Special Interests Reap State Budget Policy, Spending Breaks

Proposed bill ushers bounty hunters, faster cable TV cutoffs and more junk mail

June 13, 2013

Madison – The proposed 2013-15 state budget the legislature considers this month benefits special interests by making it easier for them to get millions of dollars more in state grants, tax breaks and contracts, threaten water supplies, send people more junk mail, cut off your cable television faster and let bounty hunters work in the state, a Wisconsin Democracy Campaign review found.

Powerful business, manufacturing, construction, transportation, natural resources, health care, road building and real estate interests among others contributed $53 million between 2007 and 2012 to candidates for statewide office and the legislature. These same wealthy special interests also financed groups that spent an estimated $72.1 million on outside electioneering activities to help candidates for statewide office and the legislature win elections.

The provisions reviewed by the Democracy Campaign were in the budget bill crafted by Republican Governor Scott Walker or added in recent weeks by the legislature’s budget-writing Joint Finance Committee. The budget can still be changed – these and other items can be removed and added – by the legislature in the coming days and finally by Walker with vetoes later this summer.

But these special interests have invested a lot of money to help the governor and legislators get and keep their jobs. Special interests with a stake in these and other budget items contributed $14.1 million between 2007 and 2012 to current legislators, including $10.6 million to GOP lawmakers who control the legislature by a comfortable margin – 18-15 in the Senate and 60-39 in the Assembly. Walker received $22.3 million from these powerful special interests to help him capture the governor’s office in 2010 and win a 2012 recall contest to stay in office.

Here are some of the proposed budget items that benefit special interests:

Private School Vouchers – Expand the school voucher program statewide and increase state spending on each pupil in the program from $6,442 a year to $7,210 for pupils in kindergarten through eighth grade and $7,856 for each high school student. School vouchers currently serve about 25,000 pupils in Milwaukee and Racine and already cost taxpayers about $158 million a year to let some families send their children to private and religious schools. This expansion would increase spending on school vouchers by about $73 million in the next two years.

Selling State Property – Allow the governor with legislative approval to sell state property, including office buildings, prisons, power plants, highways and university dormitories. The transactions would require state Building Commission and legislative approval but would not require competitive bidding. Critics contend the budget provision could potentially put iconic Wisconsin treasures up for sale, such as the State Capitol, to reward special interests and other large campaign contributors and force taxpayers to pay more for services and benefits from state resources they already own.

Transportation – Borrow about $1 billion and transfer about $445 million in taxpayer dollars and money from environmental funds to pay for road projects and other transportation programs.

Health Care – Reject $119 million in federal aid that would have insured 85,000 more people through Medicaid. Instead, pay Wisconsin hospitals up to $73.5 million to treat patients who aren’t covered by Medicaid under this action and cannot afford private insurance. The GOP-controlled legislature and Walker concocted this plan after hospitals complained they would lose money because the governor, who strongly opposes the new federal health care program, refused a federally-funded expansion of Medicaid.

Large Wells – Bar people from challenging construction of large wells, such as those used for iron ore and sand mining and factory farms, if a regulator decided not to consider the cumulative environmental impact on neighbors’ wells.

Defective Products – Limit the ability of people harmed by a defective product to sue manufacturers. This provision further nullifies the effect of a 2005 Wisconsin Supreme Court decision that allowed victims of lead poisoning to more easily sue paint manufacturers. The legislature changed state law in 2011 so the court decision would not affect future cases, but this provision retroactively changes product liability laws to restrict lawsuits filed against businesses between 2006 and 2011.

Private School Tuition – Create a tax deduction for parents who want to send their children to private schools. The proposal would allow deductions of up to $4,000 a year for grade school children and $10,000 a year for high school children that will cost state taxpayers $30 million in 2014-15.

Bounty Hunters – Create a five-county private bail bond program for five years, and then allow it to go statewide. Bail bondsmen were banned in Wisconsin in 1979 and the plan is almost universally opposed by the law enforcement and judicial communities. But the proposal has legs because of the American Legislative Exchange Council, a corporate bill mill that connects state legislators nationwide with wealthy special interests to devise pro-business legislation. One of ALEC’s top officials runs a bail bond company.

