Saturday, July 4, 2015

Open records scandal- the plot thickens

The debate over the increasingly-hated gutting of the state's open records law by the Joint Finance Committee this week is not just anger from Wisconsinites of all stripes at what is clearly an attempt to shield elected officials from the public that pays their salaries. There's also a question of "who gave the order?" as none of the 12 Republicans on the Joint Finance Committee that voted for that pile of garbage is saying that he or she was the one who formally put that into the session-ending 999 provision. However, we are starting to get some clues, and some fingers seem to be pointing directly up the Capitol's steps to Governor Scott Walker's office.

Take a look at this article from longtime Madison Capitol reporter Dee Hall, who now heads the Wisconsin Center for Investigative Journalism. Hall reviews what the JFC's proposal would do, and talks to various state politicos that note the similarities between the bill's attempt to use "the deliberative process" as a reason to deny open records requests, and Walker's office using a similar excuses to avoid giving out documents during this budget, including those related to the rewrite of the University of Wisconsin System's mission statement and the literal removal of the Wisconsin Idea from state doctrine. And back in February, Walker blamed a "drafting error" for the change before open records revealed the order to be coming from the top.
Although Walker initially denied any involvement, the Wisconsin State Journal and the Milwaukee Journal Sentinel and other outlets used the state open records law to confirm that the governor’s office was behind the effort to rewrite the mission statement.

“Governor Walker’s office acted outside Wisconsin’s open records law in denying our basic request to see communications that were behind removing the ‘Wisconsin Idea’ from our statutes,” {writer for The Progessive] Jud Lounsbury said in an email. “So we took them to court. Instead of following the law, they’ve decided to change the law.”

Christa Westerberg, vice president of the Wisconsin Freedom of Information Council, noted similarities between Walker’s invocation of a deliberative process exemption in recent months and the proposal in the “Motion 999” amendment to the state budget passed Thursday.

“It’s strangely coincidental that we’re seeing the deliberative process exemption in the budget within months of the Governor’s office and Department of Administration attempting a similar exemption in recent (open records) responses,” said Westerberg, a Madison attorney who also is legal counsel for the Wisconsin Center for Investigative Journalism.
Funny how that stuff works, doesn't it? The JFC member who put that language into the 999 amendment had just the same idea. Imagine that!

Two tweets yesterday from Dem members of the Joint Finance Committee also add to this intrigue over whether Walker's office is the one that wanted the change.

And State Sen. Jon Erpenbach seems to back up Hintz's claim.

The silence, blubbering and backtracking from GOP members of the JFC is also telling- no one seems to want to own this, which sure would be the act of someone who was doing this move for someone else. Now why they want to risk their own re-election chances in 2016 by signing onto this fascist pile of crap is beyond me, but maybe these people are so far in to the RW bubble that they think they can get away with almost anything. Or they and the Governor's office are guilty as hell of criminal corruption and are trying desperately to cover it up by any means necessary (constitutional or otherwise).

Keep your ear to the ground, because there's a whole lot more to come as these guys try to figure out what to do with this as the full Assembly and Senate debate the state budget in the next couple of weeks. Maybe this move resembles what has been described in graphics as a "hairy hand" - a distraction from the other ridiculous and regressive crap in this budget. But given that even the Walker cheerleader and Journal-Sentinel managing editor George Stanley is expressing his blistering disagreement with this, it would seem to be a very stupid tactic.

Somehow, I don't think this is what the "'Murican" WisGOP party wanted to be talking about as they appeared in their communities' 4th of July parades, but they did it to themselves, either through following orders from the Governor's office, or through their own anti-democratic leanings. And I don't feel in any way sorry for them.

Friday, July 3, 2015

On the 4th, Wisconsinites being treated like colonists in 1776

It's Independence Day weekend, and with our Governor likely to invoke images of the Founding Fathers and numerous homages to “freedom” when he officially stops skirting campaign finance laws announces his run for the presidency a week from Monday, it’s a good time to reflect on the ideas where this country's independence came from.

With that in mind, every once and awhile, it is useful to read the document that is the cause for our holiday this weekend, and realize how it is still relevant to our lives today. This seems especially true in the Age of Fitzwalkerstan here in Wisconsin. So I give you, the Declaration of Independence. I’ll start with the second paragraph – the part that many of your hear quoted on occasion, and will bold some of these passages that I find especially true in Wisconsin today.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, -- That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.
In other words, it takes a lot to reach this breaking point, but when it is reached, it is the people’s DUTY to make the change, and not sit back and accept what is being done to them.

