State Budget in Governor Evers’ Hands
Last Tuesday and Wednesday, both houses of the Republican-controlled state Legislature passed the state's next two-year budget with all Republicans and a handful of Democrats supporting the $87.5 billion plan. The Legislature presented the budget to Governor Evers on July 2. The Governor has until this Friday, July 9, to veto the entire document or use his line-item veto powers to craft a version more to his liking before signing it into law.
Below, are the major state budget takeaways for municipalities so far.
What’s not in the budget? Let’s start with what’s not in the state budget. After Governor Evers introduced his budget proposal, AB 68, earlier this year, the Republican controlled Joint Committee on Finance (JFC) began developing its own budget plan by removing nearly 400 of the Governor’s proposed measures, including a 2% increase in shared revenue funding in both years of the biennium, modifications to the levy limit law sought by the League, an increase in funding for the Payment for Municipal Services Program, and a local sales tax option for populous municipalities. The JFC also stripped from the state budget restoration of collective bargaining for some municipal employees and restoration of prevailing wage requirements for municipal construction projects.
Consequently, there are no funding increases in the state budget for shared revenue, expenditure restraint program, payment for municipal services program, and the recycling grant program. Also, there are no changes to the levy limit law.
Transportation funding. The Republican budget plan sent to the Governor includes:
A 2% increase in General Transportation Aids in 2022 and 2023. The GTA funding level for cities, villages and towns is currently $383,503,200. the budget increases that amount to $391,173,300 for 2022 and $398,996,800 for 2023.
Provides $100 million in 2021-2022 on a onetime basis to be used to fund local road projects under the Local Roads Improvement Program discretionary component to be allocated as follows: $25,386,000 for cities and villages; $35,559,100 for counties; and $39,054,900 for towns.
Reduces mass transit operating assistance by 50% in 2022 for tier A-1 (Milwaukee County Transit System) and tier A2 (Madison Transit System). The reductions to both systems total $41,341,600. Funding levels for Tier B and Tier C transit systems remain unchanged from the current year.
Personal Property Tax Repeal Hold Harmless. The Legislature included in the budget bill $202 million in JFC's supplemental account for the purpose of making payments to municipalities in 2023 to hold them harmless if the Governor signs into law AB 191, repealing the personal property tax on businesses.
Medicaid Reimbursement Rate for Ambulance Runs. The Legislature included in its version of the budget the first increase to Medicaid reimbursement rates for ambulance services since 2004. The budget sets aside over $16 million to increase the Medicaid reimbursement rate for all ambulance trips to up to 80% of the current Medicare “urban rate.”
Video Service Provider Fee. The budget bill provides a $5 million annual increase in the Video Services Provider Fee Payment to fund the program at just over $10 million annually which is sufficient to pay the estimated increase in the fee payments owed to municipalities.
Bump in Stewardship Local Government Assistance Grants. The budget bill reauthorizes the Knowles-Nelson Stewardship program for 4 years. The budget increases the Local Assistance Grants under the Stewardship program from $6,000,000 to $9,250,000 annually. Municipalities use these grants to improve public access to urban lakes and rivers, construct bike paths, and other green space projects. The Governor had recommended the local assistance grant program be increased to $13 million.
Volunteer Fire Fighters and EMT Length of Service Awards. The budget bill eliminates the statutory cap on the total amount provided each year by the Department of Administration for length-of-service awards for volunteer fire fighters, first responders, and emergency medical technicians.
Homelessness. The budget bill sent to the Governor:
- Adds $600,000 annually to the Housing Assistance Grant Program. The program is currently funded at $300,000 annually. The Governor had proposed increasing funding to $5 million annually.
- Modifies the homeless employment program to require municipalities to provide a match of at least $10,000, rather than $50,000 under current law. The program provides grants to municipalities to connect homeless individuals with permanent employment. The Governor had proposed repealing the program because municipalities had not been using it because the $50,000 match was so high. Instead of repealing the program. The Legislature reduced the match requirement to see if more municipalities would apply.
Aids in Lieu of Property Taxes. The budget requires the Department of Natural Resources (DNR) to pay $3.50 per acre for aids in lieu of taxes on all lands acquired by the DNR before July 1, 1969, including $3.20 from GPR and $0.30 from the forestry account of the conservation fund. It sets the minimum payment for aids in lieu of taxes on lands acquired between July 1, 1969, and December 31, 1991, at $3.50 per acre. It requires DNR to pay no less than $3.50 per acre for aids in lieu of taxes on lands acquired since January 1, 1992, for each acre or portion of an acre in each taxation district (a town, village, or city). (Note: This provision increasing DNR PILOT payments mainly helps towns, but a few cities and villages will also see increased PILOT payments for DNR owned land located in their borders.)
Senate, Assembly Pass Repeal of Personal Property Tax
Last week, the Assembly on Tuesday and the Senate on Wednesday passed AB 191, repealing the personal property tax that manufacturers and businesses pay on furnishings and equipment.
The personal property tax has been in place in Wisconsin for more than 100 years. Over that time the Legislature has carved out dozens of exemptions.
The Substitute Amendment to the bill, incorporates the technical changes that the League, the Counties Association, and other local government stakeholders had recommended to the authors earlier in the year relating to taxation of buildings, fixtures and improvements on leased land as well as mobile homes. Each of these are treated as real property subject to property taxes under the bill.
The state budget contains a $202 million appropriation for making payments to local governments in 2023 to hold them harmless for the lost revenue caused by repeal of the personal property tax.
The League has consistently taken the position that as long as the Legislature provides for a reimbursement program that is adequately funded, like computer aid, we would not oppose repealing the personal property tax. We feel the Legislature has done that in this instance. We have had discussions with Sen. Stroebel's staff, the main architect of the bill, about the strategy the Legislature is employing to avoid the Governor’s line item veto pen. Sen. Stroebel’s chief of staff has assured us that the goal is to create a permanent personal property aid program next session if AB 191 is signed into law.
The bill has been sent to the Governor for his signature or veto.
Governor Signs Room Tax Changes into Law
Last week, Governor Evers signed into law SB 198 as Act 55, making several substantive and technical changes to the room tax law. Under the Act, Airbnb, Expedia, and other online lodging marketplace providers charged with collecting and remitting room taxes are required to collect the room tax and file it with the municipality, on a form specified by DOR, on a quarterly basis, at a minimum, or more frequently if mutually agreed to by a marketplace provider and a municipality. The form must contain at least the following information:
• The total sales for properties located in a municipality with a room tax.
• The total number of nights such properties were rented.
• The room tax rate.
• The total tax collected.
The bill further provides that if a marketplace provider does not file the required room tax returns to municipalities in a timely fashion or fails to pay the taxes, a municipality may impose a forfeiture of up to $5,000 annually.
The League supports this Legislati0n and worked with the author, Rep. Kitchens (R-Sturgeon Bay), to make changes relating to the time by which market place providers must remit room taxes to municipalities.
Effective Date: The creation of s. 66.0615 (1r) (c), Stats., requiring DOR to develop a web page containing the following information about room tax collections:
- The name and mailing address of each municipality that imposes a room tax under sub. (1m); and
- The rate of the room tax imposed by each municipality,
took effect on July 1, 2021.
The remaining provisions of the act take effect on October 1, 2021.