I am vetoing these sections to avoid the potential revenue loss. This would keep the revenue estimates in accord with the estimates the Legislature considered in passing the budget.
I recognize the inherent complexity of the Internal Revenue Code. I request the Legislature to reconsider the IRC update as it intended and pass the update as separate legislation.
S358
7.
Sales Tax Exemption for Water Slides
Sections 2246nm and 9444 (3w)
This provision provides a sales and use tax exemption for commercial water-park slides including support structures, attachments and parts. The exemption reduces general fund revenues by $90,000 in 2001-02 and by $120,000 in 2002-03.
I am vetoing this section because I object to such a narrowing of the sales tax base. This is a highly selective exemption for one form of construction and maintenance of entertainment or recreational structures. This favors a single industry among a variety of industries providing recreation
8.
Individual Income Tax Exclusion for Military Pensions
Sections 2142m and 2142n
Starting in tax year 2002, these sections exclude from taxation all payments, other than surviving spouse benefits, received from the U.S. military employee retirement system that are not excluded under current law.
I object to the exclusion of surviving spouse benefits from this new tax benefit. Under current law pre-1964 military pension and surviving spouse benefits are not taxed. It is inequitable to broaden the exemption to include only post-1963 military pension and to not include post-1963 surviving spouse military retirement benefits. My partial veto of this section will make these surviving spouse benefits tax exempt.
9.
Estate Tax
Section 2200L
This section requires persons who prepare an estate tax return for deaths occurring after December 31, 2002, to prepare a return under this newly decoupled Wisconsin estate tax. Other provisions in the bill decouple the Wisconsin estate tax from the federal estate tax beginning in fiscal year 2003-04. Because estate taxes are due nine months after a death, the relevant date for deaths should have been for deaths occurring after September 30, 2002.
I am partially vetoing this section to remove the December 31, 2002, date because it does not reflect legislative intent. This partial veto realizes the Legislature's intent to begin the new, separate Wisconsin estate tax in fiscal year 2003-04 by requiring estate tax preparers to prepare returns under the decoupled Wisconsin tax in fiscal year 2003-04. It is my intent to rescind the decoupling of Wisconsin's estate tax from the federal estate tax in my 2003-05 biennial budget.
10.
Artistic Endowment Foundation Tax Credits
Sections 2148m, 2150d, 2150t, 2175, 2179d, 2179h, 2193d, 2193h and 2205n
Sections 2148m, 2150d, 2150t, 2175, 2179d, 2179h, 2193d and 2193h provide a nonrefundable individual, corporate and insurance company tax credit for contributions to the Artistic Endowment Foundation created in this budget.
Under this credit a tax filer could claim ten percent of the amounts contributed to the artistic endowment fund. The maximum credit is $50 ($100 for married couples filing jointly) or $500 for the corporate tax credit.
Section 2205n requires the Department of Revenue to provide for an income tax form provision that would allow a taxpayer to contribute additional funds to the Artistic Endowment Foundation. These additional contributions would reduce a taxpayer's refund or increase a taxpayer's payment for tax liability.
I support the new Artistic Endowment Foundation, but I object to the new ten percent credit as it doubles the amount of the current five percent itemized deductions credit. Many contributions or expenses that are eligible for the current five percent credit are as worthy of tax code benefits as are contributions to the arts. I support the arts, but I do not believe Wisconsin should provide a new and exceptional tax benefit to artistic contributions. I am vetoing these sections to eliminate this new credit. As a charitable contribution, contributions to the Artistic Endowment Fund will be eligible for the current five percent itemized deductions credit.
I am vetoing section 2205n entirely because I object to the requirement that the Department of Revenue should modify the tax forms as indicated in section 2205n. The above veto of the credit removes the need for the department to modify the tax forms.
11.
Baseball Park District Income Tax Checkoff
Sections 395 [as it relates to s.
20.566 (1) (hp)] 917r, 2153g, 3037m, 3037n and 9344 (8x)
These sections:
•
Provide funding for the Department of Revenue's administration of voluntary payments for professional baseball park districts.
•
Define voluntary payments for these districts and establish the procedure for making such contributions to a baseball park district on the income tax return. These additional contributions would reduce a taxpayer's refund or increase a taxpayer's payment for tax liability.
