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Facing Historic Tax Hike, Illinoisans Look To Get Away

Fri, 07/07/2017 - 01:38

MacIver News Service | July 7, 2017

By M.D. Kittle

Madison, Wis...] You'll forgive Illinois taxpayers if they feel like they're in a Southwest Airlines commercial these days.

You know the ads: Some poor schlub royally screws up and wants desperately to escape his mistake. In the Southwest commercial, we here the voiceover guy ask said poor schlub, and anyone who knows the feeling, "Wanna Get Away?"

In the case of Illinois, it's the debt-ridden state's lawmakers playing the part of schlub, although there's not much sympathetic about these politicians who have just made their state's citizens a lot poorer. And, undoubtedly, some of those numbers will wanna get away for good, joining tens of thousands of others in the last year to leave the Land of Bankruptcy.

On Thursday, some Illinois House Republicans joined Democrats in signing a deal with the tax-and-spend devil, overriding Gov. Bruce Rauner's vetoes of a budget package that will permanently hike taxes by 32 percent, retroactive to July 1. Individual income tax rates climb from 3.75 percent to 4.95 percent, and corporate rates will soar from 5.25 percent to 7 percent - one of the highest corporate tax rates in the nation.

Yes, the deal means the state will have its first budget in more than two years, putting an end to the nation's longest fiscal impasse since the Great Depression. Yes, the state will be able to pay many of the creditors it has long stiffed.

Illinois was sitting on a backlog of bills and $800 million in late-payment interest, according to the Associated Press. Illinois' annual deficit sits at $6.2 billion, with $14.7 billion in past-due bills.

But Rauner said the Democrats' budget plan, led by tax-and-spender-in-chief, House Speaker Michael Madigan, did nothing to deal with the structural fiscal problems the state faces, not the least of which is a runaway public pension debt estimated at $250 billion by credit rating agency Moody's Investors Service.

The Republican governor, who rose to power on a wave of voter discontent following a similar bailout of Springfield with the state's largest temporary tax increase, said the override vote was another step in "Illinois' never-ending tragic trail of tax hikes."

"(Madigan's spending plan) is not balanced, does not cut enough spending or pay down enough debt, and does not help grow jobs or restore confidence in government," Rauner said. "It proves how desperately we need real property tax and term limits."

And at the end of it all, Moody's stands on the verge of downgrading the state's credit strength to "junk" status, which would make Illinois the first state to hold the dubious honor of holding speculative venture ratings. The credit ratings service agreed with Rauner that the bailout may help pay outstanding bills in the short-term, but it won't solve the state's deeper fiscal woes.

"Illinois' fiscal skeleton is so rotten that even by fixing this short-term cash flow problem there's a long-term debt crisis that's been happening under years and years of over-promising on things like public sector pensions, underfunding those pensions, but all the while knowing that no amount of money could keep up with the growth of that debt," Austin Berg, senior writer for the Illinois Policy Institute, told MacIver News Service on the Vicki McKenna Show, on NewsTalk 1310 WIBA in Madison.

Berg has spent the past couple of weeks tracking the final days of the budget battle.

He said Wisconsin has benefitted by Illinois' fiscal disorder, as an exodus of Illinoisans seek a better life. It's not that Wisconsin has a lower income tax rate than its neighbor to the north, Berg said. It doesn't. The Badger state's progressive rate ranges from 4 percent to 7.65 percent. Wisconsin's lowest bracket was higher than Illinois' 3.75 percent flat tax. That has changed.

"To be clear, this exodus of Illinoisans to Wisconsin by the thousands over the last couple of years, it's not as if Wisconsin is a tax paradise. It's not as if Wisconsin has extremely low taxes," Berg said. "But the trajectory of the states couldn't be anymore different."

In Wisconsin, Republican Gov. Scott Walker and the GOP-controlled Legislature have presided over six years of balanced budgets, cuts to property, income, and corporate taxes by billions of dollars, and saved taxpayers another $5 billion and counting through reforms to public sector collective bargaining.

Walker outlined more tax cuts in his most recent budget proposal, and an Assembly majority plan to phase in a state flat tax is estimated to cut income taxes by a combined $2.7 billion over a dozen years.

The MacIver Institute has advocated a glide path to a 3 percent flat income tax.
http://www.maciverinstitute.com/2017/01/a-glide-path-to-a-3-percent-flat-income-tax/

Walker spokesman Tom Evenson in an email to MacIver News said Wisconsin is an attractive place for people and businesses to relocate to.

"Our state has low unemployment, low debt, lower taxes and a tremendous education system," Evenson said when asked about Wisconsin's economic position compared to Illinois'.

"Over the past six and half years, we've seen countless businesses choose to relocate their operations to Wisconsin from other states. As the governor said recently, 'And why wouldn't they?' We've moved Wisconsin into a top ten state for business, our workforce is dedicated, and we are getting government out of the way of economic growth. Our common sense conservative reforms are working," Evenson added.

Many of those businesses have opted to move their operations from Illinois - which will have the fourth highest corporate tax rate in the country - to the greener pastures of Wisconsin.

Illinois continued to bleed residents to out-migration. The Land of Lincoln for three straight years has lost more residents than any other state, according to U.S. Census data. In 2014, the state saw a net exodus of nearly 100,000 residents, and more than 114,000 between July 2015 and 2016. On net, Wisconsin took in more than 11,000 Illinoisans in 2015 according to the Illinois Policy Institute. Illinois lost almost 86,000 people on net to Wisconsin between 2006 and 2015.

The state's tax drag is a big reason, Berg said. He doesn't see a loud "political revolution" in the fallout. No pitchforks. It will be quiet. It won't be televised.

"It's people saying tearful goodbyes, calling a Realtor and getting a moving truck, because that's what we've seen the last few years," the reporter said. "You can expect to see a lot more Illinoisans in Madison."

In short, they wanna get away.

Walker Offers To Reduce Bonding $200 Million To Break Transpo Impasse

Thu, 07/06/2017 - 13:30

MacIver News Service | July 6, 2017

By M.D. Kittle

[Madison, Wis...] In an apparent move to break the stalemate on the state budget, Gov. Scott Walker is proposing cutting $200 million in bonding from his transportation package, a move the Republican governor asserts is a "win for (GOP) Assembly leadership" long critical borrowing to pay for projects.

But Capitol watchers wonder whether Walker's latest offer is an olive branch or a stick to beat over the heads of a recalcitrant, Republican-controlled Assembly that has pushed gas tax and fee increases to fill a disputed $1 billion transportation budget shortfall?

One thing is certain: Walker hasn't changed his mind on tax and fee hikes. In a letter to Assembly Speaker Robin Vos (R-Rochester), and Senate Majority Leader Scott Fitzgerald (R-Juneau), he urges the Legislature to "pass a strong and safe transportation budget without a gas tax or vehicle fee increase."

"We can pass a budget that provides meaningful increases to local governments to improve roads and bridges - as well as add significant investments in safety and maintenance and highway rehabilitation - all without raising the gas tax or vehicle fee," the governor wrote in the letter, dated Wednesday.

Noting that transportation is "at the center of finalizing" the past due 2017-19 budget, Walker proposes "reducing transportation fund supported bonding by $200 million in this budget by using an improved transportation fund balance, project cost savings, and other administrative actions."

"We believe this can be accomplished while continuing to keep projects on schedule," he wrote.

Walker has proposed $500 million in new bonding. The Senate has been kicking around adding $350 million in borrowing onto that. In his letter to Republican leadership, Walker noted that his original transportation budget, presented in September, includes the lowest levels of transportation bonding since the 2001-2003 state budget.

"Lowering bonding by $200 million is a win for Assembly leadership who have voiced their desire to return bonding for transportation projects," Walker wrote.

Assembly Majority Leader Jim Steineke (R-Kaukauna) and other Assembly Republicans did not immediately respond to MacIver News Service's requests for comment.

Walker's updated transportation plan asks the Legislature to approve contingency bonding for the Southeast Freeway Mega Project program, projects receiving federal financial assistance and carring a price tag of $500 million or more.

"Interstate 94 North/South, the Zoo Interchange and Interstate 94 East/West are high profile projects in southeastern Wisconsin. We propose contingency bonding that would be linked to additional federal funding for mega projects," Walker wrote. "Wisconsin is well positioned to qualify for additional federal funding to help support mega projects."

Walker said the prospect of moving on several mega projects in southeast Wisconsin is a "win for Senate leadership."

Sen. Alberta Darling (R-River Hills) recently told MacIver News that the state could be eligible for significantly more funding.

"The federal government budget comes out in August. We're hoping there is opportunity for us to get a big investment out of the federal government," said Darling, co-chairwoman of the Legislature's budget committee.

But banking on a Congress that has failed to get much of its work done is a dangerous proposition for state governments.

In his letter to leadership, Walker said all active major projects remain on schedule with "these additions to our proposal."

