Posts Tagged ‘Free Market’

Statewide Public School Choice Coming to Wisconsin

MacIver News Service | January 26, 2012

[Madison, Wisc...] More than a year after it was introduced, legislation that will bring unprecedented school choice to families who wish to enroll in Wisconsin’s public schools passed the Assembly Thursday.

Senate Bill 2, which expands the timing and options behind the state’s open enrollment policies, will allow parents and children more freedom than ever before when it comes to choosing the school that is right for them.

The legislation, now on its way to the Governor for his signature, will change the process of open enrollment. The law will allow for a freer transfer of students between public schools across districts. This legislation expands the formal application process from a three week span to three months and include provisions for year-round transfers for students that aren’t happy with their current schools.

The sweeping reform comes at the conclusion of  National School Choice Week and the new policy is a major victory for educational freedom for parents and schools alike. Families will now have greater options to find the public school that works best for their children.

This will have a significant impact reaching from regular public schools to charter and virtual schools across the state. Along with the labor reforms enacted in 2011, this legislation has the potential to dramatically change the education landscape in Wisconsin. By creating a free market within Wisconsin’s public schools the new law is expected to foster competition between school districts and increase the influence of parents in areas as far reaching as curriculum development and school operations.

Currently, families have a three-week window in the beginning of February during which they can apply to attend a public school other than their local neighborhood school. The resident school board can prevent students from leaving by rejecting their application and informing parents by April.

Parents will now have the ability to apply to up to three districts in an expanded timeline for open enrollment transfers. The application period will now run from the beginning of February to the end of April and families will know whether or not their transfer has been approved by June – in time for the upcoming school year. This means that parents will have a better idea of the options available for their children and in a more timely manner than the previous system.

Moreover, stipulations exist that will allow students to transfer outside of this window as well. If students meet certain conditions parents can apply for their transfer at any time during the year. If the receiving district has room available for the student, then they will be compelled to accept the transfer unless the district and the Department of Public Instruction both rule that the transfer does not have the student’s best interests at heart.

In short, parents disappointed with their child’s school will have more options for transfer – and they won’t have to wait for that three-week period in February to act. This means greater freedom for parents and, ideally, fewer instances of students being trapped in schools that don’t fit them for long stretches of time.

School districts will have to determine the number of open slots for all students – both regular and special education based – in January. These limits will be determined by criteria such as class size, student-teacher ratios, and enrollment projections. Students that are excluded from transferring thanks to these limits will be put on a waiting list, and parents will know whether or not they have been accepted by the third Friday in September.

The legislation had the support of educational groups across the state. The Wisconsin Coalition of Virtual School Families was the legislation’s leading proponent and the American Federation for Children, the Wisconsin Association of School Boards, and the Wisconsin Association of School District Administrators all rallied behind the plan. The expansion is not expected to have a significant fiscal effect on public education, but will reach thousands of parents and families across the state. It is expected to be signed into law by Governor Scott Walker within days.

Parent advocates boast that this bill amounts to is the passage of year-round public school choice for Wisconsin’s families. Parents will have more flexibility and a greater awareness not only of their schooling options, but also over when their children can transfer if they decide that their neighborhood school is not for them.

Price of (Legal) Drugs Subject of Bipartisanship in Madison

By James Wigderson
Special Guest Perspective for the MacIver Institute

The legislature may soon be on drugs. As a topic, I mean. A bipartisan group of legislators wants to repeal the minimum markup law for prescription drugs in Wisconsin, making Wisconsin the 46th state in the country to allow retailers to sell drugs for below cost. It would be a free market approach to lowering health costs for many in Wisconsin.

In other states, large retailers like Target and Walmart are able to sell commonly prescribed prescription drugs for only four dollars. Under Wisconsin’s Unfair Sales Act that price for many drugs is illegal because the four-dollar price is below the retailer’s cost.

The proposed bill, SB 360, would exempt prescription drugs from the Unfair Sales Act. The bill passed the state assembly last year only to die from inaction by the senate. This time around, the assembly is waiting to see if the senate will take up the bill before they act on it. There has been a public hearing on the bill in the Senate Committee on Health.

In a very tense political season, it’s rare to see a bill that has such bipartisan support. Republicans State Representative Bill Kramer (Waukesha) and State Senator Leah Vukmir (Wauwatosa), and Democratic State Senator Tim Carpenter (Milwaukee) and State Representative Jon Richards (Milwaukee), are the sponsors of the bill.

