General Fund Taxes
77. Refundable Business Tax Credit Claims
Sections 1036h, 1036Lm, 1037bc, 1037bd, 1037be, 1037d, 1037e, 1037f, 1037g, 1037h, 1037i [as it relates to s. 71.07 (3wm) (c) and (d)], 1037t, 1037u, 1037v, 1037w, 1038g, 1038h, 1085ba, 1085bb, 1085bc, 1085bd, 1085be, 1085d, 1085e, 1085f, 1085g, 1085h, 1085i [as it relates to 71.28 (3wm) (c) and (d)], 1086b, 1086d, 1086e, 1086f, 1086g, 1086h, 1110ba, 1110bb, 1110bc, 1110bd, 1110be, 1110d, 1110e, 1110f, 1110g, 1110h, 1111b, 1111d, 1111e, 1111f, 1111g, 1111h, 1769v, 1779L, 1783q and 9150 (3t) These provisions require that claims for credits awarded by the Wisconsin Economic Development Corporation must be filed with and paid by the corporation from the tax credit appropriations using policies and procedures developed by the corporation’s board. In addition, these provisions require that credits earned by pass-through entities be claimed by the business entity itself rather than the individual owners of the business. Finally, these provisions specify that the corporation may recover such credits that have been revoked or that are otherwise invalid from either the pass-through entity or the entity’s individual owners.
I am vetoing these provisions because I object to transferring these responsibilities from the Department of Revenue to the Wisconsin Economic Development Corporation, which may result in a diminution of internal controls that safeguard against incorrect payments. I appreciate the desire for efficiency by consolidating functions with the corporation, but the department has a well-established system to prevent incorrect payments of these credits that would be unnecessarily jeopardized by transferring these functions to the corporation.
78. Limit on Enterprise Zones
Sections 1783L and 1783o
These provisions eliminate the current law limit that the Wisconsin Economic Development Corporation may not designate more than 30 zones under the Enterprise Zone Jobs Tax Credit program. Instead, the provisions specify that the corporation may not verify businesses as eligible to claim enterprise zone credits of more than $80,600,000 biennially, beginning with the 2017-19 biennium. The corporation would be permitted to exceed the biennial limit if such an action is approved by the Joint Committee on Finance subject to a 14-day passive review process.
I am vetoing these provisions because I object to fully removing the 30-zone limitation on the corporation while also imposing limitations on credit payments that could result in uncertainty for recipients regarding when their credits, which are subject to existing contracts specifying timetables for payment, may be claimed. The biennial limitation on verifications may result in situations where key Wisconsin companies would face significant delays between when their qualifying activity takes place and when they may claim the credits for those activities. This would weaken the attractiveness of the enterprise zone program for businesses, potentially harming the ability of the state to attract and retain businesses.
79. Historic Rehabilitation Credit
Section 1775g
This section creates a limitation on the historic rehabilitation tax credit that limits the amount of credits the Wisconsin Economic Development Corporation may certify to no more than $5 million on the same parcel. This limitation would first take effect with certifications beginning on July 1, 2018.
I am partially vetoing this because I object to continuing this program with almost no limitation on the amount that can be awarded each fiscal year. The $5 million per parcel limitation does little to curtail the fiscal effects of this program, which has swelled to cause an annual tax revenue loss exceeding $60 million, making it one of this state’s most expensive economic development incentives. My budget proposal included a recommendation to limit program awards to $10 million annually and institute competitive awards of those credits to emphasize job creation potential, among other considerations, in order to balance the state’s fiscal exposure with the needs of local communities. I am using the digit veto to reduce the per parcel cap from $5,000,000 to $500,000. Reducing the per parcel cap to $500,000 per parcel leaves unchanged the incentives for many of the projects in smaller communities across Wisconsin while reducing the state’s fiscal exposure on larger projects. I am maintaining the July 1, 2018, effective date for this new cap to allow projects currently under consideration time to incorporate the limitation into their plans.
Roughly half of states have per project caps and a third of those state have per project caps at or lower than $500,000. Of the awards approved since 2014, just under half have been for $500,000 or less.
Further, while I support the reasonable changes made through this veto, the Legislature could pursue separate legislation that more closely mirrors my original budget recommendations to more thoroughly reform this program, addressing both the state’s fiscal exposure and program objectives in a comprehensive manner.
The fiscal effect of this veto is estimated to be an increase in general fund tax revenue of $1,220,700 in fiscal year 2018-19, $12,062,900 in fiscal year 2019-20 and $33,173,000 in fiscal year 2020-21. Savings would grow to $46,241,200 in fiscal year 2021-22 and $47,390,000 annually beginning in fiscal year 2022-23.
