Statutes interpreted
Agency authority
DATCP has broad authority, under s.
93.07(1), Stats., to adopt rules needed to implement laws under its jurisdiction. DATCP also has authority, under ss.
126.81 and
126.88, Stats., to establish license fees and fund assessments under the agricultural producer security program. Chapter
126, Stats., establishes license fees and fund assessments, but authorizes DATCP to change those license fees and fund assessments by rule.
Under current law, DATCP must modify fund assessments whenever fund balances fall outside a specified range. The fund balance attributed to the grain warehouse keeper sector currently falls below the required minimum of $200,000. Therefore, DATCP must modify fund assessments for grain warehouse keepers. DATCP is authorized, but not required, to modify fund assessments for other contractors.
Background
DATCP administers the agricultural producer security program under ch.
126, Stats. DATCP has adopted rules to implement the program. The rules are contained in chs.
ATCP 99-
101, Wis. Adm. Code. Under current law:
• Licensed contractors must pay license fees to fund DATCP administration of the agricultural producer security program. Administration includes grain warehouse inspections, review of contractor financial statements, license administration and response to contractor financial defaults and law violations.
• Most contractors (“contributing contractors") must pay fund assessments to finance the agricultural producer security fund. The fund is held in trust, for the benefit of producers. If a contractor defaults on payments to agricultural producers, DATCP may reimburse producers from the fund. Fund assessments are like insurance premiums, and are based on contractor size, financial condition and risk practices.
Prior to 2003, DATCP administrative costs were paid by a combination of general tax revenue (“GPR") and contractor license fees. However, the 2003-2004 Biennial Budget Act eliminated virtually all GPR funding for program administration. That made it necessary to transfer staff from GPR funding to license fee funding. Partly as a result of that change, current license fee funding is no longer adequate to cover administrative costs. There has been a gradual growth in administrative costs, due to factors (such as statewide union contracts for accountants and auditors) that are outside DATCP control.
Funding shortfalls are especially severe in the grain dealer and grain warehouse keeper programs. Administrative costs now annually exceed license fee revenues by over $200,000 in each of those programs, and each program has a negative cash balance of more than $350,000. In the vegetable contractor program, administrative costs now annually exceed license fee revenues by over $20,000, and the program has a negative cash balance (January 1, 2007) of more than $50,000.
Deficits in the grain and vegetable administration accounts are currently being covered by milk contractor license fee revenues and by fund assessment revenues that would normally go to the producer security fund. That unfairly affects milk contractors and reduces fund coverage for all producers (grain, milk and vegetable).
This rule increases annual license fees for grain dealers, grain warehouse keepers and vegetable contractors, to remedy current inequities and provide minimally adequate funding for program administration. This rule also adjusts fund assessments, especially for grain warehouse keepers (for whom an adjustment is required by law).
Notwithstanding this rule, the total of all contractor payments under the producer security (license fees plus fund assessments) will actually decline over the next few years, because of fee credits and declining formula rates that are built into the producer security law itself. This rule will slow, but not reverse, that overall decline. This rule will not have any significant impact on contractors' overall business costs.
Rule contents
Grain Dealer License Fees
Current Fees. Under current law, a grain dealer must pay the following annual license fees and surcharges:
• A license processing fee of $25.
• One of the following fees:
• $500 if the grain dealer purchased at least $500,000 worth of producer grain in this state during the grain dealer's last completed fiscal year.
• $200 if the grain dealer purchased at least $50,000 but less than $500,000 worth of producer grain in this state in the grain dealer's last completed fiscal year.
• $50 if the grain dealer purchased less than $50,000 worth of producer grain in this state in the grain dealer's last completed fiscal year.
• A $225 fee per business location in excess of one location (but only if the grain dealer purchased $500,000 worth of producer grain in this state during the grain dealer's last completed fiscal year).
• A $45 fee per truck, in excess of one truck, that the grain dealer uses to haul grain in this state.
• A $425 surcharge if the grain dealer submits a required financial statement that is not an audited financial statement.
• A $500 surcharge if the grain dealer operated without a license at any time during the preceding year.
• A $100 surcharge if the grain dealer, during the preceding year, failed to file a required financial statement by the required filing deadline.
• A $100 surcharge if the grain dealer failed to file a license renewal application by the license expiration date of August 31.
Proposed fees. This rule changes the calculation of grain dealer license fees. Under this rule, a grain dealer must pay the following fees and surcharges:
• A license processing fee of $25 (same as current law).
• A fee equal to the lesser of the following amounts:
• 0.175 cents per bushel of producer grain that the grain dealer procured in this state during the grain dealer's last completed fiscal year (the grain dealer must report the number of bushels of grain procured).
• $15,000.
• $100 per business location in excess of one location (regardless of the grain dealer's annual grain purchase amount).
• A surcharge of $500 if the grain dealer operated without a license at any time during the preceding year (same as current law).
• A surcharge of $100 if the grain dealer, during the preceding year, failed to file a required financial statement by the required filing deadline (same as current law).
• A surcharge of $100 if the grain dealer failed to file a license renewal application by the license expiration date of August 31 (same as current law).
This rule eliminates the following current grain dealer fees and surcharges:
• $45 fee per truck.
• $425 surcharge for submitting a required financial statement that is not an audited financial statement.
Grain Dealer Fund Assessments
Current Assessments. Under current law, a contributing grain dealer must pay the following annual fund assessments:
• A basic assessment, based on a formula that considers the total dollar value of Wisconsin grain purchased in the grain dealer's last completed fiscal year, the grain dealer's current ratio, and the grain dealer's debt-to-equity ratio. Other things equal, the formula yields declining basic assessments over time.
