News of the Day

The Commerce Department said on Wednesday that retail sales surged 3.0% last month, the largest increase since March 2021, after declining by an unrevised 1.1% in December.

Last month’s broad increase in retail sales was led by motor vehicle purchases, with receipts at auto dealers accelerating 5.9%. Sales at service stations were unchanged, despite rising gasoline prices. Online retail sales rebounded 1.3%.

Furniture stores sales jumped 4.4%. Receipts at food services and drinking places, the only services category in the retail sales report, soared 7.2%.

Electronics and appliance store sales shot up 3.5%. There were also hefty increases in clothing stores sales as well as receipts at general merchandise and health and personal care stores. Sporting goods, hobby and musical instrument stores eked out a 0.2% gain, while building material and garden equipment suppliers receipts climbed 0.3%.

Excluding automobiles, gasoline, building materials and food services, retail sales increased 1.7% last month. These so-called core retail sales fell by an unrevised 0.7% in December.

Core retail sales correspond most closely with the consumer spending component of gross domestic product.

The governor’s office announced Tuesday that his executive budget will include $290 million from the surplus for stadium repairs. In exchange for the money, the Brewers have agreed to extend their lease at the stadium by 13 years through 2043, the administration and the team said.

The money for the stadium repairs would be a one-time cash payment from the state surplus, which currently stands at around $7 billion. But the proposal is sure to rekindle old arguments over whether privately owned sports teams deserve public handouts to continue operating — especially the Brewers, who have benefited immensely from a sales tax that helped build the stadium.

The stadium opened in 2001 as Miller Park, replacing the Milwaukee’s aging County Stadium. The construction price tag was about $392 million, funded largely through a 0.1% sales tax imposed in Milwaukee County and the four other counties surrounding the stadium.

The tax was ultimately enacted that year and generated about $605 million before it expired in 2020. The stadium name changed to American Family Field in 2021 after the Brewers struck a 15-year naming rights deal with the insurance company.

The Southeast Wisconsin Professional Baseball Park District essentially serves as the Brewers’ landlord at the stadium. The Brewers’ lease calls for the district to cover repairs, but Evers’ office said the end of the sales tax has left the district short of funds, according to the governor’s office and the Brewers.

“We oppose the return of the five-county tax, and we are prepared to commit to a lease extension for the Brewers to remain at American Family Field through at least 2042,” the Brewers’ Schlesinger said.

Evers’ office said the $290 million payment will go to the district, which will invest the money and collect interest on it as it disburses funds to cover repairs.

Former Gov. Scott Walker, a Republican, signed a bill in August 2015 to contribute $250 million in taxpayer dollars to help pay for the Fiserv Forum, the Milwaukee Bucks’ arena. Brown County residents approved a half-cent sales tax in 2000 to help pay for renovations at Lambeau Field, home of the Green Bay Packers. That tax expired in 2015 after generating about $310 million.

Governor Tony Evers announced new details of his proposal to cut taxes by more than $1.2 billion in the next two-year state budget on Sunday as Wisconsin’s budget surplus has topped $7 billion.

Governor Evers first proposed the tax cut last August that includes a 10 percent state income tax cut for the middle class. Individuals making less than $100,000 and married couples or joint-filers making at or below $150,000 would benefit from the proposal. Evers said the proposal would provide $839.6 million over the budget for low- and middle-income residents with an average cut of more than $200 annually for 1.9 million filers.

Wisconsin’s Democratic governor and GOP leaders have frequently been at odds over fiscal policy. Their differing views on tax breaks for residents is just one of many disputes over how to spend the state’s record budget surplus, which is on top of an additional $1.7 billion set aside for Wisconsin’s rainy day fund.

In his budget, Evers is also proposing to:

• Increase the federal Earned Income Tax Credit to more than $300 annually on average for 200,000 families
• Enhance the Homestead Tax Credit to help seniors and increase eligible household income to $35,000
• Expand property tax relief for veterans with disabilities by providing $53.5 million over 2 years
• Create a caregiver tax credit to help with caregiving costs limited to $500 in a tax year, providing $195 million in tax relief over 2 years to around 240,000 taxpayers
• Expand the Child and Dependent Care Tax Credit from 50 to 100 percent of the federal credit in 2023
• Adopt federal tax changes to protect student loan borrowers and adopt remaining provisions of the Tax Cuts and Jobs Act of 2017, which would raise $388.2 million over 2 years
• Repeal the personal property tax, providing more than $200 million to businesses
• Increase a research credit for businesses from 15 to 15 percent in 2024
• Limit the 30 percent long-term capital gains exclusion to individuals making less than $400,000, raising $339.4 million over 2 years
• Limit the manufacturing tax credit to the first $300,000 in qualified production income, raising $655.1 million over 2 years to offset tax breaks for the middle class and businesses

The public is unlikely to ever know how the state Department of Administration came to decide how to allocate and spend nearly $4 billion from three federal pandemic emergency spending bills.

