On Thursday, Feb. 28, Gov. Tony Evers released his 2019-21 state budget. Overall, Evers proposes an operating budget of $40.7 billion in fiscal year 2019-20 and $42.7 billion in fiscal year 2020-21. The proposed budget adds over 700 more positions than in the 2018-19 fiscal year. The largest increases in general purpose revenue (GPR) go to the Department of Public Instruction ($1,593 million increase over base) and the Department of Health Services ($329 million increase over base). Below is an overview of provisions of Evers’s budget by issue area. For more on the budget, visit our 2019-21 State Budget Issue Update.
- Medicaid expansion. Expands Medicaid to 138 percent of the federal poverty level, which is estimated to provide coverage for 82,000 people. By accepting additional federal dollars, the budget assumes $325 million GPR in savings. Funding is reinvested in the program to support provider increases, including dental access, the Healthy Women, Healthy Babies program and institutions that serve Medicaid recipients.
- Medicaid cost to continue. Provides $354 million GPR.
- Includes $200 million ($72.2 GPR) for the reinsurance program (Wisconsin Healthcare Stability Plan).
- Medicaid community health benefit. Includes $22.5 million GPR for a Medicaid community health benefit for nonmedical services to MA recipients, including housing referrals, nutritional mentoring, stress management, and transportation services.
- Imported prescription drugs. Allows the Department of Health Services (DHS) to contract with foreign drug manufacturers to import generic, off-brand drugs from abroad, which must generate significant savings and no more than three domestic competitors and maintain federal safety requirements.
- Act 370 repeal. Repeals changes from the recent extraordinary session related to the legislative oversight of federal waivers and state plan amendments, which included Joint Finance Committee oversight if DHS seeks an amendment to the state’s Medical Assistance plan or a change to the reimbursement rate for making a supplemental payment to a provider under the Medical Assistance program with an expected fiscal effect of more than $7,500,000 from all revenue sources over a 12-month period.
- BadgerCare waiver repeal. Repeals requirements under the BadgerCare Reform waiver, including work requirements, premium payments, a health risk assessment, nonemergency use copays and a health savings account.
- Provides $365 million to hospitals that serve Medicaid patients – this includes an increase to disproportionate share hospital payments, acute care hospital access payments, critical care hospital payments, pediatric supplemental payments, and rural critical care supplemental payments.
- Includes a dental access initiative, including establishing a dental therapist license and $16 million GPR in reimbursement rate increases for dental providers that serve Medicaid and BadgerCare Plus patients.
- Increases reimbursement in Medicaid for telehealth services by $2.4 million GPR and increases the expenditure authority for medical services delivered under telehealth.
- Lead exposure. Includes a lead exposure and lead poisoning prevention initiative, including increases health service initiatives, improved lead testing and abatement in homes of Medicaid eligible children and pregnant women, a grant for lead abatement for non-Medicaid eligible homes, and a Medicaid pay-for-performance initiative on blood lead testing.
- Healthy Women, Healthy Babies. As part of the Healthy Women, Healthy Babies program, provides $22 million ($9.6 million GPR) for extending postpartum Medicaid eligibility from 60 days to 12 months
- Opioid crisis. Provides funding ($898,800) to develop a hub-and-spoke model under the Medicaid Home Health benefit.
- Provides program revenue to incorporate opioid naïve alerts in the Prescription Drug Monitoring Program.
- Regulates pharmacy benefit managers (PBMs) by requiring registration with OCI.
- Preexisting conditions. Includes language for preexisting healthcare coverage for plans on the insurance marketplace.
- Medical marijuana. Establishes a medical marijuana program with $1.2 million in funding and four positions.
Evers’s budget proposes some of the largest investments in transportation in state history at $6.6 billion all funds appropriations to the Department of Transportation (DOT) over the biennium. Specific provisions of the DOT budget include:
- Gas tax. Raises the gas tax by 8 cents per gallon and reinstates indexing.
