Ayes, 5 - Senators
Breske, Grobschmidt, Baumgart, A. Lasee and Schultz.
Noes, 0 - None.
Senate Bill 227
Relating to: qualifications for endorsements authorizing the operation of a school bus.
Introduction and adoption of Senate amendment 1.
Ayes, 5 - Senators
Breske, Grobschmidt, Baumgart, A. Lasee and Schultz.
Noes, 0 - None.
Passage as amended.
Ayes, 5 - Senators
Breske, Grobschmidt, Baumgart, A. Lasee and Schultz.
Noes, 0 - None.
Senate Bill 229
Relating to: qualifications for an endorsement authorizing a person to operate a school bus.
Passage.
Ayes, 5 - Senators
Breske, Grobschmidt, Baumgart, A. Lasee and Schultz.
Noes, 0 - None.
Senate Bill 56
Relating to: following snowplows and providing a penalty.
Passage.
Ayes, 5 - Senators
Breske, Grobschmidt, Baumgart, A. Lasee and Schultz.
Noes, 0 - None.
Roger Breske
Chairperson
__________________
State of Wisconsin
Office of the Governor
August 30, 2001
To the Honorable, the Senate:
The following bill(s), originating in the Senate, have been approved, signed and deposited in the office of the Secretary of State:
Sincerely,
Scott McCallum
Governor
Office of the Governor
August 30, 2001
The Honorable, The Senate:
To the Honorable Members of the Senate:
I have approved Senate Bill 55 as
2001 Wisconsin Act 16 and deposited it in the Office of the Secretary of State.
The bill I am signing represents many difficult decisions made by a Legislature that remained focused on concluding a budget in a timely and orderly fashion. I commend the Legislature for its civility and commitment in crafting the most important piece of legislation in this legislative session. Despite constraints in revenue growth and the unfunded costs of new programs adopted in the previous legislative session, significant progress was made in a number of key policy areas, particularly economic growth, educational quality, health care for seniors and lower taxes.
Wisconsin's taxes remain too high. The 1999-2001 state budget took a serious step toward reducing our state's income tax burden by lowering rates eleven percent and this budget continues the trend of lowering the tax burden on Wisconsin citizens. Despite the severe financial constraints faced in developing this budget, taxes are further reduced by eliminating the income tax on military pensions and implementing the federal phase-out of the estate tax. While the Legislature chose to reinstate the estate tax in fiscal year 2003-04, I intend to restore the federal phase-out schedule in my next budget.
Future tax reductions will require continued robust economic growth. This budget includes a number of measures that will propel Wisconsin's economic engine to new heights, including the creation of eight new technology development zones and one agricultural development zone; an airline hub tax exemption for Wisconsin-based airlines, Midwest Express and Air Wisconsin; $317 million in new biotechnology facilities through the University of Wisconsin's BioStar Initiative; and $38 million for expanded information technology and biological sciences courses and other economic stimulus initiatives at the University of Wisconsin. All of these measures were included in my budget and represent further investments in Wisconsin's economic renaissance.
This budget also continues the trend of stabilizing the property tax burden by increasing school aids and shared revenue. Property taxes as a percent of ability to pay have dropped fourteen percent since controls on school revenues began in December 1993. This reduction is the result of balancing reasonable school cost growth (that has exceeded the rate of inflation), with continued investments in educational quality.
Since 1994, the first year that the school district allowable revenue formula was in place, the state has invested over $2.6 billion in our local schools. This funding has served to reduce property taxes and increase educational quality. State taxpayers will spend almost $100 million in school year 2002-03 to reduce class sizes in early grades through the Student Achievement Guarantee in Education (SAGE) program. School technology has increased exponentially with the $290 million provided since 1998 for the Technology for Educational Achievement in Wisconsin (TEACH) program. Improved educational attainment for all Wisconsin children is also being supported through an eighteen percent increase in funding for school breakfasts and investments in the private and public school choice and charter school programs.