In an interview Monday night, Kramer explained that they took provisions to protect “mom and pop” retailers from predatory pricing from his proposed legislation to end the Unfair Sales Act and added it to Richards’ and Carpenter’s bill from last year that would have repealed the Unfair Sales Act for prescription drugs.

“We’re taking a play out of the liberal playbook. We’re doing a little incrementalism. Last term it passed it passed the Assembly on a voice vote but it wasn’t taken up by the Senate,” Kramer said. “So this year we’re going to have the Senate act first. And then once they pass it we should have no problem in the Assembly.”

Asked if he was concerned if the recalls could bog the bill down, Kramer said, “Always concerned what the Senate is going to do. That’s why we’re not going to waste our time in the Assembly until we know that the Senate has passed it.”

At the public hearing, Kramer said that most of the questions seemed to come from Democratic Senator Jon Erpenbach who was “hung up on” the question of what happens when an insurance company’s co-pay is more than the cost of the prescription drug.

“I said, ‘Well, then I’m probably going to pay four dollars and I’m not going to tell my insurance I’ll send them another six.’ He was really, really hung up on that.”

When Erpenbach raised the question came up how the smaller pharmacy retailers would not be able to match the economies of scale of the larger retailers and therefore would not be able to compete, Kramer did not dispute the point.

However, Kramer said the law wasn’t helping anyone anyway. “Later testimony from one of the ‘mom and pop’ pharmacies basically said, ‘When I started there were 17 independent pharmacies,’ in the county he was from, ‘and now there’s two.’

“So Leah (Vukmir) asked him, ‘So, how is the current law helping you?’

“He said, ‘It’s really not.’”

Kramer said Vukmir asked, ‘So if we repeal it, you’re not losing anything? But we’re putting in these other protections about predatory pricing and using loss leaders to drive up the price on everything else. Don’t you think that would be better?”

“He replied, ‘Yeah, actually it does sound like it would be better.’ So if that testimony means anything then it sounds like the opposition does not have a leg to stand on.

“Walmart and Target have $4 generic prescription drug plans in 45 states, and I think hopefully by the end of the year Wisconsin could be the 46th,” said Kramer.

Asked who else would be opposed to the bill, Kramer said the Wisconsin Petroleum Marketers & Convenience Store Association is registered against the bill. “They’re afraid of a slippery slope,” he said. “If we get prescription drugs then next we’ll go after gasoline.”

Asked if that wasn’t ultimately the goal, Kramer said, “That’s my goal. It would be my goal to go after gasoline and alcohol and tobacco and everything else right now. But I just don’t think we have the votes to get it done so this we get something.”

“We took a lot of the language from the bill that we’ve had in the last two terms so we get to try it on this one (issue),” Kramer said. “So it will be a little familiar I would think when we bring it back again when we think we can get more.”

Tracking Return on Investment in the “Green Economy”

MacIver News Service | January 16, 2012

ZBB Energy, a Menomonee Falls based green energy company, is in a race to bring new green technologies to market as it finds itself in the center of the debate over whether government financial assistance can launch and sustain a green economy here in the United States.

President Obama visited ZBB Energy back in August of 2010 to promote the green economy and why the federal government should step in to get this sector of the economy off the ground.

“At this plant you’re doing more than making high-tech batteries.  You’re pointing the country towards a brighter economic future,” Obama said.

During his visit, President Obama vowed to create 800,000 green energy jobs by 2012.

ZBB Energy makes batteries specifically designed to store electricity from renewable sources. At least, that’s the plan.  ZBB Energy is in the middle of a major overhaul and currently does not have any products on the market. It plans to launch a new line within weeks.

“The product we’re developing will be the only storage device like it in the world,” Will Hogoboom, CFO, told MacIver News. “We’ve already closed orders for the new product even though it’s not in production.”

Investors and the stock market have not always appeared to share in the President’s optimism.  ZBB Energy stock ended the year at 71 cents a share. The day of Obama’s visit, the stock closed at $.70. Some believe investors are generally weary of green energy companies, especially startups, because these companies have high risk: they incur high overhead and generate low revenue while they attempt to develop new technologies that may or may not be profitable.

