance relating to using public benefits for UW, HFS, and Military Affairs. Eliminates energy conservation and efficiency public benefits programs, including $16 million in funding.	Current Law.	Current law on public benefits funding for certain state agencies.
Ethanol Producer Grant Program
Current Law.	Current Law.	Current Law.	Eliminates ethanol producer grant program, saving $3 million in 2001-03 biennium.	Current Law.
Distributive Generation
Current Law.	Current Law.	Current Law.	Requires DOA to investigate use of distributed generation units in state building projects costing over $5 million.	Senate Position.
Electric Utility & Residential Wells
Current Law	Current Law	Prohibits PSC from issuing needed approvals if DNR finds the proposed electric generating facility would reduce the availability of water to a residual well or causes groundwater limits to be exceeded.	Current Law.	Current Law.
Environment \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
DATCP Land & Water Resources Bureau
Current Law.	Current Law.	Current Law.	Transfers funding and positions from DATCP’s Land and Water Resources Bureau to UW-Extension and DNR.	Current Law.
Mercury Thermometer Ban
Current Law.	Current Law.	Current Law.	Adds provisions from SB-435 that bans the sale of most mercury thermometers.	Current Law.
Stewardship Program
Current Law.	Current Law.	Reduces bonding authority for 2002-2010 to $35 million annually (from $60 million), reducing debt service payments by $500,000 in 2002-03. Requires an audit comparing purchase prices to comparable prices in area.	Current Law.	Current Law.
Wetlands
Current Law.	Current Law.	Current Law.	Provides limited (Ashley Furniture) exemption to wetlands water quality provisions.	Senate Position.
Recycling Enforcement
Current Law.	Prohibits solid waste facilities from accepting solid waste from a building containing five or more dwelling units, or commercial, retail, industrial or governmental facilities that does not provide for collection of recyclable materials that are separated by occupants. Prohibits transport to waste facilities if waste contains more than “incidental” amounts of recyclables.	Current Law.	Same as Joint Finance.	Current Law.
Recycling Alternative Compliance Program
Current Law.	Current Law.	Makes permanent the alternative recycling compliance pilot program, which allows local government to opt out of the certain separation and collection mandates.	Current Law.	Current Law.
Vehicle Emissions Inspection
Current Law.	Current Law.	Requires testing in the fourth year after model year and every second year thereafter (now, second year after model year)	Current Law.	Current Law.
Environmental Audit Protections & “Green Tier”
Current Law.	Current Law.	Provides limited civil immunity for those conducting environmental audits, and creates a “Green Tier” program that provides certain regulatory flexibility for companies that provide DNR evidence of superior environmental performance.	Current Law.	Current Law.
Fish Ladders
Current Law.	Current Law.	Current Law.	Deletes the restriction prohibiting DNR from requiring dam owners to install fish ladders unless rules exist and unless the state or federal government has a program to provide cost-sharing grants to the owners of dams.	Current Law.
Economic Development \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
Wisconsin Development Fund
Current Law.	Current Law.	Current Law.	Deletes $3 million GPR in 2002-03. Funding for the Wisconsin Development Fund would total $7 million in 2002-03 ($2.9 million GPR and $4 million PR).	Deletes $1 million from the program.
Division of International and Export Services
Current Law.	Current Law.	Current Law.	Deletes $1.8 million GPR and 10 positions in 2002-03 and provides expenditure authority to convert the funding source for the Division from GPR to PR.	Senate position modified to delete $500,000 GPR and 2.5 GPR position and provide $500,000 PR and 2.5 PR positions.
Biostar Initiative Bonding
Current Law.	Current Law.	Current Law.	Accelerates the schedule for issuing $158 million in bonding to fund the Biostar Initiative at the UW-Madison campus for construction of biological sciences facilities.	Senate Position.
Impact Fees
Current Law.	Current Law.	Current Law.	Allows school districts to impose impact fees, and authorizes political subdivisions and school districts to impose impact fees for public facilities and other purposes.	Current Law.
Financial Institutions \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
Wage Lien
Current Law.	Grants super priority status to wage claim liens, including financial liens that had superceded the wage claim lien. Makes retroactive to 1998.	Current Law.	Same as Finance.	Current Law.
Free Credit Reports
Current Law.	Current Law.	Current Law.	Incorporates provisions in SB-135, requiring a credit reporting agency, upon written request and within five days of receiving the written request, to provide one free written disclosure report to a consumer per year.	Current Law.
Regulation of Credit Unions
Current Law.	Current Law.	Overhauls the regulation of credit unions (Chapter 186), including changes relating to bylaws and board duties, investments, powers, privacy, sale of insurance.	Same as Assembly, but makes technical corrections and adds provisions relating to privacy.	Current Law.
Universal Banking
Current Law.	Current Law.	Authorizes Division of Banking within Department of Financial Institutions to certify banks, savings and loan associations as “universal banks” provided prescribed procedures are followed.	Current Law.	Current Law.
Credit and Debit Card Privacy
Current Law.	Current Law.	Current Law.	Incorporates provisions of SB-365, prohibiting retailers from including certain information on sales receipts.	Senate Position.