Many other significant needs are addressed in this budget. We take the lead in health care access for seniors by establishing a new prescription drug benefit for Wisconsin's greatest generation. We provide a significant increase to the Birth to Three and Family Support programs to assist disabled children and their families. We improve the environment and support economic development through expanding the brownfields redevelopment program and providing continued funding for recycling. We have funded additional prison capacity while also supporting community corrections efforts. We fully fund child care subsidies so that low-income individuals can work and seek more educational opportunities. We protect more of Wisconsin's pristine landscape through a $112 million expansion of the Warren Knowles-Gaylord Nelson Stewardship 2000 Program.
Wisconsin is on the right path, we're reducing taxes and investing in our future. Unfortunately, the budget I received from the Legislature included a number of initiatives that could divert us from this path. First and foremost, the Legislature ignored the significant investments it has made in educational quality and listened instead to calls for a return to unfocused school spending.
Exemptions to school district allowable revenues and modifications to the qualified economic offer for teacher compensation packages will further burden Wisconsin taxpayers with no clearly defined benefit to students. Wisconsin already spends generously on a per student basis, sixth highest in the country. Growth in school district costs has outpaced inflation since the allowable revenue formula was adopted in the 1993-95 budget. Compensation for Wisconsin teachers remains among the highest in the country and our class sizes among the smallest. And, most notably and most importantly, our students are the best and the brightest.
Can more be done? Yes. Should more be done? Absolutely. We must continue to focus on improving educational achievement for all students, from inner city Milwaukee to South Shore on Lake Superior. The bill I am signing includes relief to small school districts that must serve large geographic areas. It also supports the private school choice program, restores state funding for four-year-old kindergarten and expands charter schools. It prudently targets taxpayer dollars toward programs shown to be effective in improving student achievement.
Many school districts continue to offer wage and compensation increases to teachers that exceed the 3.8 percent that constitute a qualified economic offer. According to the American Federation of Teachers, Wisconsin ranks tenth nationally when comparing teacher salaries to annual private sector earnings. In addition, the recent Supreme Court decision upholding changes to the state retirement system will serve to provide school districts with an $84 million windfall, much of which will translate into enhanced compensation packages for teachers.
My second major concern is the risk to our financial future by using over $800 million of one-time funding measures to deliver a "balanced" budget. These measures include $109 million from the intergovernmental transfer program for county and privately-owned nursing homes, $100 million in borrowing to extend existing debt, $50 million from reducing the statutory ending balance, $450 million from the tobacco endowment fund and $115 million from delaying a school aid payment. While my budget included $350 million from the tobacco endowment fund as a "bridge" to get us to a firmer financial footing, the bill before me puts us on a bridge to financial risk and uncertainty. Financing the permanent spending supported by these one-time measures will likely consume all of the anticipated revenue growth in fiscal year 2003-04, making it extremely difficult to fund growth in existing programs such as school aids, medical assistance and the University of Wisconsin System.
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These one-time measures, combined with payment shifts made in previous budgets and an unwillingness to create meaningful budget reserves, have weakened the state's standing in the eyes of financial markets. That weakness has manifested itself in a lower rating of creditworthiness on the state's bonds, raising the potential for higher borrowing costs. The financial cost of this lower rating pales in comparison to the perception that Wisconsin's finances are inherently unstable. This is not the message we want to deliver to businesses looking to expand operations or venture capitalists looking for fertile ground to grow high tech enterprises. We must act decisively to right our financial ship and keep our economy on a direction toward high wage, high skill employment.
To begin this transformation toward financial stability, I have used my veto power to eliminate the $115 million school aid payment delay, and I have increased the statutory ending balance to 1.2 percent of appropriations and compensation reserves. We must live within our means. Just as a family cannot delay a mortgage payment without risking foreclosure, the state cannot continue to ignore today's obligations with promises to pay tomorrow.
In this budget, I remain committed to controlling school property taxes through the school district allowable revenue formula and to meeting the state's commitment to fund two-thirds of school costs. These goals must be accomplished honestly by paying the bills, as they come due, not by further shifts in paying school aids. We cannot responsibly meet these goals at the expense of the state's fiscal health and by extension threatening the stability of local government finances. While I cannot use my veto authority to restore the full 2002-03 school year payment, by law the Joint Committee on Finance must meet in June 2002 to review estimated school costs and set the school aid funding level.
