CHICAGO – Wisconsin’s new $76 billion, two-year budget is awaiting Gov. Scott Walker’s signature two months after the start of the fiscal year.
The final budget agreement includes more borrowing than originally proposed by Walker, drops an expansion of a Wisconsin-based national conduit issuing authority’s powers, and puts off efforts to explore implementing tolls.
The final budget deal raises proposed general obligation and revenue borrowing levels to $771 million for various state and university projects from the $212 million originally proposed by Walker early this year. The figure includes $250 million of general fund-supported borrowing for intestate improvements tied to the state’s $3 billion incentives package for the Foxconn Technology plan planned for southeastern Wisconsin.
The Senate headed into session on Friday with passage uncertain as a few GOP senators had not yet been won over by Walker and the GOP leadership following the Assembly’s passage of the budget earlier in the week. No Democrats voted for the budget.
Under a deal struck with the senators, Walker agreed to a series of vetoes demanded by a few holdout GOP senators including a veto of a bill that would have revised and broadened the Public Finance Authority’s powers. If the Senate instead changed the budget language, it would have needed to go back to the Assembly.
“I look forward to signing it into law soon,” Walker said of the budget.
Walker's statement noted that he agreed to “veto the following budget items after discussions” with senators including “modifications” to the PFA’s statutes, and another that would have funded a study on toll installation could have paved the way for the state to seek needed federal approval to put tolls on existing roadways.
The vetoes also mean the repeal of the state’s prevailing wage law on state projects would take effect immediately and school districts would face greater restrictions on referendum dates.
The long list of PFA changes that would have expanded its powers, relaxed some requirements, and provided some additional state oversight were added to the budget during negotiations before the Joint Finance Committee.
Some local and state government conduits opposed creation of the authority in 2010 and it’s come under attack from critics for usurping local oversight of projects, especially those with more risky prospects underscored by low to non-investment grade bond ratings.
The “modifications” would have allowed the PFA to adopt policies and procedures, in addition to bylaws; allowed the PFA to own or operate property and gift or otherwise transfer property; allowed it to employ counsel; and allowed it to purchase bonds issued by or on behalf of, or held by, a subunit of a political subdivision, as well as the federal government.
In addition, it would have been authorized to create one or more business entities of which it is the sole controlling owner, member, manager, or partner, provided that the purpose of the business entity is to carry out or assist PFA in its powers.
The changes would have modified the definition of "political subdivision" to include tribal governments and extended current law that exempts PFA board members from personal liability to include an officer, employee, or agent of PFA. It would have deleted a current law requirement that PFA have debt covenants audited at least every two years and allowed projects to be located outside of the United States or its territories if the borrower is incorporated in the U.S.
The budget had been held up since the start of the fiscal biennium July 1 due to a disagreement over how to address a transportation funding shortfall with divisions over whether the state should borrow more or raise transportation related taxes. They settled on a plan that relied on limited borrowing, some project delays, and raising annual fees on hybrid and electric vehicles.
State spending continued at previously appropriated levels during the impasse and state statutes allow debt service to be continued to be paid.
The budget calls for a direct transfer of $20 million to the state’s modest reserves. Wisconsin carries double-A ratings from three rating agencies and an Aa1 from Moody’s Investors Service.
Democrats blasted the budget. "This is the largest budget in state history, but we’re underfunding our schools, we don’t have a long-term fix for our road problems, and we're giving more tax breaks for millionaires at the expense of hard-working middle-class families," said Senate Minority Leader Jennifer Shilling, D-La Crosse.
The budget bolsters education funding over the biennium by $639 million, but it still falls short, Democrats complained. They also attacked the lack of a long term funding solution for the state’s transportation needs. It lacks Walker’s income tax cut proposal but it does trim business taxes on some property and cuts the state’s portion of the property tax.