- Minimum markup. Eliminates the minimum markup on motor fuel. According to Gov. Evers, at today’s gas prices, this will save consumers as much as 14 cents per gallon.
- Registration fees. Increases heavy truck registration fees by 27 percent, raising $36 million over the biennium. Increases the title fee on original or transfer vehicle titles, raising $36 million over the biennium. Requires collection of the hybrid vehicle fee, raising $9.7 million over the biennium.
- State Highway Rehabilitation Program. Allocates $320 million in additional funding to the state highway rehabilitation program, the most far reaching and comprehensive highway building and resurfacing program in the state.
- Local Road Improvement Program. Provides $1.9 million over the biennium.
- General Transit Aids. Provides a 10 percent increase for a total of $11 million annually.
- Passenger rail. Provides $45 million in support of improved passenger rail service between Milwaukee and Chicago.
- VW settlement. Allocates 40 percent of the remaining 25 million in Volkswagen emissions settlement funds for electric vehicle charging stations through a grant program at the Department of Administration (DOA). 60 percent is allocated for the replacement of public transit vehicles.
- Property taxes. Incorporates provisions from the recently circulated property tax assessment reform bill. Evers’s plan would require property to be assessed at its “highest and best use” and would remove vacant properties, or “dark stores,” as comparable sales for the purposes of property tax assessment, thus allowing assessors to value occupied property more solely because of its occupancy.
- Online sales tax. A state budget provision in 2013 provided that any additional revenue resulting from changes to federal law regarding online sales taxes must be used to offset income tax reductions. Evers’s budget proposes changing the structure of how the income tax reductions are distributed among tax brackets.
- Research and development tax credit. Increases the refundable share of the research credit from 10 percent under current law to 20 percent beginning in tax year 2020. This change will provide $2.25 million in fiscal year 2020-21 to such businesses and $9 million annually beginning in fiscal year 2021-22.
- Manufacturing and agriculture tax credit. Limits the manufacturing portion of the credit to only apply to the first $300,000 in qualified production activities income for each firm qualifying for the credit. The agricultural portion of the credit will remain as it is under current law. This will raise $279.5 million in fiscal year 2019-20 and $237.1 million in fiscal year 2020-21, paying for approximately half of the proposed middle-class tax cut. Evers had previously vetoed the legislature’s version of funding a middle class tax cut via the 2017-19 budget surplus.
- Capital gains tax. Limit the current 30 percent long-term capital gains exclusion to those taxpayers with adjusted gross incomes below $100,000 for individuals and $150,000 for married-joint filers.
- Federal conformity. Conform Wisconsin’s tax base with provisions of the federal tax code.
- Qui tam. Restore a private individual’s ability to bring a qui tam claim against a person who makes a false claim against the state.
- Extraordinary session. Repeal parts of the 2018 extraordinary session legislation. Evers suggests a full repeal of Act 370 which gives the legislature oversight of agency waiver requests, allows Joint Finance Committee oversight of Medicaid program changes, and codifies Medicaid work requirements (see Health above), and substance abuse screening for FoodShare. Evers also proposes repealing provisions of Act 369 including:
- The requirement that the legislature approve settlements by the attorney general.
- The ability of the legislature to intervene in lawsuits involving the state.
- The ability of the legislature to obtain outside legal counsel.
- The definition and public transparency requirements for agency guidance documents.
- The requirement that agencies cite statutes supporting any interpretation of law they publicly provide.
- Judicial Council. Does not restore funding or position authority to the Judicial Council. Former Gov. Scott Walker defunded the Judicial Council in the 2017-19 state budget after the Supreme Court sent an orderto DOA that it will no longer transfer funds to DOA in support of the Judicial Council. While the Judicial Council lacks funding, the statute (Wis. Stat. s. 670) creating the Judicial Council remains in place.
- Water quality. Adopts the water quality initiatives Evers previously announced.