That’s where federal and state governments step in, providing those companies with massive tax breaks and loans. Many companies state in their SEC filings they could not survive without this preferred treatment. However, as we’ve seen, government favoritism is not a guarantee of success.

Solyndra, a solar panel manufacturer in California, received a $535 million loan guarantee from the Department of Energy in 2009. Two years later the company was out of business.

ZBB Energy has received significantly less help from the federal government than Solyndra. In June, the IRS awarded it a $14.7 million Clean Energy Tax Credit.  In 2009 it received a $1.3 million stimulus loan.

The stock market has been a consistent challenge for ZBB Energy. In December 2010, AMEX notified ZBB its shareholders’ equity was below the minimum $4 million required to continue being listed. This December, the company announced its shareholders equity was at $4.1 million and it was back in compliance.

However, ZBB’s stock still trends downward. It closed at $5.80 on June 18, 2007, three days after the company executed a 1:17 reverse split. Since then, it’s been downhill. On December 20, 2011 it closed at 74 cents a share and has not broken $1/share since September.

Courtesy of NASDAQ.com

ZBB’s market trouble is reflected in its SEC reports. Its Q3 revenue was at $1.637 million. ZBB’s payroll alone was $60,000 more than that. The total operating loss was $1.696 million.

The company hopes to turn all this around with the release of a new line of batteries, which are in the final stage of testing.

“Once we start actually producing and shipping, it will mean the world to us,” Hogoboom said.

The company has also added a number of new employees. At the time of its overhaul two years ago, ZBB employed 25 people. Today it employs about 60 people and has 7 open positions.

Over the past few months, while developing its new product, the company has also been forging new partnerships. In fact ZBB is opening a new factory in China in the next few weeks.

On December 15th, ZBB announced a new joint venture partnership with an unnamed “global technology company,” to help in product development. That partner is investing $800,000 in the project, and bought $700,000 of ZBB stock.

Company insiders appear to be confident. Hogoboom bought 14,000 shares on December 13. Buoyed by the government investment in the firm, investors purchased 1,307,860 shares over the last six months, all at market value.

To achieve President Obama’s goal to create 800,000 green energy jobs by 2012, the federal government has invested heavily in companies like ZBB. Yet, there is presently no official way to verify the success of such job creation efforts since the Labor Department does not track green jobs. The Bureau of Labor Statistics is in the process of conducting a survey to find out exactly how many green jobs there are in the country and hopes to have that complete by the middle of this year.

Meanwhile, announced expansion projects, a new product line, and large stock purchases have not been enough to give non governmental investors in the market confidence in this green energy “startup.” ZBB’s stock opened at 78 cents a share on December 15, 2011 and closed at 81 cents a share on Jan. 13, 2012.

ABC’s Debate Series Topic: There’s Too Much Government in My Life

Earlier this month Wisconsin’s First District Congressman and House Budget Committee Chairman Paul Ryan joined columnist George Will for an hour-long debate with Rep. Barney Frank and former Labor Secretary Robert Reich. The four took part in the inaugural event of the ‘Great American Debate Series’ on ABC’s This Week program, and focused on the topic: “There is Too Much Government in My Life”

See the video.

Congressman Ryan’s opening remarks:

Is there too much government in our lives? Yes. Ask most people and they will agree. It’s no coincidence that government spending has hit record levels while people’s trust in government has hit record lows. So the longer answer, why is this, is pretty simple.

Too much government inevitably leads to bad government. When government grows too much and extends beyond its limits, it usually does things poorly. Our founders put limits on government because they knew the limits of government.

The left usually likes to advance what I would call a strawman argument or a false choice, that those of us who believe in the constitutional principles of limited government somehow favor sort of a Hobbsian state of nature, or a social Darwinism, where people are left to fend for themselves completely, only to be exploited by the few who are powerful, and that the only alternative to this cruel society is a vision of a society of total security and total outcome, results guaranteed by government.

Fortunately, this is not the case. Those of us who believe in limited government also believe in effective government. A good and popular government is one that respects its limits. Is one that fulfills its goals and its functions well.

But look at where we are today. Look at our economy, look at our debt. Crony capitalism where government is picking winners and losers. Where you have big government and big business exchanging favors with one another while the entrepreneur and the small-business person is left struggling to survive.