"In addition, new revenues will be available for roads in the next budget as the bonds funded by the Petroleum Inspection fee will be paid off and those revenues can be available to bolster the Transportation Fund," Walker wrote.

Senate Republicans were scheduled to caucus Thursday.

Two Rivers, Hefty Debt, And the Transportation Tax Debate

Thu, 07/06/2017 - 06:00

MacIver News Service | June 6, 2017

By M.D. Kittle and Tyler Brandt

[Madison, Wis...] In a sales pitch last October for state transportation tax and fee increases, Two Rivers City Manager Greg Buckley opened with a common refrain from the tax-hike crowd: "(N)one of us likes paying higher taxes and fees..."

But ...

Buckley's argument for the transportation lobby includes a very big but.

"I'm not suggesting Wisconsin needs to go hog wild with gas tax and fee increases. But the reality is that our state has a growing funding gap between available resources and infrastructure needs," the government executive wrote in his column for the Transportation Development Association. "Major highway projects are getting delayed, and local maintenance and reconstruction efforts are inadequate."

What's the harm, Buckley argued, in asking Wisconsin motorists to pay a "little" more? Would "another 6 cents at the pump, in support of streets, roads and bridges, have posed an undue burden?" Buckley asked, pointing to the possible revenue that could have been raised had Wisconsin only kept the state's comparatively high gas tax indexed to inflation over the past decade. After all, the city manager insisted, we either pay now or we will pay later - undoubtedly much more later.

Buckley's opinion piece, penned on October 13, 2016, was at the very least prescient.

"With a new session of the Legislature and a new state budget process coming up, transportation funding is likely to be a hot topic," he wrote.

But you didn't need to be a soothsayer to see just how heated the transportation debate would be.

What is worth noting is the fact that Buckley made his pitch for more taxpayer-funded road money while his city shouldered a "debt service" level higher than most communities its size. The year before Buckley urged the Legislature to consider boosting taxes and fees to cover a disputed $1 billion state transportation budget shortfall, Two Rivers' debt service on General Obligation debt topped $8.6 million, or more than one-third of the city's budget.

The Manitowoc County city with a population of 11,712 residents was at 77 percent of its borrowing capacity of approximately $25 million, according to 2015 data obtained from the Wisconsin Department of Revenue. That was significantly higher than the 11 similarly sized cities included in a review by MacIver News Service. Platteville was second on the borrowing list, at about 63 percent of its limit. Cedarburg was the lowest that year, at 15 percent.

So what gives the administrator of a city carrying so much debt the fiscal authority to ask state drivers to pay more in taxes and fees to cover his city's transportation needs?

Buckley said the 2015 figure, the latest available data from the Department of Revenue, is an anomaly. It reflects "about $6 million" in refinancing of existing debt for interest savings, sans changes to the repayment term, and $2.6 million in regular, scheduled principal and interest payments.

Buckley, however, concedes the city's "normal" annual debt service payments, at as much as $3 million per year, "are as high as they are - although not outrageously high - in large measure because this city has "devoted significant local resources to transportation infrastructure improvements," typically funded through debt. Most of the city's borrowing has been on a 10-year schedule, an aggressive debt repayment schedule, according to the city manager.

"Two Rivers has made rebuilding its infrastructure a priority, and we have leveraged state and federal resources to the greatest extent possible, in addition to debt financing," Buckley said.

The city has worked with the state Department of Transportation over the past two decades in replacing three bridges on state highways and several major highway segments in the community, Buckley said.

He points to Two Rivers' 17th Street lift bridge. A 2002 report found structural deterioration on the 1950s span, Buckley said, requiring a posted weight limit and eventual replacement. The city secured an $8 million earmark in the 2015 federal highway bill.

"During the extended local discussion of that project, we held several public meetings where the City Council and I looked residents straight in the eyes and said, 'This will require new city debt, this project will raise your taxes.'  And, predominately, the community's response was 'let's do it,'" Buckley said.

But was it necessary?

Traffic studies found a relatively new, four-lane Wisconsin Highway 42 bridge, just five blocks to the north, "could handle all vehicular traffic crossing the East Twin River," the city manager said. Still, the council "and many local residents" got behind the "lift bridge or no bridge at all" project "in order to maintain a vital vehicular, bike and pedestrian link from our downtown to the City's east side and Lake Michigan beach," Buckley said.

The total project cost $14 million, according to the city, with the local share north of $3 million reflected in the city's debt service payments. Buckley said the bridge, dedicated four years ago, should serve Two Rivers for 60 to 75 years.

If Two Rivers has prioritized transportation infrastructure as Buckley asserts, it's nowhere near the premium the city has put on government operations and public safety.

According to MacIver News Service's review, Two Rivers had 115 salaried city employees in 2014. That compares to an average work force of about 70 employees for like-sized cities. Two Rivers' payroll in 2014 topped $6.5 million. The closest comparable city was Baraboo, which had 94 salaried employees and a payroll of nearly $4.9 million. The average payroll of the 12 cities surveyed was $3.95 million.

In 2017, Two Rivers spent 53 percent of its general fund on public safety, despite having lower crime rates than the state average. The average public safety expenditure percentage of the cities surveyed was 43 percent.

Buckley asserts Two Rivers' percentage of public safety expenditures is "pretty typical among WI cities - especially those with full-time fire and EMS departments." He noted the city takes in about $585,000 annually in ambulance revenue.

Two Rivers' public works department is projected to spend $1.58 million this year, including street maintenance and bridge repair and maintenance projects, part of the city's budgeted $9.8 million General Fund expenditures.

Total public General Fund spending on public safety is budgeted to approach $5.14 million this year, according to Two Rivers budget documents.

The city annually receives about $3.8 million in shared revenue.

Budgets are about priorities. Two Rivers has prioritized its government workforce, the generous wages paid to its workers, and police and fire protection in a relatively safe community.

And yet it could be argued that Two Rivers is asking motorists across the state to pick up a good part of the tab for its public works projects when the city's spending priorities don't include transportation, at least by comparison.

Buckley said he stands by his statement that more resources are needed to fund Wisconsin transportation, perhaps higher gas taxes or some new, mileage-based charges such as toll roads. He points to former Department of Transportation Secretary Mark Gottlieb's call for the same. But Buckley failed to note the state audit that found hundreds of millions of dollars wasted in a DOT that failed to account for inflation in its project estimates and failed to seek competitive bidding for hundreds of big-ticket projects.

Buckley isn't alone. Local government leaders across the state have cried poverty on state transportation spending as they have been reluctant to prioritize transportation at the expense of other government initiatives.

As the transportation spending PR campaigns roll on, the Republican-controlled Legislature remains at a standstill. Gov. Scott Walker's budget proposal includes significant increases in state aid for local road maintenance, but he has rejected calls for tax and fee increases. GOP Assembly leadership has said tax and fee hikes are needed to keep major road projects on track, a position seemingly not supported by Senate Republicans. Meanwhile, the majority party in the Senate is kicking around $350 million more in transportation bonding than the governor's $500 million, a position sharply criticized by Assembly Republicans like Rep. Jim Steineke, R-Kaukauna.

In his opinion piece last year, Buckley noted the possible savings that could be realized in myriad ways within the DOT, but he cautioned not to expect to close "a $700 million annual gap with cost savings alone."

Perhaps before calling on taxpayers statewide to pick up more of the tab, communities such as Two Rivers should first try saving at home.

ChartSmart: K-12 Test Scores

Thu, 07/06/2017 - 06:00

As our state government decides on funding levels for Wisconsin's 424 public school districts, a look at student achievement

July 6, 2017

Welcome to today's edition of ChartSmart. As we wrote yesterday, things are about to get moving fast here in Madison. In an effort to make sure nothing gets lost in the coverage, we're rolling out a series of K-12 charts and graphs now.

Today, we'll dive into student achievement. From ACT and AP exams to graduation rates and report cards, there's a lot to cover. Stay tuned for another edition of ChartSmart tomorrow!

As always, check out the MacIver Institute and MacIver News Service on Twitter for more up-to-the-minute updates.


Transportation Fund Pays for New Welcome Center and Otter Exhibit at Milwaukee County Zoo

Thu, 07/06/2017 - 06:00

Zoo pulls slick move to get slick-skinned mammal exhibit

MacIver News Service | July 6, 2017

By Tyler Brandt

[Milwaukee, Wis...] The Milwaukee County Zoo is scheduled to open a new welcome center and otter exhibit this August on the west side of the grounds. While the zoo's persistent push to improve its facilities and add new attractions to draw in more visitors is not surprising, what is surprising is where the almost $13 million in funding came from: the Wisconsin state transportation fund.

With the massive zoo interchange project, the DOT needed to acquire zoo land on the east side of the grounds to make way for their work. In 2014, the DOT took eight acres from the zoo, home to 700 parking spaces.

