AB571: Bill Text

LRB-3000/1

PG/ML/RC/JK/MS:wlj:ch

2003 - 2004 LEGISLATURE

2003 Assembly BILL 571

October 15, 2003 - Introduced by Representatives M. Lehman, W. Wood, Ainsworth and Gronemus. Referred to Joint Committee on Finance.

AB571,2,14 An Act to repeal 111.70 (1) (dm), 111.70 (1) (fm), 111.70 (1) (nc), 111.70 (4) (cm) 5s., 111.70 (4) (cm) 7., 111.70 (4) (cm) 7g., 111.70 (4) (cm) 8m. b., 111.70 (4) (cm) 8p., 111.70 (4) (cn), 121.15 (1) (a) to (e), 121.15 (1g) and 121.23 (2); to renumber 121.23 (1); to renumber and amend 121.15 (1) (intro.); to consolidate, renumber and amend 111.70 (4) (cm) 8m. a. and c. and 121.15 (1m) (a) (intro.) and 3.; to amend 20.255 (2) (ac), 20.255 (2) (r), 67.03 (1) (a) and (b), 67.05 (6a) (a) 2. (intro.), 71.08 (1) (intro.), 71.10 (4) (i), 77.52 (1), 77.52 (2) (intro.), 77.53 (1), 111.70 (1) (b), 111.70 (4) (cm) 5., 111.70 (4) (cm) 6. a., 111.70 (4) (cm) 6. am., 111.70 (4) (cm) 7r. (intro.), 111.70 (4) (cm) 8s., 111.70 (4) (d) 2. a., 115.93, 118.255 (4), 118.51 (16) (b), 118.51 (16) (d), 121.08 (1) (intro.), 121.08 (4) (a) (intro.), 2., 3. and (b), 121.09 (1) and (2), 121.09 (2r), 121.095 (1) (intro.), 121.095 (2), 121.105 (3), 121.15 (1m) (b), 121.23 (title), 121.85 (6) (a) 1., 121.85 (6) (e), 121.85 (6m), 121.85 (8), 121.85 (9) (c), 121.86 (2) (a) 1., 121.90 (2) (intro.) and 121.91 (2m) (e) (intro.); and to create 15.375 (1), 20.255 (2) (t), 20.835 (2) (cb), 25.90, 65.90 (7), 67.03 (1) (c), 71.07 (5d), 115.34 (3), 115.341 (3), 115.343 (6), 115.345 (10), 115.36 (4), 115.361 (3), 115.366 (3), 115.405 (4), 115.42 (5), 115.43 (3), 115.435 (4), 115.45 (11), 115.88 (10), 115.995 (3), 116.08 (6), 118.153 (8), 118.43 (9), 120.145, 121.085, 121.086, 121.105 (2) (c) and 121.135 (4) of the statutes; relating to: abolishing the general equalization aid formula for distributing state school aid; creating a foundation plan to fund school costs; creating a School Building Projects Board; providing state aid to school districts for building projects; creating a school levy rate limit; eliminating school district revenue limits; eliminating certain categorical aids to school districts; modifying dispute settlement procedures in local government employment other than law enforcement and fire fighting employment; creating a refundable individual income tax credit for certain sales and use taxes paid by a claimant; increasing the sales and use tax; granting rule-making authority; and making appropriations.

Analysis by the Legislative Reference Bureau

School aid

Under the current school aid formula, the state establishes a guaranteed tax base, known as the guaranteed valuation. The rate at which a school district's costs are aided through the formula is determined by comparing the school district's per pupil tax base (or equalized valuation) to the guaranteed valuation. State aid is provided to make up the difference between the school district's actual tax base and that state guaranteed level. Thus, school districts with low property valuations per pupil generally receive a larger share of their costs through the formula than school districts with high property valuations per pupil.

Beginning in the 2004-05 school year, this bill eliminates the current school aid formula. Under the bill, in 2004-05 each school district is paid an amount per pupil that is determined by multiplying the district's prior year educational cost per pupil by the percentage rate that, when applied annually for 20 years, will result in a per pupil payment of $19,000 in the 2023-24 school year. Beginning in the 2005-06 school year, each year the prior year per pupil payment is increased by the same annual percentage rate. In addition, the bill eliminates most formula-driven categorical aid programs (such as special education and children at risk).

Current law limits the increase in the total amount of revenue per pupil that a school district may receive from general school aids and property taxes in a school year. This bill eliminates school district revenue limits beginning in the 2004-05 school year.

