Brian Dake

Consumer spending bounced back sharply in January as rising inflation and a post-holiday surge kept cash registers ringing, the Commerce Department reported Wednesday that retail sales for the month rose 3.8%.

Excluding auto sales, the retail gain was 3.3%, after falling 2.8% in the previous month.

Online shopping contributed the most on a percentage basis, with non-store retailers seeing a gain of 14.5%. Furniture and home furnishing sales increased 7.2%, while motor vehicle and parts dealers saw a 5.7% rise.

Food and drinking establishments, considered a barometer for the pandemic-era economy, saw sales dip just 0.9% for the month despite the major escalation in Covid cases fueled by the omicron spread.

“Consumers say they are worried about inflation, but they continue to spend,” PNC’s chief economist, Gus Faucher, wrote. “Even taking into account the December decline, retail sales in recent months have been increasing much faster than prices, so households are purchasing larger volumes of goods and services, not just paying higher prices.”

Sales at sporting goods, music and book stores fell 3% while gasoline station receipts were off 1.3% as a tick down in fuel costs saw prices at the pump move lower.

On a year-over-year basis, retail sales overall rose 13%, pushed higher by a 33.4% surge in gasoline station sales and a 21.9% burst in clothing stores.

During his 2022 State of the State address tonight, Gov. Tony Evers announced he will be signing an executive order calling the Legislature to meet in a special session to take up his plan to use a portion of the state’s $3.8 billion projected surplus to send a $150 surplus refund to every Wisconsin resident, provide targeted relief for childcare and caregiver costs, and invest in education while holding the line on property taxes.

Gov. Evers’ plan includes sending every Wisconsin resident $150 to help address rising costs Wisconsin families are experiencing and as businesses face challenges getting supplies and resources. Every Wisconsinite will be able to receive the full surplus refund, including for each of their dependents. A family of four, for example, would receive $600 under the governor’s proposal. Most Wisconsinites would have to take no action to receive the refund, which would be distributed through information provided by an individual on their tax returns. For those who do not plan to file an income tax return, including those who receive Social Security benefits, the Department of Revenue will set up an online portal through which they may file claims for the refund.

In addition to measures aimed at addressing rising costs, Gov. Evers’ plan also includes additional provisions aimed at reducing the costs for childcare and caregiving—key proposals to help support Wisconsin’s workforce and address barriers to employment. Gov. Evers’ plan proposes expanding the newly created Child and Dependent Care Credit from 50 percent of the federal credit to 100 percent. This will provide nearly $30 million in tax relief to 107,000 Wisconsinites who claim the federal credit, or about $274 per filer. Most people who are eligible for the credit could receive up to $600 if they are claiming it for one qualifying individual’s expenses or $1200 for two or more qualifying individuals’ expenses.

Additionally, Gov. Evers is proposing to create an income tax credit for qualified expenses incurred by a family caregiver. A majority of Wisconsinites are in income ranges to be eligible for the credit, and most filers will receive up to $500, while married-separate filers will receive up to $250. The governor’s plan would provide an estimated more than $100 million in tax relief to Wisconsinites who are experiencing increased costs and expenses caring for a family member. The governor originally proposed creating the Caregiver Tax Credit in his 2021-23 biennial budget, but the move was rejected by Republicans in the Legislature.

The governor’s plan also invests nearly $750 million into education at every level to continue improving school quality and address the state’s achievement gap while providing $188 million in property tax relief.

Despite some recent years of trade disruptions and supply chain challenges, I am proud of how Wisconsin’s agriculture industry has remained resilient and competitive in providing high-quality agricultural products to the world.

Wisconsin hit a new record for agricultural exports in 2021, exporting an all-time high of more than $3.96 billion. All product categories saw large increases from 2020, with dairy products up 14.6 percent, meat product exports up 10.4 percent, and crop product exports up 20.4 percent. This is not only a boost for our state’s economy, but for the producers who passionately produce agricultural products, agricultural workers who support these producers, agribusinesses, and other industries, such as transportation, that support Wisconsin agriculture.

This record-breaking year presents an incredible opportunity and the momentum needed to strengthen our state as a leader for agricultural exports. Given the challenges that come with exporting, such as tariffs and container shortages, the success and future of Wisconsin’s agricultural exports is not set in stone. Investments in promoting agricultural products and the Wisconsin brand across the world are vital to paving the way for our state’s success in exporting agricultural products.

A federal judge in Louisiana on Friday shot down President Biden’s interim estimates on the social costs of greenhouse gas emissions, dealing another judicial blow to the administration’s climate agenda.

A 2021 executive order directed agencies to use an interim metric that estimated costs to society that would come from burning carbon in environmental permitting and regulatory decisions. But Louisiana, Alabama, and eight other states “sufficiently identified the kinds of harms” needed to block the metric’s use, the U.S. District Court for the Western District of Louisiana ruled.

