News of the Day

Federal Appeals Court Upholds Wisconsin Right-to-Work Law

Posted on July 13, 2017 by Brian Dake

A federal appeals court panel has upheld Wisconsin’s right-to-work law.

The law prohibits businesses and unions from reaching agreements that require all workers at a company to pay union dues. Unions maintain the law enables nonunion members to receive free representation. The International Union of Operating Engineers filed a lawsuit last year alleging that amounts to an unconstitutional taking.

U.S. District Judge J.P. Stadtmueller upheld the law in September, citing a 7th U.S. Circuit Court of Appeals ruling upholding Indiana’s nearly identical right-to-work law.

A three-judge panel from the 7th U.S. Circuit Court of Appeals upheld Stadtmueller on Wednesday. The panel noted that the 7th Circuit has upheld Indiana’s law and the union didn’t show a reason to revisit that decision.

Wisconsin Mortgage Foreclosures Fall to 17-year Low

Posted on July 12, 2017 by Brian Dake

Amid a better jobs climate, tougher lending standards and rising home prices, mortgage foreclosure filings in Wisconsin have fallen to their lowest level in at least 17 years.

In the first half of 2017, there were 4,132 foreclosures filed with courts in the state, according to the University of Wisconsin-Whitewater’s Fiscal and Economic Research Center. That is down about 12% from 4,712 during the first six months of last year, and below the 4,740 foreclosure filings recorded in 2001 — as far back as the UW-Whitewater data goes.

The 2017 total is less a third of the number of foreclosure cases seen from January through June in 2009, the year with the worst start in Wisconsin during the foreclosure crisis.

The improved employment environment has made it more likely that borrowers will stay current with monthly house payments, but lenders are more careful now about who gets a mortgage to begin with, said Russell Kashian, a UW-Whitewater economics professor who runs the university’s research center.

“I think prior to the financial crisis the economy was doing very well, but there were a lot people that were on the bubble, that were on the precipice. I don’t think we’re making those loans today,” Kashian said.

Michael Zimmerman, senior vice president for investor relations for Milwaukee-based mortgage insurer MGIC Investment Corp., said that since about 2009, credit scores for mortgage borrowers have been “significantly higher” than before the recession and housing crash. Mortgage insurers cover part of the cost for lenders if a loan isn’t repaid.

“Stronger credit profiles since 2009, rising home values pretty much across the country, and a comparatively strong labor market with increasing wages just put borrowers in a better position to maintain the payment,” ZImmerman said. “And if they do get into trouble, they can sell the property.”

Illinois Tax Increase Welcome in Wisconsin

Posted on July 11, 2017 by Brian Dake

Many Illinois lawmakers say that following the state’s 32 percent income tax increase, neighboring states will try and recruit Illinois businesses and taxpayers. But one Illinois lawmaker on the Wisconsin border says recruiting won’t even be necessary.

State Rep. Joe Sosnowski, R-Rockford, said communities in southern Wisconsin don’t need billboards or ad campaigns to lure Illinois taxpayers and businesses over the border.

“Wisconsin doesn’t really have to [recruit], we do a good enough of shooting ourselves in the foot,” Sosnowski said.

Higher taxes, such as last week’s 32 percent state income tax increase, are driving people out of Illinois.

And he’s right. Illinois’ population has declined each of the past three years, and it lost more people than any other state in the U.S. between July 2015 and July 2016, according to the U.S. Census. At the same time, Chicago lost more people last year than any other major U.S. city.

Southern Wisconsin State Rep. Todd Novak said lower taxes and more job opportunities are driving Illinoisans to Wisconsin.

“I am seeing an influx of people who are looking to move into Wisconsin,” Novak said. “Out here we have one of the lowest unemployment rates in Wisconsin. So you can easily find a job, and a pretty good-paying job.”

The unemployment rate in Winnebago County, Illinois, Sosnowski’s district, is 6.4 percent. Lafayette County, Wisconsin, Novak’s district, has a 2.2 percent jobless rate.

Novak says there are 100,000 jobs open in Wisconsin. He says Illinois’ economic refugees are welcome to apply.

Homeowners Don’t Have to Let Assessors In to Challenge Tax

Posted on July 10, 2017 by Brian Dake

Wisconsin homeowners don’t have to let assessors inside as a condition for challenging their property taxes, the state Supreme Court ruled Friday.