Questioned by a sometimes frustrated Joint Legislative Audit Committee Tuesday at the Capitol, DOA leaders acknowledged that many of the decisions about how to allocate money to state agencies and local governments were made in phone conversations and emails with Gov. Tony Evers and his staff that were not documented.

There is no documented rationale for how much agencies would be granted or why they were granted those amounts. How the money has been spent is also often impossible to decipher given the lack of tracking or records.

The absence of recordkeeping was first discovered in early June during an audit by the Legislative Audit Bureau. In itsreport, issued in December, the bureau said DOA and the Evers administration provided to them anecdotal and undocumented information about how the state and its agencies intended to spend the emergency funds provided through the CARES Act, American Rescue Plan Act and the Investment and Jobs Act.

Kathy Blumenfeld, DOA’s secretary designee, told the committee the department intended to comply with the audit’s recommendation to document the decision-making for the additional roughly $1.8 billion the state has yet to allocate or spend.

State Sen. Devin LeMahieu, R-Oostburg, has filed open records requests with DOA for any documentation not already provided to auditors pertaining to emergency spending decisions, she said.

But it was clear during an exchange with committee co-chair Rep. Robert Wittke, R-Racine, that the department had nothing more to provide state auditors before the department was to have reported back on Feb. 17.

“We can’t produce — we wouldn’t want to, it wouldn’t be right — something that doesn’t exist,” Blumenfeld told Wittke.

Chris Patton, DOA deputy secretary, told the committee that in hindsight the kind of documentation requested by auditors was in order but that in the chaotic first months of the pandemic the goal was to allocate money as quickly as possible.

Several committee members, however, pointed out that DOA was unable to document any spending rationale for the American Rescue Plan Act, the third of the spending bills, passed nearly two years ago.

“The Department of Administration failed to provide the Audit Bureau with even the most basic documents and information used to make federal funding decisions,” co-chair Sen. Eric Wimberger, R-Green Bay said in a statement issued after the meeting. “The public has a right to know how priorities for this funding were determined and why.”

DOL Inspector General Larry Turner said in testimony submitted Wednesday to the House Ways and Means Committee that “at least $191 billion in pandemic UI payments could have been improper payments, with a significant portion attributable to fraud.”

That figure is nearly $30 billion higher than the $163 billion estimate Turner gave in testimony last year to the Democratic-controlled Senate Homeland Security and Governmental Affairs Committee.

The Ways and Means panel, chaired by Republican Rep. Jason Smith (Mo.), is meeting Wednesday for a hearing on what Smith has called “the greatest theft of taxpayer dollars in American history, the massive fraud perpetrated in the unemployment insurance program that skyrocketed with the COVID-19 pandemic.”

“With these varying estimates, it’s clear that the Biden Administration and Congress are in the dark about the size and scope of the greatest theft of taxpayer dollars in American history. The new Republican majority is turning on the lights,” Smith said.

The government created four new unemployment programs as the COVID-19 pandemic hit the country in an effort to help impacted workers, according to the Government Accountability Office (GAO), and the quick dispersal of funds opened up the programs to exploitation.

Citing DOL statistics, GAO puts the amount the federal government paid out in unemployment insurance benefits at around $878 billion between April 2020 and September 2022.

GAO said in a report last month “substantial levels of fraud and potential fraud in unemployment insurance (UI) programs during the pandemic.” Though it clarified that no measure “completely and reliably indicates the extent of fraud in UI programs,” GAO estimated that fraud specifically may have exceeded $60 billion.

“Strengthening the UI program to prevent fraud before it occurs and to detect it when it does are key objectives to ensure that unemployed workers expeditiously receive much needed benefits while safeguarding tax dollars directed toward that goal,” Turner wrote.

Governor Tony Evers on Tuesday proposed that counties and more than two dozen large cities in Wisconsin be allowed to ask voters to raise the sales tax to pay for local services such as police and fire protection and road repairs.

He first unveiled a proposal to change how local governments are funded in his State of the State speech last month. Evers announced the local option sales tax part of the plan on Tuesday, a week before he submits his two-year budget proposal to the Legislature.

The Governor, wants to fund local governments with 20% of the state sales tax, or 1 cent of the 5-cent sales tax charged per dollar spent. That amounts to about $576 million in the first year, with future payments increasing as the sales tax goes up, Evers said. Evers’ plan is similar to one that Republican legislative leaders have been discussing.

Assembly Speaker Robin Vos said in a statement that Republicans “will not grow the size of government or write blank checks without insisting that local governments innovate and combine services to reduce costs.”

