As a result of this veto, the facilities will remain operational. While I cannot restore the 270.92 FTE positions eliminated by the Legislature, I am asking the Department of Administration secretary to pursue the restoration of these positions through procedures authorized under current law to ensure continuity of basic services.
7.
Limitations on Resale of Telecommunications Services by State Agencies
Sections 94m and 695q
These sections specify that a state agency may use telecommunications services that it procures only for the agency's own purposes to fulfill its mission and that it may not offer, resell or provide services that are available from a private telecommunications carrier to the general public or private entities. An exception to this restriction is made if there is a consortium agreement in effect as of June 1, 2005, to provide services to member organizations.
I am partially vetoing these sections to remove the exception granted in the budget for an existing consortium in order to preserve the ability to maximize efficiency. The economies of scale needed to support the least costly and most effective telecommunications on a statewide enterprise level require a consolidated and coordinated approach. This capability is not served by exceptions for consortium agreements.
8.
Video Gaming Devices and Pari-Mutuel Race Track Licensing
Sections 1430m, 1430o, 2422b, 2422c, 2422d, 2422e, 2422f, 2422g, 2422h, 2422i, 2422j, 2422L, 2422m, 2422n, 2422o, 2422om, 2422p, 2422q, 2422r, 2422s, 2422t, 2422tm, 2422u, 2422um, 2422v, 2422vm, 2422w, 2422wm, 2422x, 2422xm, 2422y, 2423c, 2423d, 2423e, 2423f, 2423g, 2423gm, 2423h, 2423i, 2423j, 2423k, 2423L, 2423m, 2423n, 2423o, 9101 (9r) and 9401 (2q)
These provisions modify the current law use of video gaming machines, as they relate to simulcast wagering. Specifically, these provisions authorize a license for the sponsorship and management of video gaming devices which display a facsimile of a dog or horse race that has been previously conducted at another racetrack. They also permanently repeal the current law simulcast racing and intertrack wagering restriction that requires, effective January 1, 2007, that wagering on simulcast races must be conducted at a racetrack only as an adjunct to, and not in place of wagering on live on-track racing.
Additionally, these provisions prohibit the Department of Administration from imposing any fee on a Wisconsin licensee for receiving simulcast races from out-of-state racetracks or simulcasting races to an out-of-state legal wagering entity.
Further, these provisions create a single license category for: (a) the ownership and operation of a racetrack at which pari-mutuel wagering is conducted; and (b) the sponsorship and management of any race on which pari-mutuel wagering is conducted, but which is not located at a fair.
Lastly, these provisions provide that a license for a person operating a concession stand at a racetrack be subject to a maximum $75 annual renewal licensing fee.
I am vetoing these provisions because I object to the expanded use of video gaming devices for simulcast pari-mutuel wagering. This is nonfiscal policy that does not belong in a budget. In addition, these provisions, taken together, raise serious constitutional concerns by potentially expanding gambling.
While I am vetoing all of these provisions, I am willing to consider narrowly focused legislation that would delay the sunset of the current law provision allowing simulcast intertrack wagering.
9.
Payment of Fiscal Year 2004-05 MHEC Membership Dues
Section 9101 (10k)
This provision requires that the Department of Administration pay membership dues, not to exceed $82,500, for the previous fiscal year for the Midwestern Higher Education Compact from a program revenue appropriation within the agency.
I am vetoing this provision because I object to this earmarking of payments.
A416
10.
Required Reports on Information Technology
Sections 9101 (11k) and 9101 (12k)
These provisions require the Department of Administration to report to the Joint Committee on Finance on plans to lease a new data center and the associated hardware and software costs. Also, any proposed acquisition of major management information system project resources is made subject to Committee review under a 14-day passive approval process.
I am vetoing these provisions because they are unnecessary. The Department of Administration remains committed to working with the Legislature on these issues. However, legally mandated reports unnecessarily limit information sharing and dialogue on these matters.
11.
Pension Obligation Lapses and Transfers
Section 79
This section codifies how the Department of Administration secretary will administer the lapses and fund transfers related to unfunded retirement liability debt service.
I am partially vetoing this section to ensure the budget intent to realize savings through the issuance of pension obligation bonds is achieved while the goal of property tax relief and adequate school funding is met under the Education and Workforce Development Section, Public Instruction, Item #4. This veto will allow the Department of Administration to allocate the costs of repaying the pension obligation bonds and fully recoup the savings residing in agency fringe benefit lines.
Building Commission
12.
General Fund Supported Borrowing Target
Sections 16p and 16r
These sections establish a target increase of general fund supported borrowing for the long-range state building program, beginning in the 2007-09 biennium. This target is set initially at $480 million and is adjusted each biennium by the percentage change in construction costs and reduced by general fund borrowing already authorized, but not yet issued, and general fund supported borrowing contained in executive bills and other legislation.
