Tag Archives: Budget

It’s About the Spending

My column for the Daily News is online. Here you go:

Gov. Scott Walker has taken the first step in Wisconsin’s biennial budget process by introducing his executive budget. Walker calls it a “reform dividend” budget that is able to boost spending thanks to the reforms enacted in earlier budgets. There is a lot to like about Walker’s budget, but it suffers from a fundamental flaw: it spends way too much.

The governor’s executive budget is the first step in what will be a lengthy legislative process before Wisconsin gets to a final budget. The Legislature’s Joint Finance Committee will begin working through the governor’s budget to add and remove their own priorities. The budget that comes out of the JFC will then be debated and passed by both houses of the legislature; the versions that pass each legislative house will be reconciled and sent to the governor; the governor will issue vetoes; the legislature will consider overriding vetoes; and then we will have a final budget. There is a long way to go.

Despite the fact that the governor and both houses of the Legislature hail from the same political party, there are some sharp differences of opinion regarding Wisconsin’s budget priorities. There have already been fierce intraparty clashes over transportation funding, debt load, potential tax increases, and other issues. The final budget will look substantially different than the governor’s budget proposal, but Walker has begun the conversation by making his priorities clear.

Signaling that Walker intends to run for reelection next year, his budget includes a lot of tax cuts and spending increases targeted at various interest groups. Most of the nearly $600 million in tax cuts comes from changes to the income tax and eliminating a portion of the state property tax, but the budget also includes several smaller targeted tax cuts.

The governor’s budget increases spending in a number of areas including an additional $649 million for K-12 schools and $105.2 million more for the University of Wisconsin System. There are also spending increases for tech schools, welfare, work force development, prisons, historical society, health services, transportation, the building commission, shared revenue and more.

Walker’s budget also includes some terrific reforms and accountability measures. The budget finally eliminates prevailing wage statewide, which will save taxpayers millions of dollars on needed work. It contains reforms to welfare and work force development designed to help people break the cycle of poverty and become successful in the work force. Under this budget, Wisconsin will self-insure its employees for health coverage. This is something that many large companies already do and will save taxpayers millions of dollars.

In what is garnering the most pushback, Walker’s budget increases spending for K-12 education and the University of Wisconsin, but does so with some added accountability. K-12 schools that have not already taken advantage of the tools given them in Act 10 to make reforms may not be eligible for the increased state funding. Much of the increased spending on UW will only come after UW makes reforms like offering a 3-year degree option.

But for all of the good it contains, one cannot escape the fact that Walker’s budget still spends too much. Indeed, despite the myth of “cuts” and “austerity” perpetuated by both political parties, Wisconsin has increased spending in every budget Walker has signed. This is despite the fact that Wisconsinites’ ability to pay has still not recovered from the Great Recession.

Let us look at the numbers. Gov. Jim Doyle’s last biennial budget for 2009-11 spent $61.9 billion. The first Walker budget spent $64.1 billion. Since then, Wisconsin’s biennial budgets have increased spending every time to $68 billion to $72.6 billion and now $76.1 billion. The budget that Walker just proposed spends a full 23 percent more than Gov. Doyle’s final budget. “Austerity,” my foot.

Meanwhile, over the same time period, Wisconsinites’ income has struggled. In 2008, the year before Gov. Doyle passed his last budget, the real median household income in Wisconsin was $57,348. It took a beating in 2009 after the Great Recession and dropped to $55,227. Since then, real median household income has dropped more before finally inching up last year. It still has not recovered to the 2008 level. The real median household income since 2009 has moved to $53,269, $53,110, $52,709, $52,370, $52,683, and finally in 2015, to $55,638. As you can see, the median Wisconsin household is earning $1,710 less per year since 2008, but being asked to pay for a state budget that spends 23 percent more.

If Wisconsin’s state spending largesse cannot be justified by an increase in Wisconsinites’ ability to pay, then perhaps the increased spending is being offset by an increase in population and new taxpayers? No. Since 2010, Wisconsin’s population has only increased 1.6 percent. And according to IRS migration data, the aggregate adjusted gross income for people leaving Wisconsin is greater than those coming in. Essentially, Wisconsin is losing higher-earners and retirees to low-tax states and replacing them with lower earners.

