WEDA Political News and Notes – March 1, 2019

Gov. Tony Evers’s State Budget Proposal Scales Back Manufacturing Tax Credit; Limits TIF Flexibility

Yesterday evening, Gov. Tony Evers unveiled his first state budget bill before a joint session of the State Legislature. The two-year, $83 billion spending plan includes many of Evers’ leading proposals he campaigned on and has been promoting since he was sworn into office, including increased K-12 education funding, Medicaid expansion and legalizing medical marijuana.

Evers’ budget proposal, which would also increase the gas tax, diminish the manufacturing and agriculture tax credit, and limit TIF flexibility for local governments, was roundly criticized by Republican lawmakers who control the Legislature. Following Evers’ speech, GOP legislative leaders said they may scrap Evers’ budget proposal and start from scratch. As such, many of the governor’s proposals are unlikely to be included in the final budget bill passed by the Legislature.

As we anticipated, there are numerous economic development-related provisions included in Evers’ budget that will be considered by lawmakers over the next several months. Although the WEDA Government Affairs Team is still in the process of fully analyzing the proposed budget bill, we would like to bring the following budget provisions to your attention:

Economic Development Incentives:

  • Limit the percentage of a TIF district’s project costs that can go toward cash grants for developers to 20 percent.
  • Require TIF project plans to contain “stress tests” in their financial projections so that local governments better understand the risks of TIF utilization if projects fail to materialize as promised.
  • Limit the manufacturing portion of the Manufacturing and Agriculture Tax Credit to only apply to the first $300,000 in qualified production activities income for each firm qualifying for the credit.
  • Modify the business development tax credit to provide an additional 5 percent incentive for renewable energy generation or energy efficient projects.
  • Modify the state historic tax credit to apply the $3.5 million individual credit limit on a per-project basis, as opposed to the current law per-parcel basis.

Wisconsin Economic Development Association:

  • Require WEDC to annually award at least $1,000,000 in grants to regional economic development organizations to be spent on economic development activities, including marketing activities. Under current law, WEDC is required to provide grants to these organizations, but there is no minimum level of grants that must be awarded and the grants may be used only to fund marketing activities.
  • Restore prior law (effectively repealing 2017 Wisconsin Act 369) that would set composition of the WEDC Board composition at 12 members, giving the sitting governor control over the board.
  • Restore prior law (effectively repealing 2017 Wisconsin Act 369) that would authorize the governor to immediately appoint the WEDC CEO.
  • Require WEDC to post a searchable database of all final contracts and amendments to contracts on its website within 30 days of the finalization of such contracts or the amendment to such contracts.
  • Require WEDC to include terms in each of its tax credit contracts over $5 million in total value specifying that the recipient must provide a full update of its project plans for employment and investment if there are any material changes to the activities negotiated in its contract.
  • Require WEDC to transmit within one week any repaid tax credits to the Department of Administration for deposit in the general fund.
  • Require WEDC to report only the creation and retention of those jobs that meet the salary, benefit and other requirements of the programs for which they are being reported.
  • Require that no loan, grant or tax credit awarded by WEDC may be used to relocate jobs outside Wisconsin or reduce net employment by a recipient in Wisconsin.
  • Reestablish the cap on the enterprise zone jobs credit program. There is currently no cap on the program, but the governor’s budget proposal would implement a cap at 35 zones and also allow expiring or revoked zones to be utilized again for new projects.

Transportation and Infrastructure 

The budget bill proposes establishing more sustainable funding -and additional expenditures for transportation projects in Wisconsin, including new investment in highways, rails and harbors, and transit. Overall, Evers’ budget bill invests $6.6 billion for transportation. Please find below an overview of transportation revenue and expenditure proposals in the budget bill:

  • Increase the gas tax by 8-cents per gallon, which would raise $485 million over the biennium.
  • Reestablish indexing of the gas tax (tied to the consumer price index) beginning on April 1, 2020. It would raise $42 million over the biennium.
  • Increase Heavy Truck Registration Fees by 27 percent, raising $36 million over the biennium.
  • Increase the title fee on original or transfer vehicle titles, raising $36 million over the biennium.
  • Increase funding for the state highway rehabilitation program by $320 million for a total investment of $1.9 billion for the 2019-21 biennium.
  • Completion of the Zoo Interchange and enumeration of the expansion of I-43 from two lanes to three in each direction in Milwaukee and Ozaukee counties.
  • Provide $22 million in new funding for the state’s 81 transit systems.
  • Increase funding for the Local Road Improvement Program by $1.9 million.
  • Increase General Transportation Aids by 10%, which is more than $66 million over the biennium.
  • Provide $30 million in transportation-fund general obligation bonding for freight railroad preservation and a total of $52 million in support for the Harbor Assistance Program.

The budget bill proposal also recommends significant new investment in expanding access to high-speed internet across the state:

  • Increase funding for the Broadband Expansion Grant Program by more than $60 million over the biennium, for a total of $78.6 million.
  • Create a statutory statewide broadband speed goal of 25 megabits per second download and 3 megabits per second upload for all homes and businesses by 2025.

Local Government and Property Taxes

  • Close the Dark Store property tax loophole.
  • Modify the valuation factor under county and municipal levy limits to allow county and municipal governments to increase levies by the greater of the percentage change in equalized value due to new construction or 2 percent, beginning with levies set in 2019.
  • Increase funding for the County and Municipal Aid Program by 2 percent starting in 2020.
  • Remove the levy limit negative adjustment for fees for certain municipal services.

Workforce

  • Increase the minimum wage (from 7.25 per hour) to $8.25 in 2020, $9.00 in 2021, and an additional 75-cents per year in the next biennium. The proposed budget bill would also establish a task force to examine raising the minimum wage to $15 per hour.
  • Restore the state’s prevailing wage law for state and local projects of public works.
  • Eliminate Wisconsin’s “right to work” law.
  • Transfer grant programs intended for school districts from the Department of Workforce Development to the Department of Public Instruction. Transferred programs include career and technical education incentive grants, career and technical education completion awards, technical education equipment grants, and teacher training, recruitment and development grants.

The WEDA Government Affairs Team continues to fully analyze Gov. Evers’ 2019-21 state budget proposal and is in the process of developing an effective advocacy strategy. We will continue to provide regular updates throughout the budget process.

By | 2019-03-02T23:45:44+00:00 March 2nd, 2019|Uncategorized|0 Comments

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