Saturday, January 24, 2015

DC Republicans screw up, show their Obamacare "fix" won't work

Yeah, that whole idea of Republicans having a better grip on the economy now that they're in power in D.C.? That doesn’t seem to be going so well. Take a look at this summary of Thursday’s Senate committee meeting that was intended to show support for the GOP’s bill to allow businesses to avoid penalties under Obamacare if they choose not to insure employees that work less than 40 hours a week, instead of the 30-hour limit that exists today.

This committee hearing tried to prop up Hardee’s/Carl’s Junior CEO Andrew Puzder (2012 compensation,just under $4.5 million) as an example of a hard-pressed businessman who would be facing extra costs due to the employer mandate hitting his restaurants that have people working between 30 and 39.5 hours a week. We'll let Slate's Alec MacGillis take it from there.
For starters, there is the basic problem that President Obama has made clear that he’ll veto the 40-hour measure. If he does, Republicans could still seek to use the proposal as a cudgel to attack the law politically, but even here there are problems. The Congressional Budget Office has given the measure a decidedly unfavorable review. It estimates that the bill would result in as many as 1 million workers having their hours cut to put them under the new 40-hour limit and thereby losing their employer coverage; about 500,000 workers being left without any health coverage at all; and the deficit increasing by more than $50 billion as a result of fewer employers paying the $3,000 fine, as well as more people turning to Medicaid and federal subsidies to purchase their own insurance after being denied employer coverage.

Even worse, perhaps, several prominent conservatives have come out against the revision—notably Yuval Levin, one of the right’s most influential policy wonks, who wrote in National Review that changing to 40 hours would inevitably cause more Americans to lose hours than the 30-hour rule does, because there are far more workers just at or above that threshold than at the 30-hour threshold. “By setting the definition lower, Obamacare’s architects were trying to mitigate the damaging effects of the employer mandate some,” Levin wrote in a burst of intellectual honesty, “and by setting it higher Republicans would be worsening those effects.”…

The Democrats on the panel, in the minority for the first time in eight years, relished cross-examining the Republicans’ witnesses. Sen. Patty Murray of Washington, the panel’s top Democrat, noted that Puzder’s claim—that Hardee’s and Carl’s Jr. workers who did not get coverage at work could get Obamacare coverage instead—did not hold up in the many states that have rejected the law’s Medicaid expansion. Sen. Elizabeth Warren of Massachusetts quoted Yuval Levin’s criticism of the 40-hour change and noted the irony that Republicans were pushing a measure that would both raise the deficit and make more people reliant on Obamacare. “This bill is corporate welfare,” she said. “Big corporations would be able to cut their coverage, and taxpayers would get stuck with the tab. I’m against adding $53 billion to the deficit so corporations can push their responsibilities onto the government.”

This provoked Puzder, the CEO, into taking a shot at the CBO’s deficit estimate. “I love the CBO, but have they ever estimated anything that is accurate? I mean, really?” This off-message outburst — delivered with former CBO director Holtz-Eakin sitting right next to him — in turn earned Puzder a rebuke from his putative ally, Alexander, who reminded him that it was the CBO that had done the fast-food industry a big favor with its estimate of high job losses under a minimum-wage increase.
And may I remind you that same CBO report that claimed a minimum wage increase might end up reducing job growth by 500,000 also estimated that poverty would be reduced by more than 900,000 and real incomes would grow by more than $2 billion. That’s a good trade in my opinion, especially in times of rising job growth that would blunt quite a bit of the potential job loss (in 2014, this would have translated to 2.45 million new jobs being added instead of 2.95 million).

Gee, what a surprise that Republicans find it a lot easier to strike poses against Obamacare provisions they don’t like, but the bills they produce would end up working a lot worse than what we have today under the ACA. Sort of like their attempts to still argue that “tax cuts pay for themselves” when we have 35 years of evidence proving that they do not (in fact, the only “dynamic” part of tax cuts on the rich and corporate seems to involve rent-seeking by those people, who run to the tax breaks and reduce job growth and tax revenues).

