Notes from the West Wing: More “non-fiscal policy” issues wedged into State Budget

Posted on 26. Jun, 2009 by in News

State Representative Garey Bies

You’ll Shoulder More of the Load for Latest Auto Insurance Increase

Good Friday afternoon from the State Capitol in Madison. At 12:30 am today, the Senate approved a secret deal on the State Budget consisting of portions of the Senate Democrats’ Budget and Assembly Democrats’ Budget. We’ve had only a few hours to review the summary of the bill (the full 1700+ pages of actual language are not available yet) so, I do not have a full report for you yet and, as the Assembly Democrats plan to vote on the bill later tonight, I have much still to study. However, I did want to briefly talk about one interesting wrinkle in the new budget that is going to affect you: auto insurance mandates and premiums.

As mentioned in a previous Notes from the West Wing, the budget contains a provision that will cause everyone’s auto insurance rates to increase an estimated $300 per year.  In addition the budget also includes a provision that will require all Wisconsin drivers to carry insurance.  However, with the increased coverage requirements and mandated insurance, the Democrats have pushed many of their constituents into a very tight corner: they now must buy very expensive insurance. So what did the Democrats do? They added a provision to the budget to make it unlawful for insurance companies to consider where a customer lives in determining rates.

Currently, insurance companies use a number of factors to determine the rate for an insurance customer. One common sense factor is where the customer lives. The risk of a customer living in a city like Milwaukee is much higher than someone living in Algoma or New Franken. The reasoning is simple, drivers in Milwaukee are much more likely to be involved in an accident or have their car damaged as a result of theft (http://www.carinsurance.com/city/Milwaukee-auto-insurance-WI.aspx). This is perhaps why we see the highest number of uninsured drivers in Milwaukee.

Under this latest budget provision, a driver in Sevastopol must be considered just as risky as a driver in downtown Milwaukee. What this means to you is not only are your insurance rates going to increase from the higher mandated minimum coverage, but you will also be forced to cover the risk of Milwaukee drivers as the insurance companies will not be allowed to charge higher premiums to Milwaukee drivers to cover their higher risk of theft/damage/accidents. In effect, you will be paying to lower someone else’s auto insurance.

This budget is going to dive into your pockets for more than just its $3.6 billion in tax increases, but also for reasons like the auto insurance provisions. What is doubly unfortunate is that these auto insurance provisions should not even be in the state budget, they do not belong there. These insurance provisions are what is called “non-fiscal policy,” or policy that does not impact the revenues or expenditures of the State of Wisconsin. But because the Democrats put these provisions in the budget they did not receive any public review or public hearings or the attention from the legislature that they deserve.

Well, that’s all for this update. The Assembly is going to the floor in a matter of hours to vote yes or no on the Conference Committee Budget. Because this budget is the result of a Conference Committee, no amendments may be offered, it is simply an up or down vote. Because of provisions like those concerning auto insurance, the $3.6 billion in tax increases and $4 billion in increased spending, I will be voting No. This budget is wrong for Wisconsin.

As always, I can be reached by e-mail at Rep.Bies@legis.wisconsin.gov or by telephone, toll-free at 1-888-482-0001. You can also visit my website at http://www.legis.state.wi.us/assembly/asm01/news/.

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