SB278: Bill Text

LRB-3341/4

MS/RC/JK/RM/ML:all:pg

2003 - 2004 LEGISLATURE

2003 Senate BILL 278

October 13, 2003 - Introduced by Senators Plale, Wirch, Breske, Erpenbach, Lassa, Moore, Robson, Chvala, Risser, Decker, Hansen and Carpenter, cosponsored by Representatives Schooff, Sinicki, Balow, Hahn, Staskunas, Boyle, Hebl and Plouff. Referred to Joint Committee on Finance.

SB278,1,13 An Act to repeal 20.835 (3) (c) and 79.155; to amend 20.866 (2) (xe), 71.08 (1) (intro.), 71.10 (4) (i), 71.52 (6), 71.52 (6), 71.58 (7) (a), 71.58 (7) (a), 74.09 (3) (b) 6., 234.623 (5) and 234.625 (1); to repeal and recreate 74.09 (3) (b) 6.; and to create 16.406, 20.835 (2) (e), 20.835 (3) (c), 71.07 (8m), 71.54 (2m) and 79.155 of the statutes; relating to: property tax credits based on municipal tax levies; loans issued by the Wisconsin Housing and Economic Development Authority; refinancing certain public debt; for taxable year 2004 only, creating an individual income tax credit for senior citizens, modifying the definition of income under the homestead tax credit and increasing the homestead tax credit; studying the feasibility of covering local government and school district employees under the state employee health care coverage program; studying the state's state and local tax structure; granting rule-making authority; and making appropriations.

Analysis by the Legislative Reference Bureau

This bill does all of the following:

1. This bill creates, for property tax assessments payable in 2005, a property tax credit for all taxpayers whose property is located in a municipality that increases its municipal purpose levy for 2004 by an amount that is 2 percent or less of the amount of the municipality's municipal purpose levy for 2003. If the municipality's municipal purpose levy for 2004 is the same amount as the municipality's municipal purpose levy for 2003, the municipality will receive an amount to distribute as tax credits that is equal to the taxes levied by the municipality for municipal purposes in 2004, multiplied by 25 percent. If the municipality increased its municipal purpose levy for 2004 by an amount that is greater than 0 percent, but not more than 2 percent, of the amount of the municipality's municipal purpose levy for 2003, the municipality will receive an amount to distribute as tax credits that is equal to the taxes levied by the municipality for municipal purposes in 2004, multiplied by 12.5 percent. The estimated amount to be distributed to municipalities in fiscal year 2004-05 is $350,000,000.

2. This bill creates a refundable individual income tax credit, for taxable year 2003 only, for senior citizens who are at least 65 years old. A claimant under the credit must reside in and own his or her principal dwelling, which must be located in this state. Similar to the homestead credit, if both spouses of a married couple are eligible to claim the credit, they must decide between them who the claimant is.

If the claimant's household income is $45,000 or less, the claimant may claim a credit of $120. The credit amount is phased down to zero as the claimant's income increases from more than $45,000 to less than $85,000, and no credit may be claimed if the claimant's income is $85,000 or more. The credit amount that may be claimed under the bill is also prorated if the claimant, or the claimant's spouse, is a part-year resident of the state or if the claimant's spouse is a nonresident of the state, based on a ratio of the claimant's Wisconsin adjusted gross income (AGI) to federal AGI. If the amount of the credit for which the claimant is eligible exceeds the claimant's tax liability, the excess amount of the credit is refunded to the claimant by check.

3. Under current law, for claims filed in 2001 and thereafter, the homestead tax credit threshold income is $8,000, the maximum property taxes, or rent constituting property taxes, that a claimant may use in calculating his or her credit are $1,450, and the maximum income is $24,500. Under the current law formula, as a claimant's income exceeds $8,000, the credit is phased out until the credit equals zero when income exceeds $24,500. Also under the formula, if the household income is $8,000 or less, the credit is 80% of the property taxes accrued or rent constituting property taxes accrued. Using the formula, the credit that may be claimed ranges from $10 to $1,160.