Not surprisingly this hearing is being underreported in our “liberal” media, because it doesn’t fit the narrative that their corporate buddies and the new GOP-controlled Senate wants, and it's not as sexy as 2016 speculation. But I encourage you to take heed of what was said in there, as the testimony and the CBO figures on this bill that would raise the threshold to avoid ACA penalties has exposed the lie behind the alleged “reform” in the GOP's Obamacare bill. It is nothing but a clear attempt to allow corporations to continue to freeload off of the government by paying low wages and no benefits to just-less-than-full-time employees, forcing us as taxpayers to pay for these businesses’ negligence (aka the Wal-Mart business model).

In addition, the appearance by the fittingly named Andrew Pu(t)zder at yesterday’s hearing certainly is going to keep me from stopping at Hardee’s the next time I want a fast-food fix, joining Papa John’s and Darden Restaurants on the “let’s not eat there” list. So way to go, Andy, you hurt your cause and your company with your lame, whiny performance on Capitol Hill this week.

Is "added workforce investment" merely taking money from MKE?

One item that grabbed headlines this week involved Scott Walker’s call for programs and funding in workforce development and training. Among these is a provision in the Department of Children and Families known as the Transitional Jobs program, which evolved out of the state’s Transform Milwaukee program. A look at the DCF’s Informational Paper from the Wisconsin Legislative Fiscal Bureau helps to explain how the current Transform Milwaukee program works, and I’ll add a bit more explanation in italics.
The Transform Milwaukee program, which was created under 2013 Act 20 (the state budget bill) and took effect on July 1, 2013, provides employers in the City of Milwaukee with financial subsidies if they hire eligible low-income individuals. In contrast with W-2, childless individuals may qualify for the Transform Milwaukee program, and the income eligibility limit is higher. The program is a public-private partnership focusing on the area of Milwaukee encompassed by West Silver Spring Drive, West Mitchell Street, North Sherman Boulevard, and Highway 43 (which entails most of the poorest areas of Milwaukee). A total of 587 participants were placed in Transform Milwaukee jobs in 2014.

Under the program, DCF may reimburse an employer or contractor for a minimum of 20 hours per week for any of the following costs that are attributable to the employment of an eligible individual: (a) a wage subsidy equal to the amount of wages paid to the individual for hours actually worked, not to exceed 40 hours per week at the applicable federal or state minimum wage; (b) federal social security and Medicare taxes; (c) state and federal unemployment taxes; and (d) worker's compensation insurance premiums. An employer or, subject to DCF's approval, a contractor, may pay a participant an amount that exceeds the wage subsidy. Participants can work in the program for a maximum of 1,040 hours.
Basically it reduces the cost to those employers in that part of Milwaukee that hire people at or near the poverty line.

Now those 587 people that got placed through Transform Milwaukee may sound like a lot, but it’s really not, especially when compared to how the program was sold, which was an outgrowth of a $100 million package that Walker announced in April 2012 (just weeks before the 2012 recall election). News reports at the time quoted Walker as saying 2,000 jobs would be created in construction and other industries, which seems like a whole lot more than 587 often-temporary jobs. But maybe other areas are being touched by the program and it’s going OK.

With that in mind, here’s what the release from the Governor’s Office has to say about the plans for that program in the next state budget.
Transform Milwaukee Jobs Program – Invests $5 million annually, and extends to high-need rural areas of the state, including Racine and Kenosha, at $3 million over the biennium.
Sounds good on the face, as certainly there are other high-need areas with underemployed skilled workers throughout the state, not just in Milwaukee.

But here comes the part that made me stop and become suspicious. A sizable amount of those 587 people listed as being placed through Transform Milwaukee may not have taken that job, or started work after July 1, 2014, so the expenses didn’t show up in the 2014 Fiscal Year. But even so, Transform Milwaukee paid less than 3% of the money that was set aside in the 2014 budget. These figures from Page 43 of the DCF Informational Paper.

Transform Milwaukee/Transitional Jobs funding
2013-14 Budget $3,750,000
2013-14 Actual Expenditures $103,900
2014-15 Budget $5,716,100

And the ability to expand the Transform Milwaukee/ Transitional Jobs program has already been put into law, as also noted in the DCF paper.
Transitional Jobs Program. Subsequent to the enactment of the Transform Milwaukee program, 2013 Act 113 authorized DCF to establish a similar program in areas outside Milwaukee, to the extent funding is available. DCF must give priority to areas having relatively high rates of unemployment and childhood poverty. The same eligibility and program requirements apply to both programs. To date, the program has not been expanded beyond Milwaukee.
So is the press release that Walker’s office sent out saying that he will “invest” in the Transform Milwaukee program merely mean that he will continue to ask for DCF to keep getting $5.7 million a year, while diverting a sizable amount of that funding away from Milwaukee (the $3 million "extended to other high-need areas in the state")? In other words, there would be no change at all, other than possibly designating the Transitional Jobs funds to areas outside of the City of Milwaukee. Or are they merely going to carry over the left-over funding from this budget and apply it to the next one, to make it look like an "added" investment?