I remain confident that our economy will show renewed vigor in the next two years, providing additional revenues for schools without the need to resort to budget gimmicks. However, even without further growth in revenues, I have aggressively vetoed spending increases and prudently built up the required general fund balance to ensure that the state's two-thirds school funding commitment will be met in full as it comes due.
In addition to vetoing the school aid payment delay and restoring the required general fund balance, I am acting to further improve the state's fiscal situation by directing the secretary of the Department of Administration to monitor the need for the $100 million in debt restructuring authorized by the Legislature. We cannot afford to borrow money instead of making difficult decisions on budget priorities. In the event revenues grow faster than expected, the secretary of the Department of Administration will decide whether the issuance of these bonds is necessary.
I have also used my veto power to restore a four percent budget reduction for the Department of Public Instruction and a five percent reduction for the State Public Defender. When all state agencies, the Legislature and the courts are making budget reductions, we should not shield any administrative operations appropriations from sharing the burden. The reduction for the Department of Public Instruction exempts the state residential schools to reflect their direct service responsibilities.
The budget, as passed by the Legislature, also tapped questionable funding sources to support certain programs. For instance, use of growth in revenues from fines and forfeitures retained by counties is neither a stable nor realistic funding source for new district attorney positions. District attorneys face real world work load issues that are not addressed through unreliable funding sources. I support an increase in district attorney positions to address critical work load needs, but cannot agree to the funding source proposed by the Legislature. I urge the Joint Committee on Finance to consider meeting this need from a different source of funding through its authority under s.
13.10.
My third major concern is the amount of bonding authorized in this budget. My proposed budget authorized $522 million in new GPR-supported general obligation bonding in the 2001-03 biennium, a level calculated specifically to ensure that debt service payments would remain at 3.5 percent of total GPR revenue over the next decade. The budget passed by the Legislature contains $564 million in new GPR-supported bonding authorizations for the 2001-03 biennium. This level of bonding means that debt service will increase as a percentage of total revenue. We should not incur new long-term debt of this magnitude. Debt service payments will increase by 9.4 percent in fiscal year 2002-03, while our GPR revenue will increase less than 4.5 percent. Therefore, my vetoes have reduced the total new bonding authorization amount by $9 million to reduce the new debt we will incur to a more affordable level.
To improve the ending balance, I vetoed a total of $62 million in additional GPR spending items approved by the Legislature. This is the largest amount of GPR budget savings ever realized in a biennial budget through gubernatorial vetoes and reflects the critical need to restore fiscal responsibility and stability. I also exercised a veto to increase the size of the balance we are required to maintain from 0.7 percent to 1.2 percent of GPR spending. Since many states maintain balances of at least five percent, we must continue toward the current law goal of 2 percent. The required balance is scheduled to grow to 1.6 percent as we enter the next biennium and we need to honor this commitment. Meeting this responsibility will require fiscal discipline and prudent management of resources. Therefore, I am very pleased that the budget I am signing takes a step in this direction by including a meaningful budget stabilization fund that will set-aside fifty percent of unanticipated revenues to help us avoid future budget crises.
From general purpose revenue, net spending will be $11.4 billion in fiscal year 2001-02 and $11.6 billion in fiscal year 2002-03, for a biennial total of $23.0 billion. These figures represent annual spending increases of 3.0 percent and 1.7 percent, primarily due to increases in spending to meet our commitment to fund two-thirds of school costs, to reduce class sizes in early grades, to return inmates housed in out-of-state prisons to Wisconsin facilities, to implement a new prescription drug subsidy for seniors, to pay for increased child care and medical assistance costs for our low-income citizens, and to make investments in our higher education system. Total spending under the 2001-03 budget, as passed, is $23.3 billion in fiscal year 2001-02 and $23.5 billion in fiscal year 2002-03, for a biennial total of $46.8 billion.
