News of the Day

Governor Evers Announces More Than $140 Million for Wisconsin’s Tourism and Entertainment Industries

Yesterday, Governor Tony Evers announced more than $140 million in grants to businesses and organizations that play an integral role in Wisconsin’s tourism and entertainment industries. The new grant programs will be invested in industries hit hard by the COVID-19 pandemic, including live event venues, movie theaters, summer camps, minor league sports, and the lodging industry. Additional investments will be made in reopening Wisconsin historical sites and marketing support for Wisconsin’s tourism industry.

The investments announced by Gov. Evers today include:

• $75 million for lodging grants;
• $11.25 million for movie theaters;
• $12 million for live event small businesses;
• $2.8 million for minor league sports teams;
• $10 million for live venues;
• $15 million for destination marketing organizations;
• $8 million for summer camps;
• $1 million for the Wisconsin Historical Society to assist in reopening historical sites; and
• $7.5 million to increase marketing support for Wisconsin’s tourism industry.

These investments are being funded by the American Rescue Plan Act of 2021 (ARPA) and will be administered by the Wisconsin Department of Administration and the Department of Revenue.

Individuals and businesses interested in receiving more information about the grants, including application, should sign up to receive alerts here.

Congressional GOP Lawmakers Want Answers on Unemployment Fraud in Wisconsin

In a June 17 letter signed by every Republican member of Wisconsin’s congressional delegation, legislators asked Gov. Tony Evers, a Democrat, to respond to reports of unemployment benefits claimed by fraudsters. They cited a May memo from the Secret Service warning against a “massive” scheme by a “well-organized Nigerian fraud ring exploiting the COVID-19 crisis to commit large-scale fraud against state unemployment insurance programs.” That memo didn’t name Wisconsin as one of the states targeted by that specific scheme, but did note “it is extremely likely every state is vulnerable.”

A spokesperson with the state Department of Workforce Development, which oversees the unemployment system, said in a statement that “Wisconsin has been a national leader at detecting fraud.” The department has a variety of means to detect fraud and abuse, including but not limited to auditing employer records, comparing benefit claims to payroll records in Wisconsin and other states, exchange of information between agencies, complaints from employers and tips from the public,” wrote DWD communications specialist Tyler Tichenor.

Every year, states pursue some fraud cases against individuals who claimed funds they weren’t eligible for. What is new is the presence of large-scale scams by organized criminal syndicates, including those operating in other countries, to claim United States unemployment funds. In May, announcing a new federal Department of Justice task force on the issue, President Joe Biden said the issue was among the most serious oversight issues his administration had inherited from the administration of former President Donald Trump.

The unprecedented spike in new jobless claims in 2020 led to long backlogs and a skyrocketing total number of payments. But according to the DWD’s 2021 fraud report, both the number of cases of fraud and the total amount of fraudulently paid benefits actually declined in 2020. There were 4,734 fraud cases in 2019, and just 3,561 in 2020. It accounted for about $4.7 million in 2019 and $4.5 million in 2020, according to the department.

One interpretation of that data, said economist Noah Williams of the conservative Center for Research on the Wisconsin Economy at the University of Wisconsin-Madison, is that “fraud detection basically dropped to near zero” in 2020.

“We had a huge explosion in claims in 2020, but the actual cases in the state that were referred for fraud fell,” Williams said. “We don’t know how big the problem is, but … I wouldn’t have expected the absolute number of cases to fall.”

In a report Williams authored in May, he wrote Wisconsin “was one of the worst-performing states” by several metrics of measuring its unemployment insurance system.

Bill to Eliminate Wisconsin’s Personal Property Tax Passes Committee with Bipartisan Support

A bill to eliminate the state’s personal property tax, which businesses pay on equipment and furnishings, received bipartisan support in a Senate committee Tuesday.

The bill was recommended for approval by the Senate workforce committee 4-1, with Sen. Janis Ringhand, D-Evansville, the lone vote against the measure over concerns future Legislatures could stop providing local entities more state aid to make up for the lost revenue.

The budget committee last week voted to set aside about $202 million for such payments over 2021-23 biennial budget. However, officially eliminating the tax, which lawmakers described as an antiquated and unfair tax on businesses, would be done through separate legislation rather than through the budget process.

Both the budget and a standalone bill to end the tax are expected to come before the Assembly and Senate next week. “It’ll be a great day when we can finally get rid of this tax,” bill author Sen. Duey Stroebel, R-Saukville, said Tuesday.  Stroebel said the intent is to keep providing local taxing authorities with state money to compensate for the reduction in revenue.