80. Working Families Tax Credit
Section 1041e
This section repeals the Working Families Tax Credit beginning with the 2017 tax year.
I am vetoing this section because I object to entirely eliminating the Working Families Tax Credit instead of addressing the narrower issue of ensuring that credits may only be claimed by full-time Wisconsin residents, which I proposed in the Executive Budget for the 2017-19 biennium. The fiscal effect of vetoing this provision will be a loss of $200,000 in general fund tax revenue in each year of the biennium.
81. Private Label Credit Card Bad Debt Deduction
Section 2265
This section delays the effective date for 2013 Wisconsin Act 229, which pertains to allowing sales tax return adjustments for bad debts on private label credit cards, until July 1, 2018, instead of the September 1, 2019, recommended in the Executive Budget. I am exercising the digit veto in this section to delay the effective date to July 1, 2078, because I object to incurring a large fiscal effect in this biennium. The effect of this veto will be to achieve the same result as my original budget recommendations. These funds may be better spent on broad-based relief such as with a sales tax holiday that was included in my original budget recommendations as opposed to a provision that will benefit only select financial institutions. Partially vetoing this provision will increase sales and use tax collections by $10,436,000 in fiscal year 2018-19.
82. Sales Tax Exemption for Broadcast Equipment
Sections 1187d, 1187e, 1187f and 9438 (2i)
These provisions create a sales and use tax exemption for broadcast transmitters, satellite dishes and communications towers if the equipment is used primarily for transmitting or receiving commercial radio or television material. This sales tax exemption would first be effective on July 1, 2019, and would cause an annual general fund revenue loss of $928,000. These provisions also exempt a vehicle if it is used exclusively in the origination of radio or television programs. In addition, these provisions create an exemption for leased space on a communications tower if the space is used exclusively for transmitting or receiving commercial radio or television program material. For the purposes of this exemption, "program material" is defined to mean material generally available to the public free of charge.
I am vetoing these provisions because I object to providing a sales and use tax exemption that does not have any clear tax equity or economic purpose. It is unclear if any meaningful activity would be incentivized by this exemption. Further, there is no compelling tax equity issue being addressed by this sales and use tax exemption. This may be better reviewed as separate legislation. Vetoing this provision will increase annual revenue collections by $928,000 beginning in fiscal year 2019-20.
83. Alternative Minimum Tax Repeal Technical Correction
Section 1052e
This section sunsets the state alternative minimum tax with taxable years beginning after December 31, 2016. Separately in the bill, nonstatutory language specifies that the effective date for the repeal is for taxable years beginning after December 31, 2018.
I am partially vetoing this section to remove the "2016" reference in the applicable taxable years, which is inconsistent with the general effective dates of this provision and the Legislature’s stated intent. The intent of this provision is to sunset the state alternative minimum tax with taxable years beginning after December 31, 2018. This corrective partial veto will leave the only sunset date as the nonstatutory language setting the initial applicability of the repeal as December 31, 2018.
Local Government
Section 981e
This section specifies that the duties and responsibilities of the Milwaukee County Comptroller include administering accounts payable, payroll, accounting and financial information systems, in addition to those duties and responsibilities specified under current law.
I am vetoing this section because I object to how the increased specification of duties for the Milwaukee County Comptroller in state law will diminish how the county may best structure its administrative responsibilities.
_Hlk49297546085. County Board Approval for Sale or Lease of Land Owned by Milwaukee County Sections 980s, 980se, 981h, 981m [as it relates to land transactions in Milwaukee County], 982f and 9331 (7t)
These sections specify that, with regard to the sale or lease of property owned by Milwaukee County, the Milwaukee County Executive's action must be consistent with established county board policy and must be approved by the county board to take effect. In addition, these sections provide that the county board may only approve or reject a contract for the sale or lease of county property as negotiated by the Milwaukee County Executive. These sections also delete current law provisions that permit the Milwaukee County Executive, together with either the Milwaukee County Comptroller or an appointed real estate executive, to form a majority to lease, sell or convey any nonpark county property regardless of board policy and without board approval. These changes apply to a land transaction for which a contract has been entered into after September 1, 2018.
I am vetoing these sections [as these sections relate to land transactions in Milwaukee County] because these changes would hinder recent progress made to provide the Milwaukee County Executive with effective and efficient means to conduct the county’s business transactions.
