Transcript 2015-2017 Biennial Budget - Wisconsin Insurance Alliance

Fall Update
Wisconsin Insurance Alliance
September 21, 2015
Division of Executive Budget & Finance
General Responsibilities
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Prepare Governor’s biennial budget recommendations.
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Provide accounting, budget, financial & policy analysis services.
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Prepare various statutorily-required reports on behalf of the Administration
(November 20th Report, AFR, CAFR, quarterly balances/cash flow).
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Represent the Governor at all Joint Finance Committee hearings {s. 16.40(2)}.
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Interact with legislative service agencies (LFB, LAB, LRB).
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Recommend approval and/or veto of all legislation.
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Manage biennial budget implementation in collaboration with executive agencies.
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Fiscal and Budgetary Updates
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2015-2017 Biennial Budget
Developing our Workforce
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Implements a drug screening, testing & treatment program for individuals receiving UI and certain public
assistance benefits.
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Reduces time limit for participants in Wisconsin Works from 60 months to 48 months.
– Encourage placements in jobs at a more rapid page.
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Invests $3 million to expand transitional jobs in high-need communities; Racine, Beloit, rural communities.
Investing in Infrastructure
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Invests total of $6.1 billion in Wisconsin’s transportation infrastructure.
– Provides $415 million for ‘Zoo Interchange’ and maintains scheduled completion date of Zoo
Interchange.
– Invests in State’s harbor system, highway rehab & major highway development (total ~ $2 Billion);
Legislature reduced Governor’s Recommendation.
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Increases investment in broadband expansion by providing $18 million in grants to rural schools for
technology infrastructure improvements.
Medicaid Entitlement Reform
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Increases State funding of Medicaid by $650 million.
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Implements integrated care reforms to slow expenditure growth & maintain essential health care services.
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2015-2017 Biennial Budget
Transforming Education
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Increases State aid for k-12 schools by $192 million.
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Expands of many educational-related programs.
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Establishes MKE Opportunity Schools & Partnership Program to enhance opportunities & rebuild
underperforming schools.
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Continues a tuition freeze at UW System for State residents.
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Reforms UW System governance to provide Chancellors more authority and oversight; provides other
flexibilities for UW System Administration to maximize efficiencies.
Growing Our Economy
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Completes phase-in of Manufacturing and Agriculture Credit to stimulate these sectors.
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Establishes the Business Development Tax Credit to incentivize job creation and investment.
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Maintains the Badger Fund of Funds (venture capital program: $25 million).
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Reduces or freezes property taxes: six consecutive years of reduced or frozen property taxes for “MVH”.
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Simplifies the Wisconsin tax code; reduces the burden of AMT by mirroring federal tax code.
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2015-2017 Biennial Budget
Insurance Items of Interest
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Consolidates Worker’s Compensation function.
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Sunsets the Local Government Property Insurance Fund (deferred).
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Maintains current law re: payday lending industry (veto #89).
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Maintains current law re: chiropractic services and dispute resolution (veto #75).
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Reduces State health insurance costs by modernizing health plan design and
providing an opt-out option/stipend to State employees.
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FY2015 Budgetary Balance
Strong Statutory Budget Management Provisions Balanced the FY2015 Budget
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January 2015: Legislative Fiscal Bureau (LFB) projected FY15 General Fund deficit of $283m.
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Annual Fiscal Report for FY2015 will be released by October 15, 2015.
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The mid-year FY15 projected deficit addressed through various measures, including:
– Previously withheld Gaming revenues from a tribal government;
– Conservative use of budgeted compensation reserves;
– Statutory authority of the DOA Secretary to reduce spending.
– Historic low interest rates that kept debt service low on State variable rate obligations.
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FY2015 General Fund tax revenue may exceed January 2015 projections (LFB, May 2015).
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General Fund FY15 revenues were still projected to increase by $532 million (3.7%) from FY14
based on LFB estimates of January 2015.
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The Budget Stabilization Fund Balance will be $280 million at FY15 year-end.
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Governor’s vetoes increase ending balance of 2015-17 biennium by $45 million.
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Debt Service Levels Remain Manageable
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New bonding authorization in the 2015-2017 budget: lowest amount since the 1995-1997 biennial budget.
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Outstanding General Obligations paid from GPR decreasing each calendar year since 2012.
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2015 YTD outstanding GPR General Obligations fall further to approximately $4.6 billion.
General Obligation Debt Supported by GPR 2002-2014
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Fully Funded Pension and Minimal OPEBs Set Wisconsin Apart
Reduces Future Budget Stress
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The Wisconsin Retirement System (WRS) is a sound and strong pension program.
– State’s component is fully funded. Investment losses do not create an unfunded liability but are
addressed in adjustments to future contribution rates and benefit payments.
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Minimal other post-employment-benefit liabilities.
– State proactively addressed sick leave conversion credit program in 2003.
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Wisconsin debt combined with unfunded liabilities is minimal compared to other states.
Source: Standard & Poor’s Ratings Services Ratings Direct; October 2014 and June 2015.
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Economic Highlights and Updates
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Wisconsin’s Economy Exhibits Strengths
Growth and Strength in a Broad Array of Economic Factors
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2015 YTD new housing permits at the highest level since 2008
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Business registrations:
– 2014: 6.1% higher than 2003
– 2015: 3.4% ahead of 2014 (YTD through June)
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Wisconsin’s unemployment rate remains lower than U.S. unemployment rate.
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Wisconsin ranked 4th in U.S. in manufacturing job growth from June 2009 to June 2015.
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Wisconsin ranked 10th in U.S. in per capita real GDP growth from 2010 to 2014.
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Wisconsin's 2014 real per capita income was $43,392, 4% above U.S. average of $41,706.
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Growth in Wisconsin's per capita disposable income outpaces the nation & region.
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Moody’s Analytics Notes Wisconsin’s Strengths
“Wisconsin’s economy will steadily improve over the coming quarters as
higher-paying service industries add to payrolls.”
Other highlights:
Financial and insurance services are expanding at an above-average pace.
Business and professional services are providing a steady stream of highpaying jobs.
Recovery on “sure footing”, with first quarter employment growth
exceeding the Midwest average.
Source: Moody’s Analytics Precis Report, June 2015
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Wisconsin unemployment rate remains below the U.S. rate
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Wisconsin’s unemployment rate has been lower than U.S. rate for 91 consecutive months.
Source: Bureau of Labor Statistics.
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Wisconsin ranked 4th in the country in manufacturing job growth from
June 2009 to June 2015
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Wisconsin Among the Strongest States in Philadelphia Fed’s State Leading Indexes
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Current Initiatives
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Current Initiatives
Major Undertakings Will Result in Future Benefits
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Milwaukee Arena
– Development of public facility downtown for use by the Bucks and other public events.
• Will serve as cornerstone for other development in the City of Milwaukee.
• NBA team has a net positive impact on State’s General Fund tax collections, which
grows over time (“jock tax” & NBA media agreements).
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Asset Sales
– Reviewing certain state assets for evaluation and possible sale; initial group under review
include Hillfarms property and State-owned power plants and related facilities.
– Long-term benefits to the State of not owning, operating, and maintaining such facilities in
light of changing environmental requirements.
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State Transforming Agency Resources (STAR) Project
– First phase goes live on October 1, 2015.
– Consolidate IT systems for improved effectiveness, efficiency, and consistency among
state agencies. Modernization of the State’s IT infrastructure; the State is operating on
finance, budget, procurement, business intelligence, and human resource systems
developed in, or prior to, the 1980s.
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Q&A
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