Democrats take control; first task is solving budget deficit
By JR Ross
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Now that Democrats control both houses of the Legislature and the governor’s office for the time since 1986, the question is, what do they plan to do with their new majority?
The first big gauge of that new-found power will be how they solve the state’s $5.4 billion deficit.
Democrats won back the state Assembly in November’s elections, giving them the opportunity to go after a host of priorities that have been held up for the past two years while Republicans controlled the Assembly. But even with their new-found majority, Democrats may be hemmed in somewhat on how much they can do as they try to deal with the largest budget deficit in state history.
Still, they’ve offered some clues already on which directions they’re likely to head in the new session.
Gov. Jim Doyle has already pushed several proposals to help fix the state deficit, including a new assessment on hospital revenues and an oil franchise fee. He included both in the budget he introduced two years ago, but Assembly Republicans objected to both, and they were eventually dropped.
Doyle has promised a series of cuts to help balance the budget. But he also has said he would like lawmakers to approve the hospital assessment right away in January rather than waiting for the budget, and the same goes for the oil assessment.
Under the hospital assessment Doyle proposed in 2007, hospitals would pay a new tax on their revenues that would have cost them $418 million. About $120 million of that would go toward Medicaid programs, and a good chunk would go toward increasing hospital reimbursement rates for treating medical assistance patients. The plan would also attract $400 million in federal matching money.
The Wisconsin Hospital Association originally opposed the plan. But it got on board after some revisions, and Wisconsin Manufacturers & Commerce eventually backed it as well.
The Department of Transportation included the oil franchise fee in its request for the new budget.
It would place an assessment on the gross receipts from motor fuel suppliers a graduated rate that would charge the biggest ones the most. DOT estimates it would bring in nearly $393 million that would go into the transportation fund for road projects and other infrastructure.
The hitch, though, is that the governor and lawmakers have dipped into transportation funds in recent budgets to help pay for other programs, and there’s a question of whether they would do it again while faced with such a huge deficit.
Doyle has also pushed in past budgets for Wisconsin to join the streamlined sales tax initiative, which calls for the state to begin collecting sales tax on Internet and catalog sales. Some expect that proposal to surface again.
Democratic lawmakers have some ideas of their own on closing the deficit.
Las Vegas loophole
Senate Majority Leader Russ Decker wants to close what he says are problems in the corporate tax code, including the "Las Vegas loophole."
Currently, businesses with a presence in Wisconsin and other states are typically taxed on their holdings here. But Democrats have complained that some companies take advantage of that by moving holdings to states that don’t have a corporate income tax, like Nevada, to avoid paying taxes here.
"There’s no reason that Wal-Mart should be able to skirt its fiscal responsibility to the state and one of their competitors who’s located in Wisconsin and doesn’t have that capability of locating headquarters in another state pays the full freight," Decker said. "It’s basically a fairness issue."
But Republicans see it as a tax increase, nothing more. Senate Minority Leader Scott Fitzgerald said he expects Democrats to put the burden on taxpayers to balance the budget.
"I think they’re going to go after everything they possibly can at this point," said Fitzgerald, R-Juneau.
Outside of the budget, there seem to be a number of priorities Democrats plan to take up early in the session.
One is requiring those that run so-called "issue ads" — the spots that don’t expressly advocate a candidate’s election or defeat but often offer up a series of damaging charges — to disclose how they pay for them. Currently, groups running the ads aren’t required to report anything to the state about who gave them money.
But lawmakers have long disliked the ads, in part because they didn’t know who was attacking them. Outside groups from both sides have used them in their campaign arsenals. But Democrats have been particularly unhappy with the likes of Wisconsin Manufacturers & Commerce in past years for its ads, though the business group stayed positive in this fall’s campaign. Any regulations would likely face a court challenge on First Amendment grounds.
Assembly Speaker Mike Sheridan of Janesville promised legislation requiring disclosure for those running issue ads would be one of the first bills the Assembly would take up in the new legislative session.
Lawmakers are also expected to approve a series of initiatives that Democrats had pushed over the last two years, only to see Assembly Republicans thwart them.
That includes mandating that health insurance policies provide coverage for treatment of children with autism, requiring insurers to cover cochlear implants and hearing aids for children, and perhaps a statewide ban on smoking in work places, including bars and taverns.
Democrats have had some disagreements amongst themselves over a potential smoking ban. Decker, for example, has raised some questions about the specifics. But with Democrats now in charge of both chambers, supporters of a smoking ban could get the Assembly to pass it first and then put pressure on the Senate to follow suit if state senators can’t reach a consensus on their own.
Decker has also talked about raising the minimum wage from $6.50 to $7.60 an hour and then indexing it for inflation. He’s promised it will be the first bill introduced in the Senate during the new legislative session, but it’s not clear what kind of support it has from other lawmakers.
"People on the low end of the wage scale just need to get a bump," Decker said .