Sen. Brad Pfaff, D-Onalaska, said he hoped that revenue to local jurisdictions would be included in future budgets.

“I too have heard from my small-business owners. I recognize the importance of this,” Pfaff said. “But I do want to make sure we keep whole our local units of government.”

More than 40 lobbying groups have filed in favor of eliminating the tax, including business groups and local chambers of commerce. The AFSCME International Union and the League of Women Voters of Wisconsin oppose the bill.

Eliminating the personal property tax through standalone legislation would limit Gov. Tony Evers’ ability to alter it through his partial veto power, which can only be used on bills that spend money, like the budget. But it also opens the door to the Democratic governor vetoing the legislation altogether.

Wisconsin Housing Market Strong Even as Inventories Remain Tight

Both existing home sales and median prices rose by double-digit margins in May compared to their levels 12 months earlier, when the economy was in lockdown. Housing supply remains very tight with just 2.8 months of available supply in the state. Inventory is tight in all regions, across all urban/rural classifications and across all price ranges

“Basic economics tells us that strong and growing demand in a world of tight supply is going to create significant price pressure, and that’s exactly what we’re seeing in the state housing market. Median prices through the first five months are up at an annual pace of 12.1%. Unless demand moderates or supply improves, neither of which is likely in 2021, we can expect to see more of the same price appreciation through the end of this year. The good news is that mortgage rates remain very low by historical standards, which has at least partially offset the impact of significant price pressure on housing affordability in the state.  Hopefully the inflationary pressures don’t intensify, which could cause mortgage rates to increase and lower affordability,” said Michael Theo, President & CEO of the Wisconsin Realtors Association.

 

Wisconsin Legislature’s Budget Committee Wraps Up with Massive Tax Cuts

Taking advantage of an unexpected revenue windfall, Republicans on the Wisconsin Legislature’s budget committee voted Thursday to approve about $3.4 billion in income, business and property tax cuts, wrapping up its work on the two-year spending plan.

The Republican plan would bring the state’s third income tax bracket down from 6.27%  to 5.3%, generating about $2.7 billion in relief. That bracket encompasses individuals making between $23,930 and $263,480 per year, and households earning between $31,910 and $351,310 per year.

Lawmakers set aside $202 million to offset a repeal of the state’s personal property tax which applies, in general, to furniture, equipment, machinery and watercraft owned by businesses. A portion of that tax — which provides funding to schools and local governments — was eliminated in the 2017-19 budget.

Committee co-chair Sen. Howard Marklein, R-Spring Green, noted that the tax is frustrating for those who pay it because it continues to apply every year — not just when the taxed item is purchased.

The motions passed Thursday also include a $72 million increase in aid to technical colleges and an additional $408 million for general school aid. They also remove a reduction in general school aid associated with some independent charter schools. Because spending caps remain in place, that funding would result in a decrease in property taxes. In total, the budget reduces property taxes by about $647 million.

The Republican tax measures are based on the idea that “taxpayers will do a better job, a more responsible job” than government would with the majority of the $4.4 billion more than expected that the state is projected to take in over a three-year period, said co-chair Rep. Mark Born, R-Beaver Dam.

Federal Reserve Moves Up its Timeline for Interest Rate Hikes as Inflation Rises

The Federal Reserve on Wednesday considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.

As expected, the policymaking Federal Open Market Committee unanimously left its benchmark short-term borrowing rate anchored near zero. But officials indicated that rate hikes could come as soon as 2023, after saying in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.

Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement stood by its position that inflation pressures are “transitory.” The raised expectations come amid the biggest rise in consumer prices in about 13 years.

The committee did raise the interest it pays on excess reserves by 5 basis points to 0.15%.

In a separate matter, the FOMC announced that it would extend dollar-swap lines with global central banks through the end of the year. The currency program is one of the last remaining Covid-era initiatives the Fed took to keep global markets flowing.

Wisconsin Supreme Court Strikes Down Dane County Health Department Order to Close Schools

The Wisconsin Supreme Court on Friday sided with private school parents and students in striking down a Dane County order from last August that sought to close all schools to most students to limit the spread of COVID-19.

The court found that because state statute does not specifically allow local health officers to close schools during a public health emergency, Public Health Madison and Dane County director Janel Heinrich overstepped her authority, and it deemed flawed her reliance on a part of state statute that says people in her position can take all “reasonable and necessary” actions to protect public health.

“The power to take measures ‘reasonable and necessary’ cannot be reasonably read as an open-ended grant of authority,” Justice Rebecca Bradley wrote for the majority. “Doing so would swallow the rest of the statute and render it mere surplusage.”

