I am partially vetoing the amount of funding provided by writing in a smaller amount that deletes $37,650 in fiscal year 1999-2000 and $43,500 in fiscal year 2000-2001. Because I want to limit the number of new positions created, my veto reduces funding for 1.0 FTE wildlife biologist position and, instead, provides funding for only 0.5 FTE wildlife biologist position. I am requesting the Department of Administration secretary to not allot these funds and to authorize a 0.5 FTE wildlife biologist position rather than the 1.0 FTE wildlife biologist position. This is an important study, but it can be conducted with the staff and dollar resources that are being provided in the bill as vetoed.
25. Commerce – Gaming Economic Development and Diversification Grant Programs
Sections 172 [as it relates to s. 20.445 (7) (kd)], 478 [as it relates to s. 20.445 (7) (kd)], 2017j, 2023m, 2953g, 2953h and 2953i
These sections provide funding under the gaming economic development and diversification grant programs for two specific projects and one additional grant program. Sections 2953g, 2953h and 2953i provide annual funding of $900,000 for remediation and economic redevelopment projects in the Menomonee Valley, and also annual funding of $150,000 for the Northwest Regional Planning Commission to establish a community-based venture fund.
I object to the extent to which gaming economic development and diversification program funding is absorbed by these projects. I am partially vetoing these provisions so the funding amounts will be provided on a one-time basis so more funding will be available for spending at the discretion of the Department of Commerce. These organizations can compete for additional grants from the Department of Commerce.
The other sections provide annual funding of $600,000 for grants to tribal colleges under the Governor's work-based learning board, for work-based learning programs. I am partially vetoing these sections so that the Department of Workforce Development will be less restricted in administering grants under the work-based learning program.
26. University of Wisconsin System Aquaculture Demonstration Facility
Sections 887, 9107 (7x) and 9154 (3x)
These provisions would require the Board of Regents to submit a plan to the Joint Committee on Finance for its approval for the construction and operation of the aquaculture demonstration facility. The provisions specify that the Building Commission not authorize public debt to be contracted for the purpose of financing construction of the aquaculture demonstration facility unless the Joint Committee on Finance has first approved the report. The provisions also require the Board of Regents to make certain assurances regarding the applied research and training to be conducted at the facility.
I am vetoing these provisions because they impose unnecessary burdens on the Board of Regents. The board will still be required to obtain approval from the Building Commission prior to their authorization of public debt for the purpose of financing construction of the aquaculture demonstration facility. I am also directing the Department of Agriculture, Trade and Consumer Protection to work with Wisconsin’s aquaculture industry to develop a management plan that ensures research at the facility is applied and is in the interest of growing and promoting aquaculture in the state.
STATE OF WISCONSIN INVESTMENT BOARD
27. Bonus Compensation
Sections 694c, 694r and 694w
These provisions determine how compensation is provided to employes of the investment board, including bonus compensation.
I object to the elimination of merit-based compensation for board employes. I am partially vetoing these provisions so that employes of the State of Wisconsin Investment Board (SWIB) who are members of the unclassified service may still receive bonus compensation, as long as the cost may be financed under the new method of determining the board's operating budget. The bill shifts the SWIB’s operating budget from a fixed appropriation to an amount that is indexed to the level of assets under management. The purpose of this new authority is to provide the resources necessary to effectively manage $60 billion in assets under management. To most effectively use the new budget authority to manage resources, the authority to award performance bonuses should be maintained.
28. Information Technology Initiatives
Section 172 [as it relates to s. 20.507 (1) (h)]
Section 172 [as it relates to s. 20.507 (1) (h)] increases the salary and fringe benefits component of the Board of Commissioners of Public Lands’ (BCPL) appropriation by $43,600 in fiscal year 1999-2000 and by $50,400 in fiscal year 2000-2001 and makes an offsetting reduction of $47,000 annually provided in the supplies and services component of the BCPL’s appropriation to delete funds budgeted for general information technology (IT) support consultant services to perform these same system development and administration functions. This reallocation of funds is intended to fund a new 1.0 FTE information technology position for IT system development and administration. Although there is no language in the budget bill that authorizes this position or funding reallocation, the purpose of these changes was included in a Conference Committee amendment to the bill.
