On June 15, 2011, the state Legislature finalized its work on the 2011-13 Wisconsin State Budget, marking one of the earliest completion dates for the state budget in recent years.
Faced with a deficit of $3.6 billion, Governor Walker and the Wisconsin Legislature made significant spending cuts and reduced the structural deficit into a budget surplus of approximately $300 million while maintaining their campaign promise not to raise taxes. Moreover, property taxes will be virtually frozen over the next two years, saving the average homeowner approximately $700, according to some reports.
As reported last month, the state budget contains numerous provisions of interest to REALTORS® and property owners. Following is a brief summary of the major budget provisions impacting the real estate industry.
Property Taxes – The budget places a 0-percent property tax cap on local levies for the next two years, but would allow increases based upon net new construction and gives local governments the power to carry forward up to 0.5 percent of unused levy authority to the next year. Additionally, the budget implements a permanent 1.5-percent cap for future years.
Farmland Conversion Fee – The budget eliminates the farmland conversion fee, which applied anytime land zoned exclusively for agriculture was rezoned to another zoning classification. In addition, the budget (a) maintains the Purchase of Agricultural Conservation Easements (PACE) program, but eliminates the bonding and funding for the program; (b) funds the 12 PACE applications that had been submitted for this year; (c) deletes the requirement for DATCP to solicit PACE applications in the future; and (d) requires DATCP to study PACE and report back to JFC by June 30, 2012. These changes went into effect on January 1, 2011.
Real Estate Examining Board – The budget changes the Real Estate Board to a new Real Estate Examining Board, adds greater real estate licensee representation to the REEB (five real estate licensees, rather than four), and provides the REEB with more autonomy to approve educational curriculum and state approved forms (currently performed by the department secretary).
Prevailing Wage – The budget makes significant changes to the prevailing wage law, including:
- Publicly funded private construction projects. Makes a full repeal of all changes made in the 2009-11 state budget related to publicly funded private construction projects, which applied the prevailing wage law to private construction projects that receive direct financial assistance from a local governmental unit in the amount of $1 million or more.
- Residential projects. Exempts from the prevailing wage law projects of state or local public works involving residential property containing two dwelling units or less.
- Turnkey infrastructure for residential development projects. Exempts “turnkey infrastructure” (paid for by the developer and dedicated to a municipality) for residential subdivisions from the prevailing wage law. “Residential development” means any development where 90 percent of the lots contain or will contain one- to two-family dwellings. This will allow mixed-use developments to be eligible for the exemption.
- Local preemption. Prohibits local governmental units from enacting and administering local prevailing wage ordinances. Specifies that existing ordinances are void.
- Project thresholds. Eliminates the current provision specifying that prevailing wage laws for municipal and state public works projects do not apply to projects for which the estimated cost of completion is below $25,000. Instead project thresholds are $48,000 for single-trade projects, $234,000 for multiple-trade construction projects conducted by townships or by cities and villages with populations of less than 2,500, and $100,000 for all other multiple-trade municipal and state public works projects.
- Reporting requirements. Repeals the monthly wage reporting requirements for contractors, subcontractors, or contractors’ or subcontractors’ agents enacted in the 2009-11 state budget.
- Effective date. January 1, 2012.
Housing Impact Statement – Restores the requirement for a housing impact statement to be prepared by the Department of Administration (previously prepared by the Department of Commerce) any time a state agency proposes an administrative rule that directly or substantially affects the development, construction, cost or availability of housing in the state.
Storm Water Management Rules (Wis. Admin. Code Ch. NR 151) – Repeals the Department of Natural Resource’s Storm Water Management Rules (NR 151) and directed the DNR to recreate the rules in a manner such that the rules do not contain requirements more stringent than the federal Clean Water Act. The rules are to be recreated within the next six months.
Shoreland Zoning (Wis. Admin. Code Ch. NR 115) – Requires the DNR to perform an economic impact analysis of NR 115 on the economic effect of NR 115 on specific businesses, business sectors, public utility ratepayers, local governmental units and the state’s economy as a whole. Requires the DNR to prepare the report by December 31, 2011, and submit the report to the governor, to the chairperson of the appropriate standing committees in each house of the Legislature and to the co-chairpersons of the Joint Committee for Review of Administrative Rules.
Eminent Domain – Places new restrictions on the ability of landowners to use appraisals to challenge condemnations, and limits on the amount of attorneys fees a court can award landowners, making it more difficult for property owners to hire attorneys to represent them in eminent domain proceedings.
For more information on the provisions in the 2011-13 State Budget, please contact Tom Larson (tlarson@wra.org) at 608-240-8254.
Tom Larson is Chief Lobbyist and Director of Legal and Public Affairs for the WRA.