The last few years have shown us that a truly effective government is impossible without limits. A government that focuses on equalizing the results of our lives is one that does damage to the American commitment of equal opportunity. If we reclaim our founding timeless principles, we’ll have a government that we have faith in, that we are proud of, and the question surrounding the size and the proper size of government will take care of itself.

Read the entire transcript.

Effective Income Tax Rates in the United States

Click here for the full article from the Tax Foundation

On Ayers and the Occupiers

By James Wigderson
Special Guest Perspective for the MacIver Institute

Elisabeth Kubler-Ross wrote, “There are no mistakes, no coincidences. All events are blessings given to us to learn from.” In a moment of synchronicity, former Weather Underground leader Bill Ayers visited Milwaukee on Saturday just as the “Occupy Wall Street” protests gained a local shadow, “Occupy Milwaukee.”

So much of the current activism on the political left is nostalgia for the 1960s without remembering what really happened. Ayers and others helped organize the Chicago “Days of Rage,” and later the group engaged in a bombing campaign in an attempt to overthrow society. His wife Bernadine Dohrn (formerly of Whitefish Bay) was a fellow radical that bombed the Capitol. Ayers’ Weather Underground was also responsible for bombing the Pentagon and a New York police station.

Second thoughts may have begun when a few of Ayers’ comrades in the revolution blew themselves up attempting to manufacture a nail bomb. By then Ayers and his comrades had declared war on “Amerika” (it wasn’t until later radicals used three k’s) and went “underground.”

Despite most of the charges getting dropped in 1973 because of the surveillance methods used by the government, Ayers did not turn himself in until December 3, 1980. Soon Ayers was, in his words, “Guilty as hell, free as a bird—America is a great country.”

Ayers and his fellow radicals began their long marches through the institutions that they wanted to overthrow. Back in the upscale Chicago neighborhood so contrary to his radical posing, Ayers eventually found a home, of course, in the education establishment teaching at the University of Illinois at Chicago. It’s in those circles that he became friends with a community organizer, future President Barack Obama.

Obama was elected president promising “hope and change;” a program of a radical departure from the previous administration’s foreign and economic policies; and, a complete remaking of the health care economy in the United States.

After a failed stimulus program, a Wall Street bailout that Obama supported, bailouts for General Motors and Chrysler, a teacher “bailout,” and a reluctant continuing of the War on Terror (including keeping the detention facility at Guantanamo Bay), things have not worked out as well as the political left had hoped. We still have rampant unemployment, the new federal takeover of health care is unpopular and under attack as unconstitutional, and the promised new, “green economy” looks suspiciously like the same old crony capitalism.

A new political force on the right has formed, the Tea Party movement, which is united in its quest for a less expansive, less expensive government. The elections of 2010 were a disaster for Democrats. Democrats reacted with rage at the election results in Wisconsin when they lost both chambers of the legislature and the governor’s mansion. Adding to the injury was the loss by their beloved Senator Russ Feingold to businessman Ron Johnson.

The Icon was defeated by a plastics manufacturer, for crying out loud.

The political left was already looking for an excuse to launch a recall effort against Walker (Yes, there were cries for his recall on the morning of his Inauguration) and they found a cause around which they could rally in the collective bargaining issue. Organized labor has made Wisconsin the last stand, and has even been funding dead-end protesters in the Capitol long after the spotlight has faded and Walker’s reforms are beginning to work.

Now it’s time for another round of labor-supported protests and the “Occupy” movement comes to Wisconsin. They can’t protest against the establishment because the establishment belongs to them now. They can’t protest against President Obama because he’s one of them. They protest against “the war,” almost absent-mindedly forgetting who is running it. (By the way, we just sent troops to central Africa to intervene in another civil war.)

The economy is bad, so the “Occupy” movement protests against “Wall Street” and the “banks” even though Obama receives more money from Wall Street than anyone else and supported TARP.

That leaves the self-indulgent demands. One Wisconsin Now, usually more obsessed with the scatological, had a banner at the march complaining about the high cost of student loans. No word on when they will protest at the University of Wisconsin – Green Bay against the retirement and re-hiring of Vice Chancellor Tom Maki, or for that matter other wasteful spending and abuse in the UW System driving up tuition costs.

Never mind that these supposed adults were making a calculated risk when they signed themselves up for such debt with an expected payoff after graduation. They want their debts to be erased by the very banks that Obama supported bailing out when they made risky loans to people in part because of prodding by the government in the first place.

