Policy Items Removed From Budget, Budget Committee Begins Its Work

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Although not required by law to do so, the Legislature’s non-partisan Legislative Fiscal Bureau (“LFB”) routinely responds to individual members’ requests to identify all of the non-fiscal policy items included in the biennial budget.  The LFB generally identifies these items as having no fiscal effect on the state budget or having policy implications that far exceed any potential fiscal effect.  This year, the LFB identified 49 such items included in the Governor’s 1,600 page budget document.  Among some of the more controversial non-fiscal policy items identified by the LFB include:

  • Converting the Natural Resources Board and the Board of Agriculture, Trade and Consumer Protection to an Advisory Council;
  • Allowing the Governor’s Administration greater control over the state building process by limiting the Building Commission’s opportunities to exercise oversight over changes to projects and cost-overruns;
  • Requiring counties – rather than municipalities – to administer property tax assessments;
  • Requiring disclosure on property tax bills of each taxpayer’s proportionate share of the debt service on bonds issued by the taxing jurisdiction; the amount of taxes levied for the maintenance and operation of each taxing jurisdiction; the amount of taxes levied on other miscellaneous charges; and
  • Eliminating numerous oversight and reporting requirements for the private School Choice program. 

The Wisconsin legislature’s Joint Finance Committee (“JFC”) is considered to be one of the most powerful committees in the country, in large part because of its members’ ability to shape the final budget product.  However, another, lesser-known reason for that distinction is that the Committee’s Co-Chairs are given the authority to unilaterally determine which items they consider policy, and then remove them from the budget without a single vote ever being taken. 

This year, the Co-Chairs determined that 14 of the 49 items identified by the LFB should be removed from the budget and drafted as separate legislation for consideration by the legislature as part of its regular process.  The items slated for removal by the Co-Chairs include some of the Governor’s most controversial proposals, including his proposals to:

  • Create Advisory Councils out of the DATCP and Natural Resources Board;
  • Remove oversight over state building projects from the Building Commission; and
  • Transfer property tax assessments from individual municipalities to counties.

The remaining 35 items identified by the LFB as non-fiscal policy items left in tact by the Co-Chairs will now be considered by the full JFC, despite Committee Democrats’ attempt to remove them during the Committee’s first executive session.  That attempt failed on a 12-4 party line vote.  Future attempts to remove individual policy items will likely meet a similar fate. 

That’s not to say all votes the Committee takes will be partisan ones, however.  On Wednesday, April 15th, the Committee’s opening day, 18 of their 22 votes to approve items were unanimous.  Although that record is due in large part to the lack of controversial items on the Committee’s agenda, there is something about the process that the JFC uses that makes it a more collegial committee than most. 

Still, major items loom large on future agendas.  And, although the leaders from both parties in the Senate seem to agree on the need to eliminate Governor Walker’s cut to K-12 education in the first year of biennium, there remains a major chasm between the leaders as to what the appropriate size of the investment should be.  Similar issues exist between the parties on what it means to preserve SeniorCare, the state’s successful prescription drug program for the elderly; whether the state’s community-based long-term care program is in need of restructuring; and, how to give the UW System flexibility while still maintaining affordability. 

To be sure, more bipartisan votes are on the way from this Committee.  But, at least in regard to the state’s major budget items, even the JFC isn’t immune from the incipient creep of partisan politics. 

Budget Hearings Conclude, JFC Set to Begin Voting…Maybe

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Every budget year, the legislature’s Joint Finance Committee and its non-partisan budget office, the Legislative Fiscal Bureau (“LFB”), must complete a number of routine – if not ministerial – tasks prior to taking a single vote on the budget bill.  Typically, those actions are bookended by the JFC receiving budget briefings from major agencies and cabinet-level departments, (held March 2, 3, and 4), and a series of public hearings on the budget bill, (held March 18, 20, 23 and 25).  In between, however, a number of other important actions are completed, including the LFB’s release of a budget summary, and numerous other reports detailing tax and fee modifications, the use of fund transfers, and a general fund condition statement.   

This budget cycle, that process was completed nearly three weeks ahead of schedule as compared to recent budgets, and is consistent with the Governor’s and Legislature’s stated desire to complete budget deliberations no later than June 31, 2015, if not earlier.  However, four key issues have emerged that could prevent an on-time budget for the first time since Scott Walker was elected Governor.  Those issues include:

  • K-12 funding and the expansion of the statewide school voucher program.
  • Spending and revenue-generating alternatives for the state’s transportation fund.
  • Cuts to the University of Wisconsin System.
  • State-local financial support for a new arena for the Milwaukee Bucks. 

Although July 1, 2015 marks the statutory deadline for adopting a new budget, there are only minor consequences if the legislature fails complete its work by that date.  Unlike the federal government, which shuts down if a new budget is not adopted by Congress, state government continues to operate on a cost-to-continue basis until a budget is signed into law.  With few exceptions, most state programs can operate on a cost-to-continue budget for many months before facing a funding crisis. One exception is the Medicaid program, a sum-sufficient appropriation, which requires the government fund all program expenditures on a routine basis.   Oftentimes, the Medicaid program faces programmatic increases in the hundreds of millions of dollars from one biennium to the next and, without the authority to implement cost-saving measures, the Department of Health Services can quickly find that it lacks the resources to pay its bills. 