Payday Loans – Define “default” for a payday loan so lenders can collect after a debt is outstanding for 10 days rather than 40 days under current law.

CableTV – Repeal current law that prohibits cable companies from cutting off service for an unpaid bill until the bill is at least 45 days old.

Economic Development Credits – Reduce state income and franchise taxes by $12.7 million by increasing the economic development credits the state gives to businesses from $128 million to as much as $203 million and modify the program to make it easier to get these breaks. The modifications include allowing companies to receive credits for creating part-time jobs; reducing the value of the businesses’ property in order to be eligible for credits; and eliminating the requirement for a business with less than 500 workers from being an original equipment manufacturer. The budget also eliminates the $47.5 million limit on tax credits allowed under the Angel Investors Tax Credit for business start-ups, at a cost of $5 million.

State Investment Fund – Create a $25 million fund for investing in other capital funds which invest in Wisconsin business start-ups and emerging companies.

Business Operating Losses – Allow net operating losses to be written off for up to 20 years and carried back for two years under the individual income tax. This change will save businesses $8.5 million in taxes. Currently business losses may be carried forward for up to 15 years, and no carry-backs are allowed.

Development Surcharge – Eliminate the economic development surcharge on farms, businesses and individuals that have $4 million or more in annual gross receipts. Economic development surcharges range from $25 to $9,800 and will save those businesses $8 million a year.

Great Lakes Pollution – Increase spending by $5 million to remove sediment from Lakes Superior and Michigan that was contaminated by pollutants from businesses.

Residency Requirements – Prohibit local governments from having residency rules that require their employees to live in the community where they work or are assigned. This provision was originally sought for just the city of Milwaukee by its police and firefighter unions.

Fattening Food – Prohibit local governments from restricting food and beverage sales based on calories, portion size and nutritional value.

Erosion Control – Prohibit local governments from enacting erosion control rules stricter than state standards.

CellPhoneTowers – Limit local government regulations on the siting of cell phone and radio towers.

Shoreline Development – Legally define the city of Milwaukee’s shoreline so a developer’s high-rise project can move ahead over the objections of preservationists.

NorwegianCulturalCenterProvide $1 million in state bonding to help build the Norskedalen Nature and Heritage Center in Vernon County.

MaritimeMuseum – Provide a $5 million grant from state bonding to help build a Wisconsin Maritime Center of Excellence sought by the Marinette County Association for Business and Industry.

Printing, Junk Mail Exemptions – Create a $2.3 million sales and use tax exemption for printing and binding books and pamphlets and commercial printing and expand the sales and use tax exemption for the sale of advertising and promotional direct mail – also known as junk mail.

Biogas Exemption – Create a property tax exemption for biogas energy systems.

Research Exemption – Create a $900,000 a year sales and use tax exemption for property used to conduct biotechnology or advanced manufacturing research.

Contractor Exemption – Create a $500,000 a year sales tax exemption for property and taxable services sold by contractors in certain contracts.

Cheese Exemption – Create a tax exemption for property used to age cheese.

Outdoor Advertising – Establish new rules for relocating outdoor advertising signs displaced by state highway projects.

Contractor Registration – Eliminate the $115 contractor registration fee and the requirement that no one may act as a construction contractor unless registered with the state. The fee, which is paid every four years, was expected to pull in $485,000 over the next two years and pay for building code enforcement and inspecting commercial and residential buildings and plumbing, electrical, heating and fire safety systems.

Regulate Health Insurance Advisors – Create state licensing, training and financial responsibility requirements for health care consultants who advise consumers about coverage, financial assistance for coverage and other information about the federal Affordable Care Act. The policy provision was applauded by health insurers and agents who prefer that consumers deal with insurance agents because they would add policyholders.

Boat Break – Eliminate the Department of Natural Resources’ authority to set a fee for boats 79 feet or longer to discharge ballast into Wisconsin waters.

Crane Games – Repeal state regulation of crane games, which are arcade devices usually filled with stuffed animals and other small toys that people try to retrieve with a claw or hook.