Gov. Walker and the Republicans deserve tremendous credit for the immensely beneficial and consequential budgetary reforms they have enacted and for managing the state’s finances in a responsible manner. Long gone are the Doyle budgets of massive deficits and illegal fund raids thanks to mature management of the state’s finances.

But Wisconsin remains a tax hell precisely because it remains a spending hell. For all of the good that Walker and the Republicans have done, they have not addressed this fundamental problem and it drags down everything from economic growth to work force availability to the everyday lives of Wisconsinites just trying to keep enough of their money to build a better life for themselves.

Walker Introduces Budget Proposal

Eh.

Gov. Scott Walker on Wednesday called for nearly $600 million in reduced taxes and fees along with significant new spending in areas where he made sizable cuts in the past as part of his $76.1 billion two-year budget proposal.

Total spending under the plan would grow by nearly $2 billion, or 4.2 percent over the previous two-year budget. Taxpayer-supported spending would increase nearly $600 million. The total number of state employees, who would receive two 2 percent raises and have their health care managed and paid for by the state, would increase by about 262 positions, including about 20 taxpayer-supported positions.

The budget includes several changes to state government, including proposals to self-insure all employees, centralize more agency administrative functions under the Department of Administration and eliminate printing and mailing requirements in several areas.

There’s a lot to unwrap in this proposal. There’s some good stuff in it, but my overall reaction is that it is a budget that still spends too much. Wisconsin is a high tax state because it spends too dang much. Not a single one of the budgets under Walker actually cut spending. They held back on the rate of growth, but every budget spent more than the last. Now this budget is increasing spending even more and “paying” for it with hopeful economic projections.

When does Walker actually cut spending and justify the hatred of his opponents? I’d like to actually see a real cut, but I fear that the only way I will ever live in a state that actually controls spending will be to move to one that does. It isn’t in the Wisconsin DNA.

Wisconsin Projects Surplus

It’s still just a projection, but it’s positive news as the legislature considers the next budget. Since there’s “extra” money, the taxpayers can expect a refund, right?

Wisconsin’s biennial budget picture got $714 million brighter Wednesday, with a projected deficit turning into a small surplus, according to the nonpartisan Legislative Fiscal Bureau.

Fiscal bureau director Bob Lang reported tax revenues are expected to be $455 million higher than what the Department of Administration projected in November. Also, spending in the current fiscal year that ends June 30 is expected to be $226 million lower — largely due to lower-than-expected Medicaid enrollment — and other revenues are expected to be $33 million higher.

That turns what was thought to be a $693 million deficit for the upcoming budget into a $21 million surplus, including all departmental budget requests.

It also adds more cushion to the state’s bottom line as it closes out the 2015-2017 budget cycle. Previously the net balance was about $40 million. The latest estimate has the state closing out the year with a $362.2 million ending balance.

Another Crisis Budget Averted

Brett Healy at the MacIver Institute provides a good reminder of just how much the budget situation in Wisconsin has improved.

As Wisconsin prepares to begin the next budget cycle, the state’s finances are in solid shape. While taxes have been cut repeatedly, state revenues grew 4 percent from fiscal year 2015 to FY16, a jump from $9.49 billion to $9.87 billion. Overall revenues are projected to continue growing by about 3 percent annually over the next biennium with a modest economic growth projection of 2.2 percent per year.

Wisconsin closed the books on the 2015-16 fiscal year with a positive balance of $331 million. “The State of Wisconsin completed fiscal year 2015-16 with a positive general fund balance of $331.0 million. With this total, we entered fiscal year 2016-17 with the fourth-largest opening balance in 16 years, all four coming after fiscal year 2010-11,” stated Department of Administration Secretary Scott Neitzel.