I am vetoing the part of the bill which funds this new 1.0 FTE PR-S position by lining out the Board of Commissioners of Public Lands' s. 20.507 (1) (h) appropriation and writing in a smaller amount that deletes $100 PR-S provided for this purpose in fiscal year 1999-2000 and in fiscal year 2000-2001. My original budget request included funding for IT consulting services and I believe the board will have more flexibility to define and meet its IT support needs by purchasing consulting services. Therefore, I am also requesting the Department of Administration secretary not to allot these funds. Furthermore, I am requesting the secretary not to authorize 1.0 FTE PR-S positions.
29. Revised Investment Authority for Certain Board Investments
Sections 593e, 689b, 689d, 689fh, 689j, 689L, 694s, 695b, 695m, 698c, 699g and 699s
These sections:
· Delete the current limitation that common school fund, normal school fund, University fund and agricultural college funds are controlled and invested only by the Board of Commissioners of Public Lands (BCPL), and instead authorize the delegation of investment of the assets of each fund to the State of Wisconsin Investment Board (SWIB).
· Require that if the BCPL delegates the investment of the assets of these funds to SWIB, SWIB could invest those assets in any manner authorized for the investment of any of the types of funds under the control of SWIB.
· Require SWIB to assign an investment professional to assist the BCPL in establishing and maintaining its investment objectives.
· Authorize SWIB to deduct the costs of such services from the gross receipts of the fund to which the monies invested belong.
· Direct SWIB to deduct its investment management expenses from the gross receipts of the BCPL funds to which the interest and income of the investment will be added.
· Clarify that SWIB would credit all of these investment management expense payments for BCPL investments to SWIB’s general program operations appropriation account.
I am vetoing these sections entirely for three reasons. First, I am not confident that the revised investment authority corresponds to the fiduciary role of the Board of Commissioners of Public Lands. Second, these provisions were not debated thoroughly enough to understand the consequences of delegating this investment authority. Third, the fiscal effects of these changes were not considered. While I may support some revisions to the investment authority of SWIB and BCPL, I believe these issues should not be included in the state budget and instead should be considered as separate legislation.
REAL ESTATE TRANSFER TAX
30. Real Estate Transfer Forms and Filing Requirements
Sections 1810hm and 9143 (3b)
Section 1810hm would direct the Department of Revenue (DOR), by January 1, 2000, to identify any nonessential items that could be made optional on the real estate transfer return form (RETR), develop a simplified form, and submit it for review by the Joint Committee on Finance under the 14-day passive review process.
I am vetoing this provision because DOR has revised the RETR twice in the last three years, each time reducing the complexity of the form. In addition, a new smaller form will replace the current form effective January 1, 2000. The efforts of the department in this recent revision were specifically intended to eliminate unnecessary items from the form. To this end, DOR discussed each line on the form with representatives of other agencies, local and county officials, private sector practitioners, and department staff.
Section 9143 (3b) would specify that a RETR not be required in the case of a conveyance that is executed for nominal, inadequate or no consideration to conform, correct or reform a conveyance previously recorded. I am vetoing this provision because, if no filing were required, DOR audit staff would be unable to discern if an exemption was improperly claimed for cases in which a transfer fee should have been paid. For example, DOR audit staff have found that filers confuse the language of "for or nominal consideration" and use the exemption when there is no money exchanged for the real estate; in reality, however, a transfer fee is due in this type of situation.
SALES AND USE TAX
31. Exemption for Maintenance of Railroad Tracks and Rights-of-Way
Sections 1812t and 9443 (8c)
These sections provide a sales and use tax exemption for the gross receipts from the sale of and storage, use, or other consumption of materials in the maintenance of railroad tracks and rights-of-way.