•
Specify how the department must handle taxpayer conditional donations and errors such as failures to remit correct amounts or refunds insufficient to pay the designated contribution.
•
Structure the collection and distribution of any such contributions for administrative expenses and to retire bonds issued for the initial construction of such baseball park facilities.
•
Provide for refunds of such donations under specific circumstances.
S359
I am vetoing these sections entirely because I object to this checkoff. Wisconsin should strive to simplify and reduce the length of income tax forms. This provision will increase the complexity and length of our forms. This veto will not prevent taxpayers and other interested parties from contributing to a baseball park district. Therefore, this checkoff is not needed and this veto eliminates the provision.
PUBLIC SERVICE COMMISSION
12.
Promulgation of Rules to Facilitate the Production of Distributed Energy
Section 9142 (2zq)
These provisions direct the Public Service Commission to promulgate rules on distributed energy by the first day of the ninth month after the effective date of the budget.
I am vetoing this section to give the commission flexibility in developing these rules. The technical requirements for engineering, electric reliability and safety set elsewhere in the bill are extensive. The bill also adds review and analysis by an advisory panel in addition to the review already required by the Joint Committee on Administrative Rules. To ensure there is adequate time for complete review and analysis of these rules, I am partially vetoing this section to remove the nine month deadline.
13.
Technical Veto – Telecommunications Regulation
Section 3011d
This provision was among a series of changes I recommended regarding the Public Service Commission's enforcement authority against telecommunications providers. 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.
14.
Voice Mail for the Homeless
This provision provides funding from the universal service fund. This includes $20,000 each year for voice mail for the homeless.
By lining out the Public Service Commission's s.
20.155 (1) (q) appropriation and writing in a smaller amount that deletes $20,000 SEG in fiscal year 2001-02 and $20,000 SEG in fiscal year 2002-03, I am vetoing the funding for voice mail for the homeless. Relative to the overall needs of the homeless, this is a luxury. Funds for homeless services should first be allocated for food and shelter. It is ironic that working families are called upon to pay for voice mail services they cannot afford for themselves.
This is not an area requiring state involvement. It can be handled through private donations and corporate contributions. In many states, and even in Wisconsin, telecommunications providers have stepped forward to provide the homeless with voice mail.
15.
Wisconsin Advanced Telecommunications Foundation Contributions
Section 9142 (3mk) (d)
This provision would allow telecommunications providers to pass assessments related to the Wisconsin Advanced Telecommunications Foundation (WATF) onto a customer's bill in the form of a surcharge. A telecommunications provider could only levy such a surcharge if the bill states that the surcharge is being assessed because of the telecommunications provider's failure to contribute to the WATF prior to its dissolution.
I am vetoing this provision because it would result in additional charges on consumers' phone bills at a time when consumers are already paying significant state and federal charges on their bills. The effect of this veto would be to delete telecommunications providers' ability to pass remaining WATF assessments onto consumers.
DEPARTMENT OF REVENUE
16.
Volunteer Income Tax Assistance Program
Sections 2205m and 9144 (2x)
These sections require the Department of Revenue to work with the Internal Revenue Service and the University of Wisconsin-Extension to undertake a volunteer income tax assistance program. The program is to encourage volunteering by the state's financial and legal professionals, provide training for the volunteers, and assist in creating mobile sites to offer income tax assistance to rural and underserved areas.
I am making two partial vetoes to these sections. First, I am vetoing the requirement that the department assist in the creation of mobile sites because this may not be the best means to serve all rural and underserved areas of the state. With my veto, the department will be able to examine other means of service delivery and consider the cost and benefit of each option. Second, I am vetoing the requirement that sufficient volunteers be recruited by January 1, 2002, to meet the demand for tax assistance services. I am vetoing this provision because the department will not be able to perfectly discern the level of demand for services by this date. If necessary, the department may need to recruit additional volunteers after January 1. Both of my partial vetoes of these sections reflect the Department of Revenue's ongoing effort to serve Wisconsin residents in the most efficient and effective manner possible.
SHARED REVENUE AND TAX RELIEF
17.
