News of the Day

Governor Scott Walker announced today that the Department of Workforce Development’s (DWD) latest estimates show that Wisconsin employers who are covered by the state’s Unemployment Insurance (UI) program are estimated to experience a reduction of $45 million in UI taxes for tax year 2019 when compared to tax year 2018.

This brings the total UI tax savings for covered employers to $744 million since 2013. The savings have been achieved through a combination of tax schedule changes and better experience ratings for employers due to the strong Wisconsin economy.

In addition to the estimated $744 million reduction in UI taxes paid by employers, the UI Trust Fund achieved a balance of $1.7 billion in July of 2018, its largest positive balance since July 2001.

This year could see the most referendums and the highest amount of total referendum funding approved since 2001, according to a report earlier this month by the Wisconsin Policy Forum.

All told, 61 school districts in the state are using a total of 82 questions to request $1.4 billion in debt and revenue limit increases. Of those, 44 are asking to issue debt totaling $1.25 billion, according to WPF’s count.

Twenty-four districts are also asking to temporarily exceed state revenue limits to generate up to $157 million, while an additional 14 are asking for permanent exceptions to state revenue limits to raise about $26.1 million per year.

Since 1999, there’s been some correlation between a growing economy and the willingness of school districts to propose — and their voters to approve — referendums. Districts have also tended to ask for bigger referendums during good economic times.

WPF, a nonpartisan policy research organization, points to a number of factors that influence referendums, including aging facilities and declining enrollments, especially in rural areas, that result in less state funding.

Also, “school funding decisions made by state officials do play a role in how common referenda are or aren’t,” said WPF research director Jason Stein. “But the overall health of the economy and the individual district’s situation clearly play important roles as well.”

The economy expanded at a 3.5 percent annual rate in the third quarter, the Commerce Department said Friday. That’s slower than the second quarter’s blockbuster 4.2 percent, but it puts the economy on pace for the fastest annual growth in 13 years.

Consumer spending jumped at a 4 percent rate in the July-September quarter — the fastest in about four years and topping the 3.8 percent in the prior three months.

Overall growth may have been affected, in part, by Hurricane Florence, which flooded the Southeast U.S. in September. The Commerce Department said Florence resulted in losses of $37 billion in property and equipment.

Exports decreased at a 3.5 percent pace in the third quarter after jumping 9.3 percent in the second quarter. Analysts had cautioned that the previous increase in exports was sparked by looming tariffs by China in its ongoing trade war with the United States.

The booming U.S. economy appears to be reducing dependence on federal health insurance for the poor.

Medicaid enrollment fell for the first time since 2007, declining by about 0.6 percent in fiscal year 2018, and states don’t expect to see much growth in enrollment next year, according to a Kaiser Family Foundation report released Thursday.

States are budgeting for a “minimal” increase of 0.9 percent in 2019, Kaiser said in its annual 50-state survey of Medicaid.

“States largely attribute the enrollment slowdown to a strengthening economy, resulting in fewer new low-income people qualifying for Medicaid,” said Kaiser, a nonprofit group that focuses on health care and health policy.

Federal and state Medicaid spending still grew despite the drop in enrollment. Combined federal and state spending rose by 4.2 percent in fiscal 2018, similar to the previous year’s increase, Kaiser said. States expect a 5.3 percent jump in spending for 2019.

Governor Walker announced that Disaster Unemployment Assistance (DUA) is available to eligible individuals due to a major disaster declared by the President on October 18, 2018. The Department of Workforce Development is accepting applications for DUA from individuals in Crawford, Dane, Juneau, La Crosse, Monroe, Richland, Sauk, and Vernon Counties whose employment or self-employment was lost or interrupted due to severe storms, tornadoes, straight-line winds, flooding and landslides between August 17, 2018 and September 14, 2018.