The court said in a 5-2 decision that such visits amount to unreasonable searches and that assessors need to get warrants if they can’t obtain the homeowners’ consent.

The ruling involves Vincent Milewski and Morganne MacDonald, who own a home in the Town of Dover in Racine County. According to court documents, they tried to challenge their 2013 property tax assessment in front of a town review board.

The board refused to hear the challenge because Milewski and MacDonald wouldn’t let an assessor inside their home. Under state law, people who refuse an assessor’s request to view their property can’t contest the assessment to local review boards.

Milewski and MacDonald sued. A judge dismissed the lawsuit and a state appellate court upheld his decision. The state Supreme Court reversed that ruling.

Writing for the majority, Justice Dan Kelly said Milewski and MacDonald were faced with a difficult decision: relinquish their constitutional right to be free of unreasonable searches so they could challenge the assessment or exercise their rights and forfeit their ability to contest the assessment.

Kelly said an assessors’ visit without consent is a search as defined in the U.S. Constitution’s Fourth Amendment, which protects people from unreasonable searches and seizures. The town failed to show how assessing taxes is such a special need that the Fourth Amendment doesn’t apply, which means assessors must obtain search warrants to enter without consent, he wrote. Assessors can use other means to gather information about the property, he said. Milewski and MacDonald can challenge the assessment without an interior inspection, he concluded.

He said the law isn’t unconstitutional on its face. But it can’t be read to require a property viewing that violates the Fourth Amendment in order to allow a challenge, he wrote.

The town’s attorney, Jason Gehring, didn’t immediately respond to a voicemail seeking comment.

The court’s conservative-leaning majority handed down the decision. Shirley Abrahamson and Ann Walsh Bradley, the only two liberal-leaning justices, dissented. Abrahamson wrote in a joint dissent with Bradley that such choices are common in the law and are seen as constitutionally valid.

The Wisconsin Institute for Law and Liberty, a conservative law firm that represents Milewski and MacDonald, issued a statement calling the decision “a victory for private property rights.”

The Wisconsin Realtors Association, the state Department of Justice and the Institute of Justice, a law firm specializing in constitutional protections, all filed friend-of-the-court briefs urging the Supreme Court to strike down the law.

Governor Recommends Cutting Road Borrowing as Stalemate Continues

Posted on July 7, 2017 by Brian Dake

Seeking to break an impasse on the state budget, Gov. Scott Walker has proposed reducing borrowing for transportation projects while sticking to his pledge not to raise gas taxes or vehicle fees. The plan gained no immediate traction and his fellow Republicans who control the Legislature signaled they remain far apart on highway funding — the biggest reason for the budget stalemate.

Walker sent his letter Wednesday to Assembly Speaker Robin Vos (R-Rochester) and Senate Majority Leader Scott Fitzgerald (R-Juneau) and made it public Thursday.

“We can pass a budget that provides meaningful increases to local governments to improve roads and bridges — as well as add significant investments in safety and maintenance and highway rehabilitation — all without raising the gas tax or vehicle fee,” Walker wrote.

The governor’s original transportation plan would delay work on some projects, including the north leg of the Zoo Interchange in Milwaukee County and I-94 south of Milwaukee. But he said his new plan would not result in further delays because of projected savings and tax collections that were better than expected.

Assembly Republicans want to find new money for roads by raising gasoline taxes or other fees. Walker and Senate Republicans are opposed to that.

Underlining the disconnect between the two sides, Fitzgerald emerged Thursday from a meeting with fellow GOP senators to say his caucus won’t support raising new money for roads

“No gas tax, no increase in fees,” he said when asked to sum up the position of Senate Republicans. “In our caucus … there certainly is the idea we’re not going to support any new revenue because we believe there’s enough revenue in the system and believe that (the Department of Transportation) needs to be significantly reformed,” he said. “We think there’s some money that’s in DOT that’s currently being wasted.”

Senate Republicans want to borrow $750 million for roads over the next two years, a modest decrease from their previous positions of seeking $850 million in highway loans.

Senate Republicans want to prevent further delays on the Zoo Interchange and I-94 south of Milwaukee, Fitzgerald said. They also want to begin work on the east-west portion of I-94 between the Marquette and Zoo interchanges — an idea Walker rejected this spring.