“Consent of the governed” is a key phrase, because it implies that in the mind of the Founders legislators would have told the people how they intend to govern, and that people should have approved of the policies and actions that are taking place, likely through elections. Does that sound like this crew, who have governed by surprise and instituted numerous policies in this budget that they never ran on last November?

And while Jefferson may have been referring to George III in 1776, the list of “abuses and usurpations” certainly sounds a lot like what many of us see Scott Walker and his accomplices in the Wisconsin Legislature doing in 2015.
He has refused his Assent to Laws, the most wholesome and necessary for the public good….
This often includes the ignoring of laws if the WisGOPs don’t want to comply to them (remember how Act 10 got passed?). Also think about the recent damages that were rewarded to Capitol protestors for unconstitutional arrests, and how WisGOP Attorney Generals have wasted $1.1 million to fight against marriage equality rulings, and to file suit against EPA rules that the Koch Brothers and other big-business contributors don't like.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
Think about the state’s secretive gerrymandering and numerous examples of the overriding of local initiatives and powers. These moves have skewed the makeup of the state's legislature and laws to something that does not reflect the views of the state and local areas.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
The most recent example is the gutting of the state’s long-established open records laws last night, but it’s far from the only time Walker and his minions in the Legislature have “dropped the bomb” on numerous initiatives without warning. These last four years have featured plenty of “special” and “extraordinary” sessions to limit debate on non-pressing issues, and this budget session has seen numerous omnibus measures be introduced into the Joint Finance with no formal hearing, no public notice, and little connection to the budget items scheduled to be discussed.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people….
This "manly firmness" not only includes repressive laws against unions and women’s health rights, but it also goes back to the centralizing of power and overriding of local government, which Walker and WisGOP have done time and time again.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers….
This reminds me of how Walker and his backers have used every delay tactic in the book on John Doe, and have worked with Attorney General Brad Schimel and DNR Secretary Cathy Stepp to remove any speck of independence in the state’s enforcement divisions. The partisan crookedness of the right-wingers at the State Supreme Court and the WMC-promoted amendment to change the state's Chief Justice also fit with this description.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries….
Hi Judge Rebecca Bradley! Hi Judge Troupis! Hi Judge Biskupic!

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
This is true both in and out of government, not only with the constant centralization of power and removal of public watchdogs, but through goonery in an attempt to squelch any semblance of dissent. We first saw this in WisGOP’s smear attempt on UW Professor William Cronon during the Wisconsin Uprising after Cronon wrote an extensive article that revealed to the public just who ALEC was. It continued with Walker looking the other way while groups threatened violence and other forms of retribution against the signers of recall petitions and others who opposed Walker. Walker has also been more than OK in whipping up the racist/dead-ender part of his fan base through other “divide and conquer” means, often using his spokespersons on the public’s airwaves to do so, without those same stations airing any countering voices.

What we were dealing with in the colonies in 1776 sure seems pretty familiar in today's Wisconsin, doesn’t it? So when do we have our own revolution, and when do we dissolve our political bands with these criminals that are driving the state into the gutter, both morally and economically? Can we wait till next year, and will changing our legislators be enough to stop this assault on the state? Or does it take more, and does it need to happen sooner, with more direct action?

I’m having a hard time saying no to that last question, and I don’t think I’m alone.

Thursday, July 2, 2015

Transportation budget passes, but still a mess

After looking at the tax parts of today's Joint Finance wrap-up of the state budget, I now want to go into the transportation elements of today's action, and where the budget stands on that. has a good rundown on today's motion for the Department of Transportation, starting with the topline changes to highways.
The sweeping GOP transportation motion, as expected, cuts bonding from Gov. Scott Walker's proposed $1.3 billion to $500 million, with an additional $350 million in contingency bonding Joint Finance could approve later.

The net impact of the changes in bonding and other appropriations would mean a $200 million cut to the Zoo Interchange that would delay the north leg, a $350 million reduction in the major highway appropriation and a $100 million cut to rehabilitation, according to GOP aides.