- The budget includes two positions at the Department of Natural Resources to work on PFAS contamination issues. PFAS (per- and polyfluoroalkyl substances) are manufactured chemicals that are found in many everyday products, including nonstick pans, cleaning products, paints, and firefighting foam. Additionally, Evers proposes $150,000 GPR to develop a model to identify and prioritize sites with likely PFAS contamination and $50,000 to conduct a survey on emergency response use of PFAS-containing firefighting foam.
- Carbon free goal. Establishes a statutory goal that all electricity generated in Wisconsin be 100 percent carbon free by 2050.
- Office of Sustainability and Clean Energy. Moves the Public Service Commission’s State Energy Office to a new Office of Sustainability and Clean Energy in the Department of Administration. The director of the Office of Sustainability and Clean Energy would be appointed by the governor. Additionally, the budget would create a $4 million renewable and clean energy research grant administered by the Office of Sustainability and Clean Energy.
- Minimum wage. Increases the general hourly minimum wage to $8.25 beginning January 1, 2020, then $9.00 beginning January 1, 2021, with additional increases of 75 cents per year in the following biennium and inflationary increases thereafter. Additionally, the budget establishes a task force to further study other options to progress toward a goal of a minimum wage of $15 per hour. The task force will consist of five gubernatorial appointees and appointments made by the Senate majority and minority leaders, the Assembly speaker and the Assembly minority leader.
- Proposes attaching the Labor and Industry Review Commission to the Department of Workforce Development (DWD).
- Prevailing wage. Restores prevailing wage law for state and local projects of public works.
- Right to work. Eliminates “right to work” law, which prohibits labor unions and employers from entering into private agreements regarding the use of unionized workers on a project. This change also permits employers to require union membership or affiliation and related dues.
- Permits project labor agreements for public works projects
- Local government ordinances. Repeals preemption of local government ordinances regarding family and medical leave, wage claims, employee benefits, hours of work and overtime, and solicitation of prospective employees’ salary histories.
- Out-of-state marketing. Provides $4,080,000 GPR in fiscal year 2019-20, $1,106,700 GPR in fiscal year 2020-21, and full time position to increase out-of-state marketing.
- Office of Outdoor Recreation. Creates a new Office of Outdoor Recreation at the Department of Tourism to enhance the state’s outdoor economy through the promotion of outdoor activities and building partnerships with outdoor-related businesses. Provides $274,300 GPR in fiscal year 2019-20, $349,000 GPR in fiscal year 2020-21, and three positions.
- Promotional videos. Provides $374,200 GPR in fiscal year 2019-20, $415,800 GPR in fiscal year 2020-21, and two positions in the Department of Tourism to increase its capacity to produce promotional videos in-house.
- Decriminalize marijuana possession of 25 grams or fewer.
- Juvenile justice. Raise the age of adult jurisdiction in courts to from 17 to 18 years, effective in 2021. Provides $8.5 in total funding for juvenile justice programming.
- Beat patrol grants. Provide $1 million annually for beat patrol grants to municipal police departments and includes additional GPR for Department of Corrections officers overtime.
Evers provides $619 million in state general aid across the biennium. The education budget also
- Provides two-thirds state funding for schools.
- Draws back school choice programs.
- Eliminates the restriction on the number of referenda school districts may hold in a year.
- Transfers several agency programs to the Department of Public Instruction including the Department of Justice’s Office of School Safety, career and technical education grants and awards at DWD, and a new minority teacher grant program.
For higher education, the budget includes $45 million total GPR in the biennium for student success initiatives at the UW System and in-state tuition for noncitizens.
- Increases the Broadband Expansion Grant Program at the Public Service Commission from $16 million to $78.6 million. Additionally, creates a statutory broadband speed goal of 25 megabits per second download by 2025.
- Requires the Wisconsin Economic Development Corporation to post a searchable database of all final contracts.
- Establishes a committee to study the feasibility of a private sector retirement plan administered by the Department of Employee Trust Funds.
- Directs the Legislative Reference Bureau to redraw the legislative maps and provides $10,000 GPR.