To compensate for the lost spaces, the DOT offered the zoo $8.09 million. The Milwaukee Business Journal reported earlier this year that the two were close to a deal. The agreement was for the state to pay $2.65 million for a new parking lot, $2.76 million for a welcome center, and $2.68 million for other infrastructure improvements.

Just before the deal was signed, zoo officials decided to back out of the proposed agreement and sue the DOT instead. The lawsuit was for $19.3 million. Long before that case was settled, the zoo went ahead and constructed a new 500 space parking lot on the west side of the grounds.

Before the case came to a jury decision, the two sides reached a private agreement, settling at $12.7 million.

Armed with an extra $10 million taken from the transportation fund, Milwaukee County decided to build the new welcome center and otter exhibit in addition to the lost parking lot.

On June 29, MacIver reached out to zoo, county, and DOT officials about the project. The questions were about the appropriateness of $12.7 million taxpayer dollars going towards the zoo and the zoo only constructing 500 spaces when they asked for 700. As of yet, nobody has responded.

While squabbling over the transportation fund continues, the $12.7 million lost is yet another roadblock. With a total estimate of $1.5 billion and a possible 2 year delay, another setback to the zoo interchange does nothing to soothe the transportation woes of the state.

ChartSmart: K-12 Education in the 2017-19 Budget

Wed, 07/05/2017 - 06:00

While the world waits for Gov. Walker and leadership to reach an agreement on transportation taxes, education spending, tax cuts and bonding levels, we continue our budget analysis with a deeper look at the education budget proposed by Gov. Walker

MacIver News Service | July 5, 2017

Welcome back to ChartSmart! It's been a few weeks since the Joint Committee on Finance has met to deliberate on the state budget, but that doesn't mean it's been quiet here at the Capitol. If you have been watching the news lately or, better yet, following the up-to-the-minute updates from your hard-working staff at the MacIver News Service, you know that the 2017-2019 state budget seems to be stuck in neutral and going nowhere fast.

Governor Scott Walker and Assembly Speaker Robin Vos (R-Rochester) have been at odds for months over transportation funding and the Speaker's desire to raise the gas tax or vehicle registration fee. But just last week, after the Governor met with Speaker Vos and Senate Majority Leader Scott Fitzgerald (R-Juneau), there seemed to be momentum building for a new tax on trucks and a solution to the impasse. Just when you thought the tax increase was greased and the budget might start moving on down the road again, a group of five senators, enough to block the proposal in the Senate, came out publicly in opposition to the tax and all hope was lost. Back to the starting line.

We cannot be sure when Speaker Vos and Majority Leader Fitzgerald will reach an agreement or even when the Finance Committee will meet again to finish their work on Walker's budget proposal. When they finally do reach a deal, chances are it will move quickly through the Finance Committee and both houses of the legislature. So quickly, that we want to publish the rest of our analysis of Gov. Walker's proposal and the different legislative offerings.

Today, we'll dive back into the education debate by taking a look at proposed spending levels and pupil membership in Gov. Scott Walker's Department of Public Instruction budget.

Since JFC last met, lawmakers have introduced not one, but two separate K-12 funding plans. The Assembly Republican caucus put forth a plan that focuses on low-revenue districts, slightly cutting back on Walker's proposed increases to categorical per pupil aid to get there. That proposal would cut overall spending by about $70 million compared to the governor, but would allow about half of the state's 424 school districts to raise property taxes by up to $92.2 million. Check out a full analysis on that plan here.

On the other side of the aisle, Democrats on JFC introduced their own plan that would spend nearly $730 million more than Walker's proposal, eliminating the school levy and first dollar tax credits entirely and sending that money through the general school aids formula. The plan maintains Walker's level of funding for categorical per pupil aid, but hikes spending almost everywhere else and opens the door to property increases down the line. Read more right here.

Meanwhile, Walker's plan - which increases state support for K-12 education by $649 million over current spending levels - has been lauded by school leaders across the state. The proposal would increase general school aids by $73 million, increase categorical aids by $200 per pupil in the first year and by another $204 per pupil in the second, and would increase the school levy tax credit by $87 million.

Walker's plan would also increase sparsity aid - a pot of money devoted to rural districts with fewer students who live further apart - and create a second tier of funding to help schools that have grown too big to receive sparsity aid. For more details, read our original analysis here.

As always, check out the MacIver Institute and MacIver News Service on Twitter for more up-to-the-minute updates. As the budget debate continues on, we'll be here providing you, the taxpayer, with the details you need.

Teacher Salary Doesn't Correlate with Student Performance

Wed, 07/05/2017 - 05:00

July 5, 2017

Students from across the UW-System presented their original research to the public during Research in the Rotunda back in April. We met these two students who took on a fairly controversial topic - at least when it comes to K12 education. As the Joint Committee on Finance prepares to write the K12 budget, MNS' Jessica Murphy explains what happened when these students compared student achieve and teacher salaries.

Happy Independence Day!

Mon, 07/03/2017 - 09:52

From your friends at the MacIver Institute, we hope you had a great Independence Day weekend. Have a happy and safe Fourth of July tomorrow - and take some extra time to re-read the Declaration of Independence, a revolutionary document in the history of liberty that was adopted on this day 241 years ago.

Steineke Takes Aim At Senate's $850 Million Transportation Borrowing Plan

Fri, 06/30/2017 - 18:23

MacIver News Service | June 30, 2017

By M.D. Kittle
[
Madison, Wis...] - It appears the GOP-controlled Assembly's plan to slap a new fee on heavy trucks is dead on arrival in the Senate.

But is a bigger transportation bonding package still viable in the upper house?

State Rep. Jim Steineke (R-Kaukauna) on Friday took aim at conservative senators who publicly shot down the fee proposal even as the Senate has been considering boosting new bonding for transportation projects to $850 million.

The senators- Dave Craig (R-Town of Vernon), Chris Kapenga (R-Delafield), Frank Lasee (R-De Pere) Steve Nass (R-Whitewater), and Duey Stroebel (R-Saukville) - issued a joint statement Friday opposing the proposed fee. They reiterated that, "Now is not the time to raise taxes on Wisconsinites."

Steineke countered with a question: What is bonding if not a tax on the future?

"What it boils down to is if (the senators) are consistent that (the Wisconsin Department of Transportation) can't be trusted with more taxpayer money or they think there are massive savings we must first uncover in the the department, I think that's a valid position," Steineke told MacIver News Service. "What is not valid is they are okay spending borrowed money as they say no to raising revenue because it's a tax. They are still taxing people. They may not be taxing them now, but they are taxing my kids, your kids."

The senators reiterated that they do not support tax or free increases to support Wisconsin's troubled transportation budget. Gov. Scott Walker has held the same position, although he seemingly had eased up on the Assembly plan. At least sources say the governor told Republican legislative leadership he would not stand in the way of the two houses negotiating a compromise that could include a heavy truck fee.

Steineke, Assembly Speaker Robin Vos (R-Rochester), and other members of Assembly leadership, have said the Legislature needs to find a way to pay for the state's road projects, and they see revenue increases - tax or fee hikes - as a better option than borrowing.

The plan being kicked around in the Senate would include $350 million more in borrowing than the governor has proposed in his budget plan. State Rep. Dale Kooyenga (R-Brookfield) offered a plan earlier in the budget session that would, among other provisions, substantially pay down Walker's $500 million bonding proposal by implementing a sales tax on gasoline - a tax that does not currently exist. Kooyenga's plan was met with resistance from fiscal conservatives who saw the measure as anathema to Walker's stand against tax increases in a time of budget surpluses.

The five senators who say they oppose the heavy truck fee said they have no interest in rewarding with new tax revenue a DOT that an audit found wasted hundreds of millions dollars through inefficient and incompetent practices.

"As the budget debate lingers, it remains clear that some in the legislature are seeking to increase WisDOT taxes in any way possible," the senators said.

"The 'tax of the week' is a new tax on trucking. Instead of getting creative to find new ways to tax Wisconsinites, we should be discussing the reforms needed to clean up an agency with a record of over-designing, over-building, and over-paying for our roads," the press release states.

Steineke agrees that reforms are needed, but he doesn't see the savings drawn from them to be enough to cover the gap in transportation funding. The bigger issue, he said, is the anti-conservative idea of borrowing out of a budget hole.

"It doesn't make any sense. They're not willing to give up more money but borrowed money is okay, I guess," the lawmaker said. "Even if we raise revenue (with the heavy truck fee) it wouldn't be anywhere near $850 million."

Stroebel said there has been mixed reaction in the Senate to the bonding upper. He said the idea is open to negotiation.

"I think we need to understand what our needs are and our wants are and live within our means," he said. "I am adverse to more debt."

"After that DOT audit we can't say, 'Hey, you guys are a doing a crappy job! Here's more money.' That's not the way conservatives solve problems," Stroebel said.