Rep. John Nygren (R-Marinette), the co-chairman of the Legislature’s budget committee, praised Walker’s letter as a good first step but offered little reason to think it would solve the stalemate on its own.

“It’s good that the governor’s engaged and looking for a solution,” Nygren said.

Meanwhile, the DOT is seeking $341 million through a special federal highway program — more than 10 times as much as it has received through that program in recent years.

When states don’t use all their federal aid, other states can compete for what’s left over. Wisconsin has received $34 million annually on average through that program in the last five years, according to the Legislature’s nonpartisan budget office.

During that time, the state applied for between $30 million and $137 million annually. But the most the state has ever gotten since 2012 is $40 million, according to the Legislative Fiscal Bureau.

Nygren said that Assembly Republicans would be willing to provide more state matching dollars to capture such additional federal aid for highway projects. But he was skeptical that Wisconsin would see a huge jump in federal money for roads.

“Passing a budget based on (federal money) being there — I’m not sure we’re there,” he said.

Wisconsin’s Cap on Medical Malpractice Awards Unconstitutional, Courts Rules

Posted on July 6, 2017 by Brian Dake

Ruling that Wisconsin’s $750,000 cap on medical malpractice claims is unconstitutional, an appellate court said Wednesday that a Milwaukee woman who lost all four limbs should collect the $16.5 million for pain and suffering awarded to her and her husband.

“We conclude that the statutory cap on non-economic damages is unconstitutional on its face,” Judge Joan Kessler wrote in the 19-page unanimous opinion by the three-judge First District Court of Appeals panel.

Kessler added that “Wisconsin’s cap on non-economic medical malpractice damages always reduces non-economic damages only for the class of the most severely injured victims who have been awarded damages exceeding the cap, yet always allows full damages to the less severely injured malpractice victims.”

Wisconsin law caps non-economic damages in medical malpractice cases at $750,000 but does not put a ceiling on the amount that could be awarded for economic damages, such as medical costs, which in Mayo’s case was awarded at $8.8 million. That award and $750,000 has already been paid by the $1.3 billion state-managed medical malpractice insurance fund.

The case is expected to be appealed to the state Supreme Court.

Wisconsin has had various ceilings on medical malpractice damages since 1986. A $350,000 cap enacted in 1995 was struck down by the state Supreme Court in 2005 as being arbitrary and violating the equal protection provision of the state constitution. It was replaced a year later by the $750,000 ceiling.

Republican Lawmakers Want to Change the Way Wisconsin Taxes its Residents

Posted on July 5, 2017 by Brian Dake

With its largest Republican majority in decades — momentum is growing behind what could amount to more significant changes to the way Wisconsin taxes its residents, including an effort to move the state toward a flat income tax and a proposal to eliminate the personal property tax.

Todd Berry, a longtime tax policy analyst and president of the Wisconsin Taxpayers Alliance, is “not inclined to predict” any major changes to the way the state raises revenue. A proposal to repeal the personal property tax would require an adjustment in priorities. Moving to a flat tax requires more support than currently exists. Even a significant change in transportation funding — the largest source of discord among lawmakers and the governor during the budget process this year — is unlikely, he said.

What is significant in the current climate, Berry said, is that so much of the push for major tax reform is coming from lawmakers, particularly from a group of trained accountants known as the “CPA Caucus.”

The four-member group is composed of three certified public accountants — Sen. Chris Kapenga, R-Delafield, Sen. Howard Marklein, R-Spring Green, and Rep. Dale Kooyenga, R-Brookfield. Rep. John Macco, R-Ledgeview, is a financial adviser. Marklein and Kooyenga both sit on the Legislature’s Joint Finance Committee, which reviews, refines and rewrites the state budget after it is introduced by the governor.

The accountant-lawmakers have led the charge on tax policy changes large and small: eliminating 18 tax credits in three years, reducing the number of income tax brackets, reducing the number of people required to pay the alternative minimum tax and reducing the so-called “marriage penalty.”

Kooyenga, a U.S. Army Reservist and potential U.S. Senate candidate with a penchant for quoting the Broadway musical “Hamilton,” said his goal is to pull back on efforts made by politicians to “move levers” and control behavior through tax policy.

