State Budget highlights

 After Wisconsin Governor Tony Evers issued his 65 page veto message on July 3, the final two-year Wisconsin state budget for 2019-21 weighs in at 214 pages and spends $81.5 billion.
   So what's the final result for issues that impact the business community? Besides including the planned UWEC Science Building in the state's capital budget, the biennial budget sets the course for the state in education, infrastructure and workforce development.

Here's a recap of the key highlights of Wisconsin's budget process and the final result. 

The process

• Democratic Governor Evers proposed his version of the 2019-21 state budget during an address on February 28.  
• The Legislature then took up the budget, with its 16-member Joint Finance Committee (JFC) being holding hearings and drafting its version of the document.  JFC is made up of 12 Republicans and 4 Democrats, with half from the Assembly and half from the State Senate.
• The Legislature's version passed only Republican votes.
  • Joint Finance Committee: 12-4 on June 20
  • Assembly: 60-39 on June 25 (with 3 Republican “nos”)
  • Senate 17-16 on June 26 (2 Republican “nos”)
• Signed July 3 by Governor Evers with 78 partial vetoes (Veto message: 65 pages). The Wisconsin Governor has one of the most powerful veto pens in the nation.
• Overall, the new budget totals $8.1 billion, a 5.6% increase, over the previous budget. It covers  July 1, 2019 to June 30, 2021. 

As an interesting comparison, even though control of government is split between a Democratic Governor and Republican Legislature, the final budget was passed by the legislature before the end of the fiscal year, with the Governor signing it on July 3. In 2017, with Republicans controlling both the Governorship and the Legislature, the budget was not completed until September. In that year, the Assembly and the Senate could not initially agree on a path for transportation funding. 

More information: 
2019 Wisconsin Act 9 (Final approved budget passed by the Legislature with vetoes shown)
Governor's Budget as proposed on February 28
Governor's Veto Message (65 pages, including list and explanation of partial vetoes, Governor Tony Evers)
'Politics is about relationships': Gov. Evers, GOP had trouble meeting (Racine Journal-Times)

Governor Makes 78 Partial Vetoes To GOP-Backed Spending Plan (Wisconsin Public Radio)
Evers pumps more money into K-12 through partial vetoes as he signs budget (WisPolitics.com)
A look at Gov. Tony Evers’ partial budget vetoes (Associated Press)
Video: Wisconsin Eye Capitol Roundtable discussion of the final state budget (Wisconsin Eye)

Here are relevant comments upon completion of the final budget: 
 
Governor Evers:

• “I believe the people of our state would have been better off in this budget if we could have found more common ground, even if it meant each of us not getting everything we wanted.”
• "Vetoing this budget would have meant passing up the opportunity to provide investments in special education, the largest general school aid increase in a decade, increased revenue to fix our roads, and critical investments in broadband expansion, Wisconsin shares, child welfare, rural hospitals, and transit, among other important priorities."
• “I am exercising my broad constitutional authority to reshape this budget, to address areas where the Legislature failed to do the right thing or padded the budget with earmarks to buy votes, and to align it more closely with the budget we put together with the people of Wisconsin. This budget is a down payment on The People’s Budget and the priorities of the people of Wisconsin.

 
Senate Majority Leader Scott Fitzgerald:

• "This is a good budget for the state of Wisconsin. (Evers) basically signed the Republican version of the budget today."
  
  

Assembly Speaker Robin Vos

• “Governor Evers seems intent on trapping people on welfare. Because of his partial vetoes, he’s starving programs that incentivize work, undermining their implementation and skirting the law. We know people support drug testing and work requirements for welfare recipients and this budget ignores that fact."

 
Assembly Transportation Chair Bob Kulp (R-69)

• “Governor Evers signed a good-enough budget into law that we worked hard on in the Legislature. There were some disappointments in some of his vetoes, but overall, we have certainty moving forward at the state.”

Highlights of the final budget 

UWEC Science Building is "in" the capital budget
   Among the most closely-watched budget items for our region was the $109 million in the capital program for Phase I of UWEC's proposed new Science and Health Sciences Building, which remains in the budget and now moves forward.
   Reacting to the news, UWEC Chancellor James Schmidt said, "A new Science and Health Sciences Building will allow our master collaborative research agreement with Mayo Clinic Health System to flourish. Together, and with this investment from the state of Wisconsin, UW-Eau Claire and Mayo Clinic are poised to tackle pressing research questions and needs for innovation in rural healthcare. Phillips Hall’s days are numbered, and I look forward to beginning the planning and design process for this new building as soon as possible."

All state building projects got $1.9 billion, less than the $2.5 billion proposed by Evers but above the less-than-$1 billion level in most recent budgets.

Northwest Wisconsin loses provision that would have provided new mental health beds
   The Legislature's version of the budget had provided a $15 million earmark for a northern Wisconsin regional crisis center to provide mental health beds at HSHS facilities in Eau Claire and Chippewa Falls, to avoid the need for local authorities to transfer patients across the state for treatment. In his partial vetoes, Evers moved the money instead to help expand the Mendota Juvenile Treatment Center, which is also part of the overhaul of the state’s youth prison system. 