The bill creates a School Building Projects Board attached to the Department of Public Instruction (DPI). The bill prohibits a school board from issuing a bond to finance a capital project unless it adopts a resolution to do so by a three-fourths vote. A school board may then apply to the board for state aid for the project. The board provides aid for that portion of the project that it determines satisfies an educational need; the amount of aid is determined by multiplying the cost of the approved portion of the project by the percentage of the school district's costs that would have been paid under the former school aid formula or by 10 percent, whichever is greater.

The bill also prohibits a school board from levying a tax at a rate that exceeds three mills except to pay the principal of and interest on debt that is outstanding on the bill's effective date or unless DPI approves a higher levy rate to deal with an emergency. In addition, a school district may not incur indebtedness after the bill's effective date in an amount that would require it to levy a tax at a rate greater than three mills unless DPI approves a higher rate to deal with an emergency. The bill prohibits a school district from using revenue from its tax levy to fund employee salaries or benefits.

The bill provides that the total amount in a school district's fund balance in any fiscal year may not exceed 18 percent of the school district's budget in that fiscal year.

With certain exceptions, school districts currently receive 15 percent of their total school aid entitlement in September, 25 percent in December, 25 percent in March, and 35 percent in June. Beginning in the 2004-05 school year, this bill requires that school aid be distributed in four equal installments. The bill directs DPI to determine the payment schedule.

Sales and use taxes; public school aid fund

This bill increases the sales tax and use tax rates from 5 percent to 7.5 percent beginning on January 1, 2004. The bill also creates a segregated fund called the public school aid fund, consisting of 41 percent of all revenue from sales and use taxes. Beginning in the 2004-05 school year, money in that fund is used for state school aid. For school aid in the 2004-05 school year, the bill also transfers $5,300,000,000 from the general fund to the public school aid fund.

Dispute settlement procedures

This bill does all of the following:

1. Under current law, in local government employment other than law enforcement and fire fighting employment, if a dispute relating to the terms of a proposed collective bargaining agreement has not been settled after a reasonable period of negotiation and after mediation by the Wisconsin Employment Relations Commission (WERC), either party, or the parties jointly, may petition WERC to initiate compulsory, final, and binding arbitration with respect to any dispute relating to wages, hours, and conditions of employment. If WERC determines, after investigation, that an impasse exists and that arbitration is required, WERC must submit to the parties a list of seven arbitrators, from which the parties alternately strike names until one arbitrator is left. As an alternative to a single arbitrator, WERC may provide for an arbitration panel that consists of one person selected by each party and one person selected by WERC. As a further alternative, WERC may also provide a process that allows for a random selection of a single arbitrator from a list of seven names submitted by WERC. Under current law, an arbitrator or arbitration panel must adopt the final offer of one of the parties on all disputed issues, which is then incorporated into the collective bargaining agreement.

Under current law, however, this process does not apply to a dispute over economic issues involving a collective bargaining unit consisting of school district professional employees if WERC determines, subsequent to an investigation, that the employer has submitted a qualified economic offer (QEO). Under current law, a QEO consists of a proposal to maintain the percentage contribution by the employer to the employees' existing fringe benefit costs and the employees' existing fringe benefits and to provide for an annual average salary increase having a cost to the employer at least equal to 2.1 percent of the existing total compensation and fringe benefit costs for the employees in the collective bargaining unit plus any fringe benefit savings. Fringe benefit savings is that amount, if any, by which 1.7 percent of the total compensation and fringe benefit costs for all municipal employees in a collective bargaining unit for any 12-month period covered by a proposed collective bargaining agreement exceeds the increased cost required to maintain the percentage contribution by the municipal employer to the municipal employees' existing fringe benefit costs and to maintain all fringe benefits provided to the municipal employees.

This bill eliminates the QEO exception from the compulsory, final, and binding arbitration process.

2. Current law provides that in reaching a decision, the arbitrator or arbitration panel must give weight to many factors, including the lawful authority of the municipal employer, the stipulations of the parties, the interest and welfare of the public, and the financial ability of the unit of government to meet the costs of the proposed agreement, comparison of wages, hours, and conditions of employment with those of other public and private sector employees, the cost of living, the overall compensation and benefits that the employees currently receive, and other similar factors. But, under current law, the arbitrator is required to give greater weight to economic conditions in the jurisdiction of the employer and the greatest weight to any state law or directive that places expenditure or revenue limitations on an employer.

This bill eliminates the authorization for the arbitrator or arbitration panel to give any weight to economic conditions in the jurisdiction of the employer or to any state law or directive that places expenditure or revenue limitations on an employer.