All Wisconsin counties are now able to only levy a half-cent sales tax.

Evers’ proposal would allow for Milwaukee County to impose an additional 1 cent per dollar tax on sales, with half of what is raised going to the city of Milwaukee, if approved by voters. All other counties could ask for a half-cent sales tax increase.

Cities other than Milwaukee with at least 30,000 people could also ask voters for a half-cent sales tax increase. There are 25 cities with at least 30,000 people, based on the 2020 Census.

A new report found that just about 25 percent of hospitals are fully compliant with a federal price transparency rule that requires all hospitals to post their prices online in an accessible and searchable format.

The report, published by the Patient Rights Advocate on Monday, said that it surveyed the websites of 2,000 large hospitals across the United States to determine whether they were compliant with the federal Hospital Transparency Rule that was implemented at the start of 2021. The report said that about 75 percent were not compliant with the new rule, and even though the majority posted files, “the widescale noncompliance” was “due to most hospitals’ files being incomplete, illegible, or not having prices clearly associated with both payer and plan.”

The report also found that 6 percent of hospitals had not posted any standard charges files and therefore were in total noncompliance.

“This noncompliance obstructs the ability of patients, employer and union purchasers, and technology developers to comparatively analyze prices, make informed decisions, and have evidence to remedy errors, overcharges and fraud,” the report reads.

The report also said that none of the hospitals from the country’s largest hospital system, HCA Healthcare, were in compliance.

“This blatant obfuscation of prices and flouting of the rule demonstrates that implementation and enforcement efforts must be rigorously examined and markedly strengthened to improve compliance, enable technology innovators to parse the pricing data, and empower American consumers with upfront prices,” the report reads.

The report did show an increase of compliant hospitals from previous reports released by the Patient Rights Advocate. In August 2022, just 16 percent of hospitals were compliant with the new rules, according to the report.

The newly enacted Providing Urgent Maternal Protections for Nursing Mothers Act extends the rights of nursing mothers to have time and a private space to pump breastmilk at work. Under the PUMP Act, more workers in more industries are now protected by the provisions of the Fair Labor Standards Act. The new protections also expand remedies available to these workers if their employers do not comply with the law.

The campaign by the department’s Wage and Hour Division – which enforces the PUMP Act and the FLSA – provides information about worker protections for nursing mothers includes national outreach and a website providing guidance, fact sheets and other resources for workers and employers.

The PUMP Act includes the following provisions:

• Extends rights and protections to have break time and space to pump breast milk at work to include millions of working women not previously covered by the FLSA.
• Allows working women to take legal action and seek monetary remedies if their employer fails to comply with federal law.
• Clarifies when an employer must pay the worker for time spent pumping breast milk if they are not completely relieved of work duties.

Employers added 517,000 jobs in January, the Labor Department said in its monthly payroll report released Friday. The unemployment rate, meanwhile, unexpectedly dropped to 3.4%, the lowest level since 1969.

Job gains were broad-based in January, with leisure and hospitality leading the way in hiring, adding 128,000 new workers. That was followed by employment in professional and business services (82,000), government (74,000), health care (58,000) and retail (30,000).

“The surprisingly, strong across-the-board January employment report shows that labor demand remains too hot for the economy’s own good and will embolden the Fed to raise rates more not less,” said Kathy Bostjancic, the chief economist at Nationwide. “The risks are now that they might need to do more.”

While monthly jobs data is always important, the Fed has been closely watching the reports for signs the labor market is moderating from its frenzied pace as policymakers try to wrestle inflation –  which is still running near a 40-year high – back to 2%.

The Federal Reserve extended its fight against high inflation Wednesday by raising its key interest rate by a quarter-point, its eighth hike since March. And the Fed signaled that even though inflation is easing, it remains high enough to require further rate hikes.

The central bank’s latest move put its benchmark short-term rate in a range of 4.5% to 4.75%, its highest level in about 15 years. Though smaller than its previous hike — and even larger rate increases before that — the latest move will likely further raise the costs of many consumer and business loans and the risk of a recession.

In a statement, Fed officials repeated language they have used since March that says, “ongoing increases in the (interest rate) target range will be appropriate.” That is seen as a signal that they intend to raise their benchmark rate again when they next meet in March and perhaps in May as well.

Over the past several months, the Fed’s officials have reduced the size of their rate increases, from four unusually large three-quarter-point hikes in a row last year to a half-point increase in December to Wednesday’s quarter-point hike.

The more gradual pace is intended to help the Fed navigate what will be a high-risk series of decisions this year. The slowdown in inflation suggests that its rate hikes have started to achieve their goal. But measures of inflation are still far above the central bank’s 2% target. The risk is that with some sectors of the economy weakening, ever-higher borrowing costs could tip the economy into a recession later this year.