The senator is preparing for budget talks post-heavy truck fee proposal. He noted that Senate Majority Leader Scott Fitzgerald (R-Juneau) has said it would be tough to get the votes for it after five Republican lawmakers have made clear they are against such fee increases.

Steineke said the Legislature ought to be able to "walk and chew gum at the same time," that is to say it should be able to deal with reviewing the DOT's spending habits while finding money for important road projects.

What's next on the transportation budget battle front?

"I don't know where we go from here," Steineke said, adding that Assembly Republicans have been "very open with the (Republican members of the) Senate." He said there's room for compromise on bonding and tax and fee increases. If not, Vos has said DOT should go back to base funding. Fitzgerald earlier this week called that position "laughable."

"We have to have that conversation again," Steineke said, with frustration in his voice.

Dem Dan Kohl Comes From Left-Wing J Street To Campaign For Wisconsin Seat

Fri, 06/30/2017 - 17:00

MacIver News Service | June 30, 2017

By M.D. Kittle

[Madison, Wis...] - Dan Kohl is banking on his famous family name to beat two-term U.S. Rep. Glenn Grothman (R-Glenbeulah) in next year's 6th Congressional District election.

Kohl, nephew of former Democratic U.S. Sen. Herb Kohl of Milwaukee, faces perhaps a more daunting challenger in a district that has voted for conservative House members since 1964: his left-wing past.

The Milwaukee Journal Sentinel earlier this month described the 51-year-old liberal as a "businessman and non-profit leader."

Buried at the bottom of the story is the non-profit organization Kohl helped lead - J Street, the left-wing Middle East lobbying group whose "pro-Israel, pro-peace" mission, critics say, masks an anti-Israel agenda.

According to the Democrat's official biography, Kohl joined Washington, D.C.-based J Street as vice president of political affairs in 2009, not long after the launch of the political action committee.

Kohl's bio says he was "seeking to reground American foreign policy in the wake of the Iraq War."

The PAC certainly has some very powerful liberal friends, like House Minority Leader Nancy Pelosi (D-Calif), U.S. Sen. Bernie Sanders (D-Vt.) former Secretary of State and failed Democratic presidential candidate Hillary Clinton and former President Barack Obama.

J Street also has deep roots in Kohl's home state (although the nascent politician hasn't voted in Wisconsin since 2009, according to state voting records). The organization has offered full-throated endorsements of and generously given to U.S. Sen. Tammy Baldwin (D-Madison), and U.S. Reps. Ron Kind (D-La Crosse), Gwen Moore (Milwaukee) and Mark Pocan (D-Madison), but more on that in a moment.

J Street is a pusher of a two-state solution to the Israeli-Palestinian conflict, and a vehement supporter of Obama's Iran nuclear deal. The latter has found diminished support in the United States, with some 30 percent approving in February 2016. That number is less among conservatives, who make up the majority of voters in the 6th Congressional District.

J Street was the largest beneficiary of the Ploughshares Fund, with an ostensible mission to eliminate the nuclear weapon stockpiles. Ploughshares is backed by liberal billionaire and sugar daddy to left-wing causes George Soros. So is J Street, which took in $575,000 in grants that funded advocacy for the Iran nuclear deal.

"J Street and Ploughshares were part of a loose coalition of groups that coordinated strategy on building support for the Iran deal since late 2013, occasionally consulting with the White House," according to the Jerusalem Post.

Kohl also was a member of the J Street board of directors.

While the JStreetPAC has denied supporting the radical Boycott, Divestment, and Sanctions (BDS) movement, J Street has lent its blessing to groups and individuals heavily involved in the campaign to punish Israel. In 2015, J Street worked with other left-wing groups in opposing a bipartisan congressional measure that rejected the anti-Israel campaign.

"J Street has repeatedly come under fire from pro-Israel voices and members of Congress for its efforts to undermine Israel and delegitimize its current leadership," according to the Washington Free Beacon.

Rick Coelho, Kohl's campaign manager, said the Democrat is a strong supporter of Israel.

"If elected to Congress, Dan will work strenuously to maintain support for Israel's security, oppose efforts to delegitimize Israel and impugn its Jewish and democratic character, stand behind the two-state solution, and prevent a nuclear-armed Iran," Coelho said in an email response to MacIver News Service's questions.

The spokesman said Kohl, who lives in Mequon, left his position with J Street as Vice President of political affairs in 2012.

"Dan has been involved in the organized Jewish community for some time," Coelho said, directing MacIver News to an Israel Position paper "that underscores (Kohl's)strong support for Israel, and involvement in the community."

The political action committee likes to boast about its success in the arena of politics. It is merely a financial spigot for liberal causes and Democratic Party candidates.

"In 2016, JStreetPAC distributed a record $3.6 million to its 124 endorsed candidates for Congress, making it the largest pro-Israel PAC for the fifth cycle running," the organization boasts on its website. All 124 candidates, coincidentally, are Democrats. J Street bragged that 99 percent of its endorsed members of Congress won re-election and "not a single Iran deal supporter was unseated by a deal detractor."

Grothman is a vocal critic of the deal.

"This deal paves the way for an Iranian nuclear weapon and rewards the world's leading state sponsor of terrorism with sanctions relief," the congressman said in 2015. The Republican easily won re-election last year with 57 percent of the vote. His closest opponent won 37 percent.

But Grothman's potential opponent next time around comes with more money and the gift of a well-known political name. Dan Kohl worked for his famous political uncle for 13 years, during Sen. Herb Kohl's tenure as owner of the Milwaukee Bucks. The younger Kohl served as assistant general manager of the team.

It's safe to assume J Street will be at least as generous with one of its former leaders as it has been with the other political liberals it has graced with bundles of campaign cash.

Sen. Tammy Baldwin, for instance has taken in more than $130,000 from the the JStreetPAC in federal campaign contributions, her fifth largest contributor, according to the Center for Responsive Politics.

J Street has gotten some return on its investment.

As MacIver News Service reported earlier this month, Pocan was identified as the congressional member who anonymously reserved space on Capitol Hill for an anti-Israel forum. Pocan, according to the Free Beacon, failed to show up for the forum, titled "50 Years of Israeli Military Occupation & Life for Palestinian Children."

The liberal congressman has been an unapologetic supporter of organizations viewed as not simply anti-Israel but anti-Semitic by mainstream Jewish groups.

"Pocan, a supporter of the liberal Middle East advocacy group J Street, has come under fire in the past for meeting with convicted terrorist associated with the Popular Front for the Liberation of Palestine, a terror organization," reporter Adam Kredo wrote. "Since the Free Beacon first reported on the event--which many have described as a propaganda effort meant to defame the Jewish state--pressure has been mounting for the anonymous congressman behind the event to step forward."

Kohl in a press release announcing his campaign said he couldn't "remember a time when people in this country were so anxious about the present and so concerned about their futures and their children's future."

He blamed Grothman for that, claiming the congressman "puts his party's priorities ahead of our priorities."

Kohl, who helped lead one of the more left-wing and powerful lobbying groups in the nation, said the 6th Congressional District is represented by "the single most partisan member of the House..."

Alec Zimmerman, spokesman for the Republican Party of Wisconsin, asserts Kohl and Wisconsin's Democratic members of Congress are putting the nation's security on the line in supporting dangerous ideas pushed by J Street.

"Whether it's Senator Baldwin, Rep. Pocan, or candidates the voters have already rejected like Dan Kohl, it's clear that Democrats are sticking up for big-money Washington special interests instead of Wisconsinites," Zimmerman said. "Bottom line: Wisconsin Democrats are putting the dangerous agendas of groups like J Street ahead of the safety of hard-working Wisconsin families, and it has to stop."

Senators: No Truck Tax, No Tax Hikes For Troubled DOT

Fri, 06/30/2017 - 11:24

MacIver News Service | June 30, 2017

By M.D. Kittle

[Madison, Wis...] - Five Wisconsin state senators on Friday announced they will not support an Assembly proposal to place a new fee on heavy trucks - or tax hikes of any kind - to fund the troubled state Department of Transportation.

Sens. Steve Nass (R-Whitewater), Dave Craig (R-Town of Vernon), Frank Lasee (R-De Pere), Chris Kapenga (R-Delafield), and Duey Stroebel (Saukville), released a statement expressing their opposition.

"As the budget debate lingers, it remains clear that some in the legislature are seeking to increase WisDOT taxes in any way possible," the senators said.

"The 'tax of the week' is a new tax on trucking. Instead of getting creative to find new ways to tax Wisconsinites, we should be discussing the reforms needed to clean up an agency with a record of over-designing, over-building, and over-paying for our roads," the press release states.

Adding a new tax would only send Wisconsin's tax rankings - still relatively high - in the wrong direction, the senators contend.

"Throughout the budget process, we have been discussing the elimination of taxes like the state forestry mill tax and the personal property tax on Main Street," the statement continues. "Now is not the time to increase taxes on our citizens."