Still, the smart money is on the passage of an on time budget.  Late budgets have become somewhat of an anomaly, with the last one occurring in 2009 when Democrats controlled the Senate and Republicans controlled the Assembly and a stalemate emerged.   Already, legislative leaders have hinted at plans to reduce the cut to the UW System (while scuttling the Governor’s proposal to give it greater independence); identified alternative funding mechanisms for the Milwaukee Bucks’ arena; and, pledged to increase K-12 spending with the new revenue likely to be revealed by the LFB’s revenue estimates to be released in May. 

Despite this progress towards resolving some of the budget’s major issues, however, this year doesn’t have quite the same feel as recent budgets that, by comparison, seemed to sail through the legislature.  Democrats and Republicans alike have indicated that some of the Governor’s cost-saving proposals – like scaling-back Senior Care and revamping Family Care – are all but dead.  It’s unclear whether the Senate and the Assembly share the same vision for K-12 spending, UW System or the Bucks.  There has been little progress towards a palatable solution to the transportation funding crisis.  And, while the LFB’s revenue estimates are likely to produce additional revenue, it’s not likely to produce a windfall as it did during the 2013-15 budget deliberations. This year’s revenue estimates are expected to be more in the order of saving a few programs slated for elimination than authorizing historic property tax cuts. 

The bottom line is that there’s a lot in this budget that both parties want to change.  While the budget deficit facing the state isn’t as severe as it has been in recent years, there are more programs on the table to be saved---and that costs money, money that is yet to materialize. So, while a number of the JFC’s statutorily required functions may be behind it, the real heavy lifting is yet to begin.  And this year, that may mean that there is some extra time before the first vote is ever taken.

Proposed Wisconsin Budget Provision Potentially Impacts Municipalities

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As part of his 2015-17 biennial budget proposal Governor Scott Walker has recommended consolidating municipal (town, village and city) property tax assessment into a county wide assessment where, with limited exceptions for 1st and 2nd class cities, counties would administer the system.  The proposal would consolidate the state’s 1,851 taxing districts into a single assessment office in each of the state’s 72 counties.  In addition, the equalized value system of assessments would be eliminated in favor of annual full market value assessments.  Counties could charge municipalities up to 95% of the cost of performing assessments in 2015.  

To read the full post by Stafford's Government Relations Advisor, please click here.

Property Assessment Consolidation Proposal Raises Questions From Local Governments

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As part of his 2015-17 biennial budget proposal Governor Scott Walker has recommended consolidating municipal (town, village and city) property tax assessment into a county wide assessment where, with limited exceptions for 1st and 2nd class cities, counties would administer the system.  The proposal would consolidate the state’s 1,851 taxing districts into a single assessment office in each of the state’s 72 counties.  In addition, the equalized value system of assessments would be eliminated in favor of annual full market value assessments.  Counties could charge municipalities up to 95% of the cost of performing assessments in 2015. 

Although this proposal may represent a dramatic shift away from the current property tax assessment system, it is not a new concept, nor is it a partisan one.  In 2009, under former democratic Governor Jim Doyle, state revenue Secretary Roger Ervin floated a similar plan.  Ervin cited inequity between state and local equalized values; lack of uniformity across jurisdictions; and inefficient administration as rationale for making the shift.  Local government groups, especially the Wisconsin Towns Association, objected and cited as a primary concern their inability to control the costs of providing the service if it was moved to the county.  Ultimately, the proposal was not adopted.

Just as in 2009, local government groups are once again raising questions about the proposal.  Following is a brief summary of some of the concerns raised by each of the three major local government groups, including the Wisconsin Counties Association, the League of Municipalities and the Wisconsin Towns Association as well as individual counties and municipalities.

Wisconsin Counties Association:

  • The proposal represents a new mandate.
  • The 2017 implementation date is not feasible. 
  • The funding mechanism is inadequate. 
  • Click here for the WCA release. 

League of Municipalities:

  • The 2017 implementation date is too ambitious. 
  • The cost of the county assessment should not be part of the municipal levy.
  • The cost of assessing all parcels at full market value is more expensive than the current system. 
  • Payments to counties from municipalities for the costs of assessments will be inequitable. 
  • The opt out provision should be more flexible. 
  • The provision could interfere with the long-term contracts between some municipalities and private assessors. 
  • Click here for the LWM release.

Wisconsin Towns Association:

  • The proposal erodes local control. 
  • Full market value assessments are more expensive than equalized value assessments for taxpayers and municipalities. 
  • The proposal reduces competition in the marketplace. 
  • Click here for the WTA release. 

According to Rick Chandler, the state’s current revenue secretary, the proposal would generate cost savings at the state and local level and result in improved quality of property assessments.  Now, it is up to the Legislature to decide whether the alleged benefits outweigh the concerns raised by local governments.