By Jordan Lamb, DeWitt LLP
Governor Tony Evers signed the $82 billion 2019 Wisconsin budget bill on July 3, 2019, exactly one week after the bill was given final approval by the Wisconsin State Legislature. The bill covers state spending for the “biennium” (i.e., two-year period) from July 1, 2019 through June 30, 2021.
The Wisconsin State Assembly approved the budget bill on June 25 with a vote of 60-39. Republican State Representatives Gundrum (Slinger), Brandtjen (Menomonee Falls), and Ramthun (Campbellsport) joined all the Democrats in voting “No” on the budget. The Assembly adopted one floor amendment, which further cut back on items in the bill that could be subject to a line item veto and added several provisions deemed necessary to get enough Republican votes to pass the bill in the Senate. The next day, the Wisconsin State Senate approved budget on a 17-16 vote. Republican Senators Dave Craig (Big Bend) and Steve Nass (Whitewater) joined all Senate Democrats in opposing the bill.
Governor Evers “called” for the bill the next day giving him just six days to review and act on the bill. The Governor issued 78 line-item vetoes, which is similar to the number of vetoes used by previous governors. The following summarizes several budget provisions of interest to PIA members:
Middle Income Tax Cut Approved. The budget contains an income tax cut aimed at middle-income filers. The bill changes the income tax rate in the lowest tax bracket to 5.21 percent. It is currently at 5.84 percent. According to Governor Evers’ veto message, “[t]ypical middle class single filers will see an income tax reduction of approximately $136 annually while middle class married-joint filers will see a reduction of $182 annually when the tax rate reductions are fully implemented in tax year 2020.”
Transportation Funding Increased. The 2019 budget bill provides $6.5 billion in funding for transportation infrastructure, including $472 million in new transportation revenue. The new revenue comes in part from fee increases and in part from a one-time transfer of $75 million from the General Fund. With regard to fees, the bill increases annual vehicle registration fees from $75 to $85 (a $10 increase), which raises $65.3 million. The vehicle transfer fee (title fee) is increased by $95, from $69.50 to $164.50, raising $272.9 million. Registration fees for certain vehicle classes are increased, generating $18.5 million. An error in the statutes is corrected to allow the collection of fees on hybrid electric vehicles, which produces an additional $11.3 million. One cent from the petroleum inspection fund is transferred to the transportation fund, a move of nearly $2.3 million. The refund on fuel taxes to vendors to compensate for shrinkage and evaporation losses is eliminated, generating $7.3 million and the 1.35% administrative allowance that licensed motor vehicle suppliers may deduct when remitting the gas tax is also eliminated producing additional $19.7 million.
However, the Legislature’s transportation package included a requirement that the DOT spend up to $2,500,000 to study tolling and mileage-based fees in Wisconsin. Governor Evers vetoed this provision indicating in his veto message that he was, “…vetoing this section because [he objects] to the financing of another study that will show, yet again, that the motor fuel tax is the most effective way to approximate a user fee of roadway use and the most cost-effective way to collect revenue.” He again expressed his view that a gas tax increase was a more permanent funding solution for Wisconsin’s transportation needs.
Funding for Wisconsin Prosecutors Increased. Republican Senator Andre Jacque (DePere) made it clear toward the end of the budget process that he was unhappy with the funding that the Joint Committee on Finance provided for Wisconsin assistant district attorneys. As a result, the amendment that was adopted on the floor of the Assembly at the end of the budget process increased funding for state prosecutors and added 60.85 prosecutors positions statewide.
Tax on E-tobacco Products Approved. The budget bill imposes an excise tax and inventory tax of 5 cents per milliliter on “vapor fluids,” the fluids contained in electronic tobacco products and amends current law to add vapor products to the laws that regulate the sale and taxation of tobacco products. Governor Evers partially vetoed the statutory definition of “vapor product” to further eliminate any ambiguity and more clearly apply the tax to any device containing vapor fluid and to vapor fluid that is sold separately from a device.