On December 14, 2018, Gov. Scott Walker signed into law several bills during an extraordinary lame-duck session aimed at changing the balance of power between the legislature and the executive branch of government before incoming Democratic Gov. Tony Evers was sworn into office in early January.

The bills, which were approved by both houses of the legislature on party-line votes, included a number of provisions that will have a direct impact on the real estate industry, including changes related to funding of transportation projects, legislative oversight of state agency regulations, income and sales taxes, and the structure of the Wisconsin Economic Development Corporation (WEDC). The following is a brief overview of these new law changes.

Funding for transportation projects: Provides that for Southeast Wisconsin freeway megaprojects, major highway development projects and certain state highway rehabilitation projects for which the Department of Transportation spends federal money, the federal money must make up at least 70 percent of the aggregate funding for those projects unless an alternative plan is approved by the Joint Finance Committee (JFC). In addition, the new law eliminates the ability to transfer funding between state and federal highway programs and gives DOT oversight over local projects. 

Legislative oversight of state agency regulations: Makes a number of changes, including:

• Codifying the Wisconsin Supreme Court’s decision in Tetra Tech v. Department of Revenue, which eliminated deference given by courts with respect to statutory interpretation.
• Requiring state agencies to provide citations for any interpretation of laws they make.
• Requiring legislative review and approval of agency guidance documents, which have the force and effect of law.
• Allowing the legislature’s Joint Committee for Review of Administrative Rules (JCRAR) to suspend administrative rules multiple times. Under prior law, JCRAR could suspend a rule only once.

Income tax law changes for pass-through entities: Allows pass-through entities to elect to be taxed at the entity level for purposes of the state’s income and franchise taxes beginning in 2018 for tax-option corporations and 2019 for other entities.

Online sales tax collections: Clarifies that the recent U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. triggers Wisconsin statutory provisions allowing the Wisconsin Department of Revenue (DOR) to collect state sales and use taxes from online, out-of-state retailers. The new law also adopts language from the South Dakota law highlighted in the Wayfair decision exempting retailers with annual gross sales into this state less than $100,000 or 200 or fewer transactions. 

WEDC management: Authorizes the WEDC board of directors, rather than the governor, to appoint the WEDC chief executive officer (CEO). However, this change sunsets after September 1, 2019. After that date, the WEDC CEO will once again be appointed by the governor.

Enterprise zones: Eliminates the limit on the number of enterprise zones — currently 30 — that the WEDC may designate.

The WRA will keep a close eye on these changes in the laws and will keep WRA members informed of legislative developments that have an effect on the Wisconsin real estate climate. 

Tom Larson is Senior Vice President of Legal and Public Affairs for the WRA.