Municipal Shared Revenue Payments
Section 2281e
This section specifies that each municipality in calendar years 2002 and 2003 shall receive a one percent increase in its shared revenue payment compared to the payment the municipality received in the previous year. It also specifies that in 2004 and thereafter, each municipality shall receive a shared revenue payment equal to the payment it received in 2003.
S360
I am partially vetoing this section in two ways. I am partially vetoing the section to eliminate the freeze in shared revenue payments that the section creates beginning in 2004. I am vetoing this provision because the shared revenue formula should be allowed to redistribute state aid according to need over time. Without my veto, payments would remain static forever into the future regardless of whether a municipality gains tremendous property wealth or loses a large share of its tax base. With my veto, shared revenue payments will increase for those municipalities with greater needs.
I am also using a partial to veto to eliminate an ambiguity in the language. I am vetoing the phrase "under this section" because deleting this phase will clarify that the one percent across-the-board increases provided in 2002 and 2003 include the utility component of shared revenue but exclude small municipality shared revenue. This technical correction was recommended by the Legislative Fiscal Bureau to ensure that this section's language reflects legislative intent.
18.
Exclude Lafayette County from Maximum Constraint
Section 9344 (9m)
This section specifies that the exemption of Lafayette County from the maximum constraint provision of the shared revenue formula shall first apply to the shared revenue payments made in November 2001.
I am partially vetoing this section to move the initial applicability of the Lafayette County exemption from the 2001 to the 2002 payments. I am making this partial veto because it is disruptive to change shared revenue payments this late in counties' 2001 fiscal year. Without this partial veto, shared revenue payments for nineteen counties will be reduced in November 2001 to amounts below those anticipated by these counties when they set their 2001 budgets. As a consequence, these counties could end up in deficit situations by no fault of their own. My veto avoids this concern. By shifting the first year to which the exemption applies to 2002, counties will have adequate time to incorporate all of the bill's shared revenue provisions into their budget planning.
Because my veto moves the first year of the Lafayette County provision to coincide with the first of two back-to-back increases in shared revenue under the bill, I expect no county to experience, solely as a result of the exemption, a decline in its 2002 payment compared to 2001. This is because I am signing into law increases in county shared revenue payments that exceed the amount of funding that the Lafayette County exemption reallocates. For the 2002 payments, I am approving increases in county shared revenue and county mandate relief payments that total $1,897,400. The Lafayette County exemption will redirect to that county approximately $1,200,000 of this increase. The additional aid will more than offset the amount redistributed by the exemption and will largely flow to the specific counties impacted by the Lafayette exemption. The bill's second increase in county shared revenue and county mandate relief totaling $1,916,400 in 2003 should further relieve concerns over the redistributive impact of the Lafayette County exemption because it provides an additional increase after the Lafayette County exemption is already implemented. Only a small portion of the 2003 increase is expected to go to Lafayette County.
Lafayette County's need for assistance is clear. Lafayette County imposed the second highest tax rate of all counties on the December 2000 property tax bills. The first and third highest, Menominee and Florence, were previously exempted from the maximum constraint. In 2001, the county's operating levy was the highest permissible under the county mill rate limit. By far, Lafayette County is the most negatively impacted county under the current minimum/maximum provisions of the shared revenue formula. In 2001, the county is receiving only sixteen percent of the amount it is entitled to under the equalization formula.
The county's situation is not new. Lafayette County has been on the maximum constraint for years. As the county with the largest share of its property value in agricultural land, the fall in farmland values in the 1980s hit the county's tax base very hard. The county's 2001 tax base is virtually identical to what it was twenty years ago. In 1981, the county's equalized value was $682,437,900. In 2001, it is only one percent higher, at $690,737,800. During this same time period, the tax base of all counties statewide increased by 177 percent. Adjusted for inflation, Lafayette County's tax base is half of what it was twenty years ago.
I am not content, however, with the means the Legislature chose to assist Lafayette County. Exempting a county from the maximum constraint is a crude on/off switch for adjusting state aid. This approach provides only two choices: allowing a county to be punished by the constraint or allowing it to gain substantially without regard to the needs of others. Consequently, I encourage the Legislature to consider other means to adjust the maximum constraint. Other approaches could create a more equitable situation rather than an environment in which each county subject to the maximum seeks to become the next exception.
