The proposed state budget and construction: What it means to you

Gov. Tony Evers’ two-year budget proposal would hold the line on transportation funding, bolster clean-energy programs and implement new rules to fight wage theft in Wisconsin’s construction industry.

The biennial budget proposal outlines spending priorities that Evers argues will help the state recover from the coronavirus pandemic.

For contractors, its a budget that keeps road funding relatively flat, floats new initiatives for clean energy and broadband development and would seek to revive prevailing wages, project-labor agreements and ban right-to-work — policies construction unions broadly praised.

“I believe we can pass a budget with bipartisan support,” Evers said in his budget address. “I believe we can pass a budget that will make sure our state can bounce back and better than it was before this pandemic hit. I believe we can pass a budget that will finally realize the future we’ve dreamed. I know that Legislature and I can get this done.”

Evers budget proposal, however, will run into opposition from Republican lawmakers who control the state Legislature and said they would draft their own biennial budget.

The governor and Legislature must ultimately reconcile their proposals to pass a two-year budget this summer.

“Instead of priorities to move the state forward, the governor’s budget proposal is more of a political document to fill the wish lists of his own party,” Assembly Speaker Robin Vos said in a statement. “The spending plan contains far too many poison pills like expanding welfare, legalizing recreational marijuana, repealing Act 10 and growing the size of government.”

A “work ahead” sign stands along Interstate 94, just north of County Highway KR, in Mount Pleasant in January 2018. (File photo by Kevin Harnack)

TRANSPORTATION

Evers did not propose raising vehicle fees or gas taxes to pay for more road work in his biennial budget request, and funding for highway work would remain flat under his plan.

The budget would also enumerate and put $40 million toward work on one major project: an expansion of Interstate 94 East-West in Milwaukee.

Wisconsin’s transportation fund was hit hard last year by the COVID-19 pandemic, which caused a sharp drop in gas tax revenue as many residents stayed home due to the virus. A federal relief bill passed late last year will provide about $188 million to help make up the difference.

Terry McGowan, president of the International Union of Operating Engineers Local 139, broadly praised the transportation proposal in a statement.

“This budget proposal balances Wisconsin’s need for continued investment in our transportation infrastructure with an understanding that we must maintain a balanced approach toward funding that investment,” McGowan said.

Evers would also expand the use of the design-build delivery method for road projects in his budget request. Unlike the state’s usual design-bid-build delivery method, the design-build method would award one contract to a company that would design and then construct a road project.

Some critics have previously argued that the policy favors large contractors with in-house design teams, while proponents say it would save money by helping contractors catch design flaws earlier in the construction process.

The budget request would give WisDOT the authority to use the design-build delivery method on projects up to $20 million. WisDOT is in the process of launching a design-build program under a policy enacted in the 2019-2021 budget. The agency has not yet delivered a project with the bidding method and would release its first design-build contracts later this year.

Evers also proposed repealing a policy passed during a 2018 lame-duck session before he took office that requires federal money make up at least 70% of the funding for large highway projects. Evers also proposed eliminating the policy in his last budget request, but GOP lawmakers removed that provision from the final budget.

MISCLASSIFICATION AND WAGE THEFT 

The biennial budget request would adopt a host of policies aimed to prevent wage theft and misclassification, problems thought to be widespread in the construction industry.

The state’s Task Force on Wage Theft and Misclassification last year produced a report outlining a series of recommendations to step up enforcement of the problem, which deprives the state of about $40 million in tax revenue a year, based on a recent study. The budget proposal adopts most of the recommendations in the task force’s report last March.

Evers would propose reinstating a contractor registration system in Wisconsin, a program that existed until it was eliminated in 2013 through the state budget process. The provision would require most companies doing business as a contractor in Wisconsin to register with the Department of Safety and Professional Services. The policy would also give the agency the power to fine any company that fails to register.

Another provision would direct the Department of Workforce Development to draw up a pamphlet providing information about worker misclassification. The agency would require companies to post the pamphlet in a public place and would fine companies up to $100 for failing to do so. The state Department of Administration would also direct other state agencies to provide educational outreach about misclassification.

The bill would also step up penalties for companies found to be misclassifying workers, and would remove industry-specific bans on the practice in place currently.

DWD fines for misclassification would double for each offense under the proposal, and the bill would remove a maximum fine of $7,500 per incident in place under current law. Current rules also limit penalties to construction companies in painting or drywall. The bill would remove limits on the types of employers these penalties apply to.

ENERGY, BROADBAND AND INFRASTRUCTURE 

Evers’ budget includes a number of proposals that would increase broadband access and expand clean energy programs. It would also give local governments another tax incentive tool to promote affordable housing and outlaw coal-based asphalt sealants statewide.

Chiefly, Evers is proposing doubling the fee utilities pay as part of the Focus on Energy program, which could raise an additional $100 million for clean energy projects over the biennium. The state’s Focus on Energy program is widely seen as among the most effective renewable energy programs in the country, producing about $4.80 in benefits for every dollar invested in the program.

A task force Evers commissioned on climate change recommended expanding the program, in addition to to other policies included in the budget.

The budget, for instance, authorizes the commission to allow utilities to finance the cost of the residential energy-efficiency upgrades, and recoup those costs with a surcharge. The commission would also be compelled to consider the “social cost of carbon” when deciding whether to approve large electricity-generating facilities. A $20 million grant program would also help schools upgrade outdated infrastructure and improve energy-efficiency.

The  Public Service Commission would also take a number of steps to increase broadband access under the budget proposal.

The commission, for instance, would have to offer grants to help pay for broadband connections to customers who currently do not have access. It would also provide grants to municipalities, planning organizations and other groups to plan for construction of broadband infrastructure. And the budget would require service providers to report their broadband access and allow electric companies to use easements to expand broadband service.

Local governments would also get new tax incentive rules to encourage housing construction, and would be required to consider climate change in long-range planning.

Another policy would also give local governments the ability to push out the life of tax increment financing districts to help encourage the construction of affordable housing. The provision is generally based on a bill introduced during the last legislative session. The budget would also raise the threshold for holding a public bid from a project of more than $25,000 to projects of more than $50,000.

PREVAILING WAGE, RIGHT-TO-WORK 

Evers’ budget includes pet policies for labor unions, such as reinstating prevailing wages in Wisconsin and eliminating right-to-work.

Those policy priorities also appeared in Evers’ first biennial budget request, but didn’t survive the scrutiny of legislative Republicans. Labor unions, meanwhile, praised these policies and others in Evers’ budget, including a reinstatement of project-labor agreements on public projects and the elimination of Act 10.

The budget would also direct state officials to draw up a plan for raising Wisconsin’s minimum wage to $15 an hour and would require that businesses with 25 or more employees provide family and medical leave.

“The IBEW State Conference especially recognizes the importance of reestablishing prevailing wage laws in Wisconsin, repealing the so-called “Right to Work” law and eliminating the prohibition on Project Labor Agreements put into place by the previous administration,” Don Allen, president of IBEW’s state conference, said in a statement. “The governor’s proposals will protect Wisconsin workers and taxpayer funds from unscrupulous out of state contractors and help ensure the sustainability of Wisconsin’s proud construction industry for years to come.”