To be eligible for DUA individuals:

• Must be an unemployed or self-unemployed worker whose unemployment was caused as a direct result of the major disaster declared by the President
• Must be a U.S. national or a qualified alien; and
• Must not qualify for regular unemployment insurance benefits from any state; and
• Must have worked or were self-employed in, or were scheduled to begin work or self-employment in, one of the counties listed above; and
• Must establish that the work or self-employment they can no longer perform was their primary source of income.

Also, eligible to apply for DUA are individuals who:

• Can no longer work or perform services because of physical damage or destruction to the place of employment as a direct result of a disaster; or
• Cannot perform work or self-employment because of an injury caused as a direct result of the disaster; or
• Became the breadwinner or major support of a household because of the death of the head of the household; or
• Cannot work or perform self-employment due to closure of a facility by the federal government.

All DUA applicants must file for regular unemployment benefits first before receiving consideration for DUA benefits. DUA benefits are not payable if an individual is eligible for regular unemployment insurance benefits. Suffering a monetary loss due to damage to property or crops does not automatically entitle an individual to Disaster Unemployment Assistance.

Benefits are based on a person’s earnings for the most recent tax year. As a result, applicants may be asked to furnish earnings data from their most recent federal tax returns when filing a claim. The first potential week payable for DUA benefits is the week ending August 25, 2018.

Workers in the eight counties declared disaster areas, including those who are self-employed in farming or other businesses, must apply for benefits by November 23, 2018. Applications filed after this date will be considered untimely, unless the individual provides good cause for filing after this date.

Individuals who may be eligible for assistance must file a claim online. Go to https://dwd.wi.gov/ui/dua for information on how to file a claim. For help using online services or if you are unable to go online, call the DUA hotline at 608-318-7100 during business hours.

Additional information is available at https://dwd.wi.gov/ui/dua.

The Trump Administration is set to roll out a new policy that could reshape how employers offer insurance coverage.

The proposal would allow companies to use HRAs to reimburse employees’ premiums on the individual health-insurance market up to $1,800. The new policy would apply to small- and medium-sized companies that currently do not offer health insurance coverage to employees, administration officials said.

The proposal is the third part of President Trump’s executive order on ObamaCare and insurance competition from last fall. Two other policies from the order have already been made final: expanding the duration of non-ObamaCare short-term insurance plans, and allowing for employers to form association health plans.

HRAs allow workers to purchase coverage using tax-free dollars. Currently, an HRA can only be used to reimburse an employee or dependents for certain qualified medical expenses.

The new proposal aims to loosen these restrictions, and would allow employees to purchase insurance that doesn’t have to meet ObamaCare’s requirements.

According to the officials, expanding access to HRAs would add an additional 7 million people to the individual market over the next ten years.

The expanded HRA policy will have “guardrails,” officials said. For example, employers will have to provide either an HRA to purchase coverage or traditional employer-sponsored health plan, but not both.

A growing number of positions in state government are funded entirely with federal money, according to a new report from a free-market think tank.

The study from the Milwaukee-based Badger Institute found more than 5,000 full-time positions in state government, not including the University of Wisconsin System, were funded entirely with federal money. That’s up from over 4,000 positions 18 years ago.

Badger Institute President Mike Nichols said many of these employees work in education, health or other public service areas. But, he said, grants often come with strings attached, and nearly a third of the money is sometimes used simply for administration and compliance.

“When (officials are) out there bragging about bringing home this federal money, we should really look at it and question whether that’s really what the people back here, regardless of political affiliation, really want, and whether that money’s really being spent the right way,” Nichols said.

The report found the number of federally funded positions varies widely between state departments.

At 73 percent, the state Department of Workforce Development had the highest percentage of employees funded with federal money, while funding for the state Department of Public Instruction stood at 49 percent, and 19 percent at the state Department of Natural Resources.

Yesterday, Governor Walker announced that President Trump has approved a federal disaster declaration to help individuals and local communities impacted by devastating floods and strong storms that occurred in August and September. Earlier this month, Governor Walker requested federal disaster aid.

