Earlier this week I sent emails to Governor Scott Walker, Speaker Robin Vos, and Senate Majority Leader Scott Fitzgerald suggesting in some of my ‘best words’ to call off the power grab they were working on. I didn’t really expect to change their minds but felt I needed to respond beyond these pages.
I also sent a mass mailing to many of the Democratic electeds but also knew that they already were on the same wavelength as I was.
But when I found a few minutes, I also emailed several Republicans who are often front and center in the media. Again I didn’t expect to change their minds but I wanted to be on the record. One of those Republicans was State Representative Dale Kooyenga and I was shocked that he bothered to send out a response specific to the issue. I expected at best a form letter saying thanks for contacting me, I’ll think about it.
But instead I got this:
December 7, 2018
There has been no shortage of press covering the State Capitol this past week.
Let me assure you that the reality of our important work this week is far different from how it has been reported. I hope the following details will provide you with a better understanding of what changes were made and why.
I can also say that I have worked with Governor-elect Evers in his current position as Superintendent of Public Instruction. He was pleasant with which to work and I think he would say the same about me.
Although I do not expect either of us to compromise our principles, I do believe there is common ground on which to work with the Governor-elect, and other Democrats, on doing what is best for Wisconsin. I wish him tremendous success as Governor because his success is our success.
This week, the state legislature’s work focused on several initiatives aimed at protecting all that we have accomplished over the last 8 years.
First off, there were many proposals that did not pass, and I did not support all of the legislation that was initially proposed based on my own views and your feedback. Initiatives that did not move forward include:
– Separating the spring Supreme Court election from the partisan primaries
– Certain changes to the oversite of the Wisconsin Economic Development Corporation (WEDC) – a compromise was reached on this proposal that allows Governor Evers to select a new CEO on September 1, 2019
There were also proposals that I supported that did not pass. I voted in favor of a proposal to protect people with pre-existing conditions however it did not pass the Senate. I believe that it is vital to assure people with pre-existing conditions that they have access to affordable healthcare coverage. I support this initiative, have voted for it in the past, and will continue to push for it next session. It is simply the right thing to do.
Many of the provisions that were taken up were not new. In fact, more than a dozen of the items were changes that had previously passed and been vetoed by Governor Walker. Ten of the provisions were previously introduced as legislation. In yet other cases the provisions simply reinforced administrative rules that are already in place. Other provisions were a response to court rulings, federal law changes and incorporated changes at the state level that we believed were needed.
Here is what did pass, and why it had my support.
Online Sales and Use Taxes: Six years ago, I authored a tax reform package that included a provision that stated if there was ever a change in federal law that required sales taxes to be collected on internet sales, the corresponding revenue from that change would automatically go towards income tax cuts. The state is now collecting revenue from larger on-line retailers and will realize revenue from this new cash stream. Our rationale for this provision is that the United States Congress should not be in a position to raise a state tax. In a rare move, the United States Supreme Court reversed their previous decision regarding on-line sales taxes after our ordinary session was adjourned. Going into 2019, clarification was necessary in the law to implement these changes as originally intended.
State Adoption of Federal Tax Law Changes: Another tax item stemming from recent federal law changes was brought to our attention after the legislature had adjourned session. This additional item also needed to be acted upon before tax returns are filed in January. The new federal tax law limits state and local tax deductions to $10,000. In some circumstances, pass-through entities such as partnerships, LLCs and S-Corporations would be significantly harmed compared to their C-Corporation counterparts because the $10,000 limit does not apply to C-Corporations. For example, if a dentist owned a building and the building had $14,000 in property taxes and her state taxes and personal residency property taxes already exceeded $10,000, she may not be able to deduct any of the $14,000 as a business expense, since it is subject to the limit and it is a pass-through entity. This provision protects Wisconsin’s small businesses and had to be enacted as soon as possible. The Legislative Fiscal Bureau forecasts this will actually result in increased revenue for the state since a business that elects to be taxed as a C-Corp will be subject to the higher C-Corp tax rate.
Legislative Oversight: The fastest growing state expenditure, and the second largest expenditure in total, is the state’s Medicaid program. The growth of Medicaid expenses are consuming the majority of new revenue collected by the state. My concern is the continued growth of Medicaid expenses places pressure on our education priorities and hampers our ability to provide tax relief. The Wisconsin Constitution states the legislature needs to approve all spending before the executive and judicial branches subsequently spend money. Every budget Medicaid is granted a “sum-sufficient” appropriation – this means that whatever the Medicaid bill ends up being we pay it. The legislature passes this budget amount assuming a certain population are on Medicaid (BadgerCare) and the reimbursement rates that are in effect at the time. The problem is the executive branch then negotiates new reimbursement rates with providers and there is no legislative oversite or involvement. The changes passed this week simply allow the Joint Finance Committee to oversee the rate increases in order to retain the constitutional responsibility of ensuring expenses incurred by the state have been properly approved.
