Wisconsin Act 20 Assembly Bill 40 July 1, 2013
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Governor’s Veto Message
July 1, 2013
To the Honorable Members of the Assembly:
I have approved Assembly Bill 40 as 2013 Wisconsin Act 20 and deposited it in the office of the Secretary of State. Two years ago, Wisconsin faced a $3.6 billion deficit after years of using one-time revenues for ongoing spending. Wisconsin corrosively spent more than it took in. The State's rainy day fund was depleted and the State could not pay all the bills. Over 134,000 Wisconsinites lost jobs during the previous four years and the unemployment rate stood at 7.8 percent. Property taxes had gone up 27 percent over the previous decade.
Together, we made some tough, but prudent, decisions to put our state back on track and lay the foundation for future growth. Now, we expect to begin the new fiscal year with a $670 million surplus, the largest opening balance in over a decade; we will have over $243 million in the rainy day fund, the highest rainy day fund balance ever. Most importantly, the unemployment rate dropped to 7 percent and continues to be below the national average. Wisconsin workers are finding jobs and helping to grow our economy. In the last budget, we held the line on property taxes and this budget will continue to do so.
2013 Wisconsin Act 20 continues to invest in our priorities to create prosperity for all of Wisconsin's citizens. On February 20, 2013, I introduced a budget focused on growing our economy, developing our workforce, transforming education, reforming government and investing in our infrastructure. It included a substantial middle class income tax cut, several education reforms, a robust building and infrastructure program, and entitlement reform for the federally-shared Medicaid and FoodShare programs. The rationale for these initiatives was clear: in a globalized economy, Wisconsin needs low taxes, a strong educational system and an efficient government to compete and be prosperous. In this way, initiative and independence are rewarded. Opportunities are maximized, jobs are created, and businesses grow.
I also urged the Legislature to improve upon the introduced budget. After four months of deliberation, the Legislature returned a document that will improve our economy and continue our sound fiscal management. The Legislature put our state's surplus to work for the people of Wisconsin by increasing the middle-class tax cut, increasing funding for public schools while keeping property taxes in check, and freezing tuition for the University of Wisconsin (UW) System. I heartily endorse these accomplishments. The budget I sign today, with minimal vetoes, reinforces this direction.
I am proud to say this budget provides nearly $1 billion in tax relief for Wisconsinites as we seek to grow our economy. The lion's share of this tax cut is through a reduction in income tax rates aimed at middle class taxpayers and is the first reduction since the 1990s. Because of this budget, Wisconsin will be more competitive in attracting business and Wisconsin taxpayers will get to keep more of their own hard-earned money.
In addition, this budget invests $380 million in new state funds into public education opportunities, including nearly $300 million in funding for public schools and a $300 increase per student over the next two years. Parents will have more choices for their children's education, no matter their zip code. It freezes tuition for the UW System campuses and introduces performance-based funding for the UW and Technical College systems. By investing in the future of our children, we open economic opportunity to all.
This budget changes the relationship between the State and its citizens by encouraging personal responsibility, especially in the use of the federal entitlements of Medicaid and FoodShare. By reforming Medicaid, all Wisconsinites will have access to affordable health insurance. Medicaid is maintained as a safety net for our state's most vulnerable, while protecting our state's taxpayers from uncertain federal funding due to the federal government's implementation of the Affordable Care Act. The State's commitment to the federal FoodShare program gives worker training to those receiving benefits to help them find jobs.
We continue to invest in Wisconsin's infrastructure through improvements to the Zoo Interchange and Hoan Bridge in Milwaukee and comprehensive upgrades to the maintenance of the state highway system. In this way, Wisconsin can get goods, manufacturing or agricultural products, to market efficiently. In addition, the State makes an investment in its natural resources and tourism through a walleye fishery initiative. The State continues a vigorous building program with improvements throughout the state.
The following is a brief summary of how this budget, including my vetoes, will make Wisconsin more prosperous, more efficient and more independent:
Income Tax Relief
• Provides the largest tax cut in 14 years by driving income tax rates down for all filers, with the largest cuts aimed at taxpayers making between $15,000 and $50,000 amounting to around a 5 percent reduction for these filers. The median family of four making $80,607 will save $345 in this budget and $1,725 over the next decade in income tax savings. All Wisconsin families will keep more of the money they earn.
