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Budget Update: GOP readies amendments targeting contractor rules

Paul Snyder
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Assembly Republicans will try to remove contractor registration and worker misclassification measures from the state budget with a round of proposed amendments Thursday.

“How far they will go, I don’t know,” said state Rep. Roger Roth, R-Appleton. “But I think there are other ways to make sure contractors in this state are properly classified.”

Before approving a state budget last month, the Joint Committee on Finance added a late amendment that would establish a $25,000 fine for contractors that willfully misclassify workers. The amendment also would require contractors register with the state Department of Commerce, and it lets the state withhold 1 percent of earnings reported on 1099 tax forms by independent contractors or single-person limited liability companies.

But the Department of Commerce already has a contractor registration rule in place with a July 1 deadline, and Roth said the state Department of Workforce Development’s task force on worker misclassification already is considering a variation of the tax withholding issue.

Roth introduced a bill earlier this year challenging the Department of Commerce’s contractor registration rule. If the budget passes with the new rule, he said, he will immediately draft a new bill to repeal mandatory registration from state law.

But even the opponents of contractor registration and the proposed tax withholdings recognize the long odds of repeal.

“We would appreciate the efforts of Rep. Roth, and we would support it, but once the Legislature has passed a law, it’s not very likely to repeal it right away,” said Jim Boullion, government affairs director for the Associated General Contractors of Wisconsin Inc. “It’s probably the end of the game this session. Maybe the political winds change next session.”

Assembly Democrats met Monday and Tuesday to outline a game plan for budget amendments, said Rebekah Sweeney, spokeswoman for Assembly Speaker Mike Sheridan, D-Janesville. She said she does not know if Democrats will propose amendments to the contractor measures.

Brad Boycks, director of government and political affairs for the Wisconsin Builders Association, said the organization’s lobbying efforts to knock the provisions out of the budget will continue until the governor puts his signature on it.

“Our preference would still be to deal with these issues in a separate bill,” he said. “But if it’s a bill that negates something that’s already in place, that’s less desirable.”

Commerce’s contractor registration rule went into effect in March, requiring contractors pay $100 to register with the state for a four-year period. Department of Commerce spokesman Tony Hozeny did not return calls before deadline Tuesday to comment on whether the budget provision will change the state’s July 1 registration deadline.

But Roth said Commerce never gave a good reason for the rule. He said it is unfair to charge builders with registration fees at a time when they are struggling to keep work.

“A lot of this stuff is pretty heavy-handed on builders,” he said. “If we’re going to do this, then let’s have a debate on the floor.”

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