Publication

February 21, 2017Client Alert

A Closer Look at the Governor’s Budget: Administrative Law Changes

Governor Walker’s budget bill contains a number changes to Wisconsin administrative laws, including a version of the federal Regulations from the Executive in Need of Scrutiny Act (REINS Act). Below is a discussion of the specific amendments.

State REINS Act: Under this proposed law, if an economic analysis indicates that a proposed administrative rule will cost $10 million or more in implementation or compliance costs for businesses, local governments, and individuals over any two-year period, the agency may not work on the rule until is introduced as a bill, passes the legislature, and signed into law by the Governor. After a state agency submits its economic impact analysis for a proposed rule, the Department of Administration or either co-chairperson of the Joint Committee for Review of Administrative Rules may request an independent economic impact analysis.

State Agency Guidance Documents: This proposal provides that before a state agency is authorized to adopt a guidance document, an agency must post the proposed guidance document on the agency’s internet site and properly submit a public notice inviting public comments. After the agency adopts the guidance document, it must continue to post the document on the agency’s website and allow for continued public comment.

Another key provision provides that state guidance documents do “not have the force of law” and therefore, do “not provide the authority for implementing or enforcing a standard, requirement, or threshold, including as a term or condition of any license.” This provision reinforces the notion that a state agency cannot issue a guidance document and then attempt to enforce the policies within the guidance document as though it were an administrative rule. Instead, if the guidance document contains a policy similar to an administrative rule, it must be promulgated through the proper rulemaking process.

Repeal of Unauthorized Rules: This provision creates the process by which an agency is to follow when repealing a rule that is no longer authorized due to repeal or amendment of the law that previously authorized its promulgation. First, the agency is to submit a petition with a proposed rule that repeals the unauthorized rule to the Legislative Council staff for review. After reviewing the proposed rule repealing the unauthorized rule, the Legislative Council staff is to submit the proposed rule to the Joint Committee for Review of Administrative Rules with a statement of the Legislative Council’s written report and determination as to whether the proposed rule repeals an unauthorized rule. After reviewing the petition and proposed rule repealing the unauthorized rule, the Joint Committee for Review of Administrative Rules the Committee may: 1) approve the agency’s petition; 2) deny the agency’s petition; 3) request the agency to make changes to the proposed rule and resubmit the petition; and 4) inform the agency in writing of it decision in writing.

Transfer CAFO Oversight from DNR to DATCP: The budget bill requires the Department of Natural Resources and the Department of Agriculture, Trade, and Consumer Protection to conduct a study and make recommendations on transferring regulation of concentrated animal feeding operations from DNR to DATCP. The agencies are required to submit a joint report to the Governor, Joint Finance Committee, and appropriate legislative standing committees by December 31, 2018. The agencies must state: 1) whether DATCP may act as the federal Environment Protection Agency’s delegated agent in regulating CAFOs, 2) whether improvements would result from the transfer, and whether there would be a financial impact on the water pollutant discharge elimination system permit program.

Taxes: Overall, the governor’s budget calls for approximately $600 million in tax cuts and reduced fees. Below is a summary of the major tax provisions:

  • Income Taxes: Cuts individual income taxes by $104,377,800 in 2017-18 and $99,077,000 in 2018-19 by reducing the tax imposed on the first $37,450 of taxable income for married-joint filers and first $28,090 for single filers. This translates into a reduction of $69 for the median income family of four in 2017.
  • Property Taxes: The budget ends the state-portion of the property tax levy which equals $180 million and gives $159 million more in state aid to schools and local governments that must be passed through directly to taxpayers.
  • Sales Tax Holiday: Provides a two-day back-to-school sales tax holiday in August for clothing, computers, and school supplies
  • Provides approximately $20 million for those eligible to claim the federal Earned Income Tax Credit

Repeal of Labor and Industry Review Commission: Under current law, decisions of the Department of Workforce Development that are subject to administrative review are decided by the Labor and Industry Review Commission (LIRC). LIRC also reviews administrative decisions of the Division of Hearings and Appeals relating to worker’s compensation.

The budget bill eliminates LIRC and replaces it with the Division of Hearing and Appeals for review of decisions relating to worker’s compensation. The budget bill also provides for administrative review of decisions prior to judicial review relating to unemployment insurance and discrimination by the respective administrator of the DWD division that administers the law in question.

Wisconsin Fair Employment Law: The budget bill creates statutory offers of settlement procedures for resolving complaints involving violations of the state fair employment law, family and medical leave law, or organ and bone marrow donation law. The budget bill allows the parties in such cases to make settlement offers to resolve claims. In cases where a settlement offer is declined, the bill provides for cost and fee shifting or interest depending on whether the complainant receives a more favorable award than was included in the settlement offer.

Repeal of Prevailing Wage Law: The budget eliminates the state prevailing wage law and the highway prevailing wage law, but retains the prohibition against local governments enacting or administrating their own prevailing wage laws or similar ordinances.

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