That has been the adamant position of Gov. Scott Walker. But earlier this week, following the governor's meeting with Republican leadership, Assembly Speaker Robin Vos (R-Rochester) said the Assembly backs the proposal and is aligned with Walker on the budget. Vos said the new fee to help pay for Wisconsin's road projects could be a key piece in a budget deal.

Neither Walker nor Vos returned MacIver News Service's requests for comment.

Assembly members have been mostly silent on the idea, raised earlier this month by Rep. Amy Loudenbeck (R-Clinton). Proponents argue heavy truck operators should have to pay more to cover the wear and tear they create.

Critics say the fee singles out one category of vehicles to fix the state's disputed $1 billion transportation budget shortfall.

The Wisconsin Motor Carriers Association joined a coalition of 16 trade groups and businesses - from Walmart to Schneider National - in sending a memo Thursday afternoon to Walker and lawmakers expressing their opposition to the idea.

"We strongly oppose the current proposal being considered to assess a Ton Per Mile (TPM) tax on heavy trucks," the letter states.

The coalition asserts Wisconsin's trucking industry paid 38 percent of all taxes and fees owed by Wisconsin motorists in 2016, and it pays one of the highest trucking registration fees in the nation.

"In addition to adding a new taxing scheme that can be increased by future legislatures, the current proposal embarks on what could be a red-tape nightmare for those doing business in Wisconsin when trying to accurately calculate a Ton Per Mile tax," the memo states.

"Currently there is no TPM tax collection mechanism for intrastate carriers and an extra layer of government reporting would be placed on Wisconsin trucking companies, particularly small businesses."

The bigger problem, according to the senators, is rewarding an agency that has wasted hundreds of millions of taxpayer dollars.

"The recent audit of WisDOT shows there are many reasons the agency has been inefficient and does not deserve new revenues. We should be looking for savings in government," the senators said in the statement.

Weekly Roundup: Top Stories in Wisconsin Politics

Fri, 06/30/2017 - 06:00

June 29, 2017

Happy Friday, everyone! It's been another busy week in Wisconsin politics. Here's the run down of the top stories - from free speech victories to unused sick leave controversies.

1. Over $168 Million Spent on Unused Sick Leave
Last year alone, over $168 million worth of unused sick leave was converted to post-retirement health care benefits for state employees. Since 2011, the financial burden to taxpayers has surged by 32.3 percent, over $41 million. Participation increased by 7.6 percent - over five thousand individuals.

This is a lavish perk that only government employees receive. The average state worker receives 16.25 sick days a year, compared to seven sick days for private sector workers. Another key difference - sick days don't carry over to the next year in the private sector like they do in the public sector. Government workers almost never need those extra days, and so in the end, they get yet another benefit unknown in the private sector.

Can you bank all your unused sick days & convert them to retirement health benefits? It is if you work for the statehttps://t.co/CJqyEoQrc6 pic.twitter.com/ChQJzLh8kF

— MacIver Institute (@MacIverWisc) June 28, 2017

Read more here.

2. Budget Debate Sparks Frustration, Tension Within GOP
Tensions were high in the capitol this week, with Republican legislators butting heads over the direction of the budget debates. After negotiations broke down, the Capitol Press Room became the hottest spot in town for lawmakers trying to get out their side of the story. One after another, reporters got an earful all afternoon on Tuesday. It quickly spilled over onto Twitter. MNS' Matt Kittle has the blow-by-blow.

#WIbudget Blog - Capitol Press Get Front Row Seat To Republican Budget Impasse Fireworks Show:https://t.co/D7PIHN7Dlz#wiright #wipolitics

— MacIver Institute (@MacIverWisc) June 27, 2017

Read more here.

3. Anthem Withdraws from Wisconsin, Indicates Failure of Obamacare
Last week, Anthem Blue Cross Blue Shield announced their plans to leave the Wisconsin individual insurance market by the end of the year. MacIver president Brett Healy offered his analysis of the situation, which resonated with Gov. Walker's sentiments that this clearly displays the collapse of Obamacare.

Healy commented that "Anthem now joins other major health insurers like UnitedHealth, Aetna, and Humana that have been forced to withdraw from this government-run debacle in order to stop their financial hemorrhaging."

Premiums are poised to increase once again with Anthem's departure from the market and will also leave 18,500 Wisconsinites scrambling for new coverage in 2018.

.@GovWalker reacts to Anthem exiting WI: "WI families expect & deserve better health care coverage options...time to act is now." #wiright pic.twitter.com/SexTaKZuVN

— MacIver Institute (@MacIverWisc) June 21, 2017

Read more here.

4. Democrats' K-12 Plan Would Spend Nearly $730 Million More than Governor
Democrats on the Joint Finance Committee threw their hat in the ring and proposed their own alternative K-12 education plan in response to proposals offered by both Gov. Scott Walker and Assembly Republicans. Their plan models some of the same points as proposals from DPI, Walker, the Assembly, and tacks on $728 million more in state funding than Walker would.

The Democrats' alternative calls for the school levy and first dollar tax credits to be eliminated, which they hope will cover the substantial spending increase. This money would be redirected to general school aid, which will already increase by $525 million in their plan. Similar to the Governor and Assembly Republican proposals, the Democrats focus on per pupil aid funding, low-revenue adjustment, and required background checks for choice employees.

Sen. Luther Olsen (R-Ripon), chairman of the Senate Committee on Education, commented that the Democrats are like "kids at Christmas, picking out everything they want out of the catalogue and knowing that they'll never have to pay for it."

Read more here.

5. Assembly Entertaining Truck Tax, Receive Immediate Backlash
Rumors are floating around the Capitol that the Assembly plans to introduce a Top Per Mile (TPN) tax on heavy trucks in an effort to offer a solution in the transportation budget standstill.

A coalition quickly formed in response, with 16 trade groups and businesses - from Schneider National to the Wisconsin Motor Carriers Association - sending a memo to strongly oppose the proposal, which would directly affect their businesses and employees.

MacIver will keep you posted as this story develops.

Some senators are skeptical of a new tax on heavy trucks that's circulating the Capitol and supported by Speaker... https://t.co/4nzNNrqA1l

— MacIver Institute (@MacIverWisc) June 29, 2017

.@GovWalker met with Schneider Transportation today, sources say. Walker "got an earful" on heavy truck tax proposal #wiright #wipolitics

— MacIver Institute (@MacIverWisc) June 29, 2017

Read more here.

6. Free Speech Wins at State, National Level
Last week was a victory for free speech enthusiasts across the state and nation. The Assembly passed Rep. Jesse Kremer's (R-Kewaskum) Campus Free Speech Act and the Supreme Court struck down an unconstitutional law allowing "offensive" trademarks to be denied.

Unfortunately for UW students, the Senate may wait until fall to vote on free speech bill since their plates are full with budget discussions.

Sen. Harsdorf's office said Senate is focused on the budget, #FreeSpeech bill might have to wait till Septhttps://t.co/AWXfwTmbEd
#wiright

— MacIver Institute (@MacIverWisc) June 27, 2017

Read more here.

Interested in more in-depth coverage on any of these issues? Check out our coverage from this week on budget meetings, faces of Wisconsin's controversial alcohol regulations, and more on Twitter.

Senators Voice Resistance To Heavy Truck 'Tax'

Thu, 06/29/2017 - 11:29

MacIver News Service | June 29, 2017

By M.D. Kittle

[Madison, Wis...] - An Assembly proposal that hits heavy trucks in Wisconsin with a per-mile fee to help fund the state's troubled transportation fund isn't sitting well with some conservative senators.

"Steve will be issuing a statement soon. He's coming out hard against" the proposal, Mike Mikalsen, spokesman for Sen. Steve Nass (R-Whitewater) told MacIver News Service. "It is basically a backdoor increase on taxes on everyone."

One conservative Capitol insider was a little more colorful in his objection to the plan, saying Thursday that he was trying to figure out what kind of lipstick supporters were trying to "put on this pig."

Assembly Speaker Robin Vos (R-Rochester) says the Assembly backs the proposal "and is aligned with (Gov. Scott) Walker on budget," according to a Tweet Thursday morning from the Associated Press's Scott Bauer.

Vos "says new fee on heavy trucks to pay for roads could be one of key pieces in budget deal," Bauer tweeted.

Vos's office has not returned MacIver News' requests for comment. Neither has Walker's office.

It is odd that a Republican governor who has adamantly said he would not support gas tax and fee hikes - something the Assembly has pushed from the beginning - would be on board with a plan to create a fee on one class of road users.

Mikalsen and other Capitol insiders certainly find it hard to believe.

They say they were told that Walker would not stand in the way of the Assembly and Senate negotiating a deal on the heavy truck fee. What isn't clear is whether Walker promised not to veto the fee.