Uniform Commercial Code (UCC) Article 9 Provisions
Current Law.	Current Law.	Current Law.	Incorporates provisions of SB-372, regarding the recording and filing of UCC Article 9-related documents.	Current Law.
Health Insurance & Health Care Cost \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
Funding for Private Employer Health Care Program
Current Law.	Current Law.	Provides $850,000 loan from the Office of the Commissioner of Insurance (OCI) to the Department of Employee Trust Funds (DETF) to fund the operating costs of a previously approved, but yet-to-be implemented, small business insurance pool known as the Private Employer Health Care Coverage Program.	Provides $850,000 and includes rate band restriction.	Provides $850,000 and maintains current law on rate band.
Health Insurance Initiative
Current Law.	Current Law.	Includes a modified version of AB 876, and establishes a small employer catastrophic reinsurance program, promotes defined contribution plans for state employees, requires uniform application forms and uniform claim processing forms, updates state statutes to federalize treatment of medical savings accounts, and other items.	Current Law.	Assembly position modified to only include provisions relating to uniform employee application forms and uniform claim process forms.
Health Insurance Mandates
Current Law.	Current Law.	Current Law.	Incorporates SB 157 that takes current law caps off mandated coverage for mental health and AODA treatment. Incorporates provisions of SB 128 to require health plans to provide coverage of contraceptive devices and services. Eliminates the small business exemption from the point-of-service mandate, which now requires only larger employers offering HMO or PPO plans to offer a standard point-of-service plan.	Current law on contraceptive devices provision and mental health parity. Senate position on point of service mandate.
Hospital Construction and Expansion Limitations
Current Law.	Current Law.	Current Law.	Includes a major initiative placing strict limitations on hospital construction and expansion.	Current Law.
State Employee Benefits
Current Law.	Current Law.	Reduces the amount of annual sick leave an employee could convert for future sick leave and health insurance credits; requires state employees to pay a minimum of $10 per-month (single coverage) or $20 per-month (family coverage) for group health insurance; specifies that state employees working half-time to just under three-quarter time would contribute 50% of their health insurance premium costs; and, eliminates state contributions to the income continuation program.	Current Law.	Current law on sick leave conversion. Current law on part time employee health insurance provision. Current Law on employee contribution provision.
Transportation \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
TEA Program
Current Law.	Current Law.	Requires DOT to review and make determinations on applications for assistance under the program on a continuing, year-round basis and require DOT to make a determination on each application within a reasonable time after its receipt.	Same as Assembly.	Assembly Position.
Bonding Authorization to Compensate for Reductions in Federal Highway Aid
Current Law.	Current Law.	Current Law.	Authorizes $200 million in transportation fund-supported, general obligation bonding to compensate for reductions in federal highway aid received by the state, if needed.	Senate position modified to provide $140 million in bonding.
Southeast Wisconsin Freeway Projects
Current Law.	Current Law.	Current Law.	Restricts the use of State Highway Rehab and Major Highway Development funds for southeast Wisconsin freeway projects. Requires DOT to make a request to Joint Finance for the transfer of funds from state highway rehabilitation funding to southeast Wisconsin freeway rehabilitation. Specifies that the request can not include the transfer of funds currently allocated for projects in other parts of the state.	Senate Position.
Miscellaneous Provisions \| Top of Page \|
Governor	Joint Finance	Assembly	Senate	Conference Committee
DACTP Consumer Protection Functions
Current Law.	Current Law.	Current Law.	Deletes funding and 28 consumer protection positions from DATCP, and transfers related positions, funding and authorities to DOJ.	Senate Position.
Agency Executive Positions
Current Law.	Current Law.	Repeals authority to appoint executive assistants by state agency heads, but allows incumbents to keep job.	Effective July 1, 2002, deletes all unclassified deputy secretary, executive assistant and division administrator positions in executive branch agencies.	Current law. No deletion or phase-out of executive positions.
Delayed Correctional Facility Openings
Cost savings from delays in opening Stanley, New Libson, Highview Geriatric, and Oshkosh correctional facilities, inmate workhouses, and Sturtevant probation and parole hold facility. Governor’s proposal saves $13 million (600 positions).	Same as Governor, but additional $3 million savings from further Stanley facility delay.	Deletes Joint Finance provisions and adds about $1 million (37 positions) by accelerating opening of New Lisbon and Highview facilities.	Includes Joint Finance provision and further delays Stanley facility for total savings of $26 million (998 positions).	Opening of Stanley prison delayed until January 2003.
Campaign Finance Reform
Current Law.	Current Law.	Current Law.	Adds provisions from SB-104, including $6 million for additional public financing.	Establishes a $20 voluntary check-off to fund public grants; increases maximum grant awards to 40%; provides for supplemental grants and various provisions relating to issue ads.
Department of Electronic Government
Lapses $7.4 million in funding for Department of Electronic Government created by Gov. McCallum in Act 16 (budget bill) to general fund.	Same as Governor.	Same as Governor.	Eliminates the Department and transfers duties to DOA.	Senate Position.
Milwaukee School Choice Program
Current Law.	Current Law.	Current Law.	Eliminates $24 million in funding for Milwaukee school choice program.	Current Law.