Shakespeare’s rebel Jack Cade in Henry VI would have fit in well with these protesters when he promised, “I charge and command that, of the city’s cost, the pissing-conduit run nothing but claret wine this first year of our reign.”

Unfortunately as the protesters demonstrate against “capitalism” and for forgiven college debt, they’re showing that they need not so much as college loan forgiveness, but refunds for their failed educations. They believe, as Robert Heinlein once wrote, that if they pray hard enough they can make water run uphill. “How hard? Hard enough to run uphill, of course.”

And so they demand to forget how we got to this point, the continued 9% unemployment and more foreign wars. They’ll avoid any mention of their own personal responsibility for their economic situations while scapegoating “Wall Street.”

It’s fitting Bill Ayers brought his hate America shtick to town this weekend. (Note that’s America with a ‘c’ now–he’s a cleaned up academic now) The left in Wisconsin has a lot in common with Ayers and others who practice terrorism.

You need to be vigilant in opposition to them, no matter how often they fail. They can fail again and again and again (Kloppenburg, court challenges, senate recalls), but only need to succeed once to have incredible impact.

The Occupiers are engaging in a difficult gamble. It takes a whitewash of the memory to blame so many other people and institutions when the fault lies in themselves and the president they continue to support. No wonder Bill Ayers was an attraction Saturday night for the education establishment. He’s no longer a terrorist. That’s forgotten, too.

Good thing there were protesters at Ayers’ event to remind the attendees of the unrepentant terrorist’s past transgressions. The protesters of Ayers’ appearance were far more representative of the 99% of Americans than those “occupying” Zeidler Park.

Will Legislature Cave to Education Bureaucrats on Open Enrollment?

By James Wigderson
Special Guest Perspective for the MacIver Institute

Like many parents, my wife and I meet with our children’s teachers at the beginning of each school year. We have learned the hard way you can’t wait until the first report cards and the first parent-teacher conference to really get a grip on how our children our doing in school. The one thing we stress to the teachers is don’t wait to tell us there is a problem. Let us know immediately so we can address it.

For some parents and some school children, sometimes the problems are really too difficult to solve for the school where the child is enrolled. Sometimes a change needs to be made, preferably right away.  And sometimes the answers to a child’s educational needs are found in the next school district. The current limits on open enrollment make that change in schools difficult.

Unfortunately, the law does not allow for the parent to make the open enrollment choice year round. This is important because if a parent gets into the school year and discovers a problem with the child’s school and the school district is no position to fix things, then the parent and the child are stuck in that terrible situation. The only alternatives are home schooling and enrolling in a private school.

The Assembly version of SB2 would require parents, for nine months a year, to beg for permission to enroll / transfer their child in another public school.

When my son was in first grade in the Waukesha School District, some of the teachers and aides at his school did not have a professional reaction to my columns for the Waukesha Freeman. They made comments to my wife when she volunteered at the school. She kept them from me at first because what could we do? It’s not like we could just switch schools and escape the problem, even if the district allowed it.

However, if open enrollment had been allowed all year, my son might not have wasted a year in a classroom where we weren’t welcome. We could have sent our child to a school in a different district where the unprofessional animosity would have been less.

Allowing open enrollment all year would mean that parents would be empowered consumers of education rather than prisoners of geography. They would be allowed to have only the interests of their children when making their educational choices, and adapt when circumstances change.

It’s a common sense change in the law, but as we have seen common sense is in short supply in Madison. Republicans in the State Senate passed a bill that would have basically allowed the expansion of open enrollment to all year if the receiving district had room to accept new students. However, when the bill was considered by the Assembly, they amended it only allow open enrollment if the school district where the child is currently enrolled agrees, except under very exceptional circumstances (custody issues, bullying, crime, threats of violence).

Otherwise the open enrollment window closes after three months. A marginal improvement over the current three-week enrollment period, but the Assembly version of the bill does nothing to help the parent who discovers after the school year started that their child’s education is in need of a change of school districts.

So the bill, SB2, has now passed each house in different forms. The Senate’s version empowers parents; the Assembly’s version keeps the bulk of the power in the hands of school administrators.  Why is that?

In an interview with WTAQ’s Jerry Bader last May, current Assembly Education Committee Chairman State Representative Steve Kestell justified the limits on open enrollment by complaining about the marketing efforts of online public charter schools. He actually said he was afraid they would run television commercials all year to recruit students. Heavens, no!