Amid a transportation standoff between An Assembly that has pushed for "all options on the table" and a governor dead set against tax increases in a time of budget surpluses, Rep. Amy Loudenbeck (R-Clinton) earlier this month floated the heavy truck fee idea.

Loudenbeck has said her proposal is similar to Kentucky's heavy truck fee - at 2.85 cents per mile. The fee reportedly could generate north of $200 million over the biennium for Wisconsin's transportation coffers.

Wisconsin Manufacturers & Commerce, vehemently opposed to the heavy truck "tax," asserts the fee would be the equivalent of a 20 cent per gallon tonnage tax on trucks. WMC estimates the cost to be between $130 and $135 million per year.

Wisconsin's haulers say the proposal will hit an industry that exists on paper thin margins. Loudenbeck told Wisconsin Public Radio that her proposal does not mean to put anyone at a competitive disadvantage.

"We're trying to be fair so that this would apply to all vehicles traveling in Wisconsin, not just Wisconsin vehicles or Wisconsin companies," she told WPR. "It's everyone that drives on our road with a heavy truck."

Proponents say it's only right that the heavy users of Wisconsin's highways put in their fair share to fund their upkeep.

Critics say truckers already are paying more than their fair share.

Scott Manley, WMC's senior vice president of government relations, said the type of trucks targeted in the proposal typically account for around 10 percent of vehicle miles on Wisconsin's roads, but their owners pay approximately 38 percent of the fees. Heavy trucks also pay the fifth highest annual registration fees in the country, Manley said.

"Wisconsin is one of the most expensive states in the country to move a truck, and now the Legislature wants to make it even more expensive, to literally tax every mile they drive," he said.

The fee would only end up hurting an industry that directly serves Wisconsin's critical manufacturing and agriculture sectors, Manley said.

Mikalsen said consumers would ultimately pay the price for a tax on truckers.

"Those trucking companies work on such small margins. This isn't something they can eat," he said. "We think the proponents know that. They want truckers to be the bad guys, they want the truckers to do the work for them."

State Sen. Duey Stroebel (R-Saukville), said he hasn't reviewed a Legislative Fiscal Bureau memo on the truck fee, but he has consistently said he's not in support of tax increases. The LFB memo was not available Thursday morning.

"My stance on new revenue for the DOT has not changed," the lawmaker said. "I will continue to participate in the budget process and evaluate the budget in its entirety."

A Senate insider told MacIver News Service that there is a fair amount of resistance to the proposal in the Senate and that it is by no means a slam dunk.

Senate Majority Leader Scott Fitzgerald's office did not return a request for comment.

Budget Meetings Continue Behind Closed Doors

Wed, 06/28/2017 - 18:37

MacIver News Service | June 28, 2017

By: Bill Osmulski

[Madison, Wisc...] Wisconsin Republicans met several times behind closed doors on Wednesday hoping to find a solution to wrap up the state budget, but there still didn't seem to be much consensus by the end of the day. In fact, word leaked out that the Assembly is considering a heavy wheel tax to increase transportation revenue, complicating an already contentious situation. MNS' Bill Osmulski has more.

State of Wisconsin Spent Over 168 Million Dollars in 2016 on Unused Sick Leave

Wed, 06/28/2017 - 05:50

State employees banking 5.8 million days of unused sick leave for healthcare in retirement

MacIver News Service | June 28, 2017

By Matt Tragesser

[Madison, Wisc...] Last year, state employees who retired converted more than $168 million worth of unused sick leave, which was used to purchase post-retirement health care, according to documents obtained by the MacIver Institute.

Wisconsin has two different benefit programs for retiring state employees to convert their unused sick leave into health insurance payments. The state has offered these benefits, called the "Accumulated Sick Leave Conversion Credit (ASLCC)" and the "Supplemental Health Insurance Conversion Credit (SHICC)," for over 40 years and taxpayers continue to bear the burden of the cost.

From January 1 to December 31, 2016, 71,587 state workers earned 3.72 million sick leave hours, but only 1.87 million were used, according to the Wisconsin Department of Employee Trust Funds (ETF). That means 1.85 million hours were eligible for post-retirement plans.

Payments saw a 13.5% increase in 2011, the largest increase in the past decade, when many employees retired early because of a fear that Gov. Scott Walker would do away with the benefit as part of his landmark government reforms. That never happened.

When the MacIver News Service (MNS) reported on that surge back in 2011, many lawmakers vowed to reign in the programs. However, since then the total cost of the benefit has steadily increased by 32.3% percent, or by over $41 million, with participation also increasing by 7.6% or by 5,054 individuals.

Every state worker is enrolled in the ASLCC program, where the program takes the number of unused sick hours an employee has and multiplies it by their highest basic hourly pay rate. People who have worked for the state for over 15 years are also enrolled in SHICC, where the program takes the employee's ALSCC amount and matches a certain portion of it.

The average state worker gets 16.25 days a year. The average private sector worker receives seven days a year, and unlike for state workers, it doesn't carry over year-to-year.

Wisconsin's sick leave payment system is generous when compared to neighboring Midwestern states. Iowa, for example limits sick leave conversion benefits to state workers in its legislative, executive, and judicial branches up until they are eligible for Medicare. In Indiana, an average state worker receives 9 sick days per year, which is almost half of what is earned by a state worker in Wisconsin.

There's only been one modest effort since MNS reported on this story in 2011, a Senate bill last session that would have prevented state lawmakers from accruing unused sick leave. The bill ended up passing out of committee, but went no further.

Rep. David Steffen (R-Green Bay) co-sponsored that bill last session and admits it's difficult to reform a program when lawmakers, themselves, benefit so greatly from it.

"The reality is when I tried to end this little known health care golden parachute, it was not well received by my colleagues. I put this legislation out in my first term because I felt this benefit lacked transparency to the public and encouraged long-term tenure of elected officials," he said when contacted earlier this month.

Steffen hasn't given up on the issue. He would like to reintroduce his bill someday if he's ever able to build greater support for it.

Meet William Glass, Face Of Wisconsin's Controversial Alcohol Regs System

Wed, 06/28/2017 - 05:30

MacIver News Service | June 27, 2017

By M.D. Kittle

[Madison, Wis...] - As lobbyists and lawmakers consider tightening up what some distributors have described as the "Wild West" of Wisconsin's three-tier codes and laws, meet William Glass - the face of Wisconsin's archaic and restrictive alcoholic beverage regulatory system.

Glass, a Marine Corps veteran turned entrepreneur, nearly lost it all in a trying battle with state regulators.

In his pursuit of his version of the American dream, owning an Eau Claire-based craft brewery, Glass said he and his wife contemplated dissolving their marriage in order to save his business.

It wouldn't have mattered.

Nothing short of severing custody of his kids would have appeased state regulators in their reading of what many see as a draconian Prohibition Era law that has latched a lock on the free market and small business in the name of stopping monopolies.

"It's pretty disgusting but, unfortunately, that's the situation we found ourselves in," Glass said.

The Wisconsin Department of Revenue, charged with enforcing the law that established the three-tier system of distributing alcohol, says the law is the law.

"State statute is clear on the separation of production, distribution, and retail sale of alcoholic beverages," Nicole Anspach, spokeswoman for the Department of Revenue, told MacIver News Service in an email Monday. In short, the law prohibits brewery owners and other manufacturers of alcoholic beverages from having "any direct or indirect interest" in licensed establishments selling booze. At least Chapter 25 of the statute "contains numerous provisions which prohibit relationships between the tiers."

But Glass says the department took "indirect interest" to an extreme level.

Entrepreneurial bug

When Glass finished active duty in 2009, the recession was hitting hard. He took a job at MillerCoors while going to school for entrepreneurial management at the University of Wisconsin-Eau Claire.

"I always had this kind of bug in me that I needed to work for myself. It might have been (the result of) a few years of working through the military bureaucracy, but I knew I only wanted to answer for myself," Glass told MacIver News last week on the Dan O'Donnell Show on NewsTalk 1130 WISN in Milwaukee.

So he and his wife went in with a couple of investors to purchase a failing tavern in downtown Eau Claire. Glass said they turned it into one of the best craft beer bars in the state.

But this entrepreneur was bored. Selling beer wasn't his cup of tea. He wanted to brew craft beer, and had a passion for it. It seemed like "the next logical step from being a bar owner."

The Brewing Projekt, with a mission "to create damn good beer," was born.

How to transition was the problem. How to do so within Wisconsin's prohibitive three-tier system was the real trick.

In general, state law aims to keep alcoholic beverage makers, wholesalers and retailers, including restaurants, bars, and liquor stores, out of each others' businesses.

Glass' attorneys advised that he and his wife draw up a marital property agreement legally separating Glass from the tavern. His wife, who understandably did not want to give up the successful business she had built, became sole owner of the establishment. Her husband had no legal interest in it. Glass would be free to pursue his brewery project without "branching tiers" and running afoul of the "interest" clause.