With the $350 million in bonding the committee would hold back, it could back fill those cuts in majors and rehabilitation, for example, if it chooses.
An interesting sidelight to the DOT developments is that the Legislative Fiscal Bureau released updated projections yesterday on the Transportation Fund. It’s largely good news, as it gave a slightly larger cushion for legislators to work with compared to what we knew of a couple of months ago.
An estimate of the transportation fund condition was last published by this office in LFB Paper #630 on April 22, 2015. This statement of the fund's condition was based on revenue and debt service estimates made subsequent to the [budget] bill's introduction. At that time, the fund was estimated to have a biennium-ending balance of $84.7 million. The Department of Transportation (DOT) recently provided updated information on revenues and expenditures for 2014-15 that reflect revenue collections data and fiscal actions taken through the end of May, 2015. As a result of these factors, and the actions taken to date by the Joint Committee on Finance with regard to the 2015-17 biennial budget, the transportation fund's ending balance for the 2015-17 biennium is now estimated at $114.0 million (or $29.3 million higher than the April estimate cited above).
The main reasons for the better bottom line were lower debt service costs, and slightly higher vehicle registration fees (driver’s license fees and gas tax revenues were pretty much as predicted), and since Gov Walker’s budget bill only counted a year-end balance of $11.2 million, there is another $102.8 million that can be used to reduce borrowing in the final budget. But even reducing the total borrowing to $850 million would still mean a cut of $350 million in spending, and add in the $350 million that is apparently being set to the side with the hope that it not be used, that becomes a cut of $700 million. This would cause many highway and maintenance projects would be delayed as a result (I mentioned that list in this post, as well as others), which includes the I-39/90 expansion to 3 lanes between Madison and Beloit, and work on the Verona Road project for Highway 18-151 in and around Madison.

It’s also interesting that the GOPs in the Legislature are insistent on not raising gas taxes or registration fees to lower the amount of borrowing, particularly in light of the GOP-controlled Michigan Senate passing a bill this week that would raise that state’s gas tax by 5 cents a gallon for each of the next 3 years, then indexing the gas tax for inflation after that. Iowa has already raised its gas tax by 10 cents a gallon this year to help pay for roads and bridges, and Indiana changed over to a 7% excise tax on gasoline this time last year, bumping its tax by 4 cents a gallon at the time (although this gas tax isn’t as high now, given that gas prices are lower). The Dems on Joint Finance presented a measure that would have returned the state's gas tax to indexing in 2017, allowing the tax to rise with the price of inflation, and making the Transportation Fund more stable for the 2017-19 budget, but it was quickly denied by Republicans.

So instead, the measure that did pass had a number of silly talk radio-based initiatives, such as not allowing any state transit funds to be used to operate the Milwaukee streetcar (of course, the streetcar won't be running by June 30, 2017 and there isn't any state money set aside in the budget to build or operate it anyway). There are also items that reduce the role of bicycle and pedestrian measures in road projects, and prohibiting the use of state money for local communities to add what Wispolitics describes as "aesthetic preferences" (I suppose this is related to those designs you see on E. Wash in Madison and other bridges). You know, important and forward-thinking items to care about.

But what is worth caring about is the statistic the Legislative Fiscal Bureau produced after contentious debate about borrowing and priorities in transportation.
If the GOP transportation plan is approved by the full Legislature, the state would dedicate 20.6 percent of transportation fund revenues to debt service beginning in 2016-17, according to LFB.

That would be less than the 22.3 percent for debt service the state would have paid under Gov. Scott Walker's original plan to borrow $1.3 billion over the next two years.

But it would also be the highest mark LFB says it is aware of in state history.
This might be a stat to have in your back pocket as Scott Walker tries to claim to a national audience he "responsibly balanced the budget" in Wisconsin and will do the same for the rest of the country. Because today's actions at the Joint Finance Committee showed neither Walker nor the Republicans to be willing to do the right thing, and ask citizens to pay a bit more for the road projects they want and need. But instead, highway construction will be cut AND the Transportation Fund's budget will be in worse shape for the next budget, as more projects will need to be done, with the budget deficit still in place (and likely growing).

Not a huge WisGOP giveaway, but JFC still passing stupid tax policy

As you’d imagine, there is a lot to sort through in the tax omnibus that passed the Joint Finance Committee this afternoon. I’ll start with the big-line items, and then narrow it down to the smaller, more ridiculous special interest crap. Not surprisingly, these moves were pushed by State Rep. Dale (Koo-Koo) Kooynega, the Paul Ryan wanna-be who heavily promoted the prior tax cuts that have put this state in a major hole.