Total projected revenue in the next biennium is expected to increase by about $1.4 billion over the 2016-17 base. A healthy revenue stream means that Wisconsin is well-positioned for a deliberative, non-feverish budget debate in the coming months.

That’s a stark difference from just a few short budget cycles ago. Back in the Doyle years, Wisconsin lurched from one budget calamity to the next. In response to massive shortfalls between budgets, Doyle and his allies raised taxes, raided funds like the transportation fund, and used every budget gimmick they could to meet the state’s balanced budget mandate.

In the era of Walker, it seems those days are over.

Go read the rest of the piece. It’s long, but gives a great rundown of the landscape for the upcoming budget debate.

Budget Requests For Wisconsin State Agencies Don’t Add Up

The stage is set.

Wisconsin state revenues are projected to fall $693 million short of what state agencies have requested for the 2017-19 budget, Gov. Scott Walker’s administration said Monday.

The report from the Department of Administration is the first document to take into account budget requests submitted in September. Those requests will be scaled back when the governor releases his budget early next year, and further refined by the Legislature in the months that follow.

First, remember that the entire “shortfall” is because of the Department of Public Instruction’s request for a $707 million increase over the last budget. The DPI is an independent agency that does not report to the Governor.

Second, remember when the media and the Democrats, but I repeat myself, start screaming about Governor Walker “cutting” the budget, he is only cutting the increases. Much to my frustration, Governor Walker and the Republican legislature have not yet actually passed a budget decrease. Every budget has spent more than the previous one.

Wisconsin Finishes Biennial Budget Cycle with Surplus

Outstanding.

MADISON, Wis. (AP) — A new report shows the state finished the last fiscal year in the black.

Gov. Scott Walker’s Department of Administration released a report Monday showing the state finished the year that ended June 30 with $313.8 million left over.

The report says the state collected $15.1 billion in general-purpose revenue taxes, which include individual and corporate income taxes, sales tax and excise taxes. That’s up 3.8 percent from the previous year.

Expenditures total $15.3 billion, $103 million less than the $15.4 billion allocated for spending in the state budget.

State aid to municipalities and school districts accounted for 51 percent of spending. Aid to individuals and organizations represented 25.8 percent.

Walker Signs Budget with 104 Vetoes

As expected, Walker signed the budget before his announcement for president today. While he had a lot of vetoes, none of the major things – like school choice expansion, partial repeal of prevailing wage, etc. – were touched.

WAUKESHA — Gov. Scott Walker signed the state’s 2015-17 budget Sunday, including more than 100 line-item changes to the version the Legislature adopted swiftly last week after several weeks of Republican gridlock.

“The difference between Wisconsin and Washington is we actually get things done,” Walker said Sunday evening to a crowd just before he signed the next Wisconsin state budget, and about 24 hours before he announces his bid for the White House.

Before signing the $72.7 billion spending plan, Walker used his powerful veto pen to alter 104 items — nearly twice as many as he has previously.

Wisconsin Budget Heads to Walker’s Desk

Good.

The Assembly signed off on a $73.3 billion budget that repeals the prevailing wage for local projects and re-works significant pieces of the proposal Gov. Scott Walker sent the Legislature in February.

From one perspective, this budget is another strikingly conservative budget when compared to budgets of the past 50 years in Wisconsin. From another perspective, it still follows the Wisconsin “tradition” of spending too much, borrowing too much, and taxing too much.

Undoubtedly, Walker will want to sign this before he announces for president on Monday. We’ll see how much he uses his veto pen.

Wisconsin Republicans Come to Agreement on Budget

Well, sort of. There are three major issues of contention that have been holding up the budget and the Republican legislative leaders have come to enough agreement to move ahead. Let’s take a look.

Issue #1: Prevailing Wage

Under the agreement leadership reached, the Assembly will bring to the floor next week a bill introduced in that chamber to fully repeal the prevailing wage. Assembly Republicans will then offer an amendment to the bill that reflects a package Sen. Frank Lasee, R-De Pere, has put together. It would repeal the prevailing wage statutes for local governments and federalize it for state work. State thresholds currently on the books would remain in effect.