At least that's what he was told by a representative of the Department of Revenue.

Things were looking good. Glass went through the arduous process of obtaining a separate federal license from the Alcohol and Tobacco Tax and Trade Bureau. The TTB enforces the Federal Alcohol Administration Act, "to ensure that only qualified persons engage in the alcohol beverage industry."

But after a few months, Glass still hadn't heard back from the state Revenue Department on a final decision. After some prodding from the governor's office and a couple of legislators, the entrepreneur finally got an answer from the agency.

He was stunned.

"What we found out was that they (DOR) weren't going to grant us the license," Glass recalled. The agency quoted a 1972 opinion from the state's attorney general. Because Glass and his wife were married, their relationship breached the prohibition on mixing two tiers - in this case, the manufacturer and the retailer. It did not matter that they had legally separated their business assets. It didn't matter that a DOR agent previously had said doing so would make them compliant.

The law is the law.

An indecent proposal

"So we were desperate at this point," Glass recalled.

He said he had spent every penny he had - north of $200,000 - in working through the regulatory and planning phases.

"We were panicked," Glass said. "We're trying to start this business and now the state is telling us something different than what they told us a couple months earlier."

Glass and his wife discussed getting divorced to free up their regulatory entanglement. It wasn't a matter of a failed relationship. Glass said he and his wife love each other with or without a marriage certificate. It was fear that drove them to even considering ending their marriage, Glass said.

"The fear that they (DOR) had, and the fear that they have, is that we would use our relationship to somehow create a monopoly between our two businesses," he said.

But dissolution of a marriage wasn't enough for the regulator.

Glass asked agency officials point blank: If he got a divorce, would that be enough to satisfy the three-tier law? The answer was, no. The couple would still have a fiduciary connection because they have children. Child support payments presumably could be used to support business interests - a prohibited branching of tiers.

Glass said he and his wife were put in the untenable position of giving up custody of their children to pursue their small business dreams. Not a chance.

"It's a whole different story when you start talking about your kids," he said.

So, now what?

Relatively regulating

Glass said his father, a 69-year-old retired sheriff's deputy/investigator for Chippewa County, offered to take over ownership of the brewery.

They went back through the federal regulatory process, what Glass described as "quite a proctological exam."

"Keep in mind we're racking up overhead costs this whole time," he said. "We had a lease on the building, we're making business payments. We're still trying to keep our heads above water."

They resubmitted the application to the Department of Revenue. Again, a few weeks passed without an answer.

Finally, a letter arrived. Once more the agency rejected the license application. Why? Glass was listed on the document as a management employee.

"They tell me I legally can't work for the brewery and they won't issue a license to the brewery because I'm requesting to work for what is legally and essentially my father's business," he said.

Glass then had his name removed from the application. The applicants went back through the federal paperwork, and then back to the DOR. Again, more delays. Eventually, Roger Johnson, who at the time administered the state's liquor laws, personally called and said the application looked good but...

The brewer's wife just happened to work as a waitress at a downtown Eau Clair bar, so the state still couldn't issue the license. The waitress would have "undue influence over consumers' purchasing habits," was the explanation, Glass said.

"That's just how far in this goes. We were just beside ourselves," he said. "The supposed idea is that we are going to set up a monopoly because one of the employees of this brewery has a wife who sells beer and liquor part-time from behind a bar a mile and a half away, that was good enough reason for them to shut us down."

The waitress ended up leaving her job so that her husband could take the brewer position and the brewery could finally be released from the shackles of regulation.

The Brewing Projekt's story may be the most extreme impact of the three-tier system, but Glass is not alone in his regulatory struggles.

Like Minds Brewing in Milwaukee was forced to move the business to Chicago in 2015 because of the so-called "tied house" laws within the three-tier system. Rep. Dale Kooyenga, R-Brookfied, intervened and the Department of Revenue found that breweries are allowed to hold an "indirect interest" in a restaurant with a Class B liquor license.

Brewing controversy

Now Wisconsin's craft brewers, distilleries and wineries, among others, are pushing back against a proposal that would tighten up the three-tier system and create an "alcohol czar" to enforce the law.

Glass, acting president of the newly formed Wisconsin Craft Beverage Coalition, was among several attendees at last week's closed-door Capitol meeting to talk about the "working document." State Rep. Rob Swearingen (R-Rhinelander), a member and former president of the Wisconsin Tavern League, organized the meeting.

"Once people from the wine and beer wholesalers explained the proposal, the group almost came together for the most part," Swearingen told MacIver News.

Glass and other members of the Craft Beverage Coalition had a different takeaway. They worry the proposed changes will only serve to fully stifle entrepreneurism and kill competition.

Brian Samons, president of the Wisconsin Distillers Guild, said the proposed changes to an incredibly complicated body of laws and codes are moving too fast. And too many stakeholders are being left out of the discussion, he said.

"There's no need to rush, if we're talking about making good policy, and I hope we are," Samons said. "We're not against enforcement of the rules and rules that make sense, good public policy. The problem is when it's neither clear or good policy."

The proposal appears to be the latest move by distributors to alter the system to their benefit, critics say. In 2015, the Distilled Spirits Council of the United States sent Gov. Scott Walker and lawmakers a letter noting concerns about a "covert attempt by a wine and spirits wholesaler to slip a provision into the budget that will further tighten its monopoly control over the Wisconsin alcohol beverage market."

The proposal involved making distributor contracts bound by perpetuity, no matter a transfer of ownership.

"The supplier's responsibility and objectives to provide a broad range of brand choices to consumers efficiently and competitively are eliminated by this legislation. For the retail tier, noncompetitive wholesalers translate into higher prices and less services to retailers," the letter stated.

Distributors contacted for this article did not return phone calls and emails.

Glass said the three-tier law is in desperate need of reform, but not to carve out more protection for special interests.

As the law stands today, being married to someone locks would-be entrepreneurs out in the name of protecting the tiers. The proposed changes strike another blow to the free market, Glass said.

"It's their attempt to tighten up the market and that's opposite of what we're trying to do, which is to expand our businesses, grow our businesses, diversify our businesses and make our industry stronger."

Budget Blog - Capitol Press Get Front Row Seat To Republican Budget Impasse Fireworks Show

Tue, 06/27/2017 - 14:40

June 27, 2017

[Madison, Wis...] - The fireworks began a few days early, and reporters in the Capitol press room got the best seat in the house Tuesday.

They were treated to the latest incendiary display of budget discord between Republican leadership in the Assembly and Senate.

After less than 45 minutes of futility, Senate Majority Leader Scott Fitzgerald stormed out of GOP budget talks declaring that the Senate was "done," Assembly Speaker Robin Vos told reporters during an impromptu visit.

Fitzgerald then paid a call on the press room to set the record straight, according to a spokeswoman for the Juneau Republican. The senator told reporters he wasn't angry, just direct.

State Rep. Jim Steineke (R-Kaukauna), the Assembly majority leader, tweeted his displeasure.

Set aside the entire day for negotiations w/senate. Talked at for 40 minutes w/no negotiations. Sad!

— Jim Steineke (@jimsteineke) June 27, 2017

Steineke was among a wave of Republican leadership to flow into the Capitol press room Tuesday.

The problem, in the parlance of "Cool Hand Luke," is a failure to communicate among Republican friends who, some argue, have treated each other more like enemies over key budget differences - principally how to fund transportation.

Vos (R-Rochester) has oft-repeated that if the two houses can't reach a deal, the state's troubled Department of Transportation would be funded at base levels, with no new cash for delayed projects.

Fitzgerald called that position "laughable."

Assembly Republican leadership has long said all options must be on the table to deal with a disputed $1 billion transportation budget shortfall. That includes increases to the gas tax, vehicle registration fee hikes and other "revenue enhancers." The Senate effectively has stood by Gov. Scott Walker's budget plan, which calls for $500 million in borrowing, delaying some major projects, and absolutely no tax increases.

Capitol reporters at the barrage of Republican leadership point-counterpoint, seemed to gleefully tweet about Tuesday's back-and-forth. Vos, according to one of the accounts, said Fitzgerald spent a lot of time "talking at us, seeming angry and then said, 'We're done.'"

Vos' spokeswoman said Vos was not available for comment Tuesday. Rep. John Nygren (R-Marinette) was in meetings Tuesday afternoon.

Fitzgerald told reporters the Assembly doesn't seem interested in compromise - or reality.

"As the senator told the press room today, he didn't feel the Assembly came prepared to negotiate and he doesn't believe (their proposals) could be approved by both chambers and the governor," Myranda Tanck told MacIver News Service.

While the major legislative players have their differences, the Republican governor holds the veto pen. The Assembly's failure to recognize Walker's very powerful budget weapon is getting in the way of completing a timely budget, at least that's the sentiment of Senate leadership.