• Simplifies Wisconsin's tax code by eliminating 17 little-used credits, reducing the number of income tax brackets from five to four and adopting federal treatment of several provisions. Tax simplification reduces the state's compliance burden on individuals and businesses, improving Wisconsin's business climate.
• Cuts total income taxes by $650 million over the biennium; the beginning balance for the biennium is $670 million. In this way, the tax cut is paid for by sound fiscal stewardship. The state's taxpayers reap the benefit and the state can compete for business.
Growing Our Economy
• Provides access to seed capital for growing businesses through the seed accelerator program and maintains a commitment to promoting tourism businesses in Wisconsin. Immediately adds $36 million in additional economic development tax credits and repeals the $47.5 million lifetime cap on the angel investment tax credit program.
• Allocates $118.6 million over the biennium for economic development efforts administered by the Wisconsin Economic Development Corporation (WEDC) and enhances efficiency of WEDC's economic development programs by strengthening the corporation's auditing, reporting and procurement standards.
• Provides $2.5 million to the Wisconsin Development Reserve Fund to leverage $11.25 million for loan guarantees in support of the Wisconsin Housing and Economic Development Authority's (WHEDA) Transform Milwaukee initiative.
• Provides $25 million GPR in fiscal year 2013-14 for an investment capital program passed in separate legislation.
Developing Our Workforce
• Provides increased opportunities for workers through Wisconsin's technical colleges through the use of performance funding to focus on job placement and programs in high demand fields.
• Continues to work to increase employment, through a variety of initiatives that build on the successful features of past programs, such as the Transform Milwaukee jobs initiative and the Trial Employment Match Program (TEMP).
• Invests $31 million all funds into expanding and improving work training services for individuals with the lowest incomes, while requiring able-bodied adults without dependents to meet federal work or employment training requirements in order to receive FoodShare benefits.
Rural Access to Care and Workforce Development
• With an aging population and increased health care access, Wisconsin faces a physician shortage in rural and underserved areas. This budget provides grants to rural hospitals to provide residency slots to alleviate the primary physician shortage to address the primary health care shortage in Wisconsin by increasing the size and scope of rural medical programs at the Medical College of Wisconsin (MCW) and the UW-Madison Medical School.
o MCW will build two new campuses in the Wausau and Green Bay areas.
o UW will expand the medical school's Wisconsin Academy for Rural Medicine (WARM) and Training in Urban Medicine and Public Health (TRIUMPH) programs using $1.5 million of program revenue.
• Funds additional students at the Marquette Dental School to provide more dental care in Wisconsin.
• Provides $3.75 million to fund increased access to the UW Carbone Cancer Center's cutting-edge molecular imaging.
• In addition, provides grants to rural hospitals to create residency slots and help fund the continuation of those residency positions in high-need medical specialties.
Transforming Education
• Provides $380 million in new state funds for public education and quality educational opportunities for students, including nearly $300 million for K-12 public schools.
• Provides an additional $250,000 over the biennium for STEM (Science, Technology, Engineering and Math) grants.
• Provides $2.8 million over the biennium to continue and expand the PALS reading screener to ensure teachers can measure basic reading skills for all students from four-year-old kindergarten through 2nd grade.
• Provides $13.6 million for a new Educator Effectiveness system for evaluating teachers.
• Provides $1 million to expand Teach for America's presence in Milwaukee.
• Implements a cap on tuition at the UW System, the first two-year tuition freeze in the history of the UW system.
• The University of Wisconsin will fund $2 million to support the start-up of a UW Flexible Option – an on-line learning and degree option that will transform higher education.
Transforming Education through School Choice
• Expands school choice options statewide to allow low-income families to choose the appropriate educational environment for their children: 500 students in the first year and 1,000 students in the second year for families below 185 percent of the federal poverty level will be allowed to participate.
• Creates a new tuition tax deduction of up to $4,000 a year for K-8 students and $10,000 a year for parents with high school students. This will cost $30 million a year.
Reforming Government
• Keeps property tax increases under control. The median value home is expected to have an increase of just less than 1 percent on both the December 2013 and December 2014 tax bills.
• Continues to protect property taxpayers by maintaining levy limits on counties, municipalities and technical college districts, limiting levy increases to the rate of growth due to new construction.
• Provides $29.7 million over the biennium in added funding for property tax credits.
• Encourages local government cooperation by removing a disincentive for contracted services between municipalities under the expenditure restraint program.
• Maintains the state's commitment to counties and municipalities by funding shared revenue at current law levels.