Taxes

• $450 million in income tax cuts funded by imposition of the online sales tax and the anticipated surplus
• Lowest 4% rate drops to 3.89% in 2019 and 2.76% in 2020
• Next lowest 5.84% rate drops to 5.08% in 2019 and 4.93% in 2020
• Average savings per taxpayer: $91 for 2019, $136 for 2020
• Added $6.2 million to the lottery credit to ensure property tax bills drop nominally

  
Transportation

• Evers had proposed about $600 in additional revenue by increasing the gas tax by 8 cents and indexing it, partly offset by eliminating the minimum markup law. Proposed $338 million in bonding.
• Legislature: Instead of accepted Ever's proposed additional funding mechanisms, the Legislature passed $484 million in new revenue: Vehicle title fees raised by $95, auto registration fee increased by $10. Also provides $87.8 million in general fund transfers and $326 million in bonding.
• $66 million of budget increases local road aids by 10% (proposed by Evers and accepted by Republicans)

Transportation is one area where there were a number of partial vetoes. Perhaps the most significant, the Governor reduced the legislature-passed $90 one-time million GPR transfer to transportation for local roads to $75 million. He then ordered DOT not to allot the funds, which then allows DOT to determine it will be used. 

"The effect of this partial veto will be to allow the department to prioritize the most critical transit and transportation needs," said Evers in his veto message. Assembly Transportation Chair Bob Kulp said, “Evers’ veto creates a DOT slush fund of $75 million instead of directing it to local roads as intended.”

Other transportation-related partial vetoes included:

• Vetoed: $2.5 million to study implementing a mileage-based fee and/or tolling
• Vetoed: Reducing heavy truck fees for 6-8,000 lbs from $106 to $100; and 8-10,000 lbs from $155 to $100
• Vetoed: Allowing Tesla to sell direct to consumers
• Vetoed: Earmarks to enumerate a bridge in Kaukauna and an I-41 expansion/interchange in Brown county
• Vetoed: Reduced amount of specificity in the statute as part of a mandate for DOT to test a “design-build” process
• Vetoed: Restrictions on local regulations of quarries

There was an overall theme to Evers' partial vetoes where he eliminated specific directions from the legislature for the use of various appropriations to give his administration more flexibility in their use.
 
Education and Workforce Development

• K-12 Schools:  Overall, they receive additional funding of $570 million. The Legislature had passed a funding increase of $505, including $97 more for students with disabilities. Evers had proposed $1.4 billion including an additional $600 for special education. in his veto, Evers found a way to increase per pupil state aid by $87 million using his partial veto, although he changed other funding to make for total additional K-12 funding of $570 million. 
• UW System. Funding increase of $57.7 million, about half of what Evers proposed. The tuition freeze is continued. As noted above, the UW's capital funding request of about $1 billion was largely retained. 

• Technical College System: $25 million increased funding.
• Lawmakers approved an additional $12.5 million for various worker-training related programs, including Youth Apprenticeships and other.s. 

 Health Services and Insurance

• Overall $588 million in new state funding for health care programs, including $74 more for nursing homes and $94 million for personal care workers
• The Governor had proposed Medicaid expansion by accepting $1 billion in federal funds, which he said would have freed up $324 million in state funds for other uses. This was rejected by the legislature.
• Vetoed/Changed: Gov redirected a $15 million earmark for a northern Wisconsin regional crisis center to instead help expand the Mendota Juvenile Treatment Center, which is also part of the overhaul of the state’s youth prison system. (These are the mental health beds that would have gone to HSHS in Eau Claire and Chippewa Falls.)
• Partial veto: $800,000 Marquette dental health scholarships to encourage graduates to practice in dental shortage areas. The Governor eliminated the specificity to Marquette dental students and specific geographic requirements: “I object to limiting the funding to one health care practice area and I believe it is important to provide additional resources to support health care professionals practicing in all health care shortage areas across the state.”
• Partial veto: The Governor eliminated funding for FoodShare Employment and Training programs related to work requirements for able bodied adults with school age dependents, although the requirement continues for those without school age children
• Vetoed: Funding for drug screening for FoodShare recipients

 
Agriculture, Tourism and Economic Development

• Broadband: Provides $48 million to expand the Broadband Expansion Grant program

​Additional information and analysis:
Video: Wisconsin Eye Capitol Roundtable discussion of the final state budget (Wisconsin Eye)
Video: The "Insiders" on who won the budget battle (WisPolitics.com)
Video: Rewind - The Week in Madison (Wisconsin Eye/WisPolitics.com)
Podcast: #Localgovmatters (Wisconsin Counties Association)

Posted by Scott Rogers, Governmental Affairs & Workforce Director
rogers@eauclairechamber.org