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Legislative Update

Legislative Update. Manufacturing Matters! February 27, 2014. WMC Background. Wisconsin Manufacturers & Commerce. Founded in 1911 in response to progressive era reforms State Chamber of Commerce and Manufacturers Association More than 3,500 members statewide

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Legislative Update

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  1. Legislative Update Manufacturing Matters! February 27, 2014

  2. WMC Background

  3. Wisconsin Manufacturers & Commerce • Founded in 1911 in response to progressive era reforms • State Chamber of Commerce and Manufacturers Association • More than 3,500 members statewide • About ¼ of Wisconsin’s private sector workforce • All sectors of economy, and businesses of all size • Largest general business lobbying organization • Mission: To make Wisconsin the best state in the nation to do business

  4. Wisconsin’s Improving Business Climate

  5. Improving our Business Climate • Wisconsin has made significant progress in business climate rankings: • CEO Magazine: 17th (43rd in 2008) • WMC Survey: 94% of CEOs say WI on Right Track (10% in 2010) • Site Selection Magazine: 13th Best State to locate a business.

  6. Improving our Business Climate • Wisconsin has made significant progress in business climate and economic rankings: • NAM: Top 5 states for new manufacturing jobs • US DOL: Top 12 for wage growth, 2nd in Midwest • Philadelphia Federal Reserve: 2nd in the nation for potential economic growth, 3rd in the nation for 3 month job growth • Tax Foundation: Off the Top 10 list for high taxes

  7. State Budget

  8. State Budget • After years of multi-billion dollar deficits, WI entered 2013-2015 budget cycle with a surplus • $484 million surplus in January • Nearly $500 million additional revenue by May • Surplus funds enabled tax cuts and additional support for K-12 schools • Revenues up 4.2% over last year • $71 million additional surplus accrued since budget

  9. Budget: Transportation • No new tax or fee increases • $3.4 billion in spending from gas tax & registration fees • $991 million in spending from bonding • Keeps large construction projects on time

  10. Budget: Education • $75 per pupil increase in 2013-14 and $150 per pupil in 2014-15 • Over $288 million in new school aid • Expanded school choice statewide • Capped number of students to 500 in the first year and 1,000 in the second

  11. Budget: Taxes • $650 Million Income Tax Cut • Focused on middle-class • Delivered in proportion to taxes paid • Eliminates one tax bracket

  12. New Tax Brackets

  13. Budget: Taxes • Manufacturing and Ag Credit • Passed in 2011; takes effect in 2013 • Over $100 million in tax relief over next two years to manufacturers and ag producers • Full phase-in occurs in 2016 • Will virtually eliminate income taxes for manufacturers and ag producers.

  14. Budget: Taxes • Major Tax Reform • R&D Tax Credit Extension – Beginning in 2013, pass-through entities like LLCs and S corps can claim the credit • Federalize Depreciation – State rules for depreciation and depletion will be phased out starting in 2014 in favor of the federal tax policies.

  15. Budget: BadgerCare • Adopted Governor’s MA plan • Rejected expansion out of concern feds are unable to keep future commitment • Sets MA eligibility as those earning under 100% federal poverty

  16. Budget: BadgerCare • Those earning over 100% FPL eligible to obtain subsidized insurance through ACA exchanges • Established safety net to maintain current MA eligibility and coverage if federal exchanges aren’t up and running on time • Added $30 million(matched by $43.5 million FED) for hospitals that serve high numbers of MA patients

  17. Budget: Natural Resources • Air Permit Program • Reduced magnitude of fee increases by $4.5 million • 50% ROP • Exempt Natural Minors • High Capacity Wells • Provides regulatory certainty to holders of high capacity wells permits

  18. Budget: Unemployment Reforms • Several pro-business reforms enacted: • Redefining misconduct • Eliminating many quit exceptions • Stopping prisoners from collecting UI • Making it easier to discipline a habitually tardy or absent employee • Using state funds to pay $27 million FUTA interest payment rather than passing on cost to businesses

  19. Budget Surplus & Tax Reform

  20. $912 Million Budget Surplus • Governor Walker has proposed: • Adjusting income tax withholdings: $320M • Reducing the lowest income tax bracket from 4.4% to 4.0%: $100M • Backfilling tech college property tax levy in the amount of $406M to reduce property taxes.