I am vetoing these sections in their entirety because they are unnecessary. The State of Wisconsin Building Commission exists to review the state building program and debt issuance strategies. The commission already considers general fund revenues and debt service, general fund borrowing already authorized but not yet issued, and general fund supported borrowing contained in executive bills and other legislation as it develops recommendations for additional general fund supported borrowing. A statutory target is unnecessary given this role.
Furthermore, the target is artificial as it is created by setting a $480 million starting point based on information from one year and inflating the amount based on percentage changes in construction costs, despite the fact that the target includes both construction and nonconstruction related borrowing. The target also does not allow for consideration of program requirements or regulatory requirements that may impact the commission's recommendations for new general fund supported borrowing.
EMPLOYEE TRUST FUNDS
13.
Required Nonrepresented State Employee Retirement Contributions
Sections 737e, 737r, 9101 (7k) and 9414 (1k)
These sections require nonrepresented state employees, including University of Wisconsin faculty and academic staff, to begin paying 1.5 percent of earnings into the Wisconsin Retirement System, effective September 1, 2005. Currently the state, as the employer, pays this portion of the total employee-required contribution for all represented and nonrepresented employees.
The GPR amounts budgeted in agencies for the 1.5 percent portion of the retirement contributions would lapse to the general fund. Comparable offsets would occur with other sources of funding.
I am vetoing these sections because they present serious legal and policy implications.
Adding these sections to the budget bill in a late night, last minute effort to secure votes did not allow for public input or a thorough debate of the issues. For good reason, the statutes require that bills and amendments related to the retirement system and pension contributions be referred to the legislative Joint Survey Committee on Retirement Systems.
Increasing the employee's required contribution may impair contractual rights.
These provisions create disparities among employees' compensation and benefit funding.
To maintain a neutral fiscal effect to the general fund associated with this veto, I am requesting the Department of Administration secretary use the authority granted under s.
16.50, Wisconsin Statutes, to prudently manage the allotment of funds in order to produce offsetting lapses during budget implementation.
Regulation and Licensing
14.
Transfer of Alcohol and Other Drug Abuse Counselor Certification
Sections 2337am, 9121 (12s) (am) and 9421 (10q)
A417
These provisions transfer the certification and regulation of Alcohol and Other Drug Abuse (AODA) counselors from the Department of Health and Family Services to the Department of Regulation and Licensing effective January 1, 2006. Included in these provisions is the creation of a certification review committee to advise the Department of Regulation and Licensing on proposed rules. The majority membership of this committee is to be recommended by the Wisconsin Association on Alcoholism and Other Drug Abuses, Inc. (WAAODA). Also included in this provision is an exemption from certification for any physician who specializes in psychiatry. Other physicians would be subject to the new certification.
I am partially vetoing the effective date of this provision because the Department of Regulation and Licensing needs additional time to prepare for this transfer.
Additionally, while WAAODA should have input into determining the certification committee membership, the final appointment authority should be the Department of Regulation and Licensing secretary. I am, therefore, vetoing the requirement that a majority membership of the committee be recommended by WAAODA.
Lastly, I believe that all licensed physicians should be able to practice AODA counseling without special certification under this provision. The Wisconsin Medical Society already certifies physicians for AODA counseling. I am, therefore, partially vetoing the provision to remove the exemption for a physician specializing in psychiatry because it is unnecessary. This partial veto will allow all licensed physicians to provide AODA counseling without further certification.
VETERANS AFFAIRS
15.
Operational Efficiency Consultant
This provision provides $200,000 in additional expenditure authority to the Department of Veterans Affairs to hire a consultant to determine how the department can operate the veterans homes at King and Union Grove more efficiently.
By lining out the departments appropriation under s.
20.485 (1) (gk) and writing in a smaller amount that deletes $200,000 PR in fiscal year 2005-06, I am vetoing the additional PR that was added by the Legislature to complete the study. I am also requesting the Department of Administration secretary not to allot these funds.
I am vetoing this provision because I object to providing scarce resources for this purpose. If the department feels there are operational efficiencies to be found at the two homes through an efficiency review, it should allocate existing base resources for this purpose.
F.
TAX
General Fund Taxes
1.
Individual Income Tax Exclusion for Social Security Benefits
Sections 1286hm, 1286im and 1286jm
These sections phase in a full income tax exclusion for Social Security benefits above certain thresholds: $25,000 for single filers and $32,000 for joint filers. Currently, 50 percent of the income above these thresholds is excluded from income tax (100 percent of income below these thresholds is excluded). The provision would increase this percentage to 65 percent for tax year 2007, 80 percent for tax year 2008 and 100 percent in tax year 2009.
I am partially vetoing this provision to start the full 100 percent exclusion of Social Security benefits one year earlier, beginning in tax year 2008 which makes the benefit of the full exclusion available to Social Security recipients sooner rather than later, and which provides $16.2 million more in tax relief to these individuals by the end of fiscal year 2008-09.
2.
Private School and Homeschool Tax Credit
Sections 140 [as it relates to s.
20.835 (2) (eo)], 451u, 1311p, 1312m [as it relates to s.