Under this bill, for claims filed in 2005, based on property taxes accrued or rent constituting property taxes accrued in 2004, a claimant may claim a credit of 120% of the amount that he or she is otherwise eligible to claim using the current law formula.

Also under current law, "income" is defined under the homestead tax credit as the sum of Wisconsin adjusted gross income (AGI) and a number of other items, to the extent that the other items are not included in Wisconsin AGI, such as certain public assistance payments, nontaxable interest received on state and municipal bonds, unemployment insurance, and all payments received under the federal Social Security Act, other than cash reimbursement payments made under title XX of that act.

Under the bill, for taxable year 2004, the definition of "income" for homestead credit purposes is modified such that only payments received under the Social Security Act in excess of $2,500 are included in the definition of "income" if social security payments represent at least 50 percent of a claimant's Wisconsin AGI. If social security payments do not represent at least 50 percent of a claimant's Wisconsin AGI, the entire amount of such payments is included in the definition of income. Also for taxable year 2004, all amounts of unemployment compensation are excluded from the definition of income under the homestead credit.

4. Currently, before June 30, 2003, for public debt that is used to finance tax-supported or self-amortizing facilities, the state may contract additional public debt in an amount not to exceed $75,000,000 to refund the indebtedness. The bill increases that amount to $425,000,000 and provides that the refinancing of the debt must occur before June 30, 2005.

The bill also provides that this public debt may only be contracted if the secretary of administration makes a specific request to the Building Commission and that the secretary may make this request only if the Department of Administration determines that the estimated net general fund balance for the fiscal year is less than the estimated net general fund balance for that fiscal year as shown in the most recent schedule summary.

5. This bill increases the general school aid appropriation by $100,000,000 in fiscal year 2003-04 and $100,000,000 in fiscal year 2004-05.

6. Under current law, a homeowner 65 years of age or older with total household income of no more than $20,000 may annually apply to the Wisconsin Housing and Economic Development Authority for a loan to pay all or a portion of the individual's current property taxes and special assessments, and any interest or penalties on delinquent property taxes. The maximum annual loan amount is $2,500. This bill increases the income limit under this program to $33,500 and increases the maximum annual loan amount to $3,200.

7. The bill creates a special committee to be called the Commission on Municipal Employer Health Care Coverage Costs (MEHCC), which consists of the governor or his or her designee; the secretary of revenue or his or her designee; the secretary of administration or his or her designee; one member of the assembly, appointed by the speaker of the assembly; one member of the senate, appointed by the president of the senate; one member who represents labor organizations, appointed by the governor; and one member who represents the public interest, appointed by the governor. Under the bill, MEHCC must study the feasibility of allowing all local government and school district employers to provide their employees with health insurance coverage under the health care coverage plan for state employees that is administered by the Group Insurance Board and must report its findings and recommendations no later than December 31, 2004.

8. The bill creates a special committee to be called the Commission on State and Local Tax Structure, which consists of members appointed by the governor. The commission must study this state's state and local tax structure and determine the tax burden, by income category, on Wisconsin residents and must report its findings and recommendations no later than January 1, 2005.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB278, s. 1 Section 1. 16.406 of the statutes is created to read:

SB278,4,12 16.406 Request to issue certain general obligation debt. Annually, on or before September 1, but not after 2005, the department shall prepare an estimate of the net balances of the general fund for the fiscal year corresponding with the year in which the department makes an estimate under this section. Copies of the estimates shall be provided to the cochairpersons of the joint committee on finance and to the legislative fiscal bureau. If the estimated net general fund balance for the fiscal year, as certified by the department, is less than the estimated net general fund balance for that fiscal year as shown in the most recent schedule under s. 20.005 (1), the secretary of administration may request that the building commission refund the whole or any part of any unpaid indebtedness used to finance tax-supported or self-amortizing facilities from moneys appropriated under s. 20.866 (2) (xe).

SB278, s. 2 Section 2. 20.835 (2) (e) of the statutes is created to read:

SB278,4,15 20.835 (2) (e) Senior citizen tax credit. A sum sufficient to pay the claims approved under s. 71.07 (8m).

SB278, s. 3 Section 3. 20.835 (3) (c) of the statutes is created to read:

SB278,4,18 20.835 (3) (c) Municipal purpose levy credit. A sum sufficient to make payments under s. 79.155.

SB278, s. 4 Section 4. 20.835 (3) (c) of the statutes, as created by 2003 Wisconsin Act .... (this act), is repealed.

SB278, s. 5 Section 5. 20.866 (2) (xe) of the statutes is amended to read:

SB278,5,15 20.866 (2) (xe) Building commission; refunding tax-supported and self-amortizing general obligation debt incurred before June 30, 2003 2005. From the capital improvement fund, a sum sufficient to refund the whole or any part of any unpaid indebtedness used to finance tax-supported or self-amortizing facilities. The state may contract public debt in an amount not to exceed $75,000,000 $425,000,000 for this purpose. Such indebtedness shall be construed to include any premium and interest payable with respect thereto. Debt incurred by this paragraph shall be incurred before June 30, 2003 2005, but only pursuant to a request by the secretary of administration under s. 16.406, and shall be repaid under the appropriations providing for the retirement of public debt incurred for tax-supported and self-amortizing facilities in proportional amounts to the purposes for which the debt was refinanced.

SB278, s. 6 Section 6. 71.07 (8m) of the statutes is created to read:

SB278,5,17 71.07 (8m) Senior citizen tax credit. (a) Definitions. In this subsection:

SB278,5,24 1. "Claimant" means an individual who files a claim under this subsection, is at least 65 years old in the year to which the claim relates, and who resides in and owns his or her principal dwelling, which must be located in this state. If 2 individuals of a household are able to meet the qualifications for a claimant, they may determine between them as to who the claimant is. If they are unable to agree, the matter shall be referred to the secretary of revenue and the secretary's decision is final.

SB278,6,2 2. "Household" means a claimant and an individual related to the claimant as husband or wife.

SB278,6,3 3. "Household income" has the meaning given in s. 71.52 (5).

SB278,6,4 4. "Income" has the meaning given in s. 71.52 (6).

SB278,6,11 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 an amount that is calculated under this paragraph, and if the allowable amount of the claim exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against those taxes shall be certified by the department of revenue to the department of administration for payment to the claimant by check, share draft, or other draft from the appropriation under s. 20.835 (2) (e):

SB278,6,13 1. If the claimant's household income is $45,000 or less in the year to which the claim relates, the claimant may claim a credit of $120.

SB278,6,16 2. If the claimant's household income is greater than $45,000 but less than $85,000 in the year to which the claim relates, the claimant may claim a credit calculated as follows:

SB278,6,19 a. Calculate the value of a fraction, the denominator of which is $40,000 and the numerator of which is the difference between the claimant's household income and $45,000.

SB278,6,20 b. Subtract from 1.0 the amount that is calculated under this subd. 2. a.

SB278,6,21 c. Multiply $120 by the amount that is calculated under this subd. 2. b.

SB278,6,23 (c) Limitations. 1. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

SB278,7,8 2. For a claimant who is a part-year resident of this state and who is a single person or a married person filing a separate return, multiply the credit for which the claimant is eligible under par. (b) by a fraction the numerator of which is the individual's Wisconsin adjusted gross income and the denominator of which is the individual's federal adjusted gross income. If a claimant is married and files a joint return, and if the claimant or the claimant's spouse, or both, are part-year residents of this state, or if the claimant's spouse is a nonresident of this state, multiply the credit for which the claimant is eligible under par. (b) by a fraction the numerator of which is the couple's joint Wisconsin adjusted gross income and the denominator of which is the couple's joint federal adjusted gross income.

SB278,7,9 3. Nonresidents of this state are not eligible for the credit under this subsection.

SB278,7,11 4. No credit may be claimed under this subsection if the claimant's household income is $85,000 or more.

SB278,7,13 5. No credit may be claimed under this subsection for a taxable year that begins after December 31, 2003.