“The Court agrees that the public interest and balance of equities weigh heavily in favor” of ordering the administration to disregard the calculations Judge James D. Cain Jr. wrote in the opinion.

States challenged the temporary cost, claiming Biden didn’t have the authority to issue such a significant decision without notice-and-comment rulemaking. They also claimed that its use in decisions would hamper their economies through higher costs and more stringent standards.

The Justice Department unsuccessfully tried to argue that the states’ claims were premature until the metric was actually used in a decision. The DOJ said it’s “reviewing the decision” and declined to comment further.

The court did make it clear that it was ruling on whether Biden had flown against administrative procedures with his interim metric and not on “the scientific issues regarding greenhouse gas emissions, their effects on the environment, or whether they contribute to global warming.”

On Wednesday, the Internal Revenue Service (IRS) announced the suspension of more than a dozen additional letters, including the mailing of automated collection notices normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a tax return. These mailings include balance due notices and unfiled tax return notices.

The IRS entered the 2021 tax filing season with several million original and amended returns filed by individuals and businesses that have not been processed. The IRS will continue to assess the inventory of prior year returns to determine the appropriate time to resume the notices.

Some taxpayers and tax professionals may still receive these notices during the next few weeks. Generally, there is no need to call or respond to the notice as the IRS continues to process prior year tax returns as quickly as possible.

However, if a taxpayer or tax professional believes a notice is accurate, they should act to rectify the situation for the well-being of the taxpayer. For example, the IRS cautions people with a balance due that interest and penalties can continue to accrue. In addition, IRS employees may in select circumstances issue notices to taxpayers to resolve specific compliance issues.

The IRS does not have the authority to stop all notices as many are legally required to be issued within a certain timeframe. The IRS encourages those who have a filing requirement and have yet to file a prior year tax return or to pay any tax due to promptly do so as interest and penalties will continue to accrue.

Consumer prices rose 7.5 percent annually by the end of January, according to data released Thursday by the Labor Department, the fastest rate since February 1982. Consumer prices also rose 0.6 percent in January, the same rate as in December, after falling for three consecutive months.

Price hikes for food, electricity, and shelter contributed the most to January’s inflation jump, the Bureau of Labor Statistics said Thursday. Food prices rose 0.9 percent in January, nearly twice December’s gain of 0.5 percent, and energy prices also rose 0.9 percent as higher electricity rates offset declines in gasoline and natural gas prices.

Food prices are 7 percent higher, gas prices are 40 percent higher, and energy prices in general are 27 percent higher than in January 2021, according to the Labor Department.

The Fed has also laid the groundwork to raise interest rates several times this year as inflation rises well above their annual average target of 2 percent. The bank all but formally confirmed it would raise interest rates in March from the current baseline, which was set near zero due to the ongoing pandemic.

Most Republican lawmakers and an array of economists had urged the Fed to begin hiking interest rates last year, though Fed officials resisted over concerns it would limit the return of workers to the labor force. The Fed, however, pivoted sharply in December as inflation continued to spike and pose potential threats to future job gains.

A group of Republican lawmakers is hoping to block local governments from using a relatively new approach to fund road maintenance through what are known as transportation utility fees.

On Wednesday, Rep. Mark Born, R-Beaver Dam, and Sen. Duey Stroebel, R-Saukville, introduced bills that would punish local governments that enact transportation user fees by forcing them to lower the amount they can collect from property taxes by however much they raise from the new transportation fees.

A statement from Stroebel’s office said lawmakers have worked to ensure a favorable tax climate and have increased local transportation aids in recent state budgets.

“A municipality must not be allowed to circumvent the popular levy limit law through the creation of a transportation utility to extract more money from taxpayers,” Stroebel said. “The option of a referendum is always available if the people actually want higher taxes.”

At the same time, the conservative Wisconsin Institute for Law and Liberty is arguing in Outagamie County Circuit Court that transportation utility fees are unlawful taxes. The firm is suing the Town of Buchanan for adopting a transportation utility district and corresponding fees in 2019.

A 2020 legal opinion written by the League of Wisconsin Municipalities states that local governments have “broad statutory and/or constitutional home rule powers to create a transportation utility and charge property owners transportation utility fees.”

Wisconsin spent or made plans for some $2.8 billion in federal pandemic aid funding through the end of 2021, and the state has more than $1.8 billion in federal funds that have yet to be spent.

Gov. Tony Evers this week issued an update on how the state has spent the COVID-19 relief funding it received as a result of federal aid bills passed in 2020 and 2021. The data show the state has spent or allocated the great majority of aid intended for businesses, schools and local governments. What remains of the $4.6 billion the state was granted include major investments in broadband expansion, health care and neighborhood infrastructure. Some of the new grants are set to be announced this month.