3. Under current law, every collective bargaining agreement covering school district professional employees must expire on June 30 of the odd-numbered years. For all other local government employees, the term of a collective bargaining agreement must be two years, except for an initial agreement and except as the parties otherwise agree, and in no case may exceed three years. This bill treats the terms of collective bargaining agreements for school district professional employees the same as those of other local government employees.

4. Finally, under current law, school district professional employees are required to be placed in a collective bargaining unit that is separate from the units of other school district employees. This bill eliminates this requirement.

Income tax credit

This bill creates a refundable individual income tax credit for the sales and use taxes paid by an individual who rents his or her principal dwelling, in this state, for the entire taxable year to which the claim relates. The maximum credit that may be claimed for taxable years 2004 and 2005 is $500, or $250 for each spouse if a married couple files separate tax returns. The maximum credit that may be claimed for taxable year 2006 is $250, or $125 for each spouse if a married couple files separate tax returns. The maximum credit that may be claimed for taxable year 2007 is $125, or $62.50 for each spouse if a married couple files separate tax returns. If more than one renter of a principal dwelling is eligible to claim the credit, the renters must decide who may claim the credit. If they are unable to agree, the secretary of revenue will make the final decision.

Because this individual income tax credit is refundable, if the amount of the credit exceeds the taxpayer's income tax liability, the difference will be refunded to the taxpayer by check.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB571, s. 1 Section 1. 15.375 (1) of the statutes is created to read:

AB571,5,4 15.375 (1) School building projects board. There is created a school building projects board attached to the department of public instruction under s. 15.03. The board shall consist of the following members, appointed for 3-year terms:

AB571,5,5 (a) Three members appointed by the state superintendent of public instruction.

AB571,5,6 (b) Three members appointed by the governor.

AB571, s. 2 Section 2. 20.255 (2) (ac) of the statutes, as affected by 2003 Wisconsin Act 33, is amended to read:

AB571,6,4 20.255 (2) (ac) General equalization aids. The amounts in the schedule for the payment of educational aids under ss. 121.08, 121.09, 121.095, and 121.105 and subch. VI of ch. 121. No moneys may be encumbered from this appropriation after the 2003-04 fiscal year.

AB571, s. 3 Section 3. 20.255 (2) (r) of the statutes, as created by 2003 Wisconsin Act 33, is amended to read:

AB571,6,9 20.255 (2) (r) General equalization State school aids; transportation fund. From the transportation fund, the amounts in the schedule for the payment of aid under s. 121.08 121.085.

AB571, s. 4 Section 4. 20.255 (2) (t) of the statutes is created to read:

AB571,6,13 20.255 (2) (t) State school aids; public school fund. From the public school aid fund, a sum sufficient for state school aid under ss. 121.085, 121.086, 121.09, 121.095, and 121.105 (3), and subch. VI of ch. 121.

AB571, s. 5 Section 5. 20.835 (2) (cb) of the statutes is created to read:

AB571,6,16 20.835 (2) (cb) Sales and use tax individual income tax credit. A sum sufficient to make the payments under s. 71.07 (5d).

AB571, s. 6 Section 6. 25.90 of the statutes is created to read:

AB571,6,20 25.90 Public school aid fund. There is established a separate nonlapsible trust fund designated the public school aid fund consisting of 41 percent of all revenue from sales and use taxes.

AB571, s. 7 Section 7. 65.90 (7) of the statutes is created to read:

AB571,6,25 65.90 (7) The total amount in a school district's fund balance in any fiscal year may not exceed an amount equal to 18 percent of the school district's budget in that fiscal year. In this subsection, "fund balance" means the difference between fund assets and fund liabilities, as determined by the department of public instruction.

AB571, s. 8 Section 8. 67.03 (1) (a) and (b) of the statutes are amended to read:

AB571,7,10 67.03 (1) (a) Except as provided in s. 67.01 (9), municipalities may borrow money and issue municipal obligations therefor only for the purposes and by the procedure specified in this chapter. The aggregate amount of indebtedness, including existing indebtedness, of any municipality shall not exceed 5% of the value of the taxable property located in the municipality as equalized for state purposes except that the aggregate amount of indebtedness of any school district that offers no less than grades 1 to 12 and that at the time of incurring the debt is eligible to receive state aid under s. 121.08 121.085 shall not exceed 10% of the equalized value of the taxable property located in the school district.

AB571,7,15 (b) Any school district about to incur indebtedness may apply to the state superintendent of public instruction for, and the state superintendent may issue, a certificate as to the eligibility of the school district to receive state aid under s. 121.08 121.085, which certificate shall be conclusive as to such eligibility for 30 days, but not beyond the next June 30.

