The Wisconsin State Budget stalemate finally ended in September – over two months after the previous budget had expired. Despite unified Republican control of state government, the Governor and leaders of the Senate and Assembly could not come to agreement on key issues. While it is not unusual for the budget to pass after the June 30 deadline – in fact only three budgets since 1977 have been on time – only two in the last 20 years have been passed later than the 2017-19 budget.

The largest sticking point being over transportation. Governor Scott Walker and Senate Republicans wanted to bond more for projects, while Assembly leadership wanted to increase bonding only if taxes and/or fees were raised to help pay as you go. In the end, fees were raised on electric and hybrid vehicles with a lower increase in bonding than originally proposed.

Wins for the industry:

  • Budget Committee deleted Governor’s plan to tax captive insurance companies
  • $75 million cut to the personal property tax – start of what will be a several budget process of repealing the tax altogether
  • Repeal of the Alternative Minimum Tax
  • Historic Tax Credit – Removed overall program cap and institutes a $5 million per project cap beginning July 2018
    • Upon signing, Governor Walker partially vetoed this provision and reduced the per project cap to $500,000.

On a parallel track, the legislation relating to the Foxconn incentive package was signed into law last month. While separate from the budget, it will have a lasting impact on the budget process in years to come. Should Foxconn create the 13,000 jobs and invest $10 billion in capital in Wisconsin, the state will be paying the Taiwanese LCD manufacturer over $300 million/year from 2022-2026. This will make future budgeting all the more difficult.

While lawmakers chose not to include it in the 2017-19 budget, WBA moved the ball forward on a tax exemption for income generated from commercial and agricultural loans. The price tag – $26 million/year – was simply too high to get included in the budget after the Governor’s budget proposed spending almost all new revenue in public education. The concept received a high level of support among leadership in both the administration and Legislature, and was in the mix until the very end of the budget process. We will continue to urge the administration to include it in the 2019-21 budget.