I am vetoing these sections because the delayed effective date of the provision, January 1, 2001, extends the full fiscal impact of the program beyond the scope of the current biennium, and because I am concerned about creating additional sales tax exemptions. The fiscal effect of this veto is to increase GPR revenue by $470,000 in fiscal year 2000-2001.
SHARED REVENUE AND TAX RELIEF
32. Tax Exemption Reporting Fee
Section 1655p
Under current law, the owners of certain tax-exempt properties are required to file a biennial report providing an estimate of the value of their exempt properties. To defray the cost of collecting this information, local governments are authorized to collect a fee from the owners of these properties. This section exempts churches and religious associations from this fee.
I am partially vetoing this section to limit the exemption only to churches. Since the definition of “religious association” is less distinct and, consequently, more likely to allow questionable claims for tax exemptions, it is appropriate that these organizations continue to pay the fee. I wish to make perfectly clear, however, that this veto makes absolutely no changes regarding the taxability of any properties.
33. Use-Value – Definition of Agricultural Land
Sections 1655L and 9343 (23am) [as it relates to s. 70.32 (2) (c) 1.]
These sections modify the definition of agricultural land beginning January 1, 2000, to exclude from use value assessment land that generated less than $2000 in gross farm profits in the preceding year.
I am vetoing this provision because it is unclear, unequitable and would create administrative difficulties for farmers and assessors. If this provision is applied on a per-parcel basis, some parcels of a farm may qualify for use-value assessment while some may not. Meanwhile, another farm that is identical in every way except that its land parcels are larger may qualify in its entirety for use-value. The requirement to annually examine the preceding year income from the land could lead to parcels qualifying one year for use-value but not the next despite uninterrupted use as farmland. Applying the $2000 annual threshold to each parcel would require farmers to keep, and assessors to examine, detailed records each and every year.
34. Use-Value Administrative Rules
Sections 1797k and 9343 (22tm)
These sections prohibit the Department of Revenue from including in the Wisconsin Property Assessment Manual the department’s per acre value guidelines for each municipality unless the guidelines are based on procedures that are included in the department’s administrative rules.
I am vetoing these sections because this requirement is unnecessarily restrictive. The department should continue to have flexibility to quickly adopt changes that are in keeping with accepted appraisal practices. Requiring the Department of Revenue to update its administrative rules for minor revisions in accepted appraisal practices would hinder the department’s responsiveness to new information and market conditions.
35. Automatic Teller Machines
Sections 1653b and 9343 (23c) [as it relates to s. 70.11 (39)]
These sections exclude automatic teller machines from the property tax exemption for computer equipment beginning January 1, 2000.
I am vetoing this provision because this is an unnecessary intrusion into the Department of Revenue’s administrative responsibility to apply the exemption fairly and uniformly to all property. As a result of my veto, GPR expenditures under the sum sufficient appropriation to reimburse local governments for the tax base lost by the computer exemption under s. 20.835 (1) (e) will increase by an estimated $750,000 in fiscal year 2000-2001.
36. Tax Incremental Financing – Village of Gilman
Section 1630k
This section extends to 38 years the maximum number of years the Department of Revenue may allocate positive tax increments to a tax incremental financing district in the Village of Gilman in Taylor County.
I am vetoing this section because this exception to normal tax incremental financing law may not be necessary. The tax incremental financing district in question still has many years remaining under current law before the department may no longer allocate tax increments to the district. Consequently, it is premature to make this extension at this time. My veto does not effect the other provisions in the bill for a tax incremental financing district in the Village of Gilman. My veto merely retains the same maximum number of years for increment allocations by the department for this tax incremental financing district as similarly situated districts in other municipalities.