86. Conduit Revenue Bonds
Sections 8s, 177s, 179e, 179f, 179s, 585h, 984g, 984gb, 984gc, 984gd, 984ge, 984gf, 984gg, 984gh, 984gi, 984gj, 984gk, 984gL, 984gm, 984gn, 984go, 984gp, 984gq, 984gqf, 984gr, 984gs, 984gt, 984gu, 984gv, 984gw, 984gx, 984gy, 984h, 984hb, 984hc, 984hd, 984he, 984hf and 984hg
This provision modifies current law as it relates to the Public Finance Authority and its ability to issue bonds in an assortment of ways, including empowering the authority to create one or more business units to carry out, or assist the authority in carrying out, all or part of the purposes or powers of the authority. In addition, the provision modifies the requirements for local approval of financing by the authority; broadens the authority's ability to own or operate property; and extends the existing personal liability law exemptions to officers, employees and agents of the authority and related business units.
I am vetoing this provision because this is nonfiscal policy that should be vetted as separate legislation.
87. Ordinances Conflicting with Statutory Provisions
Section 982t
This provision prohibits cities, villages, towns or counties from enforcing ordinances which either directly conflict with statute or when the intent of the ordinance appears to conflict with statute, either in its intent or its spirit.
I am vetoing this provision because I object to inserting a broad provision which may violate home rule under the Wisconsin Constitution for cities and villages. The statutes already provide the ability to regulate matters of statewide concern that could affect political subdivisions.
Department of Transportation
88. Transfer of State Car-Killed Deer Removal Program
Sections 362n, 578ym and 1222m
_Hlk491433452This provision would transfer, from the Department of Natural Resources to the Department of Transportation, the administration of the car-killed deer removal program that is currently funded on a one-time basis in the 2015-17 biennium by the forestry account of the conservation fund. It would further require that the Department of Transportation's expenses for contracting with vendors or local governments to remove car-killed deer shall be funded from the department's departmental management and operations, state funds appropriation under s. 20.395 (4) (aq) and specify that the removal of car-killed deer is not a routine highway maintenance activity. I am partially vetoing this provision in several ways because I object to the appropriation under which the Department of Transportation is to fund its costs pertaining to the removal of car-killed deer and I object to the restrictions placed on the department’s flexibility to address the removal of car-killed deer.
I am vetoing the requirement to fund the removal of car-killed deer from the department's departmental management and operations, state funds appropriation under s. 20.395 (4) (aq) because this requirement would take funding away from other priorities for the department's operating expenses given that no additional funding was provided to the department for car-killed deer removal. I am vetoing the prohibition that specifies that the removal of car-killed deer is not a routine highway maintenance activity because this prohibition conflicts with current law. Through its routine maintenance agreements for county-performed maintenance on state highways, the department already has the authority under s. 84.07 (1) to perform, "all routine measures deemed necessary to provide adequate traffic service" including the removal of car-killed deer. I am also vetoing the requirement that the department must contract for the removal and disposal of deer killed by vehicles to provide the department with greater flexibility in administering these duties.
This provision placed an unfunded mandate on the Department of Transportation. Under my partial vetoes, however, removal of deer carcasses could be funded under the Department of Transportation’s routine maintenance appropriation if a need arises.
Under my partial vetoes, the earlier intent to sunset the Department of Natural Resources program for car-killed deer at the end of fiscal year 2016-17 will be maintained.
Section 111
_Hlk491346840This provision allocates funding for state vehicle replacement and the creation of a statewide local transit capital assistance program using Wisconsin’s share of a settlement with Volkswagen related to the company’s fraudulent vehicle emissions practices. I am partially vetoing this provision to eliminate the $10,000,000 cap on Volkswagen settlement funds that may be used for state fleet vehicle replacement because I object to limiting the funds for state vehicle replacement to an amount below the state's potential replacement needs. As a result of my partial veto, Volkswagen settlement funds sufficient for the replacement of all eligible state vehicles will be available for this purpose. This partial veto will not, however, impact the total $32,000,000 in funding set aside for a statewide local transit capital assistance program because the state can fully fund this amount by allocating a portion of the final third of Wisconsin’s share of settlement funding that it will gain access to in the 2019-21 biennium.
This provision provides the Department of Transportation with $2,500,000 SEG in fiscal year 2017-18 to enter into a contract not to exceed that amount for a tolling implementation study. The study is to include an analysis to support the completion of a federal tolling application process; a tolling concepts of operations plan that outlines the policies, procedures and operations needed to govern roadway tolling; a traffic and revenue analysis including the revenue needed to support toll revenue-supported debt; and an evaluation, or reevaluation of federal environmental requirements, including needed documentation.