“I’m a firm believer that there should be less power in Madison and less power in D.C. And one of the ways that even Republicans have tried to assert their power is by creating mechanisms in the tax code to try to get people to do what they want to do,” Kooyenga said. “And I think that people should decide what they want to do and try to minimize the government trying to penalize or reward certain actions.”

The personal property tax, implemented in the early days of Wisconsin, when most of its governmental revenue came from property taxes, began as a tax on items like livestock, furniture, jewelry and vehicles. Its property tax counterpart — real property — covers land and buildings.

The list of exemptions to the personal property tax has grown to include, among other items, clothing, personal items, stocks and bonds, vehicles, farm and manufacturing machinery and business computers. The tax now applies, in general, to furniture, equipment, machinery and watercraft owned by businesses.

According to an analysis by the Wisconsin Taxpayers Alliance, personal property has accounted for between 2.2 and 2.6 percent of the state’s property tax base since 2005. Compared to the 40 other states with some form of a personal property tax, Wisconsin taxes less than most, but more than most of its neighbors.

While the personal property tax brings in a relatively small sum compared to other taxes, the state Department of Revenue estimates eliminating it would result in a loss of about $261 million per year in funding for schools and local governments. That’s based on a proposal introduced in April by Sen. Duey Stroebel, R-Saukville, and Rep. Bob Kulp, R-Stratford.

Depending on the proposal, the money would either be gone or accounted for with an increase to real property taxes — paid by homeowners and business owners, rather than only business owners, as it is currently.

Kooyenga said in an interview that his plan would reclassify some personal property items as real property, putting the fiscal impact below $240 million. It would also eliminate and reduce some tax credits.

“We would be replacing (the revenue),” Kooyenga said.

Heavy Truck Fee Concept Emerges in Budget Talks

Posted on June 29, 2017 by Brian Dake

Senate Majority Leader Scott Fitzgerald said the possibility of collecting a new fee on heavy trucks emerged Wednesday in his budget talks with Gov. Scott Walker and Assembly Speaker Robin Vos.

Fitzgerald, R-Juneau, said he’s not sure if Republican senators support the concept, adding they need to learn more about it. That marks a shift from just a day earlier, when Fitzgerald dismissed the proposal, offered by GOP state Rep. Amy Loudenbeck, R-Clinton, as a “nonstarter.”

The concept is the latest to be entertained by state leaders as they attempt to craft the state’s next budget. July 1 is when the budget is supposed to be passed and take effect, a deadline Walker and lawmakers now appear certain to miss.

“For a state that grows and produces as much as we do, it really provides a significant disincentive to produce more,” Manley said of the concept.

Still, Wednesday’s developments hinted at possible progress in budget talks. Contrast that with a day earlier, when Assembly-Senate negotiations broke down and Vos and Fitzgerald vented their frustrations to reporters, each calling the other’s budget positions “laughable.”

“It feels like things are kind of moving a little bit compared to what we saw yesterday,” Fitzgerald told reporters Wednesday.

Vos, R-Rochester, also was more optimistic Wednesday that a deal could be reached, saying the two Republican caucuses are “closer than we have been.”

Transportation is the biggest sticking point in budget talks, with Vos and Assembly Republicans maintaining the state needs a long-term revenue infusion to pay for road projects. Other issues still unresolved include how to boost funding for K-12 schools and how to cut taxes.

Walker has said he opposes increasing gas taxes or vehicle fees, the two main state funding sources for transportation, and would veto a gas tax hike if lawmakers pass one. Fitzgerald and Senate Republicans have said they won’t back either of those options because Walker won’t.

Opposing views on fee

Manley said the truck fee concept discussed by Walker and GOP legislative leaders would be collected on a per-mile basis for heavy trucks traveling on Wisconsin roads. It could generate more than $130 million a year for state roads and bridges, he said. Those figures were not confirmed independently by Walker’s office or legislative leaders.

Bill McCoshen, a lobbyist for the state’s DRIVE Coalition, a group representing business, tourism and agriculture interests that advocates for more funding for roads, said he was heartened by the truck fee discussion.

“Every credible study says our roads and bridges are some of the worst in the country, and the only way we’re going to address those is to generate new revenue,” McCoshen said.

