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July 13, 2017

 

State budget impasse continues over transportation funding 

Nearly two-weeks into the new budget biennium, state budget negotiations remain stalled, as Senate and Assembly Republicans continue to disagree on transportation funding and other issues.

 

The Legislature’s budget-writing committee – the Joint Finance Committee – has not met since mid-June and have yet to take-up several major budget items, including K-12 education, taxes, and transportation.

Transportation funding continues to be the main obstacle to reaching a budget consensus. Assembly Republicans would prefer new tax or fee increases to pay for road projects and remain strongly opposed to additional borrowing without new revenue to pay off the loans. Senate Republicans on the other hand are more in line with Gov. Scott Walker’s plan to increase bonding and delay certain projects to balance the transportation budget.

 

Assembly Speaker Robin Vos recently said he's accepted there won’t be a revenue increase for transportation due to Walker’s opposition, but believes Senate Republicans must now accept there should be no new transportation borrowing without a way to pay for it. In fact, Vos is open to holding the transportation budget flat, which would mean no new funding for key projects across the state.

 

Senate Republicans has expressed concerns with that option, saying a budget that does not include new bonding or holds the transportation budget flat would delay critical highway projects, especially those in southeastern Wisconsin. They also believe it would harm the state’s economic development environment.

The Assembly and Senate also appear to be on different pages when it comes to tax cuts. While Assembly Republicans support the income tax reductions proposed by Gov. Walker, the Senate GOP would instead prefer to eliminate of the personal property tax on businesses. The Senate argues repeal of  the personal property tax would have a greater impact than the governor’s proposed income tax cuts. There is not enough money to implement both tax cuts as part of the budget bill.

 

Republican legislative leaders continue to meet on the budget, but there are no signs the impasse will be broken anytime soon. Political fallout from the stalemate has been minimal to date, but pressure to approve a budget will intensify with each day that passes without a deal.


If you have any questions or would like more information on the status of the state budget bill, please contact WEDA at mwelsh@weda.org.

 



WEDA testifies in favor of "Dark Store" legislation  

A competitive tax rate encourages business activity, increases investment capacity and sparks job creation. This is a longstanding WEDA position, and one that has led the organization to support tax policies that promote business growth and economic activity.

WEDA recently testified in support of important tax legislation (Assembly Bill 386) before the Assembly Ways and Means Committee that would close the dark stork tax loophole in Wisconsin and  help create a more competitive and equitable tax environment.
 
Under the dark store tax strategy, large retailers - often referred to as big-box stores - argue their stores should be valued as if they were empty or “dark”, rather than a thriving, active business. This selective application of the property assessment methodology benefits one property taxpayer over another. While large retail businesses benefit from reduced property taxes, homeowners and local businesses are forced to carry a larger tax burden.

The marathon public hearing on the legislation was well attended by stakeholders on both sides of the issue. Christian Tscheschlok testified on behalf of WEDA in support of the bill. Tscheschlok's
testimony touched on the negative impact a fully implemented dark store tax strategy and the resulting tax shift would have on Wisconsin small business growth and community main streets across the state. His comments also focused on the harm it could have on tax incremental financing. (TIF)

Many TIF districts contain multiple big box retailers, and municipalities rely on the tax generated by those retailers to fulfill their TIF obligations. The dark store strategy would have a chilling effect on TIF, not only on the success and growth of current TIF districts, but on the future use of tax incremental financing in Wisconsin.

WEDA was joined by the League of Wisconsin Municipalities, the Wisconsin Counties Association and several other groups at the hearing who expressed support for the bill. The legislation however is opposed by large retailers and a handful of business-related groups and remains a contentious issue in the State Capitol. Further action on the proposal is not expected until the fall.


If you have any questions or would like more information on the dark store legislation, please contact WEDA at mwelsh@weda.org.

 



Quick Notes...


QN - On July 1, the WI Department of Workforce Development announced the opening of two ongoing Grant Program Announcements (GPAs) under the state’s Fast Forward program. The ongoing GPAs will apply to the Small Business Occupations and All Sectors categories. Under the new process for these categories, the GPAs will remain open all year and grant award announcements will occur quarterly. Link

QN - Illinois just made it $51 million harder for Wisconsin lawmakers to pass a state budget. Illinois recently approved their own budget plan that included significant tax increases. The hit to Wisconsin is the result of our tax reciprocity agreement with Illinois. Under the agreement, Wisconsin residents who work in Illinois only file taxes in Wisconsin. The state then reimburses Illinois the difference of what would have been owed. Due to the Illinois tax hike, Wisconsin’s payment to our neighbors to the south will increase by more than $20 million. It will also lead to Wisconsin residents claiming $31 million more in tax credits for taxes paid in other states. Link

QN - Milwaukee businessman Andy Gronik has officially jumped into the 2018 race for Wisconsin governor. Gronik, a Democrat, is a political newcomer who touts his experience in the private sector running an appraisal and consulting firm. Other Democrats considering a run for governor include state Senator Kathleen Vinehout, state Representative Dana Wachs, state school superintendent Tony Evers, and Madison Mayor Paul Soglin. Link


QNA group of GOP legislators recently unveiled a proposal to implement operational reforms at the WI Department of Transportation (DOT). The legislative proposal, which calls for a full audit of the DOT, includes the following provisions: Provide the agency with multiple options for project delivery, including Design-Build; create a Technical Review Committee to review contract proposals; establish a process that encourages lower project costs; and repeal of the state prevailing wage law and the highway prevailing wage law. The bill has yet to be introduced. Link

QN - Last week, the Wisconsin Supreme Court ruled 5-2 that homeowners who don’t allow assessors entry into their homes still have a right to contest their tax assessment. Previously, homeowners who denied an assessor access to their home were not guaranteed the right to challenge the assessment. Link


QN - Earlier this week, a federal appeals court upheld Wisconsin's "right-to-work" law, which prohibits labor agreements that require workers to pay union dues. The appeals court agreed with a lower court decision that rejected the plaintiff's argument that the Wisconsin law is unconstitutional. Link

 

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