Since I’m a nice guy, I’ll begin with a minor positive note in the bill. There is a pause in the Manufacturers and Agriculture tax credit, which was on the books due to prior tax-cutting idiocy during the Age of Fitzwalkerstan, and as the Wisconsin Budget Project has pointed out, ended up being much larger than expected, and is a main reason behind the revenue shortfalls and budget cuts that had to result over the last 18 months.

The budget motion will keep rates at the same level that they were at in 2014 instead of cutting them further this year, adding $16.8 million in revenue for this budget in 2015-16. However, this is merely a one-shot measure, as that massive tax cut is then allowed to continue to its full giveaway amount for tax year 2016, continuing to expand the revenue hole, especially for the next 2-year budget.

But you know the GOP won't bank any extra tax revenue or (God forbid) spend it, so that extra $16.8 million is offset by two main tax cuts in the legislation. The first is what Koo-Koo Kooyenga calls a removal of the “marriage penalty”, which basically adds a small amount to the state’s standard deduction in 2016 for couples that make a combined $21,360 and $117,477. Seems like a relatively small amount, but the total price tag is estimated at $20.9 million.

In addition, Koo-Koo got one of his reductions of the Alternative Minimum Tax in there (Alternative 3 in this paper), but in a nice twist, it gets delayed until tax year 2017, so there’s only $6 million in lost revenue for this budget. However, that provision also blows a $55 million hole in the next budget, with no way to make up for it, and State Rep. Chris Taylor blasted the move since any cut in the AMT would overwhelmingly help rich Wisconsinites, as the Wisconsin Budget Project has mentioned.

It’s also clear that Republicans on the JFC are feeling the heat from the scandal involving the Wisconsin Economic Development Corporation (WEDC) improperly loaning out $124 million in taxpayer dollars. The first part of their solution is to take away $19.8 million in WEDC funds, and put it into the JFC’s bank for later, meaning that WEDC has to come back and justify getting that money (good luck getting those funds as the election nears…). Not a bad plan in itself. The motion also limits and eventually phases out almost all of WEDC’s loan programs as of July 1, 2017.

But you know the WisGOPs can't get it all right, because instead of getting rid of this corporate welfare, the LFB notes that it simply trades loans for more money in tax credit programs.
Increase the annual limit recommended by the Governor for the amount of business development tax credits that WEDC may allocate during a calendar year from $10 million per year to $17 million in 2016 and $22 million in 2017 and annually thereafter. As compared to the bill, increase estimated GPR tax expenditures for the credit by $1,750,000 in 2016-17.

Specify that WEDC may not originate new loans in excess of $10 million in 2015-16 and $5 million in 2016-17. Prohibit WEDC from originating a new loan after June 30, 2017. However, specify that this provision would not apply to the technology development loan program as it existed and was administered by the Corporation on January 1, 2015. Permit WEDC to originate new loans of up to $3 million from non-federal sources, annually, under the technology development loan program, and specify that no annual limit would apply to loans funded from federal revenues.
So the WisGOP want to “solve” WEDC's problem with a maneuver that will screw up future budgets. Not only does the expanded WEDC credits drop $1.75 million off of revenues for 2016-17, it grows to reduce the next budget’s revenues by more than $20 million. And it seems to give little extra scrutiny on how those tax credits are handed out, which means the cronyism that is central to the WEDC’s slushiness will continue. The JFC Dems had a tax package that would have banned recipients of aid from WEDC from outsourcing jobs, but that was shot down in a 12-4 party-line vote.

And lastly, here are a few things from the “ridiculous special-interest crap” portion of the Koo-Koo tax omnibus. It starts with an $11 million sales tax exemption to contractors that give certain materials to schools (including voucher schools), municipalities or non-profits. That’s the highest-ticket item, but far from the only one.

· The bill increases a tax stamp discount by 0.1% for “cigarette manufacturers, bonded direct marketers, and distributors.” You likely won’t get a break on that next pack of smokes, but it’ll give a break of $1.1 million to those businesses.

