Senator Howard Marklein's Weekly E-Update

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When Federal Decisions Become
Wisconsin Problems

The Federal government often makes decisions for states, local governments and private citizens without our input. Agencies, Congress and often, the President, send down mandates or make far-reaching decisions that have dramatic impact for a variety of reasons.
 
Eye-catching headlines often make people feel good, but the true implications and impacts of feel good changes can have extremely detrimental outcomes. It’s easy to make a blanket change without fully thinking through, and taking responsibility for, the actual and practical application of the change. Several degrees of separation enable decision-makers to take credit for a positive, feel-good message while separating themselves from painful outcomes.
 
In May 2016, President Barack Obama announced publication of the United States Department of Labor’s (DOL) final rule that makes changes to overtime regulations. This agency rule change (not a change that went through Congress), automatically extends overtime pay to more than 4 million workers in its first year.
 
According to the DOL, the Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. The rule:

1.        Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);

2.        Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and

3.        Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

4.        Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. https://www.dol.gov/whd/overtime/final2016/

 
The bottom-line is that many salaried workers making less than $47,476 per year will be eligible for overtime pay. This sounds good – right? To some, it might. To employers and taxpayers, it is concerning. 
 
On the surface, this may sound (and feel) good.  However, this rule change, thrusts the Federal government into the employer-employee relationship with huge financial implications that could greatly impact our economy, businesses, jobs and taxpayers.  These rules apply to both the public and private sector.
 
In order to understand the impact of these changes on taxpayers, I asked the non-partisan Legislative Fiscal Bureau (LFB) for an analysis of the potential impact of the Federal Overtime Pay Administrative Rule Change on Wisconsin. 
 
It is important to note that there are three ways to manage this rule change:

1.        Make all of our “white collar” employees “exempt” from the overtime pay requirements.

2.        Prepare (as best we can) to pay overtime to newly non-exempt employees at an undetermined cost.

3.        Strictly limit our non-exempt employees to 40 hours of work per week.

According to the LFB, it is estimated that 1,101 full-time, executive branch employees would need to have their salaries increased by $4.3 million annually to avoid the final federal overtime pay requirements. In addition, 17.2 part-time executive branch employees would have to have their full-time equivalent salaries increase by approximately $100,000 annually. The maximum possible fiscal impact to executive branch agencies is estimated to be $5.1 million annually.
 
As the steward of your taxpayer dollars, this rule change concerns me. We have intelligent, talented state employees who work hard every day for pay that is commensurate with their duties and roles. These rule changes would force us to either pay our employees more than we currently do or strictly limit their hours of work per week simply because the Federal government changed the rules.
 
I am also very concerned about private employers and small business owners who will be forced to comply with this change. How will they manage overtime rules?  Will an employee be asked to end their work day, whether or not a project is completed?  Will an employer incur unreasonable costs? Will they have to lay-off staff members and/or expect more from those they have in order to balance the books? How will currently “exempt” workers feel when their classification becomes “nonexempt”? Why should employers be forced into uncomfortable, unreasonable situations with long-time staff who have no problem with the way things currently operate?
 
Once again, the Federal government has thrust itself into relationships between employers and employees without considering the full impact of the change – or maybe they don’t care.  We see evidence of this same situation when it comes to phosphorus regulation.  For more information on the phosphorus issue, please reference my 5/20/16 column.
 
As your State Senator, I will monitor the impact of this rule change on private and public sector employers and employees as it takes effect December 1, 2016. It will be an interesting discussion as we look toward the next state budget in 2017.

Congratulations to Lori Baryenbruch!

Lori Baryenbruch, a fifth grade teacher for 26 years at River Valley Elementary School in Spring Green was recently named as one of two Wisconsin recipients of the Presidential Award for Excellence in Mathematics and Science Teaching!

According to the PAEMST announcement, Lori shares her passion for science with her students through a multi-disciplinary, hands-on, project-based learning approach.  Students are engaged and challenged to think like real-world scientists or engineers solving real-world problems.

Lori will be traveling to Washington, DC later this fall to receive her award!  Congrats Lori! And thank you for your service!

Wisconsin Health Priorities Survey

The Wisconsin Health Improvement Plan will include five priorities for the next five years: alcohol abuse, nutrition and physical activity, opioid abuse, suicide, tobacco use. Woven though these priorities will be an additional focus on Adverse Childhood Experiences (ACEs), trauma and resilience. 

This plan will create and support solutions for better health, with strategies and measures, for collective action by public health partners across Wisconsin. Our goal is to continue to build upon the community efforts of previous state health plans to improve health in every Wisconsin community. We are seeking your input in creating and implementing Wisconsin’s public health plan. Click Here to go to the survey.

General Purpose Revenue (GPR) Collections, Fiscal Year 2016 

The Wisconsin Department of Revenue (DOR) released their annual report detailing GPR taxes collected by the agency in the 2016 fiscal year. 
 
Tax collections increased 3.8% in fiscal year 2016 (FY16) to $15,090.5 million. This is 0.6% less than the Legislative Fiscal Bureau's January 2016 estimate of $15,175.6 million. 
 

General Purpose Revenue (GPR) Collections, FY2016
Fiscal Year 2016 Unaudited Final
Amounts in Thousands ($), rounded

Source: Wisconsin Department of Revenue

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