19.
Special Charges for Municipal Services
Sections 2022tL, 2022w, 2022x, 2023 and 9359 (8z)
These sections allow municipalities to impose special charges for services available, regardless of whether the services are actually rendered, by allowing municipalities to allocate all or part of the cost of the services to properties served or eligible to be served.
S361
I am vetoing these sections because the imposition of a charge for services not rendered blurs the line between fees and taxes. I am also concerned that this provision will have a negative impact on the activities of many nonprofit organizations because the provision would broaden the scope of charges that could be applied to tax-exempt property. While this provision would help municipalities finance public services, it could hinder private entities that produce public benefits. I am especially concerned that this provision would lead to reductions in programs that help the homeless, the disabled and other populations assisted by the many nonprofit organizations across the state. I do hope, however, that a dialogue between municipalities and the owners of tax-exempt property will occur that will produce an acceptable means to ensure that municipalities are enabled to adequately finance public services without impairing the benevolent efforts of our nonprofit organizations.
20.
Automatic Teller Machines
Sections 2108q and 9344 (23k)
These sections exclude automatic teller machines from the property tax exemption for computer equipment beginning January 1, 2002.
I am vetoing this provision because it will lead to higher fees for Wisconsin residents to use automatic teller machines by increasing the costs of operating the machines. I am also vetoing this provision because it is an unnecessary intrusion into the Department of Revenue's administrative responsibility to apply the computer exemption fairly and uniformly to all property. As a result of my veto, GPR expenditures under the sum sufficient appropriation to reimburse local governments for the tax base lost by the computer exemption under s.
20.835 (1) (e) will increase by an estimated $1,117,500 in fiscal year 2002-03.
21.
Area Cooperation Compacts
Section 2022t
This section requires municipalities in standard metropolitan statistical areas to enter into area cooperation compacts with other municipalities or counties in the same region. The compacts will produce savings to taxpayers by improving cooperation in service delivery. Beginning in 2003, each municipality will be required to enter into an area cooperation compact with at least two municipalities and/or counties to perform at least two governmental services. Beginning in 2006, each municipality will be required to enter into an area cooperation compact with at least four municipalities and/or counties to provide at least five governmental services. An exception is provided for municipalities with less than two adjacent municipalities.
I am partially vetoing this section to eliminate the broader compact requirement that begins in 2006. As a result of my veto, the compacts will be with at least two local governments for at least two services for 2003 and each year thereafter. I am vetoing the broader requirement beginning in 2006 because it is premature. Municipalities should be given greater opportunity to gain experience with this new means for seeking cooperative gains before it is expanded. Although my veto eliminates the mandate for broader compacts, broader compacts will not be prohibited. Indeed, I encourage local governments to fully explore all opportunities to create savings by working together.
22.
Annexations Creating Town Islands
Section 2019n
This section allows a city or village to create a town island by annexation if an intergovernmental cooperation agreement or a cooperative plan for boundary change applies to the territory that is annexed in creation of the town island.
Intergovernmental cooperation agreements can cover a wide range of concerns. I am partially vetoing this section to eliminate the use of these agreements to create town islands because the provision does not specify that the agreement must cover boundary issues. My veto prevents the use of agreements related to nonboundary concerns from being inappropriately applied to this section. As a result of my veto, a city or village may create a town island by annexation, but only if a cooperative plan for boundary change between the city or village and the town exists and the plan applies to the land that is annexed.
23.
Classification of Certain Property as Swamp and Waste
Sections 2114m and 9344 (28v)
These sections require undeveloped land to be classified as swamp and wasteland if the land is not classified as agricultural or productive forest land and the land is part of a parcel where the other part of the parcel is enrolled in the Managed Forest Program.
I am vetoing these sections because they undermine the property tax system while providing no tax relief. Except for agricultural property, real property is assessed at market value. Consequently, no property impacted by these sections would receive a property tax reduction. In addition, determining the classification of land based on the characteristics of adjacent land rather than the characteristics of the land itself weakens the uniformity of the property tax system.
State Treasurer
24.
Changes in Statutory Appropriations