· There's a limit on the state sales tax for “amusement devices”, and it seems to indicate there’s no sales tax due as part of people putting in money for a pool table, darts, arcade games jukebox, items like that. I’m guessing that won’t drop my $1 dart game to $0.75, or give me 13 songs instead of 12 for my $5, but it will cost the state $300,000 in the next 2 years.

· There's a sales tax write-off for someone who sells farm-raised deer to a game farm or hunting reserve. Price tag: $210,000

· The bill defines pear cider as “hard cider” instead of “wine,” so it pays a cheaper excise tax. Price tag: $375,000.

And this may be chicken feed compared to what might go in the "end of the budget" omnibus that’s coming up later, when the real gifts get handed out. Ugh. Technically the tax bill is "revenue-neutral", because the bottom line for the budget actually gets better by $468,500. But that's done by improving year 1 by $37.7 million, and making year 2 worse by $37.2 million- a gimmick that means any shortfall in 2015-16 means major adjustments and cuts in year 2, because not only is there even less breathing room now in year 2, it's on top of $700 million in unspecified cuts that was the only way the original numbers could even balance.

If we lived in a place where certain politicians weren't completely bought off, the WisGOP legislators would have used the pause in budget deliberations to reflect on the current downward direction of the state's economy. Since Joint Finance's last meeting, we found out that Wisconsin lost more jobs than any other state in America in May and was revealed to be dead last in Midwest job growth during Scott Walker's first term. If they cared about acheiving quality results, they'd think "maybe all of this special-interest legislation and silly, unnecessary tax cuts that has dominated the 4 years of the Age of Fitzwalkerstan isn't the way to go," and they'd change course, possibly with some bipartisan taxing and spending deals with Democrats.

But instead of deciding to invest in the state, the WisGOP are going to cut transportation spending (more on that later), and double down on the trickle-down policies that have only succeeding in helping GOP campaign contributors, at the expense of everyone else in Wisconsin. They've made their choice, and I sure as hell hope the people in this state take notice, and choose wiser at the ballot box over these next 16 months.

Wednesday, July 1, 2015

Wednesday with Bernie

I'd comment more on the budget deal, but I'm hanging at the Veterans Memorial Coliseum with about 10,000 of my closest friends of all backgrounds and races, waiting for Bernie Sanders to start. There's something happening here, and all Dems should take notice as to why that is.

Tuesday, June 30, 2015

Budget delay won't mean much short-term....and apparently it's short-term

Unlike what’s going on to our south, Wisconsin government won’t shut down when the 2015-16 fiscal year begins tomorrow without a budget in place. As the Wisconsin State Journal’s Molly Beck explains, things largely stay “business as usual” for the short-term.
... .State spending will continue at the same rate as it is now.

“No one in our state knows the difference between June 30 and July 1,” said Legislative Fiscal Bureau director Bob Lang….

Local governments aren’t expecting a lump sum of money on Wednesday, said Lang, and if a budget is passed later than the deadline, then the periodic payments agencies receive throughout a budget cycle are adjusted at that time.

[State Sen. Luther] Olsen said public schools could have been affected if general funding levels were different than last year’s budget, but they are likely to be held flat.
However, the later timetable does mean those adjustments to payments and funding amounts will suffer a more drastic change the longer this plays out, and that’s what I want to touch on with this post.

In comparing the base-year budget for Fiscal Year 2015 vs the amount Governor Walker has recommended for 2016 (starting with Appendix 3 of the Budget in Brief), here are the agencies facing the biggest changes in expenses, and therefore the ones that may need to make larger and more sudden adjustments as the budget drags on.

Biggest increases in GPR Spending
Dept of Health Services +$263.0 million
Dept of Children and Families +$44.9 million
Dept of Revenue +$14.8 million
High Education Aids Board +$3.9 million

The higher DHS costs are largely the result of increasing Medicaid expenses. There is likely plenty of money from the Feds to keep up with the increases on a short-term basis, but problems would likely come in if the budget is dragged out for another month or two. Same seems to be the case for DCF. DOR’s problem is that the Walker budget had $25 million in extra funding to hire additional auditors, and $1.75 million to expand the Statewide Debt Collection program. If there is no budget, the positions and funding aren’t available to hire those agents, and that puts into doubt the Walker Administration’s projections of recapturing nearly $125 million from these measures over the two years of the budget if it takes longer to get off the ground.

