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  • December 07, 2017

    2017-2019 State Budget Builds Up Construction Industry

    The 2017-2019 Wisconsin budget eliminates the state’s prevailing wage and institutes tax relief measures that benefit the construction industry. John Schulze discusses these and other significant construction-related initiatives recently signed into Wisconsin law.

    John J. Schulze

    The comparison of lawmaking to sausage making is usually unfair ... to the butcher.

    John Schulze John Schulze, Marquette 2004, is director of legal and government affairs for Associated Builders and Contractors of Wisconsin, Madison, a construction employer trade association.

    With Republicans controlling the governor’s office and both legislative houses, the 2017-2019 Wisconsin state budget was expected to be approved quickly. However, the governor, Senate Republicans, and Assembly Republicans each had different priorities.

    As a result, deliberations took 11 weeks longer than usual and had more twists and turns than a Cumberland sausage (look it up!).

    In the end, just like a Labor Day weekend brat, it was worth the wait for many in the construction industry.

    Here is a summary of the significant construction-related initiatives signed into law in late September:

    • Immediate end of Wisconsin's prevailing wage law. Effective Sept. 23, 2017, there is no longer prevailing wage on any public projects in Wisconsin that do not include federal dollars. The Wisconsin Departments of Administration and Transportation have already published non-prevailing wage bid notices.

    • Elimination of personal property tax on machinery, tools, and patterns. Effective Jan. 1, 2018, any "structure or assemblage of parts that transmits force, motion, or energy from one part to another in a predetermined way by electrical, mechanical or chemical means" is exempt from Wisconsin's personal property tax. This exemption does not apply to buildings or machinery used in manufacturing.

    • Sales tax exemption expansion. This is a two-parter. Building on last year's construction sales tax exemption, contractors will be able to purchase construction materials without paying sales tax when doing work for U.W. schools, U.W. Extensions, and technical colleges. In addition, the state sales and use tax exemption for lump sum contracts is expanded to apply to all construction contracts and to subcontractors that include personal property that adds up to less than 10 percent of total project cost. These will also take effect in 2018.

    • Federal aid "swap." Federal funding comes with more stringent and costly regulatory requirements like the Davis-Bacon Act. By swapping out state money for federal money on certain projects, Wisconsin local governments will be able to save valuable transportation dollars.

    • Technical Assistance Grant funding increase. Career and technical education grants provide public school districts with as much as $1,000 for each high school student who graduates with an industry-recognized certification in addition to a high school diploma or technical education diploma. Up until this year, the state provided $3 million annually for these grants, and demand always exceeded funding. This year, $500,000 was added to the state budget, encouraging more schools to help children achieve the certification and bridge the skills gap

    • Reduced state employee headcount. Two hundred Department of Transportation positions will be eliminated over the next two years, with the $13 million in estimated annual savings to be used to support the state transportation fund.

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    The Construction & Public Contract Law Section Blog is published by the State Bar of Wisconsin; blog posts are written by section members. To contribute to this blog, contact Mark Schmidt and review Author Submission Guidelines. Learn more about the Construction & Public Contract Law Section or become a member.

    Disclaimer: Views presented in blog posts are those of the blog post authors, not necessarily those of the Section or the State Bar of Wisconsin. Due to the rapidly changing nature of law and our reliance on information provided by outside sources, the State Bar of Wisconsin makes no warranty or guarantee concerning the accuracy or completeness of this content.

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