I am signing this budget with a total of 315 vetoes. Many of these vetoes were needed to reduce spending by a total of $62 million GPR. These vetoes will also reduce the structural deficit confronting the state in the next biennium. A number of these vetoes are technical in nature and were required to make provisions workable. A number of these vetoes curb the Legislature's involvement in the day-to-day management of state agencies by eliminating the most burdensome new reporting requirements. The Legislature has a legitimate interest in knowing how state programs are working, but it should not micromanage agencies or dictate agency work load through the budget bill.
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The budget I introduced in February, and the Legislature passed, keeps Wisconsin moving ahead: growing our economy through lower taxes and targeted investments, improving educational quality through innovative programs, and ensuring all citizens can access jobs, education and health care. Among the highlights are the following items:
Tax and Local Government Finance
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Eliminates the state income tax on military pensions and reduces the estate tax in fiscal year 2002-03. These changes reduce taxes by over $37 million.
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Provides a property tax exemption for air carrier hub facilities.
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Increases the state cigarette tax by 18 cents to provide prescription drug benefits for eligible lower-income seniors.
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Provides an exemption from the sales tax for electricity sold to utilities by merchant power plants to encourage the development of adequate energy supplies in Wisconsin.
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Holds the total property tax burden per $1,000 of personal income to 14 percent below December 1993 rates.
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Increases shared revenues, expenditure restraint payments, county mandate relief payments and small municipalities shared revenues by one percent annually in fiscal year 2002-03 and fiscal year 2003-04.
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Restores the municipal shared revenue formula in 2004 to ensure that state aid is delivered to communities with the greatest needs.
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Provides $5.6 million in fiscal year 2001-02 and $7.4 million in fiscal year 2002-03 to fully fund the personal property tax exemption for computer equipment. Business taxes are reduced by retaining exemptions for automated teller machines and expanding exemptions to copier and fax machines.
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Establishes a state spending cap to limit annual noneducation GPR spending increases to the increase in state personal income.
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Requires that fifty percent of unanticipated revenues be set aside in the state's budget stabilization fund to help avoid future budget crises and reduce Wisconsin's deficit under generally accepted accounting principles.
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Maintains the state's budgetary balance at 1.2 percent of spending instead of reducing the balance to a sixteen-year low of $90 million.
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Creates a permanent endowment fund from tobacco securitization proceeds to support tobacco cessation and prevention efforts, provide interest earnings to the general fund and provide an offset to the state's $1.2 billion deficit under generally accepted accounting principles.
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Implements full disclosure in budgeting by requiring state budget documents to state the impact of the proposed budget on future state finances and to report the estimated budget balance under generally accepted accounting principles.
Economic Development and Transportation
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Protects state residents from unwanted telephone sales calls by prohibiting telephone solicitors from calling those listed in a statewide no-call database.
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Preserves the application of the Wisconsin Consumer Act to rental purchase agreements.
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Improves highway safety and enhances economic development by increasing state and federal support for highway construction projects and local transportation aids by over $300 million over the biennium.
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Enumerates three new major highway projects: STH 17 in Oneida County; I-39/USH51 in Marathon County (Wausau Beltline); and STH 26 in Rock, Jefferson and Dodge counties.
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Provides over $160 million over the biennium for reconstruction of the Marquette Interchange in the city of Milwaukee.
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Increases the basic allocations for local road improvement funding by providing a six percent annual increase for critical transportation infrastructure projects.
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Increases local transportation aids by four percent in calendar year 2002 and three percent in calendar year 2003 to meet rehabilitation and maintenance costs and to limit growth in property taxes.
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Increases state assistance to local transit systems by four percent in calendar year 2002 and two percent in calendar year 2003.
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Provides $14 million over the biennium for brownfields assessment, remediation and redevelopment efforts.
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Creates technology development zones to enhance investment in high technology and create high-skill, high-wage jobs by providing credits against income, sales and property taxes for qualified businesses.
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Authorizes $25 million in bonding for a biomedical technology research incubator at the Medical College of Wisconsin.
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Protects Wisconsin's critical animal agriculture industry by providing a 150 percent increase for the Johne's disease control program.
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Promotes economic development in the city of Beloit by designating a development opportunity zone and allocating $4.7 million in tax credits to reward job creation and capital investment.