The clock is ticking. The Legislature will not have a budget to Walker's desk by Friday, the end of the fiscal year. Capitol insiders tell MacIver News that the Joint Finance Committee isn't likely to meet again this week, further setting back the timeline.

Fitzgerald said he doesn't "know where to go from here."

Tomorrow is another day, however. Senate Republicans plan to caucus Wednesday, and Vos and Fitzgerald are supposed to meet with Walker.

On a more conciliatory note, Tanck said Republican leadership is "fairly close" on a "vast majority" of provisions in the K-12 education budget.

"There is agreement on most of the big issues on that budget area. Now it's just a matter of cementing this together," Tanck said.

She said there is "significant support" in the Republican Senate caucus and from many Republicans in the Assembly on repealing the state's personal property tax, a move that could save businesses hundreds of millions of dollars.

Shankland's Health Insurance Rhetoric is Just Plain Wrong

Mon, 06/26/2017 - 16:26

Stevens Point Democrat peddles falsehoods while stoking hyper-partisan bonfire

June 26, 2017

Perspective By Chris Rochester
MacIver Institute Communications Director

The day after a crazed Bernie Sanders campaign worker fired 60 rounds in an attempt to assassinate congressional Republicans, state Rep. Katrina Shankland (D-Stevens Point) took to social media to perpetuate the kind of rhetoric that seemingly motivated gunman James Hodgkinson.

On Facebook, Shankland posted a mock "GOP Health Plan" card reading "In case of emergency: Die quickly." The unsubtle implication is that Republicans want people to die - a sad local installment of a national messaging campaign by Democrats desperate to stop the repeal of Obamacare by any means possible.

Her social media stunt came with a mournful missive complaining that she had been chided at the Joint Finance Committee for more over-the-top and uninformed comments about new health plan options for state employees the committee adopted.

In an effort to save $63.9 million of taxpayer money, the budget committee agreed to direct the state's Group Insurance Board to add Consumer-Driven Health Plan (CDHP) options for state employees. CDHPs generally cover basic medical needs, but offer a lower premium in exchange for higher deductibles.

CDHPs are often paired with tax-advantaged health savings accounts (HSAs) or health reimbursement arrangements (HRAs). Employees, often supplemented by employer contributions, can put pre-tax money into an HSA to cover out-of-pocket costs and roll the account over year-to-year. Under plans coupled with an HRA, employers reimburse employees' heath costs. The two methods can also be paired.

Both HSAs and HRAs coupled with a high-deductible plan give healthcare consumers direct control over their healthcare dollars, creating much-needed price competition in healthcare and driving prices down.

Shankland claimed giving state employees the option of a high-deductible plan would cause people to forego life-saving care and ostensibly get sick and die. Women would skip breast exams, and people with chronic conditions would allow themselves to wither away. But in reality, CDHPs, HSAs, and HRAs are increasingly popular among large employers. In 2013, 39 percent of employers with 500 or more employees offered HRA- or HSA-eligible plans.

By Shankland's "logic," an awful lot of employers, then, want their employees to "die quickly."

Rep. Mary Felzkowski, who actually owns an insurance firm, tried mixing in some facts. Employers have an innate incentive to keep their employees healthy and productive, she said. Add to that employees' desire to keep their monthly premiums affordable amid rising healthcare costs and CDHPs come out as a pretty attractive option.

After scolding Shankland for her over-the-top fear mongering - saying she "should be ashamed" - JFC co-chair Rep. John Nygren also interjected with another inconvenient truth omitted by Shankland: the proposed CDHP option is just that - an option. No state employee is going to be forced into a health plan they don't want. If they like their plan, they can keep it, unlike the millions of Americans whose coverage was cancelled thanks to progressives' beloved trainwreck, Obamacare.

Wisconsin state employees will be able to choose a plan - if they think it's best for them - with lower monthly premiums while covering out-of-pocket costs with an HSA or HRA, so they'll still have essential health and medicine covered.

Offering more plan tiers with CDHP options will also save taxpayer money and help "bend the cost curve down" in the overall health care market.

Shankland is just plain wrong - her rhetoric displays her ignorance about the complexities of health insurance - and the timing of her "Republicans want you to die" rant betrays a jaw-dropping lack of judgment.

Lately, Democrats have been all too willing to use overheated rhetoric and outright lies to turn their health care policy differences with Republicans into a clash of "good people" versus "evil people who literally want you to die."

Nygren was right. Shankland should be ashamed of herself - not just for her ignorance and over-the-top death mongering rhetoric on health insurance, but for her unabashed eagerness to throw gasoline on the political bonfire that nearly took a congressman's life.

King Chris Larceny...err Larson is the Poster Child for What's Wrong with Progressive Liberals

Mon, 06/26/2017 - 06:00

June 26, 2017

By Mikel Kwaku Osha Holt
Special Guest Perspective

The following column first appeared in the Milwaukee Community Journal.

There are several possible reasons to explain why State Senator Chris Larson attempted to derail bipartisan legislation that would bring greater accountability to the Milwaukee Parental Choice Program (MPCP).

But neither bodes well for the Democratic Party or poor Black folks already confused by the self-righteous position of so-called "progressive liberals."

Wanna-Be-King Chris Larson's unsuccessful attempt to stop Senate Bill 293 was both nonsensical and politically irresponsible. (In other words, it was dumb; unless you know Larson for what he really is.)

The measure, which ultimately passed 28-5 was not only a true bipartisan effort (a rarity in this era of political polarization), but it was also drafted by the Department of Public Instruction which, last I heard, was run by a school choice opponent whose campaign was endorsed and financed by the same obstructionist special interests that puts its muscle behind Larson.

The bill would mandate background checks on employees, allow DPI to expel schools from the program for financial irregularities and mismanagement, and earmark more special needs money for the Milwaukee Public Schools (MPS).

In all respects, the measure is a win-win for the taxpayers on either side of the choice issue.

To read Holt's full column, please click here.

Democrats' K-12 Funding Plan Would Spend Nearly $730 Million More than Governor

Mon, 06/26/2017 - 06:00

Proposal repackages and adds to parts of Walker's and Assembly's already-generous plans, resulting in a massive price tag

June 26, 2017

By Ola Lisowski
MacIver Institute Research Associate

[Madison, Wis...] Democrats on the Joint Finance Committee released their own K-12 education funding plan to counter competing proposals by Gov. Scott Walker and Assembly Republicans. The plan would spend $728 million more than Walker's proposal over two years.

The proposal, which the four JFC Democrats introduced at a June 22 press conference, takes several ideas from both the Walker and Assembly plans, though it would put more money into nearly every line item.

Democrats propose eliminating the school levy tax credit and the first dollar tax credit, instead sending the over $1 billion the two credits generate through the general school aids formula. The majority of general school aids are funded through the equalization aid formula, sending more money to property-poor districts. General school aids would also increase by $525 million.

The plan keeps Walker's proposed per pupil categorical aid increase of $200 per pupil in the first year followed by a $204 increase in the second year. The plan also raises the low-revenue adjustment to $9,500 in the first year and $9,900 in the second. Just a few weeks ago, Assembly Republicans released a plan which would raise the low-revenue adjustment to $9,800 in the second year of the biennium.

Speaking to MacIver News on Friday, Sen. Luther Olsen (R-Ripon), chairman of the Senate Committee on Education, noted that the Democrats were looking at similar issues, such as per pupil aid and the low-revenue adjustment, but found the final price tag unrealistic.

"It's really easy to spend money when you don't have to sign the check," Olsen said. "It's sort of like they're kids at Christmas, picking out everything they want out of the catalogue and knowing that they'll never have to pay for it."

The plan would weigh students who are eligible for free- or reduced-price lunches more heavily in the funding formula, counting those students as 1.2 pupils rather than 1.0, to send more money to schools with higher rates of poverty. It also increases sparsity aid, high cost pupil transportation aid, and special education aid. The only place where the Democrats' plan spends less money than the governor as a result of a policy change is in the high poverty aid fund, which it eliminates and sends through the general school aid formula.

The plan would cap enrollment in the state's school choice programs to 2 percent of each public school district's pupil enrollment. Under current law, the cap in choice participation is 2 percent per district in the coming 2017-18 school year, after which it increases by 1 percent annually until it is eliminated in 2026. It would also limit participation in the program by dictating that no more than 49 percent of a private school's enrollment be voucher students.

Other provisions of the plan - such as requiring background checks for choice employees - have already passed the Assembly and Senate floors. Senate Bill 293 requires private choice schools to complete criminal background checks on prospective employees before extending offers of employment. Sen. Lena Taylor (D-Milwaukee) is a co-sponsor of the bill and voted for it. Sen. Jon Erpenbach (D-Middleton) voted for the bill after asking if DPI supported it.

Reps. Katrina Shankland (D-Stevens Point) and Gordon Hintz (D-Oshkosh), the Assembly Democrats on the Joint Finance Committee, both voted against the legislation on the Assembly floor.

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