Public Policy Forum
Legislature Begins Review of Governor's Budget Plan
By Michael Theo
Now it's the Legislature's turn to say how they'd balance Wisconsin's $3 billion plus budget deficit. The budget-writing Joint Finance Committee has officially begun its detailed review of Governor Doyle's 2003-05 biennial budget proposal with detailed briefings and public hearings. While it's a certainty that changes will be made, it is far from certain how much room the legislature has to stray from the basic outlines of the governor's plan given the lack of money.
The tight fiscal times however does not impose any measurable degree of discipline or cooperation on the process given the fact that both Houses of the legislature are under Republican control and the governor is a Democrat. Both of these power centers have strongly held beliefs, values and philosophies that can be (as we have seen with Indian gaming compacts and state employee union contracts) diametrically opposed.
Revenue Problems
Topping legislative concerns at this point is the fact that over $1 billion in revenues used by Governor Doyle to balance the budget could be specious. That is, nearly one third of the revenues needed to fill the $3 billion budget deficit may not materialize and thus the budget would not be balanced. These funds include one time transfers of money from segregated funds currently used for transportation projects (a $500 million transfer), funds for compensation to certain health care patients (a $200 million transfer), and funds for medical assistance reimbursements from the federal government (a $400 million transfer). Another questionable source is the revenues from the Indian gaming compacts, of which only two are currently signed. The governor is counting on over $230 million from all compacts when they are all signed.
But what could or should be done to address these revenue questions presents Republican lawmakers with a real political conundrum. If they criticize Governor Doyle for using fuzzy numbers and unreliable revenues, they must come up with their own $1.3 billion in revenues and/or cuts to fill the gap and balance the budget. If they accept some or all of these revenues, they may be assuring yet another budget imbalance in 6 months or a year. Not fixing the budget deficit once and for all is bad politics for everyone and even worse for the state's troubled bond rating. How the revenue issue is resolved will be one of the biggest pieces of the budget puzzle to watch.
Property Tax Problems
Also high on the legislature's priority list is how to insure that cuts in state spending for aid to local governments, including schools, will be handled by those units of government? As presented, the budget could shift expenditures (through spending cuts) from the state to local property taxes and/or fees. This problem is exacerbated if the questionable revenue sources discussed above forces the legislature to make deeper spending cuts in shared revenue and school aids than what the governor proposed.
This pressure on local property taxes is caused primarily by the following provisions in the governor's budget
- Two-thirds funding for schools: Reduces the state's commitment to fund two-thirds of school costs, (66 percent to 62 percent) thus providing $400 million less to school districts than previously anticipated.
- Shared revenue: Cuts approximately $70 million in shared revenue payment to local units of government in the second year of the biennium.
- Schools: Eliminates the QEO and relaxes the revenue caps for some school districts. Some legislators support significant changes to the school funding system and/or distribution of school aids in this budget, which would add pressure on local school districts to increase property taxes.
- Manufacturing property assessments: Transfers the authority/responsibility for assessing manufacturing property from the state (DOR) to local government, causing state savings but creating a substantial unfunded local mandate and could also result in significant increases in manufacturing property taxes due to lack of local assessor expertise.
To avoid large property tax increases as a result of state budget cuts, some lawmakers are considering the merits of some form of cost or revenue controls on local governments, similar to schools. While difficult to draft and perhaps even more difficult to pass, these lawmakers would argue such property tax protections are absolutely necessary if the legislature and governor are to be honest about a "no tax increase" budget.
The Joint Finance Committee will complete it's briefings and public hearings by April 9th, at which time they will begin adopting formal changes to the governor's plan. The committee is shooting for the end of May to complete it's work. The budget bill then goes to the State Senate, then to the State Assembly, then possibly to a conference committee to work out the differences between the two Houses, and finally to Governor Doyle for his veto review and signature into law. The new fiscal biennium begins July 1.
For more information or questions, contact Michael Theo at mtheo@wra.org.
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Do Your Part for Passing Good Laws and Killing Bad Ones
By Joe Murray
By the time this new legislative session is over in March of 2004, approximately 2,000 separate bills will have been introduced-everything from naming a new state symbol to balancing a budget that is $3 billion in the hole. The bills can be one sentence or several hundred pages long. Some bills have dozens of amendments. And if past is prologue, about 200 or so of those bills will directly or nearly directly impact your day-to-day practice of real estate in Wisconsin. Some will be good ideas and some will be terrible ideas. So how can you help to make sure the good ones pass and the bad ones don't? Simple. Watch for and respond to WRA Calls To Action!
The next three months will be an extremely active phase of this legislative session. This phase will be dominated by the biennial budget debate which will be concluded by July 1. But the huge budget bill will not be the only important legislation to be considered. To maximize the WRA's ability to educate and influence legislators on key real estate issues, we need your help.
WRA Calls To Action are timely communications that asks RealtorsŪ to take certain action to help pass or defeat a specific issue before the legislature or legislative committee. The action required will be for
RealtorsŪ to contact their state representative and/or state senator, or to contact Governor Doyle's office. The contact could be a phone call, a letter, an e-mail, a face-to-face meeting back in the legislator's home district, or all of the above. The Call To Action can reach you by several means including an article in this Wisconsin
RealtorŪ publication, a separate direct mail piece to your home or office, an e-mail message, a message on your MLS screen or a phone message left on your answering machine.
Regardless of the target, the issue, the venue or the means, when you see a Call To Action, it's imperative for each and every
RealtorŪ to respond. A few minutes of your time to communicate our message to your state legislators can, and often does, make all the difference in the world in our efforts to pass good laws and kill bad ones.
Finally, one of the best ways to impact the issues that will impact your business is to devote one day, just one day from your busy schedule to come to Madison and be a part of our annual Realtor (r) and Government Day on Thursday, May 22! The timing is perfect to communicate with lawmakers about key real estate issues in the pending state budget, which will be just weeks away from passage at that point. Government Day 2003 is guaranteed to be fun, informative and absolutely critical to your business success. Isn't one day worth protecting your livelihood?
A large, strong, unified and energized organization like ours is only influential when it is mobilized. Please do your part over the next several months and take action when you see a WRA Call To Action.
For more information or questions, contact Joe Murray at jmurray@wra.org.
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