Biggest decreases in GPR Spending
UW System -$145.6 million
Dept of Public Instruction -$111.1 million
Dept of Corrections -$46.1 million
Dept of Natural Resources -$19.8 million
Environmental Improvement Program -$15.9 million

As Sen. Olsen mentioned, the FY 2016 drop in DPI funding was mostly restored by the Joint Finance Committee (albeit there is still a loss of $18.6 million to vouchers and virtual charter schools), so delayed payments and cash-flow crunches would be more likely to be the larger concern for K-12 schools if there is a budget delay, barring any changes in the final budget in the Assembly and/or Senate. The cuts to the UW System and Dept. of Corrections have been slightly reduced, but are still significant, and both of these organizations will likely have to perform layoffs and other cost-cutting measures before the budget is passed, to prevent an even larger disruption later this Summer. Likewise, the director of the DNR’s Science Services Bureau at the DNR wasn’t willing to stick around to deal with the expected cuts in his area that the Joint Finance Committee approved of a few weeks ago, and he announced his retirement last week.

Another area that will feel the sting of a delayed budget is the Department of Transportation. The DOT’s total budget was slated to increase in total spending of nearly $270 million, with almost all of that being related to extra borrowing in the Transportation Fund for the Zoo Interchange. However, GOP legislators’ concerns over high levels of borrowing in Gov Walker’s budget mean that they are looking at cutting $800 million in highway projects from Walker’s budget. That’s a huge difference, but with construction season already underway, you’d think much of those cuts wouldn’t be seen for a few months, with projects that haven't had much work started on them.

A wild card with transportation is the federal Highway Trust Fund runs out of money at the end of July, and any changes that might result from a new bill could greatly affect the amount of total money available for the state to use. Perhaps that’s a reason why it may be prudent to delay the non-GPR parts of the DOT budget until a later time, when both the state budget and federal transportation funding have been decided. In Governor Walker’s budget, GPR only makes up 3.75% of the total costs for the DOT ($123.4 million), so any adjustments that would have to be made to the final total to make the General Fund balance shouldn’t be a big deal for the DOT’s operations.

So while the delay in this budget shows a lack of WisGOP leadership and the result of trying to place bubble-world policies into real life, there likely won't be much of a day-to-day change in Wisconsin government operations for at least the next couple of weeks. But expect the anger to grow even larger if this drags out even more, or if new items are snuck in at the last second as favors to campaign contributors or other self-interested scum (as predicted by State Rep. Andy Jorgensen last week).

EDIT: And of course as I write this, this hits the wire.

Ruh roh....they gotta give 24 hours notice to have Joint Finance meet, so they'll meet Thursday. Keep your eyes peeled for the goodies and other giveaways that likely WON'T be mentioned in tomorrow's WisGOP press conference.

Monday, June 29, 2015

Hoops news pt. 2- new Bucks arena bill is out

Late this afternoon, we finally got a look at the new Bucks arena bill, and the Legislative Fiscal Bureau's rundown of it. Here are a few quick reactions.

It looks like much of the responsibility of the bonds to build the new arena have been transferred from the state (who was going to borrow $220 million and pay it back in the original Bucks bill) to a newly-expanded Wisconsin Center District (WCD). The WCD would sell $203 million in bonds, with the breakdown being as follows:

$55 million from the state
$55 million from Milw County via the state (I’ll explain below)
$93 million from the WCD

The state and county part will be paid off over 20 years, at a total price tag of $80 million for each part. Interestingly, the state will be paying more in 2016-17 than the $2.8 million they were projected to in the original version of the budget bill, as a trade-off for a flat amount of payments over those 20 years to significantly lower payments in future budgets. Also worth noting is that there are now funds to fix up the Bradley Center in its last few years of hosting NBA basketball. I didn’t see a reference in the old bill to paying $10 million for maintenance and repairs to the Bradley Center, so that’s an extra $10 million that’s being paid in this budget.
a. Two separate, GPR sum certain appropriations and provide $4,000,000 GPR in each appropriation in 2016-17 to make payments to a local exposition district to assist in the development and construction of the district's sports and entertainment home arena facilities. One of the appropriations is related to the Milwaukee County debt collection provisions in the bill, although it would not be statutorily tied to those provisions. Specify that both appropriations would be repealed on June 30, 2036. Require that the appropriation that is not related to the Milwaukee County debt collection provisions under the bill be limited to a cumulative total of $80,000,000.

