News of the Day

Income taxes would be cut across the board by $3.5 billion under a plan passed Thursday by Republicans who control the Wisconsin Legislature’s budget-writing committee.

Under the income tax cut, which is retroactive to January 1, 2023, the average reduction would be 15% for all filers or $573, Republicans said. The state would still go from four to three brackets, with the lowest rate dropping to 3.5% and the highest rate being 6.5%.

The largest percentage point drop comes at the highest rate, paid by married couples who earn more than $405,550 or single people making more than $304,170. That rate would drop from 7.65% to 6.5%. The middle two brackets would collapse so all married couples earning between $9,210 and $202,780 would pay 4.4%. The lowest rate for the poorest taxpayers would drop only slightly, from 3.54% to 3.5%.

The income tax cut will be paid for by tapping the state’s projected $7 billion surplus. Republicans also devoted $622 million to keep property taxes in check.

Republican Representative Terry Katsma said the cuts were designed to keep Wisconsin competitive with neighboring states with lower rates, like Illinois, which has a flat tax of 4.95%. “We have to be competitive with the states around us,” Katsma said.

The laws governing Wisconsin’s multibillion-dollar liquor industry would be streamlined and updated under a sweeping measure passed by the state Assembly on Wednesday that’s supported by groups from the smallest craft brewers to the largest national brewers, bar owners and alcohol distributors.

The massive overhaul to the laws affecting the production, distribution and sale of alcohol passed with broad bipartisan support. The measure now heads to the Senate for final approval. Democratic Gov. Tony Evers, who was involved with discussions of the measure, is expected to sign it into law.

The proposal would create a new division within the state Department of Revenue, which would be in charge of overseeing and enforcing the state’s alcohol laws. The absence of such a unit now has led to inconsistent enforcement of the law — and questions over how they affect new businesses that weren’t envisioned when the laws were enacted, supporters of the bill said.

The bill affects every level of the state’s alcohol industry governing the licensing, producing, selling and distribution of beer, wine and liquor. The so-called three-tier system, created in the 1930s, has been eyed for changes for years, but policymakers and the alcohol industry have been unable to reach agreement.

The three-tiered system was designed to prevent monopolies, so the same company could not produce and sell alcohol at the wholesale and retail levels. But for years the system has been criticized for not keeping up with changes in the industry, including the explosion of small craft breweries and the rising popularity of wedding barns.

The bill would require venues that provide alcohol at special events, known generally as wedding barns, to be regulated in a new way. They could either get a permit that would allow them to host events six times a year or no more than once a month — or obtain a liquor license that would allow them to sell alcohol at as many events as they wish.

The bill would also allow for expanded hours at wineries and would regulate them the same as craft breweries and distilleries. It would permit brew pubs to operate stand-alone retail stores and allow craft breweries to sell products from other out-of-state breweries. The bill would also create new guidance for contract brewing, winemaking and distilling, which is a growing segment of the industry.

The measure also creates a new statewide bartender license. Currently, bartenders are licensed by local municipality, a system that proponents of the change argued is cumbersome. It also allows for bars in 14 southeastern Wisconsin counties to stay open two to four hours longer than the current 2 a.m. limit — during the Republican National Convention next summer in Milwaukee.

Wisconsin’s unemployment reserves averted catastrophe during the pandemic, but the state has work to do to ensure the fund can withstand job losses from a potential future recession.

That’s according to a new report released Tuesday by the Wisconsin Policy Forum. It examined how the state avoided increasing the tax burden on employers during the pandemic-induced recession to fund its unemployment system, and examined where Wisconsin’s unemployment reserves sat by the end of 2022.

While the state’s unemployment fund has increased since the pandemic cut it nearly in half, it still isn’t at pre-pandemic levels and only has enough money to cover about 6.5 months of unemployment benefits if it were to reach a historically high jobless rate, the report said. The federal government recommends states keep enough money on-hand to cover one year.

“The unemployment fund has dropped out of the headlines, and it is no longer getting the attention that it got in early 2020 — and that’s appropriate because things have improved and it’s no longer in dire condition,” said Jason Stein, research director for Wisconsin Policy Forum. “But there remain issues, and we shouldn’t have it dropped entirely off the radar.”

Unemployment Insurance benefits are funded by state and federal payroll taxes that are paid exclusively by employers, but can indirectly limit compensation for workers, the report says. Typically, employers responsible for a greater proportion of layoffs are required to pay more than those with fewer layoffs.

Wisconsin was not one of the 22 states that borrowed money from the federal government to make jobless payments during the pandemic. But that’s not to say the state’s unemployment reserves weren’t impacted by COVID-19. From 2019 to 2020, its end of year fund balance dropped from $2 billion to $1.1 billion, according to the report. It stayed at $1.1 billion in 2021.