State Administrative Rules: There are laws and there are rules. Laws are passed by the legislature, and rules are issued by state agencies in the executive branch to implement the laws passed by the legislature. At the federal level and across nearly every state, the rule-making process has become out of control and anti-democratic. The rules themselves have the authority of laws, but are not as easy to find and navigate, and are often very technical and difficult to understand. The greatest concern is rules are not passed by democratically-elected bodies. We have fought the Walker administration and many of his agencies’ proposed rules. Our office has been particularly concerned about the rules issued by the Department of Revenue that limit Wisconsin breweries, wineries and distilleries from free market business practices. The legislation passed this week will simply allow legislative committees to review rules issued by the executive branch and strike rules down, or ask for further clarification of the rule, if the rule is not consistent with the Legislature’s original intent.
Codifying Policies in Law: Similar to rules there are court decisions and executive orders that have the force of law but would be better placed into the statutes. For example, voter ID was upheld by the courts, but certain executive branch changes needed to be made in order to accommodate court rulings. A new governor could easily rescind the executive order and then voter ID would no longer be required. I believe this last election shows that voter ID is not hindering voter turnout and also, it does not favor a particular party. A law enacted by the Assembly, Senate, signed into law by the Governor, defended by an Attorney General and upheld in the courts, a process involving hundreds of elected officials with public hearings, should not be nullified by a single executive able to rescind an executive order.
Federal Waivers: I have spoken a great deal about Federalism over the years. Unfortunately, states often require federal approval in order to initiate new ideas for better services and cost savings in programs that involve the federal government. For example, following the democratic process described above, we passed a law that allowed the Governor to request a waiver from the federal government to require able bodied adults to hold a job or receive some sort of job training in order to receive certain public benefits and to be able to pass a drug test. As an aside, we did this because we believe that meaningful work and social engagement benefits these individuals, our economy and our state. We also want to see individuals with addiction seek help for their own and their family’s sake. These particular provisions were passed into law and the state obtained approval from the federal government and the pilot is underway. The changes adopted this week simply require the future Governor to go through the same process of receiving public input and legislative approval before deciding to unilaterally ask the federal government to withdraw the waiver.
Legislative Branch Legal Representation: The Wisconsin Legislature is often sued, both as a body and as individuals who serve. Conservative groups and individuals have sued Democrat legislators, and liberal groups and individuals have sued Republican legislators. The interest of the Legislature is often different than the interest of the Attorney General and/or the Governor. Current Assembly and Senate policies and practices allow legislators and legislative employees to retain outside legal counsel. The provisions adopted this week codify those policies to ensure that as the Legislature is sued, the legislative bodies will be able to have an attorney that represents their views. Unfortunately, we have seen courts become more and more involved in legislative action and it is important that the legislative branch is able to represent their own interest as a separate, co-equal branch of government. It is also important to note that the powers of the Wisconsin Attorney General are not defined in the Wisconsin Constitution. They are established by the legislature through state statutes. For this reason, nearly every session changes have been made to clarify the powers of the Attorney General.
Early Voting Reform: My rural colleagues are particularly concerned about what they see as unfairness in the state’s early voting process. The legislation passed this week creates a uniform standard across the entire state for early voting. Early voting will be available 24 hours a day, 7 days a week for 2 weeks prior to election day.
Federal Transportation Funds Oversight: Wisconsin is in better shape by nearly every metric as compared to 8 years ago. There are some exceptions however. The state’s transportation fund has unhealthy levels of debt, approaching 20 cents of every dollar being spent for debt service alone. This past session, we proposed a comprehensive transportation plan that would have corrected that issue. The extraordinary session bill made a small but positive reform that will save Wisconsin taxpayers millions of dollars by allocating more federal money into larger state projects and reducing the amount of federal money being spent on smaller, local projects resulting in projects that are entirely free of federal money. Federal money in a project requires onerous standards thereby driving up the cost of a project. Concentrating federal money into fewer projects will allow the state portion of the transportation fund to go further. Even under single party control a transportation solution was not reached. This cost saving measure is not a full solution but every opportunity to save money in the transportation fund must be enacted immediately to strengthen the solvency of the fund.
If there are other provisions about which you heard that are not addressed here, please reach out to my office.
At the end of the day, the Governor of the State of Wisconsin is still among the most powerful Governors in the country. You the voters – my employers – elected me to a term ending January 7, 2019; not ending on November 6, 2018. I firmly believe the state legislature, as a co-equal branch of government, must always have a strong role in the operations of our state government regardless of the political calendar.
I know this is a lot of information so congratulations if you made it this far. My goal is always to provide you with information that you cannot find anywhere else. My sincere hope is that even if you do not agree, you know that I did not just push the green button, but that I thought about the policies, rejected some and fought for others.