37. Premier Resort Area – Eagle River
Sections 1621e and 1621f
These sections allow the City of Eagle River to enact an ordinance or adopt a resolution declaring itself a premier resort area even if less than 40% of the equalized assessed value of the taxable property in the city is used by tourism-related retailers. By enacting such an ordinance or adopting such a resolution, the city would be able to adopt a half-cent sales tax on items sold by tourism related businesses within the city.
I am vetoing these sections because the Legislature should seek a uniform means to allow additional municipalities to adopt the extra half-cent sales tax rather than enacting specific exemptions that create inequitable revenue options for similarly situated local governments.
The existence of this provision in the budget bill underscores the need for the state to examine means for municipalities to have alternative revenue sources. In this process, it will be important to look closely at which levels of government pay for what services and which levels of government pay for what share of these services.
38. Small Municipalities Shared Revenue
Sections 172 [as it relates to s. 20.835 (1) (b)] and 1818Ln
These sections increase the appropriation for small municipalities shared revenue from $10,000,000 to $11,875,000 for distributions in the year 2000 and each year thereafter, a $1,875,000 increase.
I am partially vetoing this provision to provide a $1,000,000 increase in the program by lining out $11,875,000 and writing in $11,000,000 in section 172 as it relates to s. 20.835 (1) (b) for fiscal year 2000-2001, and in section 1818Ln in specifying the appropriation amounts distributed for the year 2000 and thereafter. I am partially vetoing this provision because the state budget’s mismatch between revenues and expenditures in fiscal year 2000-2001 is too large. If this mismatch is not reduced, the state may have a very difficult time balancing the general fund budget during the 2001-2003 biennium without harsh expenditure reductions or endangering the state’s commitment to tax relief. My partial veto will still provide a 10% increase in funding for the program.
Because this veto will reduce estimated expenditures in the appropriation under s. 20.835 (1) (b) in fiscal year 2000-2001, I am requesting the Department of Administration secretary to reestimate fiscal year 2000-2001 expenditures for the appropriation down by $875,000.
39. Shared Revenue Payments
Sections 172 [as it relates to s. 20.835 (1) (d)] and 1818Lp
Section 1818Lp increases the total amount of shared revenue to counties and municipalities from $930,459,800 to $949,069,000 – an $18,609,200 or 2% increase. The increase is effective for the amounts to be distributed in the year 2000 and beyond. Section 172 [as it relates to s. 20.835 (1) (d)] reflects the 2% increase in the appropriation schedule for 2000-2001.
I am vetoing these sections to eliminate the increase in shared revenue payments. I am vetoing the shared revenue increase because the mismatch between revenues and expenditures in fiscal year 2000-2001 is too large. If this mismatch is not reduced, the state may have a very difficult time balancing the general fund budget during the 2001-2003 biennium without harsh expenditure reductions or endangering the state’s commitment to tax relief. I am fully vetoing section 1818Lp. I am also removing the additional $18,609,200 in the schedule under section 172 [as it relates to s. 20.835 (1) (d)] for fiscal year 2000-2001 by lining out $949,069,000 and writing in $930,459,800.
As a result of meeting with mayors from the League of Municipalities, it was suggested that increased funds to the Expenditure Restraint Program, Small Municipalities Shared Revenue and Payments for Municipal Services were preferable to increasing shared revenue. Thus, while I am vetoing the increase in shared revenue, elsewhere in this budget I am approving increases in expenditure restraint payments, small municipalities shared revenue payments and payments for municipal services, as well as increases to community aids, county mandate relief, transportation aid and other programs that will benefit local governments.
Because this veto will reduce estimated expenditures in the appropriation under s. 20.835 (1) (d) in fiscal year 2000-2001, I am requesting the Department of Administration secretary to reestimate fiscal year 2000-2001 expenditures for the appropriation down by $18,609,200.