  21. AMT Relief • Governor Walker’s proposal includes AMT offset for • Manufacturers Credit, retroactive to 2013 • R&D Credit, starting in 2014 • Historic Rehab Credit, starting in 2014

  22. Governor Walker’s Tax Plan • Along with the $650 million income tax cut in the budget last July, and the $100 million property tax cut in November, this is the third tax cut in a year. • Total tax cuts approaching $2 billion over the course of the Governor’s first term.

  23. Other Tax Legislation • Supermajority Tax Amendment • AJR 79 passed Assembly • Limits state income & sales tax • Aviation Labor & Parts Sales Tax Exemption • Passed the Senate and Joint Finance • $2.9 million state/$240,000 county impact

  24. Legislative Wrap Up

  25. Human Resources Legislation • Fast Forward II • Jan 2014 SS AB 2 passed Assembly • Builds on $15 million set aside in Fast Forward Bill for worker training grants • Time Keeping for Salaried Staff • AB 712 before the Assembly • Eliminates requirement to keep track of salaried “exempt” workers’ work hours • Electrician Regulation • AB 683 – voted out of Labor committees, awaiting floor action • Ensures in-house electricians won’t have to be licensed to complete day-to-day tasks • Reciprocity with MN for licensed electricians

  26. Human Resources Legislation • One Day of Rest in Seven • SB 508 – voted out of Senate Labor Committee • Currently, state permission is needed before employees of manufacturing or retail establishments can volunteer to work 7 straight days. • Waivers are often requested and always granted. 169 times in 2013. • SB 508 does away with the waiver requirement, but keeps in place protections that the 7th day of work be voluntary.

  27. Workers Compensation Reform • WMC has and continues to be the leading voice for employers on Workers Compensation policy. • WMC has served on the Workers Compensation Advisory Council (WCAC) since its inception 103 years ago.

  28. Workers Compensation Reform • Over the years, WMC advocacy has led to stability in the system: • WC is the exclusive remedy for workplace injuries – no tort liability or litigation • Robust insurance market with 300 carriers from which to choose • Established “return to work” culture with short-duration lost time injuries

  29. Fewer Long-Term Lost Time • Percentage of Claims with More than 1 Week of Lost Time

  30. Fewer Weeks of Temporary Disability • Average Weeks of Temporary Disability

  31. The Work Comp Problem • Despite positive indicators, medical costs in Workers Comp have been increasing significantly over the years. • Medical now accounts for 70% of total costs in Wisconsin’s WC system.

  32. Work Comp Medical Cost Trends

  33. The Work Comp Problem • As medical costs have increased, the gap between Workers Compensation charges and Group Health charges has also grown.

  34. Group Health vs WC: Shoulder Surgery

  35. Group Health vs WC: Knee Surgery

  36. Work Comp More Expensive in WI • Wisconsin Work Comp medical costs are substantially higher than nearly every other state. • Higher costs drive higher premiums, making our state less competitive.

  37. Higher Medical Payments Per Claim

  38. Highest Non-Hospital Prices

  39. Workers Compensation Reform • WMC has long been advocating a fee schedule as a cost containment measure. • Last year we initially proposed a fee schedule for common Work Comp procedures at 175% of the Medicare reimbursement rate.

  40. The Case for a Fee Schedule: Major Surgery Services

  41. The Case for a Fee Schedule: Emergency Services

  42. The Case for a Fee Schedule: Surgical Services Trends

  43. The Bottom Line

  44. Environment • Phosphorous – SB 547 • Lower compliance costs • Improve environmental outcomes • Passed Senate on a voice vote • Passed Assembly 76-19 • Awaiting Governor’s Signature

  45. Environment • Groundwater – SB 302 • Address Uncertainty of High Capacity Well Permitting • Wisconsin is bleeding jobs and economic development • Short one vote in State Senate

  46. Environment • Non-metallic Mining – SB 632 • Codifies Diminish Assets Rule • Extends Legal Non-conforming Use Rights to Police Powers • Protects existing operations from being shut down without due process

  47. Environment • Mining Update • Bulk Sampling is moving forward • 2 Crews doing core samples • 9 fulltime staff in Hurley • Dozens of scientists and engineers on the site

  48. Civil Justice Reform • Prevent plaintiffs from recovering phantom damages in personal injury cases (AB 29 & SB 22) • Enact Personal Injury Trust Claims Transparency Act (AB 19 & SB 13) • Lemon Law Reform • Remove felons as a protected class

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