I must have missed their commercials in between WEAC’s television ads promoting traditional public schools—that is when WEAC was not running ads to support the recall of some of Kestell’s Republican colleagues in the Senate.

Yes, online public charter schools (with union teachers) may benefit from a few more enrollees during the school year if parents choose that route. However, the bill is not just about those schools. It’s about expanding educational opportunity for all public school students in Wisconsin by empowering parents to make the decisions as circumstances dictate. That means all public schools can accept students from outside provided they have the space available, not just the ones that happen to have internet-based classrooms.

Leaving school districts with a de-facto veto over any student leaving their district is to cave to the status quo and a recognition that the convenience of the bureaucrats running the schools is deemed more important than the children who attend them.

We thought this legislature and governor had different priorities.  As the saga of SB2 continues, we’ll see how true that is.

Healy Petitions PSC for Ruling on Milwaukee Streetcar Costs

MacIver News Service | October 5, 2011

[Madison, Wisc…] The president of the MacIver Institute on Wednesday petitioned the State’s Public Service Commission, seeking a definitive answer regarding who will have to pay for the costs of relocating utilities to make way for the construction of a 2-mile streetcar in the City of Milwaukee.

“The utility rate payers of Southeastern Wisconsin deserve to know whether or not they will be on the hook for costs associated with the construction of a two-mile train that serves a tiny fraction of citizens, businesses and tourists in a tiny fraction of the city of Milwaukee,” Healy said. “I am hopeful the PSC will provide these answers before work on the project begins.”

Healy wants to know who will be paying for infrastructure costs associated with construction of a proposed a 2-mile boutique trolley route. He has requested a declaratory judgment that the City of Milwaukee will be responsible for paying for the costs associated with moving utility facilities underneath the proposed Milwaukee Streetcar route. Healy is represented in the matter by Richard M. Esenberg and Thomas C. Kamenick of the Wisconsin Institute for Law & Liberty.

Last month, in their response to queries made by State Senators Van Wanggaard and Leah Vukmir, the PSC confirmed that utility-related costs associated with the Milwaukee streetcar project could exceed $70 million.

“Although these cost estimates are likely to change, it is imperative that the public and relevant officials know who will bear them.” Healy’s petition notes.

In his petition, Healy asserts that the City, and not the utilities’ ratepayers should pay for the costs.

“There is no “adequate health, safety or public welfare justification” to require the utilities to permanently move their facilities in order to accommodate the Milwaukee Streetcar line,” according to the petition “There is nothing about the existence or location of these facilities which threatens the public health, safety or welfare. The only reason that they have to be moved is construction of the Milwaukee Streetcar line.  This cannot constitute an “adequate health, safety or public welfare justification” as a matter of law. Such a justification must involve, at minimum, an exercise of the City’s police power. Building and operating a street car is not such an exercise.”

BACKGROUND ON THE PROJECT

General construction of the $64.6 million, 2.1-mile rail line would be funded by $55 million in federal transit aid (previously allocated twenty years ago) and $9.7 million in tax-incremental financing district funds. Supporters assert that rider fares, downtown parking fees and advertising revenue will cover the $2.65 million annual operating cost.  The Milwaukee Common Council has approved the project although they have withheld the release of funding for the project pending additional information.

In their response to queries made by State Senators Van Wanggaard and Leah Vukmir, the PSC confirmed that additional, utility-related, costs associated with the project could exceed $70 million.

The PSC broke down the costs:

  • WEPCO  - $45 million
  • ATC .5 to 15.4 million
  • AT&T 10 million

The PSC said the ATC costs will vary depending on the need for corrosion protection for the steel conduit holding the underground transmission lines because of the proximity to DC (direct current) lines powering the proposed streetcars. The Commission further notes that the AT&T estimate is not for costs that would be incurred by other co-located telecommunication providers.

As the letter to Wanggaard and Vukmir states “Wiscosnin Stat. 227.41 allows the Commission to issue a declaratory ruling if a petition is filed by an interested person regarding whether a utility would be obligated to pay for moving its facilities associated with the Streetcar Project. Here, an affected utility or a ratepayer would request a declaratory ruling.”

Healy has filed the petition HEALYPETITION with the PSC requesting such a ruling as an individual utility ratepayer in Southeast Wisconsin, not on behalf of or in his role as President of the MacIver Institute.