A related provision in the bill, section 9143 (3mv), specifies that the increase in shared revenue shall be distributed proportionately by providing each county and municipality the same percentage increase to its current law payment. This provision is eliminated from the bill under my partial veto of the lottery credit. Instead of providing the same percentage increase to all, I prefer that an increase in shared revenue be distributed according to the program’s determination of need.
I believe that we need to have a comprehensive review of our local aid system with the goal of overhauling it in the next budget. I will seek input from a wide variety of local officials about how to go about that reform effort.
40. Payments for Municipal Services
Section 172 [as it relates to s. 20.835 (5) (a)]
This section [as it relates to s. 20.835 (5) (a)] increases the appropriation for payments for municipal services to $23,439,500 for fiscal year 2000-2001.
I am partially vetoing this provision to limit the appropriation to $21,565,300 in fiscal year 2000-2001. I am partially vetoing this provision by lining out $23,439,500 and writing in $21,565,300 in section 172 as it relates to s. 20.835 (5) (a) for fiscal year 2000-2001. I am partially vetoing this provision because the state budget’s mismatch between revenues and expenditures in fiscal year 2000-2001 is too large. If this mismatch is not reduced, the state may have a very difficult time balancing the general fund budget during the 2001-2003 biennium without harsh expenditure reductions or endangering the state’s commitment to tax relief. My partial veto will still provide an increase in funding for the program in excess of 19%. It will also fund an estimated 92% of entitlements under the program – providing an increase over the proration factor of recent years and returning the proration factor to a level near its historical norm. Without a veto, the program would have been funded in excess of its historical level.
Because this veto will reduce the appropriation under s. 20.835 (5) (a), I am requesting the Department of Administration secretary to not allot $1,874,200 in the appropriation in fiscal year 2000-2001. My partial veto of this provision will also reduce departmental revenues to the general fund by $862,100 in fiscal year 2000-2001.
41. Lottery Credit and Property Tax Relief
Sections 172 [ as it relates to ss. 20.455 (2) (fm), 20.566 (2) (am), and (8) (a), (b) and (c), and 20.835 (2) (dn)], 490g, 595m, 596r, 596s, 597g, 597c, 597f, 606t, 612p, 717xh, 1818mLf, 1818mLg, 1818mLh, 9143 (3g), 9143 (3gm), 9143 (3h), 9143 (3mv), 9243 (2c) and 9443 (24e)
These sections provide an increase in the lottery credit as it would appear on the December 1999 and December 2000 property tax bills by transferring over $253 million from the general fund to the lottery fund and providing for the shift of various lottery fund expenses from the lottery fund to the general fund for fiscal years 1999-2000 and 2000-2001. These sections also include several other provisions. Section 9143 (3g) specifies that the Legislature’s intent in transferring funds from the general fund to the lottery fund is to reimburse the lottery fund for certain expenditures of the lottery fund during the October 1995 to June 1999 time period. Section 9143 (3gm) provides the Department of Revenue with 3.0 FTE PR positions for the purpose of performing duties related to the business tax registration system. Section 9143 (3h) provides transfers to make technical corrections related to 1999 Wisconsin Act 5 to use pari-mutuel proceeds as part of the lottery and gaming credit. Section 9143 (3mv) specifies that the increase in shared revenue contained in the bill shall be distributed proportionately by providing the same percentage increase to each county and municipality.
I am vetoing in its entirety the provision in sections 717xh and 9243 (2c) making transfers from the general fund to the lottery fund for the reimbursement of prior year expenditures. This provision, also known as the “lottery buyback,” has raised severe constitutional questions, including those cited in a recent opinion from the Attorney General. Because the buyback relates to years prior to the April 1999 constitutional amendment allowing the lottery proceeds to be distributed contrary to the uniformity clause of the constitution, the lottery buyback very likely violates the uniformity clause. In short, it is illegal. I am vetoing the buyback because it would be irresponsible to adopt as state law a measure which would surely provide false hope of property tax relief since it would easily be struck down by a court ruling.