“This is welcome news to many people whose lives were impacted by recent flooding,” said Governor Walker. “There still is a lot of work to be done and more assistance that is needed.”

Under the declaration, individuals, families, and businesses in Crawford, Dane, Juneau, La Crosse, Monroe, Richland, Sauk and Vernon counties are now eligible to apply for federal disaster assistance.

Several other counties that also sustained damage from flooding and tornadoes are still under review by the Federal Emergency Management Agency (FEMA) for the Individual Assistance Program. Those counties are Adams, Columbia, Dodge, Fond du Lac, Green Lake, Jefferson, Marquette, Ozaukee and Washington. Governor Walker said the state will continue to work with affected individuals and businesses in those counties to provide disaster relief.

In addition to requesting individual assistance, Governor Walker also requested public assistance for local governments to help recover damage to infrastructure such as roads and bridges. Counties approved for the Public Assistance Program include Adams, Crawford, Dane, Fond du Lac, Green Lake, Iron, Juneau, La Crosse, Marquette, Monroe, Ozaukee, Richland, Sauk and Vernon counties. Under the Public Assistance Program, FEMA provides 75 percent reimbursement of eligible costs, while the state and local agencies share the remaining 25 percent.

Wisconsin Emergency Management, FEMA and the U.S. Small Business Administration will begin to implement the declaration which will take several months. Individuals and businesses in the declared counties will soon be able to register with FEMA for disaster assis

U.S. home construction fell by 5.3 percent in September, a sign that recent hurricanes and rising mortgage rates may be weighing on the market.

The Commerce Department said on Wednesday that housing starts slipped last month to a seasonally adjusted annual rate of 1.2 million, down from 1.27 million in August. So far this year, starts have increased by 6.4 percent. But the pace of homebuilding has decelerated since May.

“Starts are stagnating as the housing market slows, though September’s numbers were suppressed by the hurricane affecting the Carolinas,” said Tendayi Kapfidze, chief economist at Lending Tree, an online loan broker.

Homebuyers are facing new cost pressures that could be dampening demand.

The mortgage buyer Freddie Mac says that the average 30-year fixed-rate on mortgages rose to 4.9 percent last week, the highest level seen since 2011. The combination of higher borrowing costs and rising home values has made houses less affordable.

“It may be tempting to draw national conclusions from these storm-related dips and rallies, but the regional blips can’t obscure the year-long malaise in the national single-family home construction market: Starts have been hit or miss, sales flat and permits trending downward for months,” said Aaron Terrazas, a senior economist at the real-estate firm Zillow.

Wisconsin ended the most recent state fiscal year with a positive balance of $588.5 million and grew the state Budget Stabilization Fund to a record-high $320.1 million, according to the new Annual Fiscal Report released today by the state Department of Administration (DOA).

“The tough, prudent financial decisions and common-sense reforms that have supported job creation and led to record-low unemployment in Wisconsin, have also contributed to our state’s budget ending the most recent fiscal year in excellent shape,” DOA Secretary Ellen Nowak said. “The balance is over $41 million higher than was recently estimated, and this is in part due to higher-than-expected state revenues, which is great news as we look ahead to the next budget cycle.”

Highlights from the state’s Fiscal Year 2018 Annual Fiscal Report include:

• The undesignated general fund balance at the close of fiscal 2018 (June 30, 2018) was $588.5 million, slightly higher than the previous fiscal year’s balance of $579 million.  The balance is $41.2 million more than was estimated when the 2017-19 legislative session ended.

• The state deposited $33.1 million into the state Budget Stabilization Fund.  The balance is now $320.1 million.  This is the largest balance in state history and 190 times larger than the balance in fiscal year 2010.

• General fund tax collections were $18.4 million above estimates.  The growth was $626 million or 4 percent over last year.  Individual income taxes were $99.2 million higher than estimated.

• State expenditures were $174 million less than budgeted in 2018.