State Takes Swift Action on RYO Stores

MacIver News Service | September 29, 2011

[Madison, Wisc...] The Wisconsin Department of Revenue says it did not shut down Roll Your Own (RYO) tobacco stores across the state this week, but store owners and their machine distributor contest that claim.

RYO tobacco stores sell loose tobacco to customers, who then are able to rent time on a machine that rolls it into cigarettes.  Customers say they can save up to 50 dollars per cartoon by making their own cigarettes after purchasing tobacco on their own.

On Thursday, DOR sent a notice to RYO stores warning them to apply for additional permits, certification, and submit to additional taxes.

On Monday, many RYO stores closed their doors after visits by DOR agents.

“We have not been shutting them down, but we have been going on site to make sure they have the materials we sent out,” said Stephanie Marquis, DOR spokesperson.  “We haven’t been going out and actually shutting them down.”

However, Paul Carne, who is the authorized distributor of RYO machines in Wisconsin, clarified that point.

“They shut down the machines [not necessarily the stores]” he said.

Some stores that offer RYO also sell other products and were able to remain open.  Many others had no other option but to shut their doors.  Carne said stores that remain open were told to come into compliance or remove the machines within 30 days.

According to the DOR State law requires RYO retailers to:

State law requires RYO retailers to:

  • Obtain both manufacturer and distributor permits from the Wisconsin Department of Revenue. A retailer needs the cigarette manufacturer permit because its business involves producing cigarettes with loose tobacco, as well as a distributor permit to ensure that all cigarette packages the customer leaves the retail premises with are affixed with the appropriate Wisconsin cigarette tax stamps.
  • Sell more than 50% of the RYO cigarettes wholesale to other retailers or vending machine operators, and retailers cannot own, control or operate these other entities. This is necessary only if retailers wish to continue selling RYO cigarettes directly to customers.
  • Obtain certification from the Wisconsin Department of Justice to be placed on its approved directory of cigarettes for sale in Wisconsin in order to comply with state law and regulations.
  • Obtain certification from the Wisconsin Department of Safety and Professional Services that these cigarettes meet the fire safety performance standards.

“Under state law, if a retailer or the retailer’s customer operates a RYO machine on the retailer’s premises to make cigarettes with loose tobacco, the retailer is both a cigarette manufacturer and distributor,” DOR told store owners. “Retailers who fail to meet the above requirements could face fines, penalties, permit revocation, imprisonment, and/or seizure of the tobacco and other personal property used in this activity.”

Josh Winrich, owner of Holy Smokes Stores in La Crosse, Eau Claire and Tomah, told the MacIver News Service this came as a surprise.  He believed the RYO industry’s lobbyist had sat down with government officials earlier this month and came to an agreement.

“They actually said we were clear and if we followed a set of rules, they would leave us alone,” Winrich said.  “Obviously that wasn’t the case.”

Winrich said the DOR had not visited his stores at that time, but he was taking precautionary action.

“We’re open because we sell other products as well,” he said.  “I decided just going to voluntarily shut down my machines today, so they don’t completely shut me down.”

Winrich said in trying to get more tax revenue from operations like his, the state risks losing thousands of dollars it currently collects.

“I paid the state close to three thousand dollars in sales tax last month,” he said.  “And the state’s not going to get that money once they shut us down.”

Winrich also said his business keeps more money in the local economy, than if customers just bought pre-manufactured cigarettes.

“We employ 7-8 people, who spend their money here in town, and our customers have more money to spend too,” Winrich said.

On Friday Smoke Free Wisconsin applauded the state’s decision to go after RYO stores.

“Wisconsin must stand by the health of our citizens and no longer allow these products to be sold at the current, cheap price,” said Maureen Busalacchi, executive director of Smoke Free Wisconsin. “We applaud Governor Walker’s administration and the Department of Revenue for addressing this issue and making the right move for Wisconsin.”

Carne said RYO lawyers are meeting with state officials hoping to resolve the situation.

“I’m optimistic they will be open again soon,” he said. “But I’m sure there are folks on the other side that are optimistic they’ll stay shut down.”

According to DOR there were 50-100 RYO stores in Wisconsin before enforcement actions began this week.

Millionaire’s Share of Tax Burden

Click here for the full article by the Mercatus Center’s Veronique de Rugy


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