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.
I am partially vetoing the provisions that shift to the general fund the current lottery fund expenses for lottery general program operations, lottery retailer commissions, lottery vendor fees, the farmland tax relief credit, gaming law enforcement costs of the Department of Justice, and the lottery and gaming credit administration costs of the Department of Revenue. Under the provisions of the bill, these costs are moved to the general fund for two years (both fiscal year 1999-2000 and fiscal year 2000-2001). Under my partial veto, these costs are shifted to the general fund only for the first year of the biennium, fiscal year 1999-2000. Under my partial veto, these costs will return to the lottery fund for fiscal year 2000-2001. I am partially vetoing these provisions in this manner because of legal, fiscal, policy and practical concerns. First, the distribution of the December 1999 property tax bills is not far away. Municipalities will need to know soon what will appear on the tax bills. Therefore, I have left the shift of these costs for the first year in place to finalize the issue for the coming tax bills. Second, the drain on the general fund caused by this shift may not be sustainable into the future, especially given the large mismatch between fiscal year 2000-2001 GPR revenues and expenditures. Third, this shift artificially increases the lottery credit beyond the state’s traditional interpretation of what is defined as lottery proceeds. This artificial increase should end as soon as possible. Fourth, because the definition of lottery proceeds created by the shift of expenses is nontraditional, continued shift of these expenses may lead to legal challenges that may ultimately hurt Wisconsin taxpayers. Finally, the use of general fund taxes to pay for these costs simply violates common sense. We should stop this as soon as practical.
I am also vetoing sections of this bill to provide December 2000 property tax relief in a constitutional, uniform and common sense manner. Instead of this artificial increase in the lottery credit for the December 2000 tax bills, my partial vetoes will provide an increase in the school levy credit under s. 20.835 (3) (b) of the statutes. This will move property tax relief away from a risk-taking plan into a safely and surely deliverable procedure. Consequently, I am partially vetoing sections 9143 (3g), (3gm), (3h) and (3mv) of the bill because the partial veto of these sections is necessary to replace the artificial increase in the lottery credit with an increase in the school levy credit. My partial veto to increase the school levy credit will increase the amount provided for property tax relief by $60,000,400 on the December 2000 property tax bills. This amount will be paid by the state in July 2001. This additional property tax relief will help offset the decrease in the lottery credit that will occur when the lottery credit returns to a normal and common sense size on the December 2000 property tax bills.
In other sections of the bill I have partially vetoed the school property tax rent credit to increase property tax relief paid through that credit.
To implement my partial vetoes to fund the traditional lottery fund appropriations from the general fund for fiscal year 1999-2000 only, rather than for both fiscal years of the biennium, and to restore the normal understanding of how much is available for the lottery credit, I am taking the following specific measures:
Gaming Law Enforcement. I am partially vetoing section 172 as it relates to s. 20.455 (2) (fm) for fiscal year 2000-2001 by lining out $226,700 and writing in $0. Because this veto will reduce the appropriation under s. 20.455 (2) (fm), I am requesting the Department of Administration secretary to not allot $226,700 in the appropriation in fiscal year 2000-2001. I am vetoing section 490g because it would prohibit the return of this cost to the lottery fund for the entire 1999-2001 biennium. With my veto of section 490g, expenditure authority from lottery receipts may be restored for fiscal year 2000-2001 for the purpose of gaming law enforcement through separate legislation or action under s. 13.10 of the statutes.
Lottery and Gaming Credit Administration. I am partially vetoing section 172 as it relates to s. 20.566 (2) (am) for fiscal year 2000-2001 by lining out $33,500 and writing in $0. Because this veto will reduce the appropriation under s. 20.566 (2) (am), I am requesting the Department of Administration secretary to not allot $33,500 in the appropriation in fiscal year 2000-2001. I am vetoing section 595m because it would prohibit the return of this cost to the lottery fund for the entire 1999-2001 biennium. With my veto of section 595m, expenditure authority from lottery receipts may be restored for fiscal year 2000-2001 for the purpose of lottery and gaming credit administration through separate legislation or action under s. 13.10 of the statutes.
Lottery General Program Operations. I am partially vetoing section 172 as it relates to s. 20.566 (8) (a) for fiscal year 2000-2001 by lining out $21,095,800 and writing in $0. Because this veto will reduce the appropriation under s. 20.566 (8) (a), I am requesting the Department of Administration secretary to not allot $21,095,800 in the appropriation in fiscal year 2000-2001. I am vetoing section 597g because it would prohibit the return of this cost to the lottery fund for the entire 1999-2001 biennium. With my veto of section 597g, expenditure authority from lottery receipts may be restored for fiscal year 2000-2001 for the purpose of lottery general program operations through separate legislation or action under s. 13.10 of the statutes.
Lottery Retailer Compensation. I am partially vetoing sections 596r and 597c because a partial veto of these sections is necessary to allow lottery retailer compensation to be paid from the lottery fund during fiscal year 2000-2001. With my veto, general purpose revenue will only be used for lottery retailer compensation during fiscal year 1999-2000. Lottery revenues will again cover this cost beginning in fiscal year 2000-2001. By lining out $30,573,800 and writing in $0 in section 172 as it relates to s. 20.566 (8) (b) for fiscal year 2000-2001, I am reflecting that my partial veto prohibits use of general purpose revenue for retailer compensation after fiscal year 1999-2000. Because this veto will reduce estimated expenditures in the appropriation under s. 20.566 (8) (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 $30,573,800.
Lottery Vendor Fees. I am partially vetoing sections 596s and 597f because a partial veto of these sections is necessary to allow lottery vendor fees to be paid from the lottery fund during fiscal year 2000-2001. With my veto, general purpose revenue will only be used for lottery vendor fees during fiscal year 1999-2000. Lottery revenues will again cover this cost beginning in fiscal year 2000-2001. By lining out $12,419,000 and writing in $0 in section 172 as it relates to s. 20.566 (8) (c) for fiscal year 2000-2001, I am reflecting that my partial veto prohibits use of general purpose revenue for vendor fees after fiscal year 1999-2000. Because this veto will reduce estimated expenditures in the appropriation under s. 20.566 (8) (c) 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 $12,419,000.
Farmland Tax Relief Credit. I am partially vetoing sections 606t and 612p because a partial veto of these sections is necessary to allow the farmland tax relief credit to be paid from the lottery fund during fiscal year 2000-2001. With my veto, general purpose revenue will only be used for the farmland tax relief credit during fiscal year 1999-2000. Lottery revenues will again cover this cost beginning in fiscal year 2000-2001. By lining out $15,000,000 and writing in $0 in section 172 as it relates to s. 20.835 (2) (dn) for fiscal year 2000-2001, I am reflecting that my partial veto prohibits use of general purpose revenue for the farmland tax relief credit after fiscal year 1999-2000. Because this veto will reduce estimated expenditures in the appropriation under s. 20.835 (2) (dn) 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 $15,000,000. I am partially vetoing sections 1818mLf, 1818mLg and 1818mLh because a partial veto of these sections is necessary to preserve the state’s commitment to provide an estimated $15,000,000 annually for the farmland tax relief credit despite the shifts in funding sources.
Definition of Lottery Proceeds. I am partially vetoing section 9443 (24e) because a partial veto of this section is necessary to restore the traditional definition of lottery proceeds on July 1, 2000 – the first day of fiscal year 2000-2001 during which, because of my partial vetoes, the common sense approach to paying for lottery expenses will be restored.
