League of Wisconsin Municipalities
  Capitol Buzz 
February 8, 2017
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Governor's Budget Proposal Increases Transportation Aids; Preserves Status Quo for Shared Revenue, Expenditure Restraint, and other Municipal Programs 

Governor Walker's state budget proposal, which was introduced earlier this evening as AB 64 and SB 30, maintains current funding levels for shared revenue, expenditure restraint, and the payment for municipal services programs. As expected, the bill significantly increases funding for general transportation aids and the Local Road Improvement Program, which the Governor has been promising to do since last fall.


Other key municipal items in the Governor's budget include:

Levy Limits

The Governor tweaks the levy limit law by eliminating a way for municipalities to avoid having to reduce their allowable levy whenever their debt service on debt issued prior to July 1, 2005 is reduced. Since the 2011-2013 state budget the levy limit law has required that whenever a municipality's levy for the payment of debt service on any GO debt issued before July 1, 2005 is reduced from the previous year, the municipality must reduce its allowable levy by the same amount. In the 2013-2015 state budget, legislators created an option for communities to avoid the negative adjustment for reduced payments on debt issued prior to July 1, 2005. In any year that a municipality doesn't carry forward unused levy capacity the negative adjustment for reduced payments on debt issued prior to July 1 doesn't apply.  Governor Walker's 2017-2019 budget proposal eliminates this method of avoiding the negative adjustment that applies when a community's debt service on debt issued prior to July 1, 2005 is reduced.  



  • No funding increases are proposed for the mass transit operating assistance programs.
  • The Governor recommends using $26 million of the Volkswagen emissions settlement funds for Milwaukee County to purchase new busses for the county transit system. 
Economic Development

T he Governor recommends limiting annual awards under the  historic rehabilitation tax credit to $10 million. The Governor also recommends that credits be awarded on a competitive basis with several criteria, including job creation potential, to determine which applicants receive the credit. The Governor further recommends requiring that credits be repaid in proportion to any shortfall in job creation relative to the amounts claimed in the credit application if actual job creation is deficient within the first five years after receiving the credit. In addition, the Governor  recommends that if a recipient  is required to repay the federal credit, the state supplement to the credit must also be repaid. These changes begin with the 2017 tax year. ( Note: the Governor recommended the same changes to the program in his last budget proposal.)  


Natural Resources 

  • The Governor recommends no changes in the recycling grant program.  Consequently, funding levels remain the same, $19 million annually.
  • Environmental Improvement Program. The Governor recommends modernizing the Environmental Improvement Program by restructuring the loan program for disadvantaged and extremely disadvantaged communities to provide clean water fund loan rates at 33% and 0% of the market interest late. The restructured program could serve up to an additional 56 communities. Under the current structure, those municipalities would be ineligible for a disadvantages loan rate and be required to pay a loan rate of 70% of market rate. 
  • The Governor also recommends reducing the municipal loan interest rate from 70% of the market interest rate to 55% for clean water fund projects funded through the Environmental Improvement Program for non- disadvantaged communities for clean water fund projects beginning in fiscal year 2017-18. 


  • The Governor recommends closing the local government property insurance fund to new policies after July 1 and not renewing existing policies after December 31. The Office of Insurance Commissioner will continue to operate the fund until all existing policyholders have terminated coverage.  (Note: Most cities and villages have already exited the fund and obtained property insurance through  MPIC or other insurance options. )
  • Self Insurance. The Governor's budget assumes that the Group Insurance  Board will proceed with transitioning its group health insurance program for state employees   to a self-insurance model beginning on January 1, 2018. The Governor assumes the shift to self-insurance will save the state $60 million, $30 million of which he commits  to increased school aids. ( Note: Earlier today the Group Insurance Board voted to move forward with a self-insurance approach for the group health insurance program for state employees and the Wisconsin Public Employers Group Health Insurance Program, in which many municipalities participate. The decision to proceed to a self-insurance model cannot advance unless the Legislature's Joint Committee on Finance approves the change. 


Other items in the Governor's budget proposal:

  • Possible relief from publishing meeting minutes and other legal notices in the newspaper?  The Governor's budget includes a provision allowing an electronic option for all units of government for any statutory printing, publishing, or mailing requirements.  (We will report on exactly what this means for cities and villages as soon as we learn more details.)
  • Local governments prohibited from requiring Project Labor Agreements on public construction projects.  The governor's budget proposal incorporates SB 3 / AB 24 , which the League opposes. The Senate passed SB 3 today by a party line vote. (Note: We surveyed our members on this issue and very few, less than 4%, have any requirements relating to project labor agreements.)


More Details to come.  We will report on more details concerning items affecting municipalities as they become available. 

This is just the beginning. The Joint Committee on Finance will work on the state budget over the next 4-5 months.   


More information.  View the budget in brief, here

View the full budget bill, AB 64, here.