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Wreaths mark snow-covered gravestones on Friday, Feb. 14, 2014, at Wisconsin Memorial Park in Brookfield, Wis. Wisconsin legislators are considering a bill that would end the state's ban on funeral homes owning and operating cemeteries. The bill also could end cemeteries' property tax exemption status.

Dinesh Ramde, AP

Wisconsin debate: Should funeral homes own cemeteries?

  • Article by: TAYLOR W. ANDERSON
  • Associated Press
  • February 16, 2014 - 2:25 PM

MADISON, Wis. — When Kevin Pagenkopf's son told his first-grade teacher what he wants to be when he grows up, she didn't expect him to say funeral director.

Pagenkopf said he hopes his 7-year-old son will be able to take over the family's 101-year-old Oconomowoc funeral home, but the business' future could be in jeopardy if the state changes its laws to allow competition from cemeteries.

Wisconsin is one of nine states that prohibit cemeteries from owning funeral homes. A bill under consideration in the Legislature would scrap that decades-old law and allow cemeteries and funeral homes to be operated together.

Those working against the bill say it's a bad idea because it would open the way for some big players to move into the state and drive down costs, only to hike them later. But supporters argue deregulating the funeral industry would let an open market determine fair prices.

State and national funeral home associations representing more than 400 directors in Wisconsin oppose the bill, far outnumbering supporters. There are only a small handful of commercial cemeteries in Wisconsin.

"There's not that many family owned funeral homes (anymore), when 100 years ago, that's pretty much all you had," Pagenkopf said. He added, "The track record with these companies that come in, sure they're cheaper to begin with, but as soon as we fail and go out of business or sell out, that's when their prices go back up."

The state's laws currently prohibit cemetery owners from operating a funeral home on the same property. Wisconsin funeral home owners also can't own cemeteries elsewhere in the state, and there can be no commercial relationship between cemeteries and funeral homes.

Ending the prohibition would allow companies to provide in-house services or point families to companies that could provide them. It's a concept cemetery owners say there's nothing wrong with.

"It doesn't make any sense for the consumer or for me as the cemetery operator not to have any commercial relationship with a funeral operator," said Peter Pakalski, who owns 14 cemeteries in Wisconsin.

Pakalski owns 16 more cemeteries outside the state. He and his wife have given the bill's sponsor, Rep. Joel Kleefisch, R-Oconomowoc, $1,550 since 2006, according to campaign finance records.

"It's an old, archaic statute that needs to be changed," Pakalski said. "I want to buy some funeral homes, and the state says I can't and it's not right."

The major stakeholder in the debate is Service Corporation International, the country's largest cemetery and funeral services organization.

SCI owns 13 funeral homes and five cemeteries in Wisconsin after acquiring the second-largest group, Stewart Enterprises, in December. The merger also puts SCI out of compliance with state law.

"The prohibition doesn't allow for free market competition," said Vern Pixley, senior managing director of operations with SCI.

SCI has some time, though Pixley wasn't sure how much, before it must sell either funeral homes or cemeteries, or possibly face $200-per-day fines for each violation. Cemeteries aren't subject to property taxes, so Pixley said the company plans to sell off its funeral homes. He said the group works closely with regulators to ensure it remains a "good corporate citizen."

Opponents also point to SCI as a big factor in the proposed legislation. The merger means SCI will own Wisconsin Memorial Park, a Brookfield cemetery that built a building some say would operate as a funeral home if the law is changed.

"What you pay for a beer (at Lambeau Field) is not what you'd pay for a beer in a grocery store or in a bar," said Adam Raschka, executive director of the WFDA. "If you're allowed to create a monopoly, that's what's gonna happen."

Raschka said the law is in place to prevent monopolies from trapping families into dealing with bigger owners, no matter the cost. He said funeral directors also have court rulings in their corner.

The Court of Appeals in 1998 affirmed a circuit court ruling that said the state's prohibition is constitutional.

In response, cemetery owners point to a 1993 Federal Trade Commission letter to longtime Democratic Rep. Marlin Schneider. The letter said allowing businesses to operate both services under one roof "might in turn lead to lower prices and better service to consumers."

The bill isn't the first attempt outside the courts to overturn the ban. There were attempts in the 1990s and last session that both ended up sputtering.

The issue isn't likely to get resolved this year. Kleefisch said it's unlikely the bill would make it out of committee before the session ends.

© 2014 Star Tribune