b. A biennial appropriation funded at $10,000,000 GPR in 2016-17 for the payment of grants to the Bradley Center Sports and Entertainment Corporation. Specify that the appropriation would be repealed on June 30, 2017.

c. An all moneys received appropriation from debts collected pursuant to a state debt collection agreement with Milwaukee County to be distributed to the County that certified the debts. Specify that the first $4,000,000 annually in monies received would be transferred to the general fund, and the remaining balance would be distributed to the County, except those amounts agreed upon by the County and DOR to be held in reserve in this appropriation account for future payment to the County or to transfer to the
state general fund. Estimate $4,000,000 in 2016-17 in general fund revenue associated with this provision. Specify that on June 30, 2036, this appropriation would be repealed and recreated to distribute all funds to the County certifying the debts.
The county’s piece of the puzzle is where a big risk comes in, because some have questioned whether there is $4 million a year in County debts that can be recovered, and if not, then another provision mentions that the County’s shared revenues gets cut by however much the state falls short in getting the $4 million back. Also worth noting is that Milwaukee County gives up its ownership of the Marcus Center for the Performing Arts, as it gets taken over by the new Sports and Entertainment District.

The possibility of the PAC changing hands generated a lot of anger from County Board officials in a Parks Committee meeting a couple of weeks ago. Looks like they had a reason to be suspicious, as the County Board is cut out of the decisions involving the Bucks arena, as the power to give away the Marcus Center and sign the debt collection agreement goes solely to County Executive Chris Abele. This bill is clearly another excuse for an Abele power-grab/selloff, and should be yet another reason he needs to go next Spring.

The WCD's side is a bit iffy as well. Not only are they the entity that is issuing the debt, and have to get payments from the state (and the payments the state gets from collecting the County's debt), but the WCD also is likely to take on higher debt costs.
....It is anticipated that WCD would have to issue more than $203 million in bonds, as allowed under the bill, for the following amounts: (a) amounts to pay issuance or administrative expenses; (b) to make deposits to reserve funds; (c) to pay accrued or funded interest; and (d) to pay the costs of credit enhancement. The accrued or funded interest would include any potential capitalization of interest associated with zero coupon bonds that are expected to be issued by WCD. It is likely that WCD would have to issue zero coupon bonds because its current tax revenues are needed to retire the district's existing bonds [which is projected to go through 2032], and thus, would not be fully available to pay debt service on any new bonds until that current debt is retired.
As a result, the LFB estimates that the expanded WCD will have to pay a total of $217.25 million to fully pay everything off, and it means that Milwaukee County's extra 0.5% food and beverage tax along with the WCD's share of room and car rental taxes will stay longer than originally planned. Theoretically, a new Bucks arena would drive more people to be in a place to pay that tax, but there's no guarantee of that, as the new arena may displace other entertainment, tourism and restaurant spending.

One improvement in the new Bucks arena bill is that it seems the amount of property tax write-offs has gone way down from the original bill, which would have made numerous blocks of development exempt from property taxes, which Bruce Murphy at Urban Milwaukee estimated would cost local governments as much as $629 million over the 30-year life of the arena. Now it only seems to involve the arena and related buildings, and any bars or eating places would have to pay the same taxes as the existing places on 3rd Street, Water Street and other parts of downtown Milwaukee.
Expand the current law property tax exemption for a local exposition district to include sports and entertainment arena facilities, except that any portion of the sports and entertainment arena facilities that is used, leased, or subleased for use as a restaurant or for any use requiring a license for the retail sale of alcoholic beverages and is regularly open to the general public at times when the sports and entertainment arena is closed to the public would not be exempt.
There is also TIF language that seems to make it more likely to have currently-existing TIFs near the arena be more likely to go fully onto the tax rolls, which would take some pressure off of the City and County of Milwaukee.

If the bill was in isolation, I'd probably be ok with it (the County's part is my main concern). But with all of the other damage being done to Milwaukee in the budget bill, particular with the proposed takeover of MPS, reductions in funding to UWM, and the state's refusal to raise aids for local roads and local transit, I can't get behind this thing until the city that the Bucks play in is taken care of first. And I hope the Dems in Milwaukee that are being leaned on to get this bill through as a standalone would demand the same.