I am vetoing this provision to eliminate the requirement for the department to enter into a contract for a tolling study. This provision is unnecessary as the Department of Transportation may further study tolling under its own administrative authority at its discretion.
I am directing the Department of Transportation to continue to monitor and evaluate federal actions and directives that would impact Wisconsin's highway funding and review the need to further study tolling.
To make the $2,500,000 SEG that was provided for this study more immediately available, I am lining out the amount under s. 20.395 (4) (aq) for fiscal year 2017-18 and writing in a smaller amount that excludes this funding. In doing so, I am vetoing the part of the bill that funds this provision. I am also requesting the Department of Administration secretary not to allot these funds. This action will increase the transportation fund’s ending balance for the biennium by $2,500,000. Section 1460m
This section specifies that no county, city, village or town airport or spaceport protection ordinance may prohibit the use of a physical barrier in lieu of compliance with a 48-hour drainage requirement for a storm retention pond that is located in a residential subdivision underlain by natural clay soil.
I am vetoing this section because it creates a safety hazard by increasing the risk of wildlife strikes to airplanes. The purpose of the 48-hour drainage requirement rather than a physical barrier is to prevent standing water from attracting wildlife that may pose a hazard to aircraft operations. This is a recommended practice under federal and state guidelines. I am also vetoing this section because it may conflict federal wildlife hazard management plans required by the Federal Aviation Administration administrator.
_Hlk49297377392. State Highway Rehabilitation – State Highway 154 (Sauk County) Section 9145 (10c)
This section requires the Department of Transportation to complete state highway rehabilitation work on STH 154 in the 2017-19 biennium in Sauk County, from the Richland/Sauk County line to the village of Loganville.
I am vetoing this section because it interferes with the department’s ability to prioritize rehabilitation work. Moreover, since the department has this work programmed for fiscal year 2019-20, this project could already be advanced into the 2017-19 biennium should funding become available.
93. Enumerate I-94 between USH 12 and STH 65 (St. Croix County)
Section 1212m
This section enumerates the 7.5-mile segment of I-94 between USH 12 and 130th Street near STH 65 in St. Croix County in the statutes as a major highway development project.
I am vetoing this section because I object to efforts to sidestep the current prioritization of major highway projects. In addition, the enumeration of this project at this time may create expectations that work may be undertaken on this project earlier than is likely to occur. As a result of my veto, the Department of Transportation will be able to consider this project in the context of all other projects which are under consideration – thereby allowing a comprehensive statewide approach to be applied.
_Hlk49297383594. State Highway Construction – "Replace-In-Kind" Alternative Requirement Sections 1221m and 9345 (4t)
These sections require the Department of Transportation to study, consider and provide a cost estimate for a "replace-in-kind" alternative when developing state highway construction projects plans. These sections define "replace-in-kind" alternatives as plans that would not include bicycle lanes, added lanes of travel or significant design modifications that would include any of the following: (a) geometric or safety modifications, (b) changes to highway alignment, or (c) changes to access points. These sections would first apply to a highway improvement project commenced on the effective date of the bill.
I am vetoing these sections because placing these requirements in statute is both unnecessary and potentially costly. The provisions are unnecessary because the Department of Transportation has already adopted a "replace-in-kind" approach as a standard strategy to limit the scope and cost of construction projects. This provision is also potentially costly because the placement of this requirement in statute may force the development of plans that will be known from the start as imprudent if clear safety or congestion needs unquestionably merit something beyond a "replace-in-kind" project plan.
_Hlk49297389395. Initial Applicability of the Repeal of Prevailing Wage Law Section 9452 (2w)
This section establishes when the bill’s repeal of the state’s prevailing wage law goes into effect. This section specifies, for a project of public works that is subject to bidding, the prevailing wage repeal first applies to a project for which the request for bids is issued on or after September 1, 2018. In addition, this section specifies that for a project of public works that is not subject to bidding, the prevailing wage repeal first applies to a contract that is entered into on or after September 1, 2018.
I am vetoing this section because I object to making the taxpayers of Wisconsin wait for nearly a year before they can begin to benefit from the cost savings to be created by the repeal of the state’s prevailing wage laws. As a result of my veto, the delay of the repeal to September 1, 2018, will be deleted, so that the repeal of the state’s prevailing wage law will, instead, be effective with the effective date of the 2017-19 budget bill as a whole – and consequently, the effective date will be the day after publication of this budget act rather than nearly a year from now.