• A deferred payment assessment, if the grain dealer uses deferred payment contracts (which carry higher financial risk). The assessment equals total deferred payments for Wisconsin grain in the grain dealer's last completed fiscal year, multiplied by the following rate:
• 0.0035 if the grain dealer has contributed to the fund for less than 5 years.
• 0.002 if the grain dealer has contributed to the fund for 5 years or more.
Under current law, there is a minimum total assessment of $20 (basic assessment plus deferred payment assessment).
Proposed Assessments.
• Basic assessment. This rule does not change the calculation of a grain dealer's basic fund assessment (the formula continues to generate declining assessments over time), except that this rule creates a new minimum assessment based on volume (applies only to basic assessment):
• $20 for grain dealers who procured less than $500,000 worth of Wisconsin grain in the preceding license year.
• $200 for grain dealers who procured at least $500,000 but less than $3,000,000 worth of Wisconsin grain.
• $500 for grain dealers who procured Wisconsin grain worth $3,000,000 or more.
• Deferred payment fund assessment. Under this rule, the deferred payment assessment equals the grain dealer's total deferred payments for Wisconsin grain in the grain dealer's last completed fiscal year, multiplied by 0.0035 (regardless of how long the grain dealer has contributed to the fund). There is no minimum deferred payment assessment.
Grain Warehouse Keeper License Fees
Current fees. Under current law, a grain warehouse keeper must pay the following annual license fees and surcharges:
• A nonrefundable license processing fee of $25, plus an additional nonrefundable processing fee of $25 for each separate warehouse in excess of one warehouse.
• An inspection fee based on the combined capacity of the grain warehouse keeper's warehouses:
• A supplemental inspection fee of $275 for each grain warehouse that the grain warehouse keeper operates in excess of one warehouse.
• A surcharge of $500 if the grain warehouse keeper operated without a license at any time during the preceding year.
• A surcharge of $100 if the grain warehouse keeper failed to file an annual financial statement by the applicable deadline.
• A surcharge of $100 if the applicant fails to renew a license by the license expiration date of August 31.
Proposed Fees. This rule changes the calculation of grain warehouse inspection fees, but makes no other changes to current grain warehouse keeper license fees or surcharges. The current inspection fee schedule (see above) is replaced by a formula. Under the new formula, a grain warehouse keeper pays an annual inspection fee equal to the lesser of the following amounts:
• The warehouse keeper's highest daily grain obligations to depositors (in bushels) in the preceding license year, multiplied by 0.3 cent per bushel.
• $15,000.
Grain Warehouse Keeper Fund Assessments
Current Assessments. Under current law, a grain warehouse keeper must pay an annual fund assessment based on a formula that considers the warehouse keeper's licensed storage capacity, current ratio and debt-to-equity ratio. Other things equal, the formula yields declining assessments over time. There is a minimum assessment of $20.
Proposed Assessments. Under this rule, a grain warehouse keeper must pay an annual fund assessment that is 50% higher than the assessment generated by the current formula (the formula does not change, and continues to yield declining assessments over time). There is a new minimum assessment based on storage volume:
• $20 for grain warehouse keepers whose storage capacity is less than 300,000 bushels.
• $100 for grain warehouse keepers whose storage capacity is at least 300,000 but less than 500,000 bushels.
• $250 for grain warehouse keepers whose storage capacity is 500,000 bushels or more.
Milk Contractor License Fees
This rule makes no changes to current milk contractor license fees.
Milk Contractor Fund Assessments
Current Assessments. Under current law, a contributing milk contractor must pay an annual fund assessment based on a formula that considers the milk contractor's total Wisconsin milk payroll obligations for the contractor's last completed fiscal year, the milk contractor's current ratio, and the milk contractor's debt-to-equity ratio. Other things equal, the formula yields declining assessments over time. There is a minimum assessment of $20.
Proposed Assessments. This rule does not change the calculation of milk contractor fund assessments (the current formula continues to generate declining assessments over time), except that this rule creates a new minimum assessment based on the contractor's total Wisconsin milk payroll obligations in the contractor's last completed fiscal year:
• $20 for milk contractors with annual Wisconsin milk payroll obligations of less than $1,500,000.
• $200 for milk contractors with annual Wisconsin milk payroll obligations of at least $1,500,000 but less than $6,000,000.
• $500 for milk contractors with annual Wisconsin milk payroll obligations of $6,000,000 or more.
Vegetable Contractor License Fees
Current Fees. Under current law, vegetable contractors must pay the following annual license fees and surcharges:
• A nonrefundable license processing fee of $25.
• A fee of $25 plus 5.75 cents for each $100 in Wisconsin vegetable procurement contract obligations (to vegetable producers) that the contractor incurred during the contractor's last completed fiscal year. This fee does not apply to “nonparticipating processing potato buyers."
• A $500 fee if the vegetable contractor is a “nonparticipating processing potato buyer."
• A $500 surcharge if the vegetable contractor operated without a license at any time during the preceding year.
• A $100 surcharge if, during the preceding year, the vegetable contractor failed to file a required financial statement by its due date.
• A $100 surcharge if the vegetable contractor failed to file a license renewal application by the license expiration date of January 31.
Proposed fees. This rule increases the license fee component that is based on annual Wisconsin vegetable procurement contract obligations. It increases that fee component to $25 plus 8.75 cents (currently 5.75 cents) for each $100 in contract obligations.
This rule replaces the current $500 fee for “nonparticipating potato buyers" with a fee equal to the lesser of the following amounts:
• $25 plus 8.75 cents for each $100 in annual contract obligations (same as other vegetable contractors).