Wisconsin’s unemployment reserves increased to end 2022 at $1.4 billion, still below 2019’s $2 billion, and below federal recommendations, according to the Wisconsin Policy Forum. Meeting the federal benchmark of being able to fund one year of benefits at historically high levels would qualify Wisconsin for interest-free federal loans if the state needed to borrow to fund the program.

The report lists some ways policymakers could help Wisconsin prepare for a possible recession including using the state’s nearly $7 billion budget surplus, reducing unemployment benefits in targeted ways or increasing revenues from state payroll taxes.

“None of these options are painless,” Stein said, noting that using the state’s one-time budget surplus could be less problematic than some of the other options.

“Putting some of it into the unemployment fund would be a one-time use of the funds,” he continued. “In that sense, it wouldn’t set up budget problems for the state in the future, and, in fact, it would do the opposite — it would make the state better prepared for the future.”

A report from Forward Analytics, the research arm of the Wisconsin Counties Association, says the state needs to build at least 140,000 housing units by the end of the decade to keep pace with current demand. The shortage has been especially challenging for marginalized groups and low-income individuals.

State lawmakers Wednesday approved a bipartisan package of bills aimed at improving Wisconsin’s housing stock. The package includes bills to create loans for workforce and senior housing.

Besides incentivizing housing development, one of the bills would make it harder for residents to block new housing projects. It would require local governments to approve housing projects that meet existing zoning requirements, and would lay out a court process for developers who feel the rules have been changed on them mid-project.

Currently, many new projects must make it through multiple votes from local plan commissions and other municipal boards, a process that can take months or years and creates a number of opportunities for opponents to torpedo new projects.

The bill is meant to address what some call the “not in my backyard,” or NIMBY, problem, a term for those who raise objections to projects that may be beneficial to a city because they don’t want new development located in their own neighborhood.

Jerry Deschane, executive director of the League of Wisconsin Municipalities, said community residents throughout the state block housing “more often than anybody would care to admit.”

“Your long-range comprehensive plan says, ‘We’re going to develop this neighborhood in this way,'” Deschane said. “Your zoning says, ‘We’re going to develop this neighborhood in this way.’ Well, a developer shows up and says, ‘OK, I can build that — here’s my request for a permit.’ Then all of a sudden, the world gets turned upside down.”

State Sen. Romaine Quinn, R-Cameron, is also a realtor for Rice Lake-based Real Estate Solutions. He cosponsored the legislation and recently told Wisconsin Public Radio’s “Central Time” that it’s aimed at giving developers more certainty.

“When they develop a project, they have to know it’s going to be approved in a timely manner, because our construction season is short in northern Wisconsin,” he said. “Communities would no longer be allowed to move the ball on developers when a project is trying to come in.”

GOP leaders told party activists today at the Republican state convention they plan to cut income taxes for Wisconsinites by at least $3 billion as they wrap up work on the state budget.

Senate Majority Leader Devin LeMahieu and Assembly Speaker Robin Vos told reporters following the announcement that they aim to meet on Monday to discuss the proposal, which would reduce all four of Wisconsin’s tax brackets.

The top rate is 7.65 percent, which kicks in for income above $374,600 for married joint filers. Dem Gov. Tony Evers has previously said he opposes lowering the top rate.

The announcement comes on the heels of the GOP-controlled Joint Finance Committee approving an education package that would allow school property taxes to go up by $647 million over the next two years.

“The one thing that unites Republicans is the idea that government has too much money, and I think that’s one thing to end on,” Vos said.

The leaders made the announcement during a panel discussion today with former GOP Assembly Speaker Mike Huebsch, who served as Administration secretary under former Gov. Scott Walker.

LeMahieu during the panel said as budget sessions finish up, the state still has enough money to provide major tax cuts.

“So I look forward to putting another tax cut on the governor’s desk. Hopefully he signs it again,” he said.

Retail sales, a measure of how much consumers spent on a number of everyday goods, including cars, food and gasoline, rose 0.3% in May, the Commerce Department said Thursday. Excluding the more volatile measurements of gasoline and autos, sales climbed 0.4% last month. The figures are not adjusted for inflation.

Consumers spent more on big-ticket items like cars, furniture and home improvement projects. Gas sales slid 2.6% in May. Sales declined in just two of 13 retail categories last month.

A solid job market and big wage increases have helped to buoy consumer spending. That strong spending, however, could keep inflation elevated, adding pressure on the Fed in its quest to cool the economy and consumer prices.

“The upside for retail spending does have a downside, however, in the form of continued inflationary pressure,” said Ben Ayers, Nationwide senior economist. “Higher interest rates haven’t tamped down consumer demand enough to meaningfully slow price growth, especially on the services side of the economy. These hot trends for consumers could lead to another interest rate hike by the Fed in July.”

The Federal Reserve on Wednesday held interest rates steady for the first time in 15 months, pausing its aggressive tightening campaign to assess how the economy is faring in the face of higher borrowing costs.

The widely expected and unanimous decision left interest rates at a range of 5% to 5.25%, the highest level since 2007. But policymakers also left the door open to additional rate increases this year.

“Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy,” the Federal Open Market Committee said in a post-meeting statement. The Fed’s next meeting is set for July 25-26.

New economic projections laid out after the meeting show that a majority of Fed officials who participated in the meeting expect rates to rise to 5.6% by the end of 2023, suggesting two more quarter-point increases this year.

The central bank previously projected a peak rate of 5.1%, indicating that policymakers believe there is more work to be done to wrangle inflation under control.

The Labor Department’s producer price index — which measures inflation before it reaches consumers — rose 1.1% last month from May 2022, it said Wednesday, the smallest year-over-year gain since December 2020.

On a month-to-month basis, overall producer prices have now dropped three of the last four months. In May, wholesale inflation was pulled down by a 13.8% drop in gasoline prices.

Excluding volatile food and energy prices, so-called core wholesale inflation was up 0.2% last from April and 2.8% from a year earlier, the mildest gain since February 2021.

Inflation has been receding. Year-over-year increases in producer prices peaked at 11.7% in March 2022 and have fallen 11 straight months.

On Tuesday, the Labor Department said that its consumer price index rose just 0.1% last month from April and 4% from May 2022 — the lowest 12-month figure in two years and down from a 4.9% increase in April. Inflation in consumer prices is still running ahead of the Fed’s 2% year-over-year target.

Wisconsin’s craft brewers, including the maker of the popular Spotted Cow beer, large retailers like the Kwik Trip convenience store franchise and other producers, wholesalers and retailers are getting behind a rapidly moving proposal that would overhaul the state’s alcohol laws and lead to stricter enforcement efforts.

The measure, hammered out in the past five years largely between Republican lawmakers and the alcohol industry, is moving quickly through the GOP-controlled Legislature. It was introduced on Friday and was scheduled for a public hearing on Tuesday. The Legislature is expected to pass it in two weeks. Democratic Governor Tony Evers’ administration has also been involved with negotiations.

Most of the changes would not be noticeable to average alcohol consumers in the state, those who worked closely on the bill said. But the creation of a new division to oversee liquor laws could lead to the enforcement of largely ignored current laws, like a ban on the shipping of liquor or beer directly to a customer made popular through “beer of the month” clubs and nationwide mail-order catalogs that feature hard-to-get bourbon or other spirits.

The bill affects every level of the state’s alcohol industry governing the licensing, producing, selling and distribution of beer, wine and liquor. The so-called three-tier system, created in the 1930s, has been eyed for changes for years, but policy makers and the alcohol industry have been unable to reach agreement.

The three-tiered system was designed to prevent monopolies so the same entity could not produce and sell alcohol at the wholesale and retail levels. But the system has been criticized for years for not keeping up with changes in the industry, including the explosion of smaller craft breweries, the popularity of wedding barns and other innovations.

The bill would require venues that sell or allow alcohol at special events, known generally as wedding barns, to either get a permit or alcohol license to operate legally. The measure would also allow for craft breweries to sell products from other out-of-state breweries. Wineries could open earlier in the morning, at the same time as bars, to sell their products. The bill would also create new guidance for contract brewing, winemaking and distilling, a growing segment of the industry.

Perhaps the biggest change is creating a new division within the state Department of Revenue to regulate and oversee regulating the alcohol industry and enforcing the law. One of the loudest targets of criticism under the current system was the lack of a dedicated state office to interpret and enforce regulations.

The U.S. Supreme Court on Thursday sided with Jack Daniel’s in a dispute over a dog toy that parodies its iconic liquor bottle, ruling that a lower court erred when it said the toy was covered by the First Amendment’s free speech protections.

The unanimous opinion written by Justice Elena Kagan allows the liquor maker to revive its trademark lawsuit against VIP Products in lower courts. In the meantime, the “Bad Spaniels Silly Squeaker” toy remains on the market.

At the center of the case is the toy created by VIP Products that is strikingly similar to Jack Daniel’s bottles. The distiller sued the company over the toy claiming it violated federal trademark law, which usually centers around how likely a consumer is to confuse an alleged infringement with something produced by the true owner of the mark.

Though the court’s decision is a win for Jack Daniel’s – which argued that an appeals court made a mistake when it said the toy was “non-commercial” and therefore enjoyed constitutional protection – the justices declined to grant the distiller’s request to completely throw out the test an appeals court used when it ruled in favor of the toy, a move that would have given trademark holders wide latitude to sue companies that parody their marks on consumer goods.

“Today’s opinion is narrow. We do not decide whether the Rogers test is ever appropriate, or how far the ‘noncommercial use’ exclusion goes,” Kagan wrote, adding: “The use of a mark does not count as noncommercial just because it parodies, or otherwise comments on, another’s products.”

“We hold only that it is not appropriate when the accused infringer has used a trademark to designate the source of its own goods – in other words, has used a trademark as a trademark. That kind of use falls within the heartland of trademark law, and does not receive special First Amendment protection,” she said.