The jury is out on whether this is good or not. I’m worried that the repeal of prevailing wage has been separated from the budget. Several conservatives, including my own Senator, have said that they won’t vote for a budget without a repeal of prevailing wage. This removes it from the budget, but it is being taken up in tandem with the budget. That makes it more difficult, but not impossible, for those conservatives to stick to their guns.

As for the proposal itself, it is better than what Vos floated yesterday, but it still isn’t a full repeal. Eliminating prevailing wage for local governments would be huge and using federal standards for wage calculations would help make compliance easier and more sensible. This proposal admits how much money repealing prevailing wage would save, but doesn’t extend those savings into state projects. I’d take the deal if we can’t get to full repeal, but it leaves a lot of work left to be done.

Issue #2: Transportation

The transportation package includes $500 million in bonding with another $350 million the committee can issue as the Department of Transportation submits requests for work. That would still be a significant reduction from the $1.3 billion in borrowing Gov. Scott Walker proposed.

Speaker Robin Vos, R-Rochester, said the reduction would be felt fairly evenly between out-state projects and the Zoo Interchange. Still, work on the core of the Zoo would not be impacted. Rather work on the north leg would be delayed.

It’s an improvement over Walker’s budget, but it still borrows too much and spends too much.

Issue #3: Bucks Arena

The deal for taxpayer support of a new arena for the Bucks will be removed from the budget and taken up as a separate bill. This is fantastic. Yes, it makes it more difficult to pass a deal because now the Republicans have to get some of the Democrats to agree, but that’s a good thing. Any funding deal will be controversial and should be passed with bipartisan support. This allows the deal to be fully debated and vetted with everyone’s cards on the table.

 

 

The Transportation Test

My column for the West Bend Daily News is online. Readers of this blog will find some of it familiar. Here it is:

A gap in the budget cycle will try the Legislature


The Republicans in the Legislature were hoping for a reprieve. Gov. Scott Walker’s budget proposal had some big cuts in it along with some big borrowing that they were hoping to avoid. There were also some big new expenditures that they wanted to make, like $150 million or so in an arena for the Milwaukee Bucks. The projected tax revenues for the next couple of years were not going to be enough to cover everything they wanted to do and they were hoping beyond hope that the May projection would be higher to make their jobs easier.

The projection came in and it was not what they had hoped. They stayed the same as they were in January. The projection from the Legislative Fiscal Bureau is that tax collections will increase over the next three years, but not enough to cover the proposed spending.

This means the Republican legislators have some tough choices to make. Nowhere is this more evident than in the transportation budget.

There is a gap in the next budget cycle of $1.3 billion between what the Department of Transportation wants to spend and the tax revenue that is projected to be available. There are only three ways to deal with this gap.

The first way is to increase revenue. This means raising taxes. Transportation is funded with a segregated fund filled primarily with the gas tax and registration fees. Walker has said that he does not support an increase in registration fees and there does not appear to be any appetite for a gas tax increase in the Republican caucus. There has been some talk of some new taxes like a mileage fee or toll roads, but there is not any serious effort behind those either. In short, a tax increase seems to be off the table, which is a good and expected thing from this legislature.

The second way to fill the gap is with borrowing. This is what Walker has proposed with $1.3 billion in additional borrowing to fully fund transportation spending. Republicans in the legislature are pushing back on so much borrowing — especially in the face of an improving economy — and floating the idea of “only” borrowing a billion dollars instead. That is still far too much additional debt, but even at that it leaves a $300 million gap.

The third way to address the spending gap is to reduce the spending, which is where the real problem lies. Wisconsin needs a high-quality transportation system, but we simply spend more than we have to on it. To their credit, the last two Republican state budgets have improved the state’s transportation spending. According to Reason’s Annual Report on the Performance of State Highway Systems, which measures how much bang each state gets for their transportation buck, Wisconsin has jumped 10 spots to 15th place in the country since 2011, but it ranks 36th in spending per state-controlled mile. Wisconsin spends a whopping $226,901 per mile — way more than every other Midwestern state except Illinois. Iowa and Minnesota manage to spend less than $134,000 per mile.