According to data released by the governor’s office, some of the federal funds yet to be allocated in Wisconsin include:

• $205 million in Neighborhood Investment Fund grants, which could go to the creation of new buildings or other infrastructure aimed at “help(ing) neighborhoods recover from negative effects of the COVID-19 pandemic.”
• $125 million in workforce innovation grants aimed at addressing worker shortages.
• $83.9 million for broadband access expansion. The state has spent or allocated $21 million of a total $113.7 million in funds.
• $75 million for health care infrastructure, especially in areas disproportionately affected by COVID-19.
• $59 million in public safety grants, including grants to fund victim services and violence prevention initiatives.

The data release comes as Republicans in the Legislature are proposing a constitutional amendment that would give the Legislature greater oversight on the spending of federal funds. In Wisconsin, the governor has authority to allocate federal funding. Given the large amounts of aid that have come from federal pandemic relief, this has meant an unusually large amount of spending in the last two years was overseen by Evers rather than allocated through the state’s budget process.

The constitutional amendment proposal passed the state Senate and may pass the Republican-controlled Assembly as well. But in order to change the state constitution, it would have to pass two consecutive sessions of the Legislature and win a statewide popular vote. That process would necessarily take years.

Short of amending the constitution, some lawmakers are calling for more information about how funds have been spent. On Tuesday, a legislative committee considered a proposal to have the state’s Legislative Audit Bureau review the state’s use of COVID-19 funding. That audit proposal, which appeared to have bipartisan support, would be aimed at assessing whether funds were used appropriately.

Last Thursday, the United States Department of Homeland Security (DHS) announced the establishment of the Cyber Safety Review Board (CSRB), as directed in President Biden’s Executive Order 14028 on Improving the Nation’s Cybersecurity.

The CSRB will review and assess significant cybersecurity events so that government, industry, and the broader security community can better protect our nation’s networks and infrastructure. The CSRB’s first review will focus on the vulnerabilities discovered in late 2021 in the widely used log4j software library.

The CSRB’s first report, which will be delivered this summer, will include the following:

• a review and assessment of vulnerabilities associated with the Log4j software library, to include associated threat activity and known impacts, as well as actions taken by both the government and the private sector to mitigate the impact of such vulnerabilities;
• recommendations for addressing any ongoing vulnerabilities and threat activity; and,
• recommendations for improving cybersecurity and incident response practices and policy based on lessons learned from the Log4j vulnerability.

To the greatest extent possible, the CSRB will share a public version of the report with appropriate redactions for privacy and to preserve confidential information.

The CSRB is committed to transparency and will conduct its review in the public interest. Board meetings are limited to members, staff, and invited subject matter experts. Whenever possible, the CSRB’s advice, information, or recommendations will be made publicly available, with any appropriate redactions, consistent with applicable law and the need to protect sensitive information from disclosure. The CSRB does not have regulatory powers and is not an enforcement authority. Instead, its purpose is to identify and share lessons learned to enable advances in national cybersecurity.

A diverse coalition consisting of union workers, farmers, small business owners and forest products companies is showing strong support for a pipeline project in northern Wisconsin that was the subject of a public hearing being held by the Wisconsin Department of Natural Resources on February 2.

The coalition, known as the Wisconsin Jobs and Energy Coalition, announced that supporters of the Enbridge Line 5 relocation project have already submitted over 3,800 comments to the Wisconsin DNR in favor of approving the necessary permits to move the project forward.

The Wisconsin DNR released a Draft Environmental Impact Statement on Enbridge’s proposed Line 5 relocation on December 16th, beginning the public comment period. Initiated at the request of a Wisconsin tribe, the $450 million, 41-mile long pipeline project seeks to continue the operation of this vital energy corridor. Moving about 540,000 barrels of crude oil and natural gas liquids a day, Line 5 is a critical part of the Upper Midwest’s gasoline, diesel, jet fuel and propane infrastructure.

In addition to being part of the state’s critical energy infrastructure, an independent economic impact study estimated the Line 5 relocation project would add $135 million to Wisconsin’s economic output, increase state tax revenues by millions and support more than 1,000 jobs in the State of Wisconsin. Enbridge has signed a letter of intent with Wisconsin-based Michels Pipeline, Inc. as the mainline contractor for the project.

Organizations planning to participate in the public hearing to support the project include: Wisconsin Propane Gas Association, APEX, Futurewood, Great Lakes Timber Professionals Association, Johnson Timber, North Central States Regional Council of Carpenters, UA Local 11, Wisconsin Counties Association, Wisconsin Independent Businesses, Wisconsin Paper Council, Hawk Industries, Wisconsin Building Trades Council, Wisconsin Laborers’ District Council, Michels, Wisconsin Pipe Trades, Wisconsin Farm Bureau Federation, Operating Engineers Local 139, Wisconsin Manufacturers and Commerce, Midwest Food Processors Association and Construction Business Group.