71.07 (8r)], 1312u [as it relates to the private school and homeschool tax credit] and 9341 (10p)
These sections create a refundable individual income tax credit of $100 per eligible pupil enrolled in kindergarten or grades one to twelve at an eligible private school or home-based private educational program if the pupil is a dependent of the claimant. The credit is funded with a sum sufficient GPR appropriation and begins for tax year 2006.
I am vetoing this provision because it undermines the state's ability to properly fund public education. This tax credit takes over $14,000,000 annually from the general fund and gives it to residents whose children are not in public schools. Even homeschooling activists have registered their dislike of this credit, objecting to additional government involvement in homeschooling.
3.
Adoption Expenses Credit
Sections 1286Lm, 1311ia, 1312o and 9341 (4k)
These sections eliminate the state income tax deduction for adoption expenses and create instead a nonrefundable adoption tax credit that would be available to anyone who is eligible for, and claims, the federal adoption tax credit. The credit would be allowed for qualified adoption expenses that exceed the amount of the federal credit for which a claimant is eligible and claims. The state credit may not exceed $5,000, but unused portions of the credit may be carried over to future tax years for up to five years.
I am vetoing this provision because the state already provides adoptive parents with a tax benefit through our adoption expenses deduction. The estimated $7,500,000 annually saved through this veto will be used to fund education and provide property tax relief, offering further benefits to both adoptive parents and their children.
4.
Health Savings Accounts
Sections 1432m, 1450g and 9341 (5m)
These sections update state tax references to the internal revenue code in order to conform to federal income tax exclusions and deductions for health savings accounts (HSAs). Under the federal HSA provisions, an eligible individual covered by a high-deductible health insurance plan may make pretax deductions to an HSA to cover qualified medical expenses. These provisions would first apply to tax year 2005.
A418
I am vetoing these provisions on HSAs, as I have in the past, because HSAs are inextricably linked to high deductible medical insurance and, therefore, could decrease employer-sponsored insurance coverage. Additionally, HSAs are only viable for persons with higher incomes. Without a clear and demonstrated benefit for the residents of this state as a whole, I believe these provisions should only be taken up in the context of a larger debate on a comprehensive health care package that would effectively and affordably address the health care needs of seniors, children, and middle- and low-income families.
While I have vetoed these provisions, I am signing a tax cut for individuals paying health insurance premiums. This tax cut will help those whose employers do not contribute to health insurance premiums, meet the immediate cost of health care and will improve access to health insurance for persons who have no employer.
5.
Sales Tax on Services Provided by Temporary Help Companies
Sections 1632n and 9441 (7w)
These sections exempt taxable services provided by temporary help companies [as defined in s.
108.02 (24m)] from the state sales and use tax, as long as the client controls the means of performing the services and is responsible for the satisfactory completion of the services.
I am vetoing this provision because it does not take effect until July 1, 2007, and, thus, does not need to be decided in the context of this budget.
6.
Individual and Corporate Income and Franchise and Insurance Premiums Tax Credit for HIRSP Assessments
Sections 1311i, 1312r, 1319m, 1354m, 1385h, 1385p, 1386m, 1406m, 1428k, 1428p, 1474q, 1474s and 1686f
These provisions create a nonrefundable credit under the insurance premiums tax, the corporate and individual income and franchise taxes, and the tax on investment income paid by life insurance companies. The credit is equal to a percentage of the amount of assessments paid by the insurer during the taxable year under the Health Insurance Risk-Sharing Plan (HIRSP). The Department of Revenue and the Office of the Commissioner of Insurance must set the credit percentage for each year so that the annual cost of the credit is as close as practicable to $2,000,000 in fiscal year 2006-07 and $5,000,000 in each fiscal year thereafter. Unused credits may be carried over for up to fifteen years.
I am vetoing this provision because it is an unaffordable benefit to HIRSP insurers. Revenue associated with this credit is more effectively used to adequately fund public schools and deliver property tax relief.
7.
Withholding from Nonresident Members of Pass-Through Entities – Technical Veto
Section 1431
This section establishes rules that require corporations, trusts, limited liability companies, etc., that are treated as pass-through entities for federal tax purposes and that have Wisconsin income allocable to nonresident partners, members or shareholders to pay withholding taxes. However, the language does not provide a method for computing withholding from the income attributable to individuals and corporations.
I am partially vetoing this section to conform the language to the original legislative intent of the provision. If the veto is not made, the state will not collect some portion of the $7,500,000 in fiscal year 2005-06 and $5,000,000 in fiscal year 2006-07 that was included in my budget proposal and approved by the Legislature.
8.
Definition of Taxable Sales – Technical Veto
Section 1518m
This provision was among a series of changes I recommended to conform to the Streamlined Sales and Use Tax Agreement. The Joint Committee on Finance decided to remove the proposal from the budget. However, due to a drafting error, this section of the proposal remained in the bill. I am vetoing this section to conform the bill to the record of legislative intent.
REVENUE