Rick Esenberg, president of the conservative Wisconsin Institute for Law and Liberty, which represented some of the plaintiffs in the case, hailed the decision.

“The order from Public Health Madison and Dane County closing all county schools was illegal, unnecessary and unconstitutional,” he said in a statement. “Even as the COVID-19 pandemic recedes, the court’s decision provides a critical correction that ought to prevent future abuses of power in an emergency.”

OSHA Issues a New COVID Safety Rule, But Only for the Health Care Industry

The Occupational Safety and Health Administration announced a rule on Thursday outlining steps that employers must take to protect workers from the risk of Covid-19, but it will apply only to the health care industry, not to other high-risk workplaces, as the Biden administration initially indicated.

“The science tells us that health care workers, particularly those who come into regular contact with the virus, are most at risk at this point in the pandemic,” Labor Secretary Martin J. Walsh said on a call with reporters. “So following an extensive review of the science and data, OSHA determined that a health care specific safety requirement will make the biggest impact.”

The rule will require health care employers to provide protective equipment like masks, to screen and triage patients for the risk of Covid-19 and to ensure adequate ventilation and distancing, among other measures. It will also require those employers to provide adequate paid time off for workers to receive vaccinations and manage their side effects.

Mr. Walsh, whose department includes OSHA, said the administration was issuing optional guidance to employers outside health care that would focus on workplaces in the manufacturing, meat processing, grocery and retail industries.

 

Wisconsin Set for ‘Unprecedented’ $4.4 Billion Windfall

As a new estimate puts $4.4 billion more than previously estimated into politicians’ hands for the next state budget, Wisconsin lawmakers face a standoff about how to spend the extra money.

The estimate from the nonpartisan Legislative Fiscal Bureau comes after an initial January estimate, and projects more than $4.4 billion in state revenue than previously thought over the next three years–separate from another $2.5 billion from federal pandemic aid that is entirely up to the governor to spend.

This time, the new estimate includes record-setting state tax revenues from April and May that have shifted the picture of what the post-pandemic state revenue picture will look like. An LFB official called it “unprecedented,” and said the new projection was because of “vastly improved economic forecasts for the remainder of this year and the next two years.”

Gov. Evers responded Tuesday morning by immediately lifting agency budget requirements for the 2020-2021 fiscal year, meaning state departments–like the UW System which had to cut $45 million–no longer have to trim millions from their 20-21 budget. In total, the governor had directed the Department of Administration to find more than $250 million in cuts across 18 state agencies this year, a now-lifted requirement–and money that will have to be spent quickly by the end of the fiscal year.

“I think Democrats are open to a tax cut,” Assembly minority leader Gordon Hintz said in an interview. “I think we have the resources. But let’s maximize the resources that we have…this is a one-time opportunity to reinvest in broadband, reinvest in our infrastructure, get more money in the classroom to address opportunity, address mental health, and then look at ways to put money in more people’s pockets with a targeted income tax cut.”

Republican legislative leadership immediately pushed back on using the extra funds to expand government, calling the windfall temporary and saying the funds should instead find their way back directly to taxpayers.

“If we recklessly spend this new money and grow taxpayer obligations in an unsustainable way, we risk future fiscal stability – a stability Republicans have spent a decade cultivating,” Joint Finance Committee co-chair Howard Marklein said in a joint statement with budget leaders and Senate majority leader Devin LeMahieu.

LeMahieu also took the opportunity to call for ways to use the money to reduce tax burdens. “Hard-working taxpayers gave the state a massive surplus,” he noted.

“This is a temporary jump in tax revenue—sound financial planning would require this money is not spent on more government programs but returned to the taxpayer.” Senate president Chris Kapenga (R-Delafield) said in a statement. “There is no magic money tree, folks.”

According to the Associated Press, Speaker Robin Vos after meeting with Sen. LeMahieu will target a $4 billion tax cut, but isn’t sure yet which taxes will be targeted.

Governor Evers Defends Additional $300 a week in Federal Unemployment

Governor Tony Evers defended the additional $300 a week in federal unemployment benefits being allocated in response to the COVID-19 pandemic.

His position comes despite business groups calling on him to immediately stop the payments.

Critics argue the additional money is a major factor in the state’s workforce shortage.

“First of all, I’d like to see proof that the people struggling on unemployment, that if they all came back to work suddenly this problem is solved,” Evers said outside the state Capitol. “It’s an issue I’ve seen no data on, none whatsoever.”

Republican lawmakers are moving legislation that would end the additional federal money.

The governor appears likely to veto it. “I’ll take a look at it,” Evers said when asked Tuesday.

The additional $300 a week in federal benefits is set to expire on Labor Day.