If lawmakers don’t find more money for roads, it could mean delays to large highway projects under construction or scheduled for future construction.

Instead of new revenues, Walker has proposed $500 million in borrowing, and Fitzgerald, $850 million in borrowing, to fund road projects. But Vos and Assembly Republicans object to that approach, saying it’s unwise to put more on the state’s credit card. On Tuesday, Vos said the Assembly Republicans’ position was to refuse to discuss additional borrowing without also discussing ways to boost revenue.

But some Senate Republicans aren’t sold on the need for new revenue. Fitzgerald said Wednesday that many GOP senators think cost-saving measures must be weighed at the Wisconsin Department of Transportation.

“There’s still a lot of people that think DOT is an agency that needs significant reform,” Fitzgerald said.

Legislative leaders also have discussed highway tolling as a potential revenue source. But even if lawmakers approved it and secured a federal nod to start tolling Wisconsin’s U.S. Interstates, tolls likely wouldn’t be collected for at least four years — meaning they wouldn’t have an impact for the next state budget, covering the two-year period from July 2017 through June 2019.

Wisconsin Sees Reduction in Worker’s Compensation Rate for Second Consecutive Year

Posted on June 28, 2017 by Brian Dake

The Wisconsin Commissioner of Insurance has approved an overall 8.46% rate decrease for Worker’s Compensation (WC) premiums for business this year following a 3.19% decline last year. Some specific industries, like manufacturing, will see even greater decreases of 9.28%. This overall decrease represents a savings of nearly $170 million for employers.

“This is the second consecutive year Worker’s Compensation rates have declined in Wisconsin, reaffirming our commitment that Wisconsin is open for business,” said Governor Walker. “The magnitude of savings is a result of employers working with their employees to emphasize the importance of safety in the workplace.”

Worker’s compensation rates are adjusted yearly by a committee of actuaries from the Wisconsin Compensation Rating Bureau (WCRB). The committee studies the prior losses (claims) of hundreds of categories and professions throughout the state’s employment pool and submits a rate recommendation to the Office of the Commissioner of Insurance (OCI) who has final approval over the rates.

“Wisconsin businesses are dedicated to ensuring a safe working environment and this decrease in workers compensation rates reflects that,” said Commissioner of Insurance Ted Nickel. “These savings will allow Wisconsin businesses to continue to strengthen their ability to operate affordably and efficiently.”

Commercial Docket Pilot Starts July 1

Posted on June 27, 2017 by Brian Dake

On July 1, the Wisconsin court system will launch a three-year pilot project for the handling of large-claim business and commercial cases filed in Waukesha County Circuit Court and in the circuit courts of the Eighth Judicial Administrative District in northeastern Wisconsin.

There is also potential availability of a commercial docket for cases venued outside of those jurisdictions, when the parties agree to the change in venue, and a judge participating in a commercial docket agrees to the transfer. The commercial docket is intended to ensure that large business and complicated commercial cases are resolved timely and effectively.

“This is a significant step forward for the Wisconsin court system. It is our hope that the commercial docket will result in efficient resolutions of complex business-related controversies, and in the process, improve the efficiency of the justice system for everyone,” said Wisconsin Supreme Court Chief Justice Patience Drake Roggensack.

The Court approved the pilot project in an order issued April 11. If successful, and after a thorough review of the pilot program, the Court may consider a statewide commercial docket.

Roggensack convened the Business Court Advisory Committee in the fall of 2016 to draft a proposed rule petition to be considered in the event that the Court approved a commercial docket. The committee created the framework and forms necessary to implement the project, and the committee remains available to assist the Court with any adjustments that may be necessary moving ahead, Roggensack said.

The commercial docket will handle disputes involving, among other things: the governance of business organizations, including financial institutions; unfair competition or prohibited business activities; sales and mergers; securities sales and regulations; intellectual property rights; franchising; and cases involving claims or disputes under portions of the Uniform Commercial Code, when the amount in controversy exceeds $100,000 exclusive of interest, costs, and attorney fees.

Detailed criteria for cases to be assigned to the commercial docket, as well as cases that may be taken on a discretionary basis, are listed in the appendix attached to the Court’s order. Commercial court docket cases will be integrated with the existing circuit court eFiling system, making it easy for lawyers involved in the cases to submit and track filings.