AB571, s. 9 Section 9. 67.03 (1) (c) of the statutes is created to read:

AB571,7,20 67.03 (1) (c) No municipality may incur indebtedness in an amount that would require the governing body of the municipality to levy a tax for school purposes at a rate that exceeds 3 mills unless the department of public instruction approves a higher levy rate under s. 120.145 (1) (b).

AB571, s. 10 Section 10. 67.05 (6a) (a) 2. (intro.) of the statutes is amended to read:

AB571,8,5 67.05 (6a) (a) 2. (intro.) Except as provided under pars. (b) and (c) and, subs. (7) and (15), and s. 121.086, if the board of any school district, or the electors at a regularly called school district meeting, by a majority vote adopt an initial resolution to raise an amount of money by a bond issue, the school district clerk shall, within 10 days, publish notice of such adoption as a class 1 notice under ch. 985 or post the notice as provided under s. 10.05. The notice shall state the maximum amount proposed to be borrowed, the purpose of the borrowing, that the resolution was adopted under this subdivision and the place where and the hours during which the resolution may be inspected. The school board shall also do one of the following:

AB571, s. 11 Section 11. 71.07 (5d) of the statutes is created to read:

AB571,8,10 71.07 (5d) Sales and use tax individual income tax credit. (a) Definition. In this subsection, "claimant" means an individual who files a claim under this subsection and who rents his or her principal dwelling, in this state, for the entire taxable year to which his or her claim relates.

AB571,8,19 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 the amount of any sales taxes imposed under s. 77.52 and use taxes imposed under s. 77.53 that the claimant paid in the taxable year to which the claim relates. If the allowable amount of the claim under this subsection exceeds the income taxes otherwise due on the claimant's income, the amount of the claim that is not used to offset those taxes shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation under s. 20.835 (2) (cb).

AB571,8,22 (c) Limitations. 1. Except as provided in subd. 2., the maximum credit that may be claimed under this subsection by a claimant in each year to which the claim relates is one of the following amounts:

AB571,8,24 a. For taxable years beginning after December 31, 2003, and before January 1, 2006, $500.

AB571,9,2 b. For taxable years beginning after December 31, 2005, and before January 1, 2007, $250.

AB571,9,4 c. For taxable years beginning after December 31, 2006, and before January 1, 2008, $125.

AB571,9,7 2. If a married couple files separately, except for a spouse who files as head of household, each spouse may claim up to 50 percent of the amount specified in subd. 1.

AB571,9,9 3. Only one claimant per household, as defined in s. 71.52 (4), per year, may claim the credit under this subsection.

AB571,9,13 4. If more than one renter of a principal dwelling is eligible to claim the credit under this subsection, the renters may determine between them as to who the claimant is. If they are unable to agree, the matter shall be referred to the secretary of revenue and the secretary's decision is final.

AB571,9,15 5. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB571,9,20 (d) Administration. The department may enforce the credit under this subsection and may take any action, conduct any proceeding, and proceed as it is authorized in respect to taxes under this chapter. The income tax provisions in this chapter relating to assessments, refunds, appeals, collection, interest, and penalties apply to the credit under this subsection.

AB571, s. 12 Section 12. 71.08 (1) (intro.) of the statutes is amended to read:

AB571,9,25 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3s), (5d), (6), (6s), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and (3) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and (3) and subchs. VIII and IX and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:

AB571, s. 13 Section 13. 71.10 (4) (i) of the statutes is amended to read:

AB571,10,12 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit under subch. IX, homestead credit under subch. VIII, farmland tax relief credit under s. 71.07 (3m), farmers' drought property tax credit under s. 71.07 (2fd), sales and use tax individual income tax credit under s. 71.07 (5d), earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch. X.

AB571, s. 14 Section 14. 77.52 (1) of the statutes is amended to read:

AB571,10,19 77.52 (1) For the privilege of selling, leasing or renting tangible personal property, including accessories, components, attachments, parts, supplies and materials, at retail a tax is imposed upon all retailers at the rate of 5% 7.5 percent of the gross receipts from the sale, lease or rental of tangible personal property, including accessories, components, attachments, parts, supplies and materials, sold, leased or rented at retail in this state.

AB571, s. 15 Section 15. 77.52 (2) (intro.) of the statutes is amended to read:

AB571,10,25 77.52 (2) (intro.) For the privilege of selling, performing or furnishing the services described under par. (a) at retail in this state to consumers or users, a tax is imposed upon all persons selling, performing or furnishing the services at the rate of 5% 7.5 percent of the gross receipts from the sale, performance or furnishing of the services.

AB571, s. 16 Section 16. 77.53 (1) of the statutes is amended to read: