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The John K. MacIver Institute for Public Policy's State of Education - 2017 Edition

Mon, 09/11/2017 - 06:00

September 11, 2017

By Ola Lisowski
MacIver Institute Research Associate

As children all across Wisconsin head back to school, it is time for the MacIver Institute's annual examination of our educational system. To make sure we're all set for the semester, let's take a look at what's going on with our students.

First, we'll touch on recent developments at the State Capitol, followed by a rundown of how our kids are doing on a slew of exams and other metrics. We'll also examine different indicators of a healthy educational ecosystem - such as the state of school choice and how the state is addressing failing schools - before wrapping up. Let's start off with an update on the 2017-19 Wisconsin State Budget.

A Busy Budget Summer

To understand the context of Wisconsin's state of education, we have to start with the 2017-19 biennial budget. We've been covering those issues from the fourth floor of the Capitol all summer long.

The state's Joint Committee on Finance (JFC) agreed to a budget plan for K-12 schools that sends $639.3 million more to the Department of Public Instruction (DPI) over current funding levels. JFC's plan sends $8.9 million less than Gov. Scott Walker proposed in February, but the increase is still considerable.

Included in the budget: more funding for schools across the board in the form of per pupil categorical aid payments, more flexibility to raise property taxes for low-revenue school districts, and more access to choice and charter schools statewide. Changes to the Special Needs Scholarship Program will allow approximately 250 more students to participate, effectively doubling the program.

After three years of changing students' standardized tests three different times, Wisconsin is stuck with the Forward Exam. That's a clear win for students and the rest of the public, as we'll soon have another yardstick to compare student growth year over year.

Add to that a one-year waiver for the Opportunity Schools Partnership Program (remember that name?) and Racine public schools, plus $9 million for a laptop for every high school freshman. A mixed bag? We thought so, too.

In a first for the administration, Walker's budget plan for the Department of Public Instruction wasn't totally far off from DPI's own request. State Superintendent Tony Evers' plan would send more money through the general aids formula rather than categorical aids outside of normal spending limits. However, with increased spending in realms like mental health and rural teacher training, Evers spent much of the summer praising Walker's investments.

Read more about the K-12 biennial budget right here.

The Metrics: How Are Our Students Performing?

DPI is slated to release new student report cards some time at the end of October or the beginning of November. Those report cards will show new results for the Forward Exam, updated graduation rates, and plenty of other metrics. For now, let's run through our most current numbers to get a sense of where our students are.

ACT Scores

Just last week, the ACT released a new national report that details scores across the country for the class of 2017.

Wisconsin's class of 2017 scored an average of 20.5 points out of 36 on the ACT - the exact same score achieved by our 2016 students. Wisconsin's score is below the national average of 21.0 points, which rose slightly from an average score of 20.8 in 2016. It must be noted, however, that all of our students take the ACT in Wisconsin. In other states, only the more accomplished students take the test, which translates into a higher average score.

The state of Wisconsin began administering ACT exams to all high school juniors in 2015. Since then, we've seen a fall in ACT scores. But dips in scores when a large increase in participation occurs is usually to be expected. Whether students plan to move on to college, getting a sense of their achievement levels is always a good thing.

Seventeen states test all students. Of those, Wisconsin's composite score of 20.5 was the third highest behind Minnesota (21.1) and Colorado (20.8). Illinois recently stopped testing all of its students, but at 93 percent participation, students there scored an average of 21.4.

Many Wisconsinites may find it surprising that we trail Illinois. More Illinoisans reached ACT College Readiness Benchmarks in every subject than Wisconsinites. Those ACT College Benchmarks are set to test readiness for higher education among exam takers.

In fact, just 25 percent of the 2017 Wisconsin graduates met all four ACT College Readiness Benchmarks, according to the report. Students stayed at exactly the same levels as last year, too, revealing a plateau in growth.

The data released also reveals a small gain in closing the achievement gap among ethnic and racial minority groups - a good sign for Wisconsin's persistent achievement gap.

Students in almost every ethnic group posted score gains compared to last year, especially among historically underserved populations. However, white students stayed at the same score, and native Hawaiian/Pacific Islander students decreased their average score from 19.4 to 18.4 points.

Earlier in the summer, Wisconsin's own DPI also released a new dataset examining the class of 2016. Overall, that class marked a stark increase in ACT participation - 45 percent more students took the exam than the year before.

Milwaukee Public Schools (MPS) students, in particular, posted strong rates of ACT participation, with a greater percentage of Milwaukee students taking the exam than the statewide average.

Still, the score indicates that Wisconsin students are falling behind. This was also clear in results for the ACT Aspire, which tests college readiness and is administered to high school freshmen and sophomores. On that exam, 60 percent of students earned scores of "exceeding" or "ready" in English, and 38.9 percent of students achieved the same level in math. As we've known, our students and our schools have major work to do. This release only underscores that fact.

Students in Milwaukee Public Schools had lower levels of college readiness than the state average on the ACT Aspire, with just 10 percent of MPS students showing readiness in math and just 31.7 percent showing readiness in English.

Back in the statehouse, the state budget that is expected to pass soon does include some provisions to address the problem of kids trapped in persistent failing schools. Performance-based funding rewarding Milwaukee's best-performing schools was stripped from Walker's budget by the Joint Finance Committee. Instead, the JFC decided to send extra funding to just failing schools, and the MPS will see new investments in MPS summer school initiatives to help children who need extra catch-up help.

Graduation Rates

Every spring, the Department of Public Instruction (DPI), headed by State Superintendent Tony Evers, releases high school graduation rates for the prior year. The release of the graduation rate data this year has been delayed for months with no real explanation from the department. When the new information was finally released in August, DPI published it with a small asterisk. Apparently, DPI published incorrect grad rates for some high schools in Wisconsin, which brings into question the overall accuracy of DPI's rates. So, while we try to sort out what happened, our analysis of high school graduation rates comes with a small asterisk.

According to DPI, in 2016, 88.2 percent of students graduated high school in four years. That number was down a hair from the prior year's 88.4 percent.

Assuming the true rate is still in a similar range, Wisconsin students have one of the best four-year graduation rates in the country. The nationwide average was 83.2 percent in 2015, according to the U.S. Department of Education. Iowans fared the best, with 90.8 percent of students graduating in four years. In Illinois, just shy of 86 percent of students graduate in four years, and in Minnesota, nearly 82 percent fare the same.

The state's biggest and most-troubled district, Milwaukee Public Schools, posted a 59.7 percent four-year graduation rate. Fewer than 60 percent of MPS students graduate in four years. Even more remarkable, just 70 percent graduate in six years. In six years!

Report Cards

Report cards for the 2016-17 school year will be released in November. In addition to providing corrected graduation rates and new Forward Exam results, report cards grade individual schools and school districts using five different ratings, from "significantly exceeds expectations" to "fails to meet expectations."

Just under 75 percent of the 2,341 schools in Wisconsin were scored as meeting expectations or better in 2016. Of the state's 424 school districts, 91 percent were ranked as meeting expectations or better.

On the poor-performing side, 99 schools and five school districts qualified as failing. That means that approximately 52,000 students in Wisconsin attend failing schools. Given the incredible amount of state money we spend every year to educate our children, 52,000 students trapped in poor-performing schools is unacceptable. We must do better.

There's also a certain irony that so many more students are in failing schools than students in districts considered failing. Just over 21,000 students attend the five failing school districts. There's a clear disconnect with the fact that so many kids are trapped in districts considered to be meeting some expectations while their individual school is still failing.

Parents and taxpayers also need to examine whether these report cards are an accurate measure of success.

We're still scratching our heads at the idea that MPS - which has nearly 25,000 students in failing schools - isn't considered failing as a district while RUSD - which has nearly 10,000 students in the same situation - is. We call it Educrat Math.

Last year's report cards also included data from the Forward Exam, administered in spring 2016 to 3rd-8th graders. That release of data showed that less than half of Wisconsin public school students are performing at grade level.

Of those tested with the Forward Exam, 42.7 percent of students were proficient in English and 42.6 percent were proficient in math. Students performed the "best" at science, with 50.1 percent achieving proficiency. Re-read that last number again. Just fifty percent was our best rating.

The report cards also highlighted extensive achievement gaps, a crucial issue for our students.

Achievement Gaps

From state exams, to the ACT, to the graduation rate, achievement gaps continue to persist between white students and minority groups. As the state's minority population grows, this clear inequity will become more and more apparent, especially in places like MPS and the Metropolitan Madison School District (MMSD).

At MPS, the state's largest district, students performed worse than the state average in every subject. On the Forward Exam, just 19.4 percent of MPS students achieved proficiency in English, and just 14.8 percent in math.

Within MPS itself, disparities between white and black students are clear. Achievement gaps between white and black students at MPS were smaller in every subject compared to the statewide averages, but both white and black students at MPS fared worse than the statewide averages for each race. In math, just 7.5 percent of black students at MPS were proficient, compared to 36 percent of white students. The 28.5 point gap is smaller than the state average of 39.3 for the same subject, but both numbers are alarming.

AP Courses and Exams

One positive trend that continued through the 2015-16 school year was a slow but steady growth in Advanced Placement (AP) exam participation, with 15.4 percent of students taking the exam in 2016.

AP classes are one of the best ways to prepare kids for their futures, whether or not they plan on going to college. AP classes teach students how to study in a different way than many of them have encountered before. If we're talking college prep, AP exams are the name of the game (another is access to educational choice in a manner tailored to individual students, but more on that later).

Sixty-five percent of exam takers earned a three or higher, down from 66 percent in the previous year. Three credits typically mean that the student can earn college credit for having taken the exam. At UW System schools, for example, scores of three typically amount to three credits.

These credits can add up for students and translate to real money saved in their college careers. In some instances, high-achieving students can even graduate with a Bachelor's Degree in three years with the credit earned from AP Exams alone.

Other Indicators of Student Success

School Choice in Wisconsin: Growth and Results

If you are the parent of one of the 50,000+ children trapped in a failing school, there is good news for you in the 2017-2019 state budget. The budget committee has approved increasing the statewide school choice program's income limits up to 220 percent of the federal poverty line, from 185 percent. This change will give more students access to a school of their choice and allow parents, not bureaucrats, to have more control over the education of their children.

It must be noted that Illinois recently adopted a school choice program with an income limit for families earning up to 300 percent of the poverty line. Illinois, more reform-minded than Wisconsin? We were surprised, too.

Meanwhile, students in choice schools tend to post better scores than their public education peers. And aside from the scores and educational assessments of different kinds, families themselves want options for schooling and continue to ask for greater access to choice. Waiting lists for the state's parental choice programs continue to plague families across the state. For a parent waiting to get a child out of a failing school or a bad situation, it is incredibly frustrating that lawmakers don't seem to understand the urgency.

One recent "study of studies" examined 22 major academic works on voucher schools. The findings for Milwaukee's choice program were significant, showing a substantial impact on student graduation rates and college attainment.

Compared to their public school counterparts, choice students graduated high school and attended four-year colleges at higher rates. According to the report, the colleges also appeared to be of higher status. While 21 percent of MPS students surveyed attended a four-year college, 27 percent of Milwaukee choice students did the same.

Voucher students were also more likely to continue into their sophomore year of college, and parents were much more likely to report satisfaction with their child's education.

They're popular, too. By some estimates, 80 percent of students in Milwaukee practice a form of choice. That ranges from students that attend their local traditional public schools to private school students, homeschooled students, students in charter institutions, and pupils that use open enrollment to attend a traditional public school that lies outside of their home district. Private schools, charter schools, and public school open enrollment are the state's most popular form of school choice.

Student counts in terms of both open enrollment transfers and charter school attendance have all risen significantly despite a smaller total number of K-12 students in the state. Wisconsin's families have chosen these schools over the past decade-plus and made these options a legitimate presence in the public school arena.

Another recent study by national research group Education Next surveyed parents of students at charter schools, traditional district schools, and private schools. From safety to teacher quality, in nearly every category, charter and private school parents reported greater satisfaction than traditional district schools.

Charter Schools

Independent charter schools will also see growth in the coming years. JFC's budget allows charter schools to expand in any area of the state for the first time, rather than just in Madison and Milwaukee. The budget also increases the number of charter authorizers, allowing more UW chancellors and technical college boards to contract with charter school operators.

Charter schools made headlines in May when U.S. News and World Report declared Carmen High School - a public charter - to be the best school in the state. Bravo, Carmen.

Scores at Carmen are significantly higher than the surrounding areas, despite the fact that 87 percent of students are economically disadvantaged. A whopping 86 percent of Carmen students took an AP exam in 2016 - compare that to the statewide average of 15 percent and it's easy to see how this school challenges students in a different way.

It's important to note that charter schools are public schools, despite being a part of the school choice ecosystem. Simply put, their rules and regulations offer them a bit more flexibility than state law typically allows.

Enrollment Figures: K-12 and the University System

Statewide K-12 enrollment numbers continue to fall, continuing a trend in declining enrollment. In the 2016-17 school year, 863,881 students were enrolled in K-12 schools. The year prior, 867,137 students had been enrolled.

Meanwhile, state attendance and dropout rates have remained largely steady, though major gaps exist between districts.

Overall college attendance in Wisconsin, however, is rising over the long term.

In Fall 2016, 175,825 students attended the UW System. The year prior, 178,571 had been enrolled. Enrollment at the UW System has slowly fallen since 2010, but has still grown steadily over the long term. Most of those students attended the system's flagship institute, the University of Wisconsin-Madison (go Badgers).

Remedial Education

Last fall, the MacIver Institute broke news on the state of remedial education in Wisconsin following the publication of a new report by the UW System.

If students make the decision to go to college, and then show up woefully unprepared, they have to take remedial courses at full cost but zero credit. Imagine paying $20,000 a year or more and receiving no college credit. It's that bad.

That dataset showed that 175 high schools in Wisconsin had six or more 2015 graduates who needed remedial help in math or English as freshmen at the University of Wisconsin System.

The "Legislated Remedial Course Report" became a requirement after Rep. John Jagler (R-Watertown) discovered that 20 percent of all freshmen at the UW System require remedial help in math or English. UW could not tell him from which Wisconsin high schools these students came, and Jagler worked on a bill to bring the annual report into existence.

Since last year's report, we are sorry to report that no major moves have been made on the important issue of remedial education in Wisconsin. There have been talks of increased collaboration between K-12 schools with the UW System to ensure that students arrive at college ready for success, but nothing game-changing has emerged.

This issue is particularly important for taxpayers. If students make the decision to go to college, and then show up woefully unprepared, they have to take remedial courses, again, at full cost but zero credit. We need our high schools to do a better job preparing our children for the rigors of college. It is a bad indicator that we have kids who are graduating from high school but are not ready to succeed at the next level.

In March, a national study showed that the University of Wisconsin-Milwaukee has a big problem with remediation and that it has a substantial affect on graduation rates. According to the study, just one in five black students graduated UW-M within six years.

Our children, our parents, our teachers and our schools - we must do better.

The (Potential?) Return of the OSPP

While the OSPP remains on hold for MPS students, all eyes are on RUSD as it hopes to avoid a "failing" designation for a second year in a row. That would, under normal circumstances, trigger the OSPP rules, starting with a new superintendent and a new plan for several turnaround schools.

You can catch up on the idea of the OSPP right here. In short, the idea is that districts that show no signs of improving would get a specially-appointed commissioner who could then pick several schools in which to implement a turnaround plan. If done correctly, it could be transformational for students who are stuck in these schools year after year.

One can easily compare the takeover-like requirement of the federal Every Student Succeeds Act to OSPP here in Wisconsin. While the same idea was called a "takeover" in Milwaukee, Obama's law makes it a requirement for the state's worst schools.

That's right - the Obama-era law was more strict on failing schools than Wisconsin's own school leaders would prefer.

RUSD officials appear to have gotten a major pass with a year-long exemption included in the Joint Finance K-12 budget. It may be good for the status quo, but Team MacIver is skeptical that it'll ultimately be good for the students. Reform isn't easy, but it's important.

As it turns out, RUSD isn't quite yet fully compliant with Act 10, that law you may have heard of that set off an entire recall attempt, saved taxpayers billions of dollars, and oh yeah - was passed way back in 2011. Once the budget goes into effect, the district will have 120 days to achieve compliance with the law and then prove to DPI that public unions are not collectively bargaining with school officials outside the law's limitations.

If they achieve compliance in three months, they get the extra year before OSPP comes into effect. If the district again earns the "failing" designation from DPI, the villages within RUSD will have the option to hold a referendum on whether or not to split from RUSD. Of course, that wouldn't be easy - smaller villages within the district have higher property values, but most don't have their own school buildings. The budget includes funding to study the idea of splitting apart RUSD in the future.

Sen. Van Wanggaard (R-Racine) released a statement following the vote, writing that "in recognition of the changes that have been implemented since the last district report card, the budget allows the implementation of an OSPP to be delayed for one year. This is not a free pass, it is a possible one-year reprieve. RUSD must improve."

Wanggaard went on to write in vaguely positive terms about the idea of a potential breaking apart of the district.

"The district should also be aware that communities should not have to wait to be part of a highly successful school district," Wanggaard wrote. "Villages will be able to determine whether or not they have faith in the trajectory of RUSD, and whether they want to be part of its success, or try to do better on their own."

A spokeswoman for RUSD thanked the Legislature for listening to the district's request to delay the OSPP, pointing to recent reforms and improvements in student achievement, saying that the district is "confident these gains will be reflected in an improved report card this fall."

At the same time, the statement took a hard swerve away from the notion of creating a new district, writing that RUSD has "serious concerns" with the idea and that the process would "cause severe turmoil, disruption, and overall extremely negatively impact our students, our families, and our entire community."

We wonder about the honest impact a year-after-year 20.2 percent English proficiency rate has on students. How's that for severe turmoil and disruption?

When the law was first passed, MPS was facing a four-year graduation rate of 58 percent. The latest data shows the district has improved slightly to 59.7 percent. While we can't compare proficiency rates across years because of the change in tests, last year's report card showed that 24,447 students attended 42 failing schools.

Of course, that was the same year that MPS as a district wasn't considered failing, while RUSD was. In all, 9,605 students attended 11 failing RUSD schools. That could all change come November - will RUSD again be designated as failing? Will MPS slip back onto the failing list?

For now, we wait until November. Yet again, the kids will wait even longer.


Listen to MacIver's Ola Lisowski discuss the State of Education 2017 report on the Vicki McKenna Show on News/Talk 1310 WIBA here:

That wraps up MacIver's 2017 State of Education. We hope you found this roundup helpful and informative! Any issues we're missing? Just drop a comment below.

Conservatives Concerned With Last-Minute Budget Additions

Fri, 09/08/2017 - 06:00

Did leadership add enough reforms to secure passage?

MacIver News Service | September 7, 2017

By M.D. Kittle

[Madison, Wis...] There are a lot of big wins for conservatives in the newly-approved JFC state budget.

Plenty of pork, too.

For the 2017-19 state budget, the question is, will the recently added budget fat turn off lawmakers looking for a smaller, leaner government enough to vote no, or are there enough tax cuts and pro-taxpayer reforms to earn their vote on the final budget bill?

The GOP-controlled Joint Finance Committee late last month did away with the Forestry Mill Tax. And the committee closed its work on the budget Wednesday evening by nixing Wisconsin's Alternative Minimum Tax (AMT). Democrats like to call it the "wealth tax," but the AMT has been ensnaring more middle-income earners.

.@DaleKooyenga: AMT, working families tax cred clutter up tax code, waste time, and yield little results. Tax package repeals both.

— MacIver Institute (@MacIverWisc) September 6, 2017

"Any time you can eliminate a tax from off the books, whether it's AMT or the Forestry Mill take that opportunity as an elected official," Rep. John Nygren, finance committee co-chair, told MacIver News Service Thursday morning during an interview on the Jay Weber Show on NewsTalk 1130 WISN.

"Now when you get your property tax bill in the future there's not going to be a state tax on the property tax bill," the Marinette Republican added. "Eliminating that tax, for me, my colleagues, I know for the governor, we see that as a huge win as we continue to put the people of Wisconsin first rather than the government."

While the AMT is more of an extension of Wisconsin's income tax, it serves as a kind of income tax system unto itself. Its elimination will save $7 million per year beginning in 2019. The mill tax is the last remnant of the state property tax. Killing it will save taxpayers a combined $180 million over the biennium.

Eliminating a tax is like the solar eclipse of limited-government reform: It happens very infrequently.

The last time the Legislature struck a tax from the books was 2008, marking the beginning of the phase-out of Wisconsin's Estate Tax.

You have to go back to the late 1990s, when the gift tax was eliminated, then back to 1974 and the death of the Oleomargarine Tax to find complete tax removal.

That's basically it over the last 40 years, according to Gov. Scott Walker's administration.

Walker and the Legislature's Republican majority four years ago all but did away with state income tax on Wisconsin manufacturers and farmers through the manufacturing and agriculture tax credit. The tax savings total nearly $300 million, according to the Legislative Fiscal Bureau.

Liberty-minded legislators are concerned about some of the items added to the Republican-led spending plan through omnibus and wrap-up motions.

Like granting the tyrannical power of eminent domain to an unelected, quasi-public authority.

Of course budgets are about giving and taking, winning and losing. While small businesses and property taxpayers continue to see relief, the tax cuts come at the expense of income tax reductions. The governor's budget blueprint originally called for $200 million-plus in income tax relief. Shifting priorities, JFC members say. Nygren says the trade-off was worth it.

Notable things that are not included in JFC's motion on taxes: sales tax holiday, income tax cuts #wibudget

— MacIver Institute (@MacIverWisc) September 6, 2017

Committee co-chairs agree there was a "bigger bang for the buck" by changing personal property tax, constituents preferred it

— MacIver News Service (@NewsMacIver) September 6, 2017

"The money belongs to the taxpayers, not the state of Wisconsin, and if there's opportunities for us to let people keep it we're going to do that," he said. "We've done that in personal property taxes, we've done that in property taxes...We're going to continue to look for ways to do that while balancing the priorities of the state."

This budget comes with some key conservative reforms, too. The JFC brought back Walker's proposal eliminating what remained of Wisconsin's Great Depression-era prevailing wage law. Beginning in 2018, taxpayers will no longer be on the hook for a system that artificially inflates wages on government building and highway projects. A previous study from the Wisconsin Taxpayers Alliance found that taxpayers could have saved as much as $300 million on 2015 construction projects had the reforms been in place then.

"Repeal of prevailing wage will be a huge victory for taxpayers in Wisconsin" - Sen. @LeahVukmir , co-author of bill #wiright #wibudget

— MacIver Institute (@MacIverWisc) September 6, 2017

The budget sausage making, of course, comes with an abundance of pork that isn't sitting well with fiscal hawks.

Like the $100,000 to help pay for improvements to the Monroe Arts Center.

Like the $583,000 in annual payments over the next five years to the city of Janesville under the state's Expenditure Restraint Program. It would seem a combined $2.9 million to the municipal government isn't exercising much in the way of expenditure restraint.

Like the $900,000 the state will pay to cigarette manufacturers and distributors to affix the mandated tax stamp on smokes.

.@VickiMcKenna Why is a state who can't afford income tax cuts giving $900K in cash to tobacco distributors? See item 39 #wiright

— AFPWI (@AFPWI) September 6, 2017

"This is not any type of giveaway. This is actually payment for a service they are providing for the state of Wisconsin," Nygren said of the 'cigarette discount' provision.

The JFC co-chair noted the so-called "999" wrap-up motions, the group of various provisions up for approval at the end of the committee's budget work, was much less extensive this year. The controversial list of items, once numbering in the 80s or 90s, dropped to 26 this session, half of those technical or clean-up measures.

Co-Chair @rep89 says 999 wrap-up motion will be small, uncontroversial. #wibudget

— MacIver Institute (@MacIverWisc) September 6, 2017

But it's in the wrap-up where a lot of the budget fat can be found.

Like sales tax exemptions for "food consisting of more than 50 percent yogurt that is prepared by a retailer away from its retail establishment..."

Like sales tax exemptions for Tournament or League Entrance fees. The measure would provide a sales and use tax exemption for tournament or league entrance fees "advertised and set aside as prize money."

Beekeepers get a tax break, too. They would be entitled to sales and use tax exemptions on tractors and machines used in their business - business inputs like bees and beehives, and electricity and fuel.

Farm-raised fish producers get a cut of the sales tax exemption, as well.

And it appears out-of-state, major broadcasters get a bit of a break.

It's not the tax cuts or exemptions that are concerning to conservative lawmakers, it's the carveouts for special interests that define the exemptions. If it's good enough for fish farmers or frozen yogurt or Disney, why not every other business?

And so it goes with the JFC's final transportation funding plan that includes specialized protections for quarries. The question posed by committee Democrats and others is this: What do quarries have to do with the transportation budget?

Nygren explained that restrictive local laws are making it more difficult for gravel and rock quarries to locate near road construction projects, forcing haulers to travel farther to move the key road-building components. Wisconsin's growing sand mining industry, too, sought such protections, but members of the Republican caucuses "did not want to go that extent," Nygren said. The idea behind the provision is to restrict local units of government from passing onerous restrictions on quarries, a benefit that regulation reformers assert should be extended to all businesses.

Reforms to the University of Wisconsin System, to municipal referenda, and federal-state transportation funding partnerships might help move the meter for some conservative lawmakers. But some of these reform measures have been watered down or don't go far enough for passionate advocates of government accountability, transparency, and fiscal responsibility.

Another provision bars System from adopting a policy that would let only faculty, tenured prof. become System President, VP, Chancellor

— MacIver News Service (@NewsMacIver) September 7, 2017

Legislative leadership is in the business of counting noses. With big majorities in the Assembly and Senate, GOP leaders may not have the same sense of urgency they would have with thinner margins. But a few reluctant fiscal hawks in the Senate could present some number challenges when it comes to the final floor vote in the days ahead.

The Assembly is scheduled to take up and debate the budget bill next Wednesday. The Senate hopes to finish its work on the budget the following week.

For the latest information and insider insight, visit often and follow us on Twitter at @MacIverWisc.

Listen to the full interview with Rep. Nygren here:

Nygren on Budget, Tax Cuts: "The Money Belongs to the People of Wisconsin"

Thu, 09/07/2017 - 14:43

MacIver News Service | Sept. 7, 2017

[Madison, Wis...] Joint Finance Co-Chair Rep. John Nygren drew a sharp contrast with the committee's Democrats over Wisconsin's 2017-19 state budget in an interview with MacIver News Service's Matt Kittle on News/Talk 1130 WISN on the Jay Weber Show Thursday morning.

"Their dissatisfaction is centered around the fact that we're actually giving people in the state of Wisconsin their money back rather than taking it from them," Nygren said. "There's no doubt this is a very good budget for the people of Wisconsin."

The budget eliminates the state's Alternative Minimum Tax and Forestry Mill Tax, and doesn't increase the gas tax or general vehicle registration fee. After more than two months of delay, JFC took its final vote on the budget Wednesday night.

Listen to the full interview here:

Civil Asset Forfeiture Bill Takes On 'Policing For Profit'

Thu, 09/07/2017 - 06:00

MacIver News Service | September 7, 2017

By M.D. Kittle

[Madison, Wis...] A bill that would limit Wisconsin's civil asset forfeiture law is moving its way through the Legislature.

The Committee on Labor and Regulatory Reform is expected to meet in executive session today to vote on state Sen. Dave Craig's (R-Town of Vernon) reform bill.

"Right now we have a law that allows law enforcement to take your property without you even being charged with a crime," Craig said of a civil asset forfeiture system that civil libertarians describe as "policing for profit."

Craig's Senate Bill 61, co-authored by Rep. Gary Tauchen (R-Bonduel), has the support of six senators, including committee chairman Sen. Steve Nass (R-Whitewater) and Sen. Bob Wirch (D-Kenosha).

The reform measure requires a conviction before property may be taken and sold as part of the forfeiture process.

Craig calls the proposal a "basic constitutional" protection.

The law, as it stands, allows police departments to turn over their drug investigations to federal law enforcement agencies. Doing so moves the cases into the federal court system, which is much more liberal with how much money or property local law enforcement are allowed to keep and cash out than the more restrictive state courts.

"It basically washes the money through the federal government, with the money coming back as appropriations," Craig said. In essence, the process works like "legal money laundering," he said.

Wisconsin's civil asset forfeiture law requires 50 percent of crime-related forfeitures go to the state school fund. Critics of the law say it has been loosely interpreted or outright violated. The statute allows about a half-dozen items in law enforcement to be reimbursed before being turned over to the school fund. Some law enforcement agencies have taken liberties with the law's intent.

"The spirit of the law or the Constitution wants as much money as possible going to the school fund," Craig said. The bill clearly limits what law enforcement can do with the proceeds from the property confiscated in investigations so there is no "profit motive" to execute the law, he added.

Seizing agencies are allowed to sell the property that is not required to be destroyed or transferred to another agency.

"The agency seizing the property may deduct 50 percent of the amount received for administrative expenses of seizure, maintenance of custody, advertising and court costs and the costs of investigation and prosecution reasonably incurred," the statute states. "The remainder shall be deposited in the school fund as the proceeds of the forfeiture."

But do upgrades to audio and video equipment in police interview rooms fall under the intent of the 50 percent rule?

The Oshkosh Police Department apparently believes so. In its 2017 Proposed Budget and Performance Report, the department notes that it, "Received ten state forfeiture actions against drug offenders." The money appears to have been used for the upgrades. Oshkosh Police Chief Dean Smith did not return a call seeking comment.

Under the report's "Objectives to be Accomplished Next Year," the chief said the department would "continue to seize assets from criminals and pursue forfeitures when practical and within statutes."

"Every year, police and prosecutors across the United States take hundreds of millions of dollars in cash, cars, homes and other property - regardless of the owners' guilt or innocence," asserts the Institute for Justice in its most recent report, "Policing for Profit: The Abuse of Civil Asset Forfeiture."

The report finds forfeiture activity has exploded, particularly in the new millennium.

Some of the report's findings:

  • In 1986, the U.S. Department of Justice's Assets Forfeiture Fund took in $93.7 million in revenue from federal forfeitures. By 2014, annual deposits had reached $4.5 billion - a 4,667 percent increase.
  • The forfeiture funds of the DOJ and Treasury Department together took in nearly $29 billion from 2001 to 2014, and combined annual revenue grew 1,000 percent over the period.
  • Total annual forfeiture revenue across 14 states more than doubled from 2002 to 2013. Those 14 states were the only states for which the Institute for Justice could obtain forfeiture revenues for an extended period.

The Institute for Justice gives Wisconsin an above-average grade on its civil asset forfeiture law, but notes the statutes "lack important protections for property rights." While tempered by a limited financial incentive for law enforcement agencies to seize property, as Craig notes, there are benefits to be gained by moving criminal investigations into federal jurisdictions.

The Wisconsin Professional Police Association opposes the plan. Jim Palmer, executive director of the police union, says the reform bill would make it harder for cops to do their job.

"To require that a conviction has to go through before the property can be seized simply allows criminals to continue to use property that has likely been used in the commission of a crime and to dispose of property," Palmer told Wisconsin Public Radio earlier this year.

"Likely" is not guilty in a court of law, reform advocates say.

Craig said the reform legislation needs to provide more education on what law enforcement can keep and what it can't under civil asset forfeiture.

"We're seeing drug training programs, all-terrain vehicles, and other things being purchased," he said. "These may have a legitimate use but they should be acquired through local budgets, not through forfeitures."

JFC Approves Transportation Budget

Tue, 09/05/2017 - 22:34

MacIver News Service | September 5, 2017

By Bill Osmulski

The Joint Committee on Finance finally approved a transportation budget Tuesday night - and by doing so removed the biggest roadblock in passing the 2017-2019 Wisconsin State Budget.

GOP transportation package passes on 12-4 party line vote. #wibudget

— MacIver News Service (@NewsMacIver) September 6, 2017

The final product to come out of JFC closely resembles Gov. Scott Walker's proposed transportation budget that he presented almost seven months ago. It also satisfies his requirement of not raising the gas tax or registration fee.

However, JFC's version creates a $100 fee for electric vehicles and a $75 fee for hybrids. Walker recently said he was okay with such a fee because those vehicles use public roads but aren't necessarily subject to the gas tax. This item is expected to raise $8.4 million over the biennium.

Walker originally proposed spending a total of $990 million in local transportation assistance and $2.5 billion for the State Highway Program. That included $1.7 billion for highway rehab, $670 million for the majors, and $122 for the megas.

JFC also puts about $2.5 billion toward the State Highway Program, but disperses it differently. It provides $1.6 billion for highway rehab, $563.7 million for the majors and $353.6 million for the megas. Local transportation assistance comes out to about $998 million.

One of the most contentious issues throughout the transportation debate was over bonding. Walker's budget included $500 million in road bonds. The Assembly was generally opposed to any bonding, and argued for a pay-as-you-go approach to transportation funding. In the end, JFC approved $410 million in new bonds. That's the lowest amount of new road bonding since the 2003-05 budget. $252 million of the $410 million was part of the Foxconn incentives package JFC approved earlier in the evening before taking up the DOT budget.

The new bonding in the Foxconn bill is specifically for the I-94 North South mega project. However, JFC decided to hit the brakes on two other mega projects for this biennium. It specifically prohibits funding for the north leg of the Milwaukee Zoo Interchange project and for the I-94 East West expansion between the Zoo and Marquette Interchanges.

JFC Co-Chair Rep. John Nygren (R-Marinette) reaffirmed his commitment to the pay-as-you-go philosophy by explaining to reporters, "This budget shows you're not going to make a commitment that you can't pay for, and that's the bottom line. If we don't have the resources to fund the east-west or the north leg of the Zoo, then we shouldn't be making that commitment."

There were also several items in the JFC transportation budget that look for savings within the DOT. It requires the agency to eliminate 200 positions over the biennium, saving $13 million annually. $4 million in land sales would be transferred to the transportation fund.

Property owners scored a win in the JFC's budget. Local governments would no longer be allowed to condemn private property in order to build recreational trails, pedestrian ways, or bike paths.

JFC's budget also explores new ways to save money on road projects. Walker's proposal to eliminate prevailing wage in state building and highway projects made it into the final version.

JFC also approved a plan by Sen. Duey Stroebel (R-Saukville) that would investigate whether the state could save money on local projects by swapping Surface Transportation Program (STP) funds with federal funds from the state highway program. There's also a plan to conduct a study on the possibility of tolling. Then there's "Replace-In-Kind" alternatives for highway development plans that require the DOT to show what the project would cost without bike lanes, extra vehicle lanes, and by making other design changes. One item would prevent the City of Milwaukee from shifting expenses from its streetcar onto TIFs, the county, or the state.

Not everything in the JFC's DOT budget will likely get the governor's approval. The Legislature is trying to limit the governor's influence on the Transportation Projects Commission (TPC). This commission is responsible for approving major and mega highway projects, so there's a lot at stake. The JFC plan takes away one of the governor's appointments and creates four new public positions appointed by the Legislature. The new transportation plan also creates three new staff positions to support the TPC, thereby expanding the bureaucracy's role in the approval process.

The approval of a transportation budget by Joint Finance does not mean the transportation funding debate has been put to rest for good. Nygren told reporters, "We're not going to come up with a long term solution for transportation, that's disappointing. But you live to fight another day. You don't get everything you want."

The conversation is far from over and I'm looking forward to continuing to advocate for a dedicated and sustainable solution. #wibudget

— John Nygren (@rep89) September 6, 2017

Joint Finance Advances Foxconn Package After Another Lengthy Session

Tue, 09/05/2017 - 21:13

September 5, 2017

By M.D. Kittle

[Madison, Wis...] Rejecting Democrats' dire warnings of environmental destruction and due process devastation, the GOP-led Joint Finance Committee (JFC) on Tuesday passed an updated incentives package bill moving the $10 billion Foxconn Technology development plan closer to reality.

On a party-line vote (12-4), the Legislature's budget-writing committee signed off on an earlier Republican-led Assembly bill, with several key amendments proposed by Senate Republicans.

The committee's endorsement of the incentives package signals Senate Republican majority approval and sets up next week's floor debate and vote in the upper house, now scheduled for Tuesday morning.

JFC co-chair Alberta Darling (R-River Hills), who has grown clearly more fatigued by the constant political doom and gloom of Democrats opposed to the Foxconn deal, spelled out the myriad projected benefits of investing in a Taiwanese tech giant that wants to build a massive new plant in Wisconsin.

"Wisconsin, you're nuts if you don't take this offer," Darling said during the first leg of the finance committee's lengthy executive committee meeting Tuesday. Darling's aggravation with "all of the negativity" from JFC Democrats was palpable.

Committee member Sen. Jon Erpenbach (D-Middleton) and his colleagues on the left took aim at a Senate amendment that gives Wisconsin's Supreme Court direct jurisdiction over legal issues arising from the Foxconn development deal.

"...(A)ny party may immediately appeal as of right to the Supreme Court from any order of a circuit court vacating, enjoining, reviewing, or otherwise relating to a decision by a state or local official, board, commission, condemnor, authority, or department concerning" the Electronics and Information Technology Manufacturing zone (EITM), the amendment states.

The incentives package creates the special zone in southeast Wisconsin in which Foxconn expects to build a manufacturing campus said to be the size of 11 Lambeau Fields.

Democrats decried the amendment for bypassing state appellate courts and going right to the Supreme Court, which is controlled by conservative justices.

"You totally eliminate an appeals process in our court system," Erpenbach said. "This is not about Foxconn anymore. This substantially changes the scope of the legislation."

Chill out, JFC Republicans countered. The amended bill doesn't abandon due process. It more immediately allows contested legal issues to be settled by the "court of last resort," where many of these cases could ultimately end up anyway.

Committee Democrats also decried what they see as a lack of accountability and oversight in the Foxconn bill.

A Senate amendment requires the Wisconsin Economic Development Corporation (WEDC) to annually evaluate whether Foxconn is living up to its end of the bargain. The deal includes a potential $3 billion in tax credits - $1.5 billion total if Foxconn creates 13,000 jobs at an average annual salary of more than $53,000, $1.35 billion total in credits for capital expenditures, and another $150 million in sales tax exemptions for construction material purchases.

WEDC is supposed to "evaluate whether the corporation appropriately verified, in accordance with statutory and contractual requirements, the amount of tax credits eligible..."

But the bill doesn't include specific benchmarks or clawbacks, Democrats charged, giving Foxconn a blank check for incentives.

That's not true, countered committee Republicans. The incentives are performance-based, meaning Foxconn doesn't receive the tax credits unless it creates jobs and builds the complex.

JFC Republicans got backup from the nonpartisan Legislative Fiscal Bureau, which reiterated that the only upfront cash the state would provide is the $15 million that could be used for development costs at the Department of Administration's discretion.

Democrats could not be consoled.

"This is going to be a millstone around the state of Wisconsin," Erpenbach said.

Erpenbach hits @GovWalker on 250K jobs pledge...again. Claims #Foxconn will be "millstone" on WI's neck, says it's an "election stunt."

— MacIver News Service (@NewsMacIver) September 5, 2017

Darling reminded naysayers about the estimated $5.7 billion the Foxconn project is expected to create in construction spending, and the 10,000 construction jobs required to build the LCD panel campus. She noted a recent study that showed Foxconn's Wisconsin operations would spur 22,000 indirect and spin-off jobs in Wisconsin.

Committee Democrats insisted the proposed incentives package would compromise the state's environmental regulations, a talking point blasted by Republicans and in large part rejected by the Fiscal Bureau. The plan would not require an environmental impact statement - a courtesy also extended to the owners of the Milwaukee Bucks - but it would not fundamentally change Wisconsin's and the federal government's stringent environmental regulations.

Recently-built facilities that got waivers from submitting environmental impact statements: Epic Systems, Uline, Amazon #wipolitics

— MacIver News Service (@NewsMacIver) September 5, 2017

Rep. Katrina Shankland (D-Stevens Point) criticized the bill's failure to demand Foxconn hire Wisconsin workers first. She was reminded by the Fiscal Bureau that doing so would break several labor and commerce laws.

"I hear a lot of misunderstanding about the way manufacturing works," said committee member Rep. Mike Rohrkaste (R-Neenah), who logged a long career in human resources in the manufacturing sector. He encouraged committee Democrats to visit a factory sometime.

And Rohrkaste took aim at committee Democrats' constant criticism of tax credits going to a "foreign company" and to "foreigners." It is an interesting position from members of a party that has blasted President Donald Trump for rhetoric about "foreigners."

"Because Foxconn is a foreign company, that's like a plague or something?" Rohrkaste asked rhetorically. "I don't know if the people on the other side of the aisle understand the global economy we're in right now."

.@RepAmy31 calls out Dem 'foreign corporation' and 'foreign workers' talking points. "I don't like where this is going" #Foxconn #wipolitics

— MacIver Institute (@MacIverWisc) September 5, 2017

The Senate has scheduled floor debate on the Foxconn bill for next Tuesday, the final stage before the bill becomes law with Walker's signature. A memorandum of understanding signed by Gov. Scott Walker and Foxconn chairman and founder Terry Gou stipulated that an incentives package needs to be in place by the end of the month.

"We are moving forward with a once-in-a-lifetime opportunity for our state to change its trajectory for the next generation," said Rep. John Nygren (R-Marinette), co-chair of the Joint Finance Committee.

Budget Blog: Joint Finance Passes Education Plan

Tue, 09/05/2017 - 06:00

September 5, 2017

By Ola Lisowski
MacIver Institute Research Associate

[Madison, Wis...] The K-12 education budget that the Joint Committee on Finance passed last week makes substantive changes to the state's school choice, charter, and open enrollment programs.

Access to Private School Choice

The most significant change is an increase in the income limit for the Wisconsin Parental Choice Program, also known as the statewide choice program. Families of four earning just shy of $54,000 annually - 220 percent of the federal poverty level (FPL) - will be eligible. Until now, the statewide limit had been 185 percent of FPL, or nearly $45,000 for a family of four.

While the move to 220 percent is important, the statewide choice program will still be different than the other choice programs. Participation in the Racine and Milwaukee parental choice programs is limited to 300 percent of FPL, or nearly $73,000 annually. School choice advocates had hoped to increase the statewide income limits up to the same level, but fell short of that goal.

"The increase to the income limit for the WPCP from 185 percent to 220 percent of the federal poverty level is a step in the right direction but still leaves many working class families on the outside looking in," Jim Bender, President of School Choice Wisconsin, said in a statement following the vote.

Ironically, the State of Illinois recently created an expansive statewide school choice program for students whose families earn up to 300 percent FPL. That program, a new tax credit scholarship for private school tuition, prioritizes students in families under 185 FPL as well as those in school districts with poor results. Students who receive the scholarship must also take the state accountability test.

As a result, Chicago will become the third biggest city in the country with access to parental choice once the program launches. The initiative will be funded by charitable donations made by individuals, who will receive a state income tax credit in exchange for their donation. Illinois' program will expire after five years if legislators do not renew it.

As for Wisconsin's vote, Sen. Leah Vukmir (R-Brookfield) voted for the package but said she would have preferred a bigger increase.

"A lot of times there are things in an omnibus that you like, and there are things that you don't like," Vukmir said. "And while I'm pleased that we've increased the participation in the school choice program from 185 percent to 220 percent of federal poverty level, everyone knows that I would've preferred a greater expansion, both in terms of that as well as the removal of the [pupil participation] cap."

The cap that Vukmir referred to is the number of students that may enroll in the statewide parental choice program. Currently, no more than 2 percent of the pupils in any public school district may participate in the statewide program. However, neither the Milwaukee nor Racine programs have enrollment caps.

If more than 2 percent of pupils in a school district apply, DPI conducts a random lottery for admission and places the rest of the students on a waiting list.

The Finance Committee did make one important change to how students on the waiting list are treated. Right now, students apply for the statewide program only when entering kindergarten, 1st, or 9th grade. If a child is refused admission and placed on a waiting list but a spot opens up after he or she has graduated to the next grade, they are out of luck. They are denied entry into the program. With a limited number of openings during kindergarten and 1st grade, many students often miss the crucial 1st grade entry point - locking them out of the program until high school.

Under the budget passed by JFC, students who are placed on a waiting list and later admitted will be able to enter the program regardless of grade level. An estimated 100 more students will be able to participate as a result of those changes.

Paul Gnan, Executive Director of Sheboygan Lutheran High School, thanked the legislature for the changes, saying he knows of at least five families who have missed out on participating in the program because of the waiting list rule alone. As for the increase in the income limits, Gnan said he thinks it will "open up the eyes" of some people who will see that "it's kind of a low-middle income program, and a lot more families are going to be able to take a choice, and make the best educational choice for their child."

"We have 160 to 170 students in our school. I'd say last year we had 20 families that were just over the threshold and what this does, is now it opens it up," Gnan said. "Every one of my teachers will be eligible."

Another change adopted by the Finance Committee will allow students, who are new to Wisconsin, to apply for the statewide parental choice program. Currently, applicants must have attended a public school within Wisconsin the prior year in order to be eligible.

JFC's budget also eliminated a provision that required school choice participants to annually verify their family's income with DPI. As long as the student participated in the Milwaukee, Racine, or statewide programs the prior year, the family's income will no longer need to be verified. Another provision will allow private school students to enter a school choice program regardless of grade level, as long as that student meets income and other requirements.

JFC also made changes to summer school funding. Until now, private schools could only receive payment for choice students attending at least 15 days of summer school, among other requirements. Under the budget motion passed by JFC, schools will be able to prorate their payments, receiving proportional funding for students attending summer school.

Gnan said his school was still reviewing those changes and others, but said that he thinks they will be very helpful for students.

"I'm just very grateful to the legislators for listening to us and at least coming partway," Gnan said, striking a note of compromise. "I think it's going to be really good."

Access to Charter Schools

The budget passed by JFC also adds more authorizers for charter schools. Current law only allows the University of Wisconsin's Office of Educational Opportunity (OEO), the chancellors of UW-Milwaukee and UW-Parkside, and the boards of Milwaukee and Gateway technical colleges to authorize new charter schools. JFC's budget allows any UW chancellor and any technical college board to authorize a new charter school.

Perhaps even more significantly, JFC's budget allows independent charter schools to be created statewide. Current law limits the locations in which authorizers can contract for a new school to Madison and Milwaukee.

One pro-charter group, the National Alliance for Public Charter Schools, celebrated the provision in a statement, highlighting that "the independent charter schools in Milwaukee are the highest performing sector of public schools in the city."

For the first time, independent charter schools will receive summer school funding from the state beginning in 2018. The budget also requires DPI to write a new report on virtual charter school funding that would compare actual educational costs to the amount that the state pays. That report must be presented to the legislature by 2019.

Open Enrollment

Another program - often called the state's most popular form of school choice - will see a funding increase. Public school open enrollment allows over 55,000 students across the state to attend other public school districts within Wisconsin. The program is open to students in kindergarten through 12th grade.

Under JFC's budget plan, schools will receive an increase of $100 every year from 2017 through 2020 for every non-special education open enrollment pupil.

In the 2016-17 school year, schools received a $6,748 "aid transfer" for every incoming student. As a result of the changes, that amount will rise to $7,148 in the 2020-21 school year, not counting other potential adjustments.

Even despite the reimbursement increase, funding for open enrollment falls several thousand dollars short of average per pupil costs in Wisconsin. New school districts do not receive as much in the per-pupil aid transfer as they do for regular in-district students. Districts that "lose" students to other places as a result of open enrollment keep the difference in funding.

More than 41,000 applications for the 2015-16 open enrollment program were submitted, according to a December 2016 DPI report. Students can submit up to three applications.

The popular program began in 1998. With no set cap on student participation, public school open enrollment has far outpaced other forms of school choice in Wisconsin.


The finance committee has yet to vote on two programs related to education: the special needs scholarship program and the school levy tax credit. Both votes are expected to take place in the coming days, as the committee wraps up its work on the 2017-19 budget. As always, the MacIver Institute will be there, watching out for any final surprises to the taxpayers. Follow along the debate at @MacIverWisc and @NewsMacIver.

One Step Congress Can Take to Control Health Care Costs

Mon, 09/04/2017 - 11:35

September 5, 2017

By Brett Healy
MacIver Institute President

The following op-ed first appeared in the Green Bay Press-Gazette on Saturday, Sept. 2.

As we all wait to see how the debate over health care reform and the fate of Obamacare will be resolved, there is a relatively simple step Congress can take to control health care costs.

While action to repeal a tax on health insurance premiums is not the full-scale health care reform Congress has been working toward, it is a step in the right direction to contain health care costs.

The tax is scheduled to take effect in January and is a component of the Affordable Care Act. It will result in employers paying $210 more per employee and families paying $530 more per year on average, according to a study by global consulting firm Oliver Wyman.

Thankfully, the tax was suspended in 2017 with bipartisan support and members of both sides of the aisle are beginning to line up in support of either suspending or repealing the tax outright in 2018. Congress needs to act soon.

Nearly 50 percent of the tax falls on Americans earning between $10,000 and $50,000 a year. Self-employed workers will bear 60 percent of the tax burden, and approximately 25 percent of it falls on Medicare Advantage and Part D plans.

In Wisconsin, if the Health Insurance Tax survives:

  • Medicare Advantage recipients will see their premiums increase $237 for individual policies or $474 per couple in 2018;
  • Fully insured small business owners and their employees will experience a $552 increase in premiums for family coverage and a $192 increase for individual coverage;
  • Fully insured large employers and their employees will see a $553 increase in premiums for family coverage and a $189 increase for individual coverage;
  • State Medicaid programs will incur an additional cost of $175 for each of their insured Medicaid enrollees in 2018; and
  • BadgerCare Plus will incur an additional cost of $34 million to the state.

If Congress fails to repeal the tax on time, the average American family can expect to see their health insurance policy premium rise by more than $5,000 over the course of a decade.

Overall, the HIT will force more than 100 million Americans nationwide to pay $22 billion more for their health insurance, whether you receive your insurance through Medicare, Medicaid or your employer.

Time is running out. Health insurance premiums for 2018 will be finalized soon and Congress needs to act in the next few weeks.

Last year, nearly 400 Republicans and Democrats voted to suspend the tax. Let's hope that Republicans and Democrats can come together again to take this simple and direct step to control health care costs for millions of Americans.

Read the original op-ed in the Green Bay Press-Gazette here.

Murr: Property Fight Enters New Phase

Mon, 09/04/2017 - 06:00

September 4, 2017

By Donna Murr
Eau Claire

The following op-ed first appeared in the Eau Claire Leader-Telegram on August 27.

It was Alexander Graham Bell who first proclaimed, "When one door closes, another door opens." This statement perfectly describes what has happened to me and my family.

After a disappointing setback at the U.S. Supreme Court, our crusade for our property rights has entered a new phase. In a ruling on June 23, the high court allowed St. Croix County to get away with a "taking" of our private property. But new legislation was recently introduced to undo the damage in Wisconsin while setting an example for other states to follow.

Our story starts with my parents' dream about owning a cabin for our family to enjoy for generations. Their dream came true in 1960 when they purchased a lot on the St. Croix River and built a modest cabin. Three years later, they invested in the undeveloped one-acre lot next door. They dreamed about building their retirement home on this beautiful property and leaving the cabin for us kids. My father also believed that purchasing the adjacent lot was a good investment.

Unfortunately, he suffered a stroke shortly after he retired, and his dream of building a retirement home ended. Since he was no longer physically able to enjoy the cabin, my parents signed it over to me and my siblings in 1994. The following year, they gave us the lot next door.

While this may sound like a typical, American family dream of passing along property from one generation to the next, it has turned out to be anything but.

In the early 2000s, my brothers and sister and I decided it was time to repair and improve our cabin. We agreed to fund the project by selling the lot next door. But the government would not let us sell it unless we sold the cabin as well. Without any notice or permission, the government had "effectively merged" our two properties together.

The regulations imposed on our property include a terribly unfair double standard. If our undeveloped lot was owned by anyone else, they could separately sell or develop it. It is only my family that is prohibited from doing so, simply because we also own the adjoining cabin parcel.

My parents raised us to respect the Constitution, and there was no question we had to fight for our rights. According to the Fifth Amendment, if the government takes property it must pay for it. St. Croix County property records show our cabin had an assessed value of $518,900 in 2010 and the undeveloped lot had an assessed value of $475,000. After losing in the courts, the two parcels are now assessed as one parcel with a total value of $485,600. Once the vacant lot became unbuildable and unsellable, the total value of our property decreased by over $500,000.

We were thrilled when the Supreme Court took our case, and optimistic for a successful outcome for all Americans. But hope turned to heartache when the decision came down on a 5-3 vote on the side of the government using a confusing new test that, according to legal experts, makes it more difficult to challenge land-use restrictions.

But then another door opened. Only a few hours after the disappointing news, I got a message from my new hero. State Rep. Adam Jarchow, R-Balsam Lake, lifted the gloom and declared, "Donna, I have a bill drafted and ready to roll to fix your issue, and I am 100 percent committed to fixing this injustice." I started to cry.

Rep. Jarchow and Sen. Tom Tiffany, R-Hazelhurst, have unveiled legislation to shore up the property rights that the Supreme Court failed to defend. First, their proposal states that if you buy land in Wisconsin with the right to build, you keep that right even if lot-size rules later change. Second, owners of separate, neighboring lots cannot have them forcibly combined by government.

"These changes will restore rights for Wisconsin owners," said John Groen, who represented us at the Supreme Court on behalf of Pacific Legal Foundation, a property rights defense organization. "They protect owners' ability to use their property consistent with their original, lawful expectations. Any development would still have to comply with environmental protections. But government could not erase your rights through creative regulatory strategies."

Our experience should be a reminder to everyone that we cannot take our property rights for granted. While this new door remains open, there is renewed hope that our long-sought victory is within reach and property rights will gain back the strength that was lost on June 23.

A resident of Eau Claire, Donna Murr was one of the litigants in Murr v. Wisconsin and St. Croix County in the U.S. Supreme Court.

The MacIver News Service has previously reported on this story:

Healy: Federal Energy Tax Would Hurt Wisconsin Families

Fri, 09/01/2017 - 09:01

September 1, 2017

By Brett Healy
MacIver Institute President

The following op-ed first appeared in the Milwaukee Journal Sentinel on August 29.

As Congress pivots to tax reform, some lawmakers have considered raising taxes on energy developers to pay for tax cuts elsewhere. Such tax hikes would slam Wisconsin's natural gas industry, leading to higher utility costs and fewer jobs.

Wisconsin doesn't have any natural gas wells of its own. But hugely important pipelines crisscross the state. Thanks to these pipelines and transport hubs, two-thirds of all Wisconsin households heat their homes with natural gas.

Wisconsin's electric utilities rely on natural gas as well. In 2016, local utility companies consumed nearly as much natural gas as all Wisconsin residents' combined.

The natural gas industry is a pillar of Wisconsin's economy. Natural gas firms injected more than $9 billion into the state economy in 2015. The oil and natural gas industry supports more than 98,000 jobs. The average wage in the industry, excluding retail jobs, is more than $100,000 -- nearly double the median income in Wisconsin. Those wages, in turn, create demand for other goods and services, supporting small businesses across the state.

Levying new taxes on the energy industry would harm communities across America. Nationally, the natural gas and oil industry supports 10.3 million jobs. Every direct job generated by energy companies supports another 2.7 jobs.

An overwhelming majority of Americans recognize that new taxes on natural gas would hurt them. More than seven in 10 voters oppose higher taxes on the American energy industry. They know intuitively what economists have shown empirically, that raising taxes on job-generating industries jeopardizes Americans' livelihoods.

And it's not as if the industry refuses to pay its dues. Energy firms already fork over huge sums to Uncle Sam. Each day, natural gas producers pay $70 million in federal taxes. They pay millions more in state and local taxes.

Instead of further taxing energy producers, lawmakers should seek to raise additional revenue by encouraging even more production. Speedily approving pipelines, authorizing offshore energy exploration and enacting other pro-development policies could create 2.3 million new jobs and increase government revenue by $122 billion a year by 2035, according to a 2015 Wood Mackenzie analysis.

Tightening regulations, by contrast, could cost the economy more than 800,000 jobs and $18 billion in government revenue over the same period.

The energy sector is a jobs and revenue-generating powerhouse, in Wisconsin and across the nation. If lawmakers stifle this economic activity by raising taxes on natural gas firms, they'll leave working-class Wisconsinites out in the cold.

Vern And Shari Colby Bitten By The 'Monster' That Is Obamacare

Fri, 09/01/2017 - 06:00

MacIver News Service | September 1, 2017

By M.D. Kittle

[Madison, Wis...] Work a little bit harder, earn just a little bit more, and the federal government will make you pay for your initiative.

That's the story of the U.S. tax code, and that's the story of Obamacare and its suite of health insurance premium subsidies that disappear once a taxpayer hits particular income thresholds.

Vern and Shari Colby found out working hard to get ahead comes with a steep price when it comes to Obamacare.

The River Falls couple earlier this week told MacIver News Service that they had to tap into their 401(k)s and ultimately sell their "forever home" after being hit with thousands of dollars in Obamacare penalties and skyrocketing health care bills.

But the Colbys' health care nightmare is far from over.

Shari and Vern, both 50, in 2013 attempted to sign up for health care coverage through the Affordable Care Act, commonly referred to as Obamacare after its namesake, former President Barack Obama. Like millions of Americans, the Colbys had all kinds of trouble logging onto the constantly crashing website. "It took forever," Shari recalled.

Finally she reached a real human being. An Obamacare customer service agent walked Shari through the application process and assured her that she and her husband would qualify for premium tax credits under the health care law. Vern works 60-hour-plus weeks as a milk truck driver. Shari logs between 30 and 35 hours per week as a florist. Their combined income in 2014 was around $60,000, Shari said.

The Colbys paid their premiums and ultimately submitted their check stubs to make sure they qualified for the subsidies they had received.

After they filed their tax return in March 2015, the IRS broke the bad news. The Colbys had to pay back the $7,000 they had received in subsidies to cover their expensive Obamacare premiums because they made a little too much money and slipped over the income threshold for the federal subsidies.

This year, the income cap on the health insurance tax credits for a married couple without qualifying children, like the Colbys, is just over $64,000 at 400 percent of the federal poverty level, and $48,000 at 300 percent. But even families under the threshold may be ineligible for subsidies based on other factors.

The Colbys were denied - long after they were told not to worry that if they were promised subsidies, they could keep their subsidies.

"It's not like we're not trying to help ourselves. We were working and trying," Shari said.

The surprise IRS bill was the proverbial straw that broke the Colbys' financial back. The couple in recent years has encountered some severe health problems. Vern had a stroke. He was yanked off of scaffolding, breaking both of his feet. He was caught underneath a tractor, smashing his lungs. And Shari this summer suffered a back injury.

"We've got into our savings. We don't buy new cars. We duct tape everything together and make it work," Shari said. "We had to dip into our 401(k) on two different occasions. We did everything we can to stay afloat."

"We've gone through all of any money we ever had and still had to sell our house," she added.

But the Colbys' sad health care odyssey continues.

They were priced out of Obamacare, and now have limited options for the bare bones short-term major medical policies they have been forced to purchase, Shari said. That's a common problem across the country, as more and more health insurers drop out of the Obamacare marketplace.

"It's a whole different monster," Shari said. "As far as trying to get insurance, I am in a pickle right now."

The Colbys' current three-month policy expires later this month, and they're looking at higher premiums and few choices ahead.

They've had to go without health insurance for a stretch because they simply couldn't afford it.

They explored the Obamacare route again in late spring, but the Affordable Care Act has become even more unaffordable for the Colbys. They faced a monthly premium of $1,180, or $14,160 per year, with a $12,600 deductible, Shari said. Such costs would drive this middle income couple closer to the poverty line. Currently, the Colbys are paying $480 per month in premiums.

On top of all of that, Shari and Vern had to pay the Obamacare penalty for not carrying insurance for part of the year. The "shared responsibility fee" under the law's individual mandate is 2.5 percent of taxable household income above the filing threshold.

Unsubsidized premiums are sharply higher this year than last year, according to, pushing more people - particularly healthy young people - out of the collapsing Obamacare marketplaces.

U.S. Sen. Ron Johnson (R-Oshkosh) called the Colbys the "quintessential example of the forgotten men and women within this health care system."

"Shari and Vern...have been so drastically harmed and damaged by Obamacare," Johnson said. "They're working hard, making a little too much money, but they simply can't afford these premiums that have doubled and tripled, and it cost them their 401(k) and their house."

Last year, the Colbys sold the River Falls home that Shari designed, the "forever home" where the couple had lived 26 of the 28 years they were married and where they'd hoped to spend their golden years. The property, built on Shari's grandfather's farmland, had even more sentimental value. Now it belongs to someone else.

"We would like to keep it in the family, but I guess it's just sheet rock and concrete and wood," Shari said. "We'll take the memories with us."

"I hope at some point, sooner rather than later, things change in a big way to make it easier for folks like us," she said. "I'm not opposed to paying premiums but when they're gouging you ... it's all a mess. The private sector and the public sector."

Walker Sounding Upbeat About Budget, Foxconn Package

Thu, 08/31/2017 - 20:19

MacIver News Service | August 31, 2017

By M.D. Kittle

[Madison, Wis...] Gov. Scott Walker is feeling pretty confident the Legislature will wrap up work on the budget and the Foxconn Technology Group incentives package in the coming days.

"We feel extremely optimistic. I believe the Joint Finance Committee is going to get their work done on both next week, the state budget and the special session bill on Foxconn," the governor told MacIver News Service Thursday in an interview on the Dan Conry Show, on NewsTalk 1310 WIBA in Madison.

"I would expect the state Assembly and the state Senate will be in the (Sept.) 12th, 13th, and 14th and finish things off," Walker added.

That may be a bit ambitious.

While the Senate doesn't have any dates set in stone, Senate Majority Leader Scott Fitzgerald (R-Juneau) has asked members to save the dates - Sept. 12, 14, 18 and 19 - for floor debate on the budget and Foxconn.

The finance committee is scheduled to take up the remaining elements of the overdue 2017-19 budget proposal, transportation and tax policy, on Tuesday, Sept. 5. The executive session is, at least now, slated to begin at 1:30 p.m. in Room 412 East of the state Capitol.

Fitzgerald spokeswoman Myranda Tanck said the majority leader is pleased the finance committee is back at the table following a lengthy delay this summer. How to fund the state's transportation system has been the biggest stumbling block for Republicans, who hold a sizable majority in the Senate, and a historic majority in the Assembly.

Tanck said she could not confirm reports that the Senate is expected to take up as many as 20 amendments to the Foxconn bill.

The Foxconn incentives package, already approved by the Republican-controlled Assembly on a mostly party-line vote, includes a potential $3 billion in tax incentives and other benefits - if Foxconn comes through on its plan to create 13,000 jobs in southeast Wisconsin at what would be the Taiwan-based tech giant's first North American manufacturing operation.

Critics of the deal have complained the economic development package puts taxpayers on the hook, while supporters point to the "pay-as-you-grow" nature of the incentives. The bill stipulates that only jobs paying between $30,000 and $100,000 a year count toward the proposed $1.5 billion in payroll tax credits. Foxconn and Walker administration officials say the average annual salary would approach $54,000.

"I find it to be a a little ironic, some of the critics of the Foxconn deal are people who for years have said, 'Boy, if we only had more good-paying, family-supporting jobs. Well, this deal provides at least 13,000 direct jobs when they (Foxconn) are up and fully operational that will pay more than $53,000 on average a year plus benefits," the governor said.

A recent report by a University of Wisconsin-Madison economist estimates Foxconn's proposed liquid crystal display panel production campus could spur another 26,000 indirect and induced jobs.

State Rep. Dale Kooyenga (R-Brookfield), a member of the Legislature's budget-writing committee, said he's looking forward to moving though the tax and transportation packages Tuesday, and finishing up the Foxconn bill as early as Wednesday.

"I would say overall conservatives should be very proud of this budget once again. It's amazing how far we've come over the last seven years. We've not arrived at any destination," he said of tax reform in Wisconsin in particular. "It's going to take more years to unravel decades of socialism in Madison and Madison folks pushing that out as state policy around the state, but we're making progress."

Minimum Markup Makes Back-To-School Shoppers Pay More For Markers, Crayons And Other Supplies

Thu, 08/31/2017 - 06:00

2017 MacIver Annual Price Check: Some back-to-school items in Wisconsin 12%-146% higher

August 31, 2017

[Madison, Wis...] Back-to-school shopping in Wisconsin is once again more expensive than in neighboring states thanks to the state's minimum markup law, which outlaws sale prices that are too low.

The minimum markup law, formally known as the Unfair Sales Act, bans retailers from selling merchandise below cost. The law, originally passed back in 1939, also requires a 9 percent price markup on specific items like alcohol, tobacco and gasoline.

Unfortunately, Wisconsinites are forced to pay for this archaic law that's still on the books despite ongoing efforts to repeal it.

According to advertisements obtained by the MacIver Institute from late August, Walmart stores in Milwaukee charged higher prices for a number of back-to-school items compared with other Walmart stores in Minnesota, Iowa, and Michigan.

Families in Milwaukee buying basic items like composition books, markers, and crayons can expect to pay anywhere from 12 to 146 percent more than shoppers in St. Paul, Minn., Dubuque, Iowa, and Kalamazoo, Mich.

Some common school items cost on average 90 percent more in Milwaukee. Crayola Crayons posted the single biggest price variance, costing almost 150 percent more in Milwaukee than in cities in neighboring states.

Parents picking up a Composition book in St. Paul, for example, only paid 50 cents. That same Composition book cost 56 cents in Milwaukee. Crayola markers cost 97 cents in St. Paul, but thanks to the archaic minimum markup law, those same markers cost $1.97 in Milwaukee, a 103 percent difference.

Walmart's circulars boast that their great sale prices mean "$10 goes far," but it goes a lot farther if you're not shopping in Wisconsin. A basic shopping list would cost 90 percent more for a Milwaukee back-to-school shopper than in nearby states.

Shoppers in Illinois have previously enjoyed the same lower prices as other Midwestern states, as pointed out by the MacIver Institute last year. But this year, possibly thanks to the state's recent draconian tax increases, families from Rockford to Chicago are joining Wisconsinites in paying inflated prices.

Efforts to repeal the antiquated minimum markup law stretch back several years.

In 2015, Sen. Leah Vukmir (R-Wauwatosa) and Rep. Jim Ott (R-Mequon) introduced a bill that would have eliminated the Unfair Sales Act. Unfortunately, the repeal bill did not receive even a public hearing in either house.

Another effort earlier this year by Rep. Dale Kooyenga (R-Brookfield) to reduce the minimum markup as part of a transportation funding package also fell flat, so the law remains on the books.

Vukmir, Ott, and other legislators haven't given up. Earlier this year, they were joined by Sen. Dave Craig (R-Town of Vernon) and Rep. Dave Murphy (R-Greenville) in introducing a modified repeal bill.

This latest effort to relieve Wisconsinites from the burden of higher prices, however, has received the same silent treatment as previous repeal efforts.

Even though minimum markup repeal has hit a wall in the Legislature, a 2015 poll found that Wisconsinites are tired of paying higher prices and want the law taken off the books. The poll was conducted by reputable research firm Public Opinion Strategies and found that 80 percent of respondents had an unfavorable view of the minimum markup law when told "Wisconsin residents are required to pay more for many on-sale items than residents in neighboring states simply because of this 75-year-old law."

Wisconsinites were just as angry when told that "the law forbids retailers from selling to consumers below cost and also requires that gasoline retailers sell gas to consumers with a minimum 9 percent markup, meaning Wisconsin drivers have to pay more for gas here than drivers do in other states."

Some retailers have used the law to file complaints with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) against competitors who were offering items for too low of a price. In 2015, MacIver first reported on numerous complaints filed against Meijer, a privately owned Michigan-based grocery and supercenter chain of stores with more than 200 locations nationwide, as it made its first foray into the Wisconsin market.

The minimum markup law also makes illegal in Wisconsin many of the discounts received on popular national bargain hunting days like "Black Friday" or "Amazon Prime Day," which in Wisconsin could better be called "Amazon Crime Day."

With repeal efforts on the rocks once again, bargain hunters should beware: Wisconsin's Price Police remain on the prowl.

Couple Sells Home, Cashes Out 401(k) To Cover Obamacare Bill

Wed, 08/30/2017 - 09:49

MacIver News Service | August 30, 2017

By M.D. Kittle

[Madison, Wis...] Shari and Vern Colby experienced first-hand the broken health care law that is Obamacare, according to U.S. Sen. Ron Johnson.

The River Falls couple sold their home after finding out from the IRS that they owed thousands of dollars to Uncle Sam thanks to the Affordable Care Act, commonly known as Obamacare.

"Shari and Vern Colby are literally the quintessential example of the forgotten men and women within this health care system," Johnson (R-Oshkosh) told MacIver News Service in a recent interview on NewsTalk 1130 WISN.

Vern works 60-hour-plus weeks, while his wife puts in 35 hours weekly at a florist shop. They signed up for Obamacare in 2014, assured by a representative that they would qualify for promised federal subsidies. The Colbys paid their premiums and ultimately submitted their check stubs to make sure they qualified for the subsidies they had received.

When they filed their tax return in March 2015, the IRS followed up with the bad news. The Colbys had to pay back the $7,000 they had received in subsidies to cover their expensive Obamacare premiums "because they made a little too much money," Johnson said. The couple's combined income was $59,000, according to Shari Colby.

"It was just due to the IRS. We had talked about doing late payments, but you have to pay the money. It's the IRS," she said.

"So they had to pretty well deplete their 401(k), plus they had to sell the house they had intended to live the rest of their lives in because they didn't want to lose it in foreclosure," Johnson added.

A review of Pierce County real estate records shows the couple sold the home that Shari designed, their "forever home" that the Colbys have resided in for 26 of the 28 years they've been married.

Shari reached out to Johnson late last month, just as the Senate was taking up the so-called "skinny repeal" of Obamacare - legislation that went down in flames.

"Shari and Vern...have been so drastically harmed and damaged by Obamacare," Johnson said. "They're working hard, making a little too much money, but they simply can't afford these premiums that have doubled and tripled, and it cost them their 401(k) and their house."

While U.S. insurers bail out of the marketplaces created under the Affordable Affordable Care Act, sending the markets into a death spiral, Senate Republicans have failed at every opportunity to do what they promised to do: repeal and replace former President Barack Obama's signature initiative.

In June, more than 1,200 counties were expected to have only one insurance provider available on the individual market next year, and 35,000 people were expected to live in counties with no insurance options, according to a scathing criticism in National Review.

"These numbers are expected to increase as insurers finalize their 2018 plans," the piece states.

Premiums have also increased by more than 100 percent since the implementation of Obamacare, according to a report issued in May by the Department of Health and Human Services. Average individual premiums increased from $232 in 2013 to $476 in 2017.

In Wisconsin, premiums are expected to jump at least 12 percent next year, according to an analysis of preliminary rate increases by the MacIver Institute.

Folks like the Colbys are paying a greater price, Johnson said. Effectively they are caught between Barack and a hard place. Obamacare's individual mandate demands Americans purchase health insurance - often very expensive insurance - or pay a penalty.

The Internal Revenue Service took in $2.8 billion in Obamacare penalties on 2016 tax returns from 4 million Americans, according to the Washington Free Beacon.

The Colbys bought insurance through the marketplace, but at a higher price than they ever dreamed. When they could no longer afford it, they were forced to pay a $2,500 penalty for not carrying health insurance, the punishment provision of the law.

"It's a real tragedy, but unfortunately not enough of my colleagues in Washington, D.C. are worried about them because they didn't seriously address these premiums that have skyrocketed, and they weren't willing to be honest and courageous enough to address the root cause of the problem and bring those premiums down," Johnson said.

Wisconsin's senior senator has been highly critical of the process and much of the product coming out of the Senate. Last month he told NewsTalk 1130 WISN that Republicans over-promised on the campaign trail with repeal-and-replace pledges.

"I come from the business world where the standard is to always underpromise and overdeliver," Johnson said on the Jay Weber Show. "I would say that' of the reasons after the election I started talking about what we ought to do is repair the damage, focus on repairing the damage and working to transition to a system that actually works."

Johnson took fire earlier this month when he suggested Arizona U.S. Sen. John McCain's bout with brain cancer may have played a part in McCain's vote against repeal of Obamacare.

"I think my comments were completely misconstrued. I was trying to first of all defend John's position. A lot of us were pretty upset about the process, and I was also just being sympathetic with his condition," Johnson said on CNBC's "Squawk Box." "I've got nothing but a great deal of respect for John McCain."

Johnson told MacIver News the Obamacare problem isn't going away. The Colbys are proof of that, he said.

Johnson said it's time to turn management of health care back over to the states.

"I think we have the responsibility to try to limit the damage, try to do everything we can to stabilize these markets so Americans don't experience a 25, 30, 35, 40 percent price increase because of Obamacare," the senator said.

Shari Colby said she and her husband can't take much more "affordable" health care.

"I hope at some point, sooner rather than later, things change in a big way to make it easier for folks like us," she said. "I'm not opposed to paying for a premium, but when they're gouging you and they can drop you and deny you, it's all a mess. The private sector and the public sector."

Kooyenga: 'Wealth Tax' Hits Middle Class, Too

Tue, 08/29/2017 - 14:50

MacIver News Service | August 29, 2017

By M.D. Kittle

[Madison, Wis...] They call it the "wealth tax," but Wisconsin's alternative minimum tax is ensnaring more middle-income earners.

And state Rep. Dale Kooyenga (R-Brookfield) is on a crusade to kill what's left of the AMT.

"I've been working on this for seven years, and so now is the time to get rid of this tax," Kooyenga, a member of the Legislature's Joint Committee on Finance and the celebrated "CPA Caucus" told MacIver News Service this week.

Kooyenga believes "the future is now," but it appears a few Republican senators want to hold onto the approximately $6.7 million per year the alternative minimum tax still sweeps up.

As noted by Kooyenga and Sen. Howard Marklein (R-Spring Green) in their 2015 column, "Wisconsin's Tax Code: The Good, The Bad, & The Ugly," Wisconsin remains one of just six states with the tax system. Those states include some of the most notorious tax-and-spenders, such as California and Connecticut.

The AMT, a kind of second income tax, adds normally tax-free money back into an individual's adjusted gross income. The tax uses a different set of rules than the standard income tax to calculate taxable income after allowable deductions. Some things can be deducted under AMT, but some things can't. In fact, its purpose and pursuit is to make sure "certain taxpayers" don't use tax incentives to escape the state income tax.

Taxpayers affected by the AMT "pay the higher of either their tax calculated under regular income tax rules or their tax calculated under the alternative minimum tax rules," the Tax Policy Center states on its website.

While the majority of AMT payers post higher gross earnings, the law is spreading its taxing talons into the incomes of retired teachers, the elderly, and those hit with high medical costs.

The Tax Policy Center has described the AMT as "the epitome of pointless complexity."

Kooyenga noted a retired Wisconsin school teacher whose state pension was caught in the AMT after her husband passed away and she had to sell his business under duress. The tax code generally allows a loss reported on the sale of a business to be carried forward to lower taxes on other income categories, like a school teacher pension.

"People think this (the AMT) is for wealthy businesspeople. Here's a retired school teacher, and a retired school teacher who is getting a higher tax because of the alternative minimum tax," the lawmaker said.

In another case, an elderly man lost the majority of his savings - a half million dollars - investing in his son's failed startup. That net operating loss was eligible to be carried forward to lower his taxable income, but his financial circumstances triggered the AMT.

"So once again here's an elderly individual that's living on his Social Security and investments and he gets caught in the alternative minimum tax because he had a business loss," Kooyenga said.

The federal alternative minimum tax, supposedly "fixed" by Congress in 2012, is impacting middle-income earners everywhere.

"While the AMT hits a much larger percentage of million-dollar households, those who earn less than $200,000 actually account for a much larger number of people who actually pay the alternative tax," wrote Jeanne Sahadi of CNN Money in 2015.

The Tax Policy Center notes AMT is more likely to hit taxpayers with large families, those who are married, and those who live in high-tax states. In 2017, families with two children are almost three times more likely to pay the AMT than childless couples, according to the center. Families with three or more children are four times more likely to pay the tax than those without children.

"Taxpayers can deduct state and local taxes under the regular income tax but not the AMT. Thus, in 2017 taxpayers in high-tax states are more than twice as likely to be on the AMT as those in low-tax states," the Tax Policy Center states in its latest briefing.

Kooyenga's plan pays for the elimination of Wisconsin's alternative minimum tax through the elimination of a tax credit. Businesses that have operations in Wisconsin and other states - not including border states with tax reciprocity agreements - receive a dollar-for-dollar tax credit on those outside tax payments. The same holds for Wisconsin residents working in other states not covered under reciprocity. That would end under Kooyenga's proposal. The elimination of the tax credit would save the state $20.3 million over the biennium, according to a legislative omnibus motion on state tax policy.

"We're subsidizing other states with higher taxes," Kooyenga said, pointing to high-tax states such as California and New York.

A decade ago the tax credit didn't cost much. Wisconsin's tax rate was higher, so the credits were nearly negligible. But several rounds of income tax cuts since Gov. Scott Walker took office have led to rising tax credit costs through the state reimbursement program.

The Legislature has made strides over the years in limiting the AMT's impact. At one point, the tax grabbed north of $100 million in revenue over the budget cycle, Kooyenga said.

But a few senators, according to Kooyenga, may be pausing at full elimination. He said he's not sure who is shooting it down in the "small room" of the Senate Republican caucus, but he thinks passage could be in jeopardy. If it's a question of optics - that the left will complain Republicans are offering more tax breaks to the rich - Kooyenga said lawmakers need only look to the total impact of a tax that is complicated at best, inequitable at worst.

Maintaining the alternative minimum tax, even with the relatively tiny revenue it generates today, sends the wrong message from a state that has been cutting taxes over the past six years, Kooyenga said. Just last week, the Joint Finance Committee moved to eliminate the state forestry mill tax.

"There's a lot of states out there that have no income tax. Wisconsin has two of them," he said.

Budget Blog: Joint Finance Increases K-12 Spending, Expands Statewide School Choice

Mon, 08/28/2017 - 18:01

August 28, 2017

By Ola Lisowski
MacIver Institute Research Associate

[Madison, Wis...] The Republican-controlled Joint Committee on Finance (JFC) voted Monday to significantly boost K-12 public education spending, just not quite as much as Gov. Scott Walker has proposed in his state budget plan. The Legislature's budget committee also expanded Wisconsin's school choice program, allowing families earning up to 220 percent of the federal poverty level to participate in statewide choice, up from 185 percent.

Joint Finance's K-12 plan increases funding by $639.3 million over current spending, keeping Walker's proposed categorical per pupil aid increases while also addressing low revenue adjustments.

The vote was along party lines, with JFC's 12 Republicans voting in favor of the motion and four Democrats voting against.

The proposal pulls back slightly from Walker's generous plan, which would have boosted public education funding by $648.2 million over the 2017-19 biennium.

The JFC education spending plan maintains Walker's $508.7 million investment in per pupil categorical aid - money sent to all districts outside of normal revenue limits as long as certain criteria are met. That fund will see a $200 per pupil increase in 2017, followed by another $204 per pupil increase in 2018. By the end of the biennium, schools will receive $654 per pupil in that source of categorical aid.

Walker's original proposal tied some of that increased funding to compliance with Act 10, the 2011 law that reformed public sector collective bargaining in Wisconsin. The governor's budget blueprint would have required school districts to certify that employees are paying at least 6 percent toward pension plans and at least 12 percent toward healthcare.

Instead, school districts will be required to annually report employee healthcare contribution levels to the state Department of Administration. That move will increase transparency statewide, marking the first time school districts are required to report Act 10 savings.

Walker applauded the committee's final product.

"Thanks to the members of the Joint Finance Committee for supporting the education portion of my budget. Once signed, this budget will include more actual dollars for K-12 education than ever before in our history," the governor said Monday evening in a press release.

Joint Finance also voted to increase the low-revenue adjustment, which allows certain school districts to levy higher property taxes. That adjustment is currently set at $9,100 per pupil. After Monday's vote, the funding level would increase to $9,300 in 2017, $9,400 in 2018, and by another $100 per pupil annually until the limit hits $9,800 per pupil in 2022.

Certain school districts will be able to raise taxes by up to $23.2 million statewide as a result of changes to the low revenue adjustment.

As a result, the statewide revenue limit authority will increase by $23.2 million.

That plan is the same as one introduced by the Senate Republican caucus last month.

JFC also picked up the Republican Senate plan on changes to sparsity aid and performance funding for Milwaukee schools.

The plan provides school districts that have grown too large to receive sparsity aid of 50 percent of the funding they received in the prior year. Rep. Mary Felzkowski (R-Irma) called that change a "safety net" for districts that grow slightly too large to receive the funding.

JFC also adopted a provision increasing incentives for rural schools to commit to shared services and whole grade sharing. Under current law, few districts pursue those strategies - including the ability to share certain administrative positions such as human resources and information technology.

Finance co-chair, Rep. John Nygren (R-Marinette) shot back at Democrats, who criticized the funding increase as not enough.

"You're actually increasing spending in this proposal by $727 million over the governor's proposal. In total, Democrats so far have proposed $1.5 billion in new spending in this budget over the governor's proposal," Nygren said, referring to the Democrats' K-12 funding proposal.

"Let's put that in context. We don't deal with Monopoly money here, we deal with real money. So to make that happen, to fund that, we would need a 5 percent increase in revenue over what we've already projected. Or, if you're going to raise taxes, which I know you guys like to do, that would be a 10 percent increase in individual income tax collection," he said.

"You can't commit to education and not actually balance the checkbook at the end of the day," - Rep John Nygren @rep89 #wiright #wibudget

— MacIver Institute (@MacIverWisc) August 28, 2017

Under the JFC plan, access to school choice increases more than Walker had suggested. By increasing eligibility for the Wisconsin Parental Choice Program to 220 percent of the Federal Poverty Level, an estimated 550 more students would be able participate in the statewide program. Families of four earning up to just over $54,000 annually will now be eligible to apply for alternative education options through the choice program.

The plan increases the number of state charter school authorizers, allowing the director of the Office of Educational Opportunity (OEO), any University of Wisconsin chancellor, and any technical college district board to contract with an independent charter school. Under current law, only the director of the OEO, chancellors of UW-Milwaukee and UW-Parkside, and the boards of Gateway and Milwaukee tech colleges can do so.

Public school open enrollment - often called the state's largest school choice program - would see a reimbursement increase of $100 per pupil per year, beginning in 2017 until 2020.

Students who are new to Wisconsin - who currently cannot apply for parental choice - would now be able to apply. Under current law, students are only allowed to enter in certain grades and cannot re-apply if they are waitlisted for more than a year. The plan passed on Monday allows students placed on a waiting list to enter the program regardless of grade level once they actually enter.

Vouchers are vilified, but those schools provide options to students who need them-improving results for most #wiedu

— MacIver Institute (@MacIverWisc) August 28, 2017

The plan also prorates summer school payments for choice schools, and allows independent charter schools to receive state payment for summer school.

The Opportunity Schools Partnership Program (OSPP), established in the last budget to provide extra help for troubled school districts, is refined in the proposal.

The JFC plan sends $3.7 million to Milwaukee for failing schools. JFC deleted Walker's proposed $1.9 million to reward the city's best-performing schools. Another $1.4 million would be sent to Milwaukee Public Schools for summer schools, beginning in 2018.

As in the Senate's education proposal, school referenda will be limited to regularly scheduled election days or on the second Tuesday of November in odd-numbered years, except in cases of emergency. Districts would also be limited to holding referenda on two dates per year.

One provision sure to gain the attention of the Legislature's fiscal hawks is the inclusion of $9.2 million for laptops for high school freshmen beginning in 2018. The Assembly Republican caucus suggested spending $18.4 million for the electronic devices, which would be provided to all students regardless of family income. Both the Senate and Joint Finance Committee cut that provision in half, beginning the program one year later.

The plan provides more money for high-cost transportation and special education aid, as well as special education transition incentive and readiness grants. Student mental health and robotics league grants also receive more money than the governor proposed.

JFC also changed teacher licensure, creating a "lifetime license" for teachers, administrators, and pupil services professionals after the successful completion of six semesters under a "provisional" license. Faculty members of institutions of higher education also would be eligible to teach in public high schools without a special license or permit from DPI. Faculty members would be required to pass a background check before teaching.

Schools also would be required to include more information on annual report cards, including the number and percentage of pupils participating in early college credit programs, youth apprenticeships, advanced placement courses, total community service hours completed, and the number of students who earned industry-recognized credentials through technical education programs.

Senate co-chair Alberta Darling (R-River Hills) hoped to strike a tone of compromise, calling for Democrats to tone down their partisanship.

"I'm sick of this victimizing teachers. And I just want to set the record straight, let's agree that education is all of our priority. It is because it's the number one funded program in our state, it has always been that. So let's agree that we all have education as our number one priority because it's our number one investment," Darling said.

The budget committee will meet again on Tuesday, Sept. 5, and is expected to continue meeting through the week until budget work on the final issues of taxes and transportation is completed.

Cochairs announce finance will meet Tues, Weds, Thurs next week on budget and Foxconn #wibudget

— MacIver Institute (@MacIverWisc) August 28, 2017

Venezuela: A Country Demanding Freedom Against A Regime Imposing Tyranny

Mon, 08/28/2017 - 06:00

August 28, 2017

By Jorge A. Jraissati
Special Guest Contributor for the MacIver Institute

It has been 169 years since Marx wrote The Communist Manifesto, 100 years since the Bolshevik revolution, 27 years since the Berlin Wall fell, and 25 years since Francis Fukuyama published his famous declaration of The End of History. Yet today in Venezuela, communism is destroying my nation. The communist regime is murdering the opposition, incarcerating anyone who believes in a better future, and spreading misery to the entire country. We are living in the worst economic, social, and political crisis in our 206 years of history as a republic.

On April 1, my people - exhausted by the misery, injustice, and hunger in every corner of our country - took to the streets to fight for their liberty. Tired of seeing their mothers without food in the kitchen, their fathers unemployed and desperate for jobs, and their brothers without the chance of a peaceful childhood, the students went to the streets to demand a change in our country. The demands were clear: freedom, justice, opportunities, and democracy. We just dream about a country in which our families can prosper, where there are opportunities for everyone, and where there is no regime to silence every citizen who disagrees with them with bullets, detrimental economic policies, or their horrible rhetoric of division, hatred, and violence.

Today, after 140 days of peaceful protests, not only has the dictatorship incarcerated more than 5,000 students protesting - with 645 of them still in jail as political prisoners in inhumane conditions - but it has also killed 133 Venezuelans. Venezuela is the most violent country in the world with 30,000 violent murders per year. Families lose a loved one every 20 minutes, and 133 mothers have lost sons simply because they yearned for a country in which everyone, without exception, can prosper, and have a better future.

The regime is using its tyrannical power to silence us, to force us to give up our fight and to send a clear message: that they will do anything to maintain their communist grasp on Venezuela. In fact, the dictator Nicolas Maduro, on national television, unabashedly said "what couldn't be done with votes, we would do with weapons." Nicolas Maduro, a sociopath and murderer, is following the old communist tradition of killing civilians to impose their system just like China, the Soviet Union, and Cuba. Maduro reminds me of Ernesto "Che" Guevara's statement "a revolutionary must become a cold killing machine motivated by pure hate."

However, Maduro is not the only sociopathic leader in the communist regime making frightening public statements. Just this month, Diosdado Cabello chillingly declared on national television, "A communist dictatorship, that's how we govern." These two quotes clearly illustrate what is happening in my country, a country demanding freedom against a regime imposing tyranny.

I feel there is no better way to conclude this piece than to state what I believe our duty is right now. In Venezuela we don't have fair elections, media outlets - and all the foundations of a democracy have been corrupted. The regime has obliterated any hope of arriving at a solution via civilized, democratic means. Given such dire circumstances, the only realistic way to reclaim our democracy, reinstate the rule of law, and ensure a free future is to never surrender to tyranny, and never stop fighting.

Nationally, we need to keep protesting, intensify the protest, and implode the regime. Internationally, the governments of the world - led by organizations such as The Organization of American States - need to act, and act now. My people are suffering; eight out of ten Venezuelans are in poverty, with half of our country in extreme poverty. My people are wondering every day whether they are going to survive this nightmare, and similarly, I find myself wondering when the International Community will build a diplomatic coalition that will bring real change in Venezuela. A coalition that will bring together all the incredible independent efforts by extraordinary leaders around the world, and will represent the help we need in Venezuela to accomplish something for which we have been fighting for years: freedom.

Joint Finance Votes to Eliminate State Forestry Tax

Thu, 08/24/2017 - 18:36

MacIver News Service | August 24, 2017

[Madison, Wis...] In its first meeting in two months, the Joint Finance Committee reconvened today to resume work on the state budget. The committee voted along party lines to eliminate the state portion of Wisconsinites' property tax bill, the Forestry Mill Tax. Reps. Dale Kooyenga​ and John Nygren​ explained why the vote was so important - and historic.

Budget Blog - Joint Finance Votes to Eliminate State Forestry Tax

Thu, 08/24/2017 - 16:21

August 24, 2017

[Madison, Wis...] In its first budget meeting in more than two months, the Joint Committee on Finance hit the ground running Thursday as it voted along party lines to eliminate the Forestry Mill Tax, the last remaining state portion of the property tax.

"Here in Wisconsin we are not only reducing taxes, we're eliminating taxes altogether," said Rep. Dale Kooyenga (R-Brookfield). "You want to talk about history? We're making history right here."

Thursday, the Joint Finance Cmte voted to delete the state property tax. @RepKooyenga & @rep89 explained why the vote is historic #wibudget

— MacIver Institute (@MacIverWisc) August 24, 2017

Rep. Katrina Shankland (D-Stevens Point) talked about the history of the tax, arguing that it has been crucial to stewardship of the state's forests. Shankland and other Democrats suggested that forest fires could become more of a problem for the state without an earmarked tax just to protect forests, quipping, "I guess when there's a massive forest fire, you guys want to do a 13:10 [finance meeting] and get that [funding] approved?"

Sen. Tom Tiffany (R-Hazelhurst), an author of the motion to eliminate the tax, slammed the claim that the state would no longer fight forest fires.

"To the point on fire - the state providing fire protection for forest fires is statutory. That is not going to go away. We are going to continue to make that a number one priority."

"The thing you're missing in your argument-this money, it's not ours." @rep89 slams back on Dem Q whether deleting mill tax is best use of $

— MacIver Institute (@MacIverWisc) August 24, 2017

Democrats also questioned whether there could be a "better way" to spend the $181 million that the Forestry Mill Tax generates. Both Kooyenga and finance co-chair Rep. John Nygren (R-Marinette) took issue with that mindset, calling it "government-centered."

"The thing you're missing in your argument, is this money, it's not ours," Nygren said. "It's not ours. The people that sent us here, the people that we represent, they are the ones that should be asking that question."

Eliminating the tax was part of Gov. Scott Walker's original budget proposal submitted to the Legislature earlier this year. In a statement released shortly after the committee's vote, Walker said, "We are eliminating an entire tax. Once passed in the budget and signed into law, there will be no state property tax collected for the first time since 1931. I applaud the members of the Legislature's Joint Finance Committee for supporting tax reform and relief!" the statement read.

JFC will meet again on Monday to vote on funding for K-12 education. As always, MacIver News will be there.

Joint Finance Hits the Road for Foxconn

Tue, 08/22/2017 - 17:20

MacIver News Service | August 22, 2017

By Ola Lisowski

[Sturtevant, Wis...] The Joint Committee on Finance hit the road on Tuesday, holding a public hearing on Foxconn at Gateway Technical College in Sturtevant, Wisconsin. The budget committee met for five and a half hours and heard testimony from a range of people, from state and local officials to concerned citizens.

As the MacIver News Service reported last week, the full Assembly passed a Foxconn incentives package last Thursday. The Senate opted to refer the legislation to the powerful budget committee.

The exact location of the potential Foxconn plant has yet to be released, but it will be somewhere in the Racine and Kenosha area. At the last public hearing, held by the Assembly Committee on Jobs and the Economy, numerous individuals asked for a hearing in Southeast Wisconsin, where Foxconn is set to break ground. On Tuesday, Joint Finance delivered.

JFC #Foxconn hearing is underway in Racine area. MacIver is here for the duration, so stay tuned. #wiright #wipolitics

— MacIver Institute (@MacIverWisc) August 22, 2017

Members of the Walker administration, including Secretary of Administration Scott Neitzel and Wisconsin Economic Development Corporation Secretary and CEO Mark Hogan, testified first, speaking about the enormous opportunity Foxconn represents for the state of Wisconsin.

"With this investment by Foxconn, two of the top five technology companies in the world will have located and invested in southeastern Wisconsin since 2013," Neitzel testified, referring to Amazon's Kenosha facility, which opened in 2015. "The groundwork was laid for our team to be successful."

Several representatives also testified in front of the committee, including Rep. Tod Ohnstad (D-Kenosha) and Rep. Cory Mason (D-Racine). Both testimonies focused on the incredible potential for jobs in Southeast Wisconsin, while making sure to highlight their concerns about the incentive package's waiver of several environmental rules for Foxconn and WEDC's record tracking companies that have received taxpayer-backed loans.

Ohnstad, the ranking Democrat on the Assembly Committee on Jobs and the Economy, voted against the bill in committee but voted for it when it reached the full Assembly. Mason, who is running for mayor of Racine, has been vocal both about his interest in the project and about his hesitations. The only other Assembly Democrat to vote for the bill was Assembly Minority Leader Rep. Peter Barca (D-Kenosha), who was present at the hearing but did not testify.

Reps. Cory Mason and Tod Ohnstad speak briefly at JFC #Foxconn hearing in Sturtevant. #wipolitics

— MacIver Institute (@MacIverWisc) August 22, 2017

Foxconn would receive a total of $2.85 billion in tax credits over the 15-year lifetime of a specially created Electronics and Information Technology Manufacturing Zone (EITM) - if the world's largest manufacturer of liquid-crystal display panels comes through on constructing its first North American plant in Wisconsin and fills all of the proposed 13,000 jobs, at an average annual salary of $53,875.

At the hearing, Hogan confirmed that the median salary at the sprawling Foxconn campus will be close to $54,000. That was in response to the notion that the average salary figure touted by the administration - also $54,000 - could be significantly inflated by a few high salaries.

Hogan also pushed back on the idea that LCD screens could become obsolete before the state's investment is realized, a talking point opponents have been hammering for weeks.

"This company has 55,000 patents," Hogan said. "This is a company where research and development is part of their DNA."

The bill includes up to $1.5 billion in refundable tax credits for job creation, but only jobs paying between $30,000 and $100,000 a year would be eligible.

Proponents describe the bill as a "pay-as-you-grow" incentives package.

Foxconn also would be eligible for a refundable credit of up to 15 percent of its capital expenditures in the zone. Aggregate payments for the capital tax refund could not top $1.35 billion, according to a review by the Legislative Fiscal Bureau. Credits would be paid from the state's General Purpose Revenue appropriations.

In a Break-Even Analysis, the review projects the state wouldn't begin making money on the Foxconn deal until 2042. However, the very same memo notes that such projections must be viewed with caution.

"(A)ny cash-flow analysis that covers a period of nearly 30 years must be considered highly speculative, especially for a manufacturing facility and equipment that may have a limited useful life," according to the memo.

Adding to the LFB's note of caution about their analysis was a report released on Monday commissioned by the Wisconsin Technology Council that found for every $1 of public investment, the Foxconn project could generate an additional $3.90 for Wisconsin's economy.

During Tuesday's hearing, members of the public raised concerns about the potential environmental impact Foxconn could have, especially given the bill's waiving of a typically-required environmental impact statement. One administration official highlighted the fact that massive facilities for Amazon, Uline, and Epic Systems all got waivers for the environmental impact statement.

At least one JFC member questioned the notion that Foxconn should be treated differently than businesses already in Wisconsin. Sen. Sheila Harsdorf (R-River Falls) asked the administration to justify the inclusion of a sales tax exemption for Foxconn, saying "I don't believe most businesses get that."

For the administration, it came down to the massive opportunity Foxconn presents for the entire state.

"They're not going to spend the dollars unless they're here," Hogan said, noting that the Bucks Arena also received a sales tax exemption. Asked why the deal is different than any other, his answer was decisive.

"Foxconn is taking an industry segment that does not exist in the United States, and they're taking it from Asia, and they're moving it to Wisconsin."