Consider that if Wisconsin could reduce its spending per mile to just the same level as our neighboring states, there would be a surplus of transportation funding. To do this, the Republican legislators are going to have to take a hard look at the reasons for that bloated spending, but so far they are not showing much appetite for that. One of the most obvious causes of bloated spending are the prevailing wage laws that studies show inflate labor prices by as much as 45 percent, but the repeal of those laws died in committee last week thanks to the vote of newly elected Republicans and all of the Democrats.

The debate over the transportation budget is a microcosm of the entire budget debate. The Republican legislature does not want to raise taxes; is willing to add some debt as long as it is not too much; and except for a feisty minority of valiant conservatives, they lack the political will to enact real spending reform.

The next few weeks are going to be test of leadership for Republicans and a measure of how conservative they really are.

(Owen Robinson is a West Bend resident.)

Walker Proposes Changes to School Choice

Governor Walker gave his budget address tonight. The biggest thing that wasn’t already floated is a major change in School Choice. WisPolitics has some details:

In addition to lifting the caps on the number of students and schools that could participate in the choice program statewide, Walker is calling for a change to how the vouchers are funded for students added to the program and new limits on who can join.

After the program was expanded statewide two years ago, reports found the vast majority of students who joined were already attending private schools. Under the budget, those now in the outstate choice program would be allowed to remain. But those seeking to join the program going forward would already have to be attending a public school.

The vouchers are also now funded through a GPR appropriation. But funding for the outstate slots would be changed, under Walker’s plan. The schools who lose students to the choice program would have their aid reduced, and that money would then be pooled statewide and divided equally among the outstate choice students.

Doing so would smooth out the differences in the amount of state aid sent to districts based on property values, administration officials say. For example, districts with high property values receive less in state aid than those with low property values. The approach would ensure students from both districts would receive the same sized voucher, administration officials say.

Eh… it’s a step in the right direction, but I’m not crazy about it. What Walker is trying to do is make it so that he can expand school choice without adding spending. It’s a good goal, but a flawed way to get there.

The “problem” that Walker highlights is that many of the families who qualified for vouchers were already attending a private school. So the kids were already attending private school and it wasn’t costing the taxpayers anything, but now it is. It is an expense that the state taxpayers did not previously have.

This is only perceived as a “problem” in the context of government spending, but not in the overall purpose of school choice. The philosophy behind school choice is pretty simple. The taxpayers are obligated, both morally and constitutionally, to pay for an education for Wisconsin’s kids. In the existing system, rich families already have a choice to send their kids to the school of their choice. Means-tested vouchers level the playing field by facilitating the same choice for all families.

In this case, it is quite true that there are many families who qualify for vouchers – meaning that they are in the lower part of the income scale – were already sending their kids to private school. Some of them are making tremendous sacrifices to make it happen. Some are receiving financial aid through their churches or elsewhere. Some are managing to pay for it with support from their extended families. Now they can receive a voucher to make the sacrifice not as painful. So what? Why is this a “problem?” Are these families somehow less worthy than families who made different choices by sending their kids to public school? I certainly don’t think so. If people are worried that they were managing to send their kids to private school already, then lower the income threshold overall.

What I don’t like about Walker’s plan is that it creates a patchwork of rules that does not treat all people the same. Under his plan, families in Milwaukee and Racine are unaffected. Any of them still qualify irrespective of whether or not they already attend a private school or not. Families who already qualified for vouchers in the rest of Wisconsin can keep getting them. But families who either didn’t win the lottery last time, are just having kids come of age, or perhaps just slipped under the income threshold to qualify, may only receive a voucher if their kids attend a public school.

What a mess…

If this passes, expect a lot of families to enroll their kids in public school just to yank them out after the first day and move them to a private school with a voucher.

Like I said, it’s a step in the right direction in lifting the caps and looking for a better funding mechanism, but it should be a program that treats all families equally.