It sure makes me wonder if there’s something beyond the press release that the Governor’s office doesn’t want to reveal until after the budget is released on Feb. 3. And it would certainly go with the cynical way this administration has operated, as the press release is designed to make the state and national media believe Gov Walker is doing some “innovative and bold” in this budget. In reality, he may simply be clarifying details of funding that already exists, and not adding or changing a thing. Sneaky, sneaky there Scotty!

Friday, January 23, 2015

LFB confirms- Wisconsin budget deficits now, and for the future

Here’s my quick reaction to the newly-updated revenue figures from the Wisconsin Legislative Fiscal Bureau that were released this afternoon.

As predicted, the LFB found the November estimates from Scott Walker’s Department of Revenue to be too rosy for this current fiscal year, which means we have to fix a larger budget hole over the next 5 months.
Based upon the November report, the administration's general fund condition statement for 2014-15 reflects a gross ending balance (June 30, 2015) of -$132.1 million. Our analysis indicates a gross balance of -$283.4 million for 2014-15. This is $151.3 million below that of the administration's report…..

The factors that cause the $151.3 million variance are as follows. First, based on economic forecasts and tax collections to date, the estimated tax collections of this memorandum are $173.5 million below the projections of the November 20 report. Second, departmental revenues (non-tax amounts deposited into the general fund) are projected to be $2.7 million less than the estimate of the administration. Third, it is estimated that net appropriations will be $24.9 million below the amount reflected in the administration's report. The primary reason for this difference is a reduction of $18.4 million in debt service payments.
In other words, this would have been worse if it wasn’t for the fact that our falling deficit and stronger dollar are putting interest rates at 2-year lows, which means we pay less in debt service (thanks Obama!).

Looking ahead, the LFB is slightly more positive on revenue growth than the relatively-optimistic figures from the DOR. A lot of this is due to the expectation of strong growth continuing in the U.S. for 2015 and 2016, with the LFB paper quoting Global Insight forecasts of 3.1% GDP growth and 2.83 million more jobs for this year, and 2.7% GDP growth and 2.49 million more jobs next year (thanks, Obama!).

The LFB predicts revenue growth of 4.7% in Fiscal Year 2015-16, and 3.8% in 2016-17, which puts total tax revenues modestly above the DOR’s estimates for those two years (by $110.9 million in ’15-’16, and $65.9 million in ’16-’17). However, this still leaves a massive budget hole, based on the budget requests made by the state’s many departments.

2015-17 projected budget, based on LFB revenue est.
2015-16 Starting balance $65 million (required reserves)
2015-16 proj. revenues $15,651.3 million
2015-16 proj. expenses $16,636.4 million
2015-16 TOTAL DEFICIT $920.1 million

2016-17 Starting in the hole -$920.1 million
2016-17 proj. revenues $16,191.4 million
2016-17 proj. expenses $17,243.6 million
2016-17 TOTAL DEFICIT -$1,052.2 million

Plus $65 million required reserves
TOTAL 2015-17 DEFICITS $2.037 BILLION

Yes, the $2.3 billion plus in deficit are lower than the $3.5 billion I was predicting earlier this week, but it's still a whole lot to make up, and we aren't even mentioning the additional troubles in the Transportation Fund. Given the strong economic expectations and the LFB’s estimates of significantly higher tax collections in early 2015 due to a “bounce back” in investment income in 2014 (the LFB says this, along with the lower withholding rates should lower tax refunds and increase revenues), I’d say the risk is to the downside for revenues. Remember, it just takes a small revenue shortfall in this fiscal year to balloon the shortfalls in the future years, due to the lower tax base.

Somehow I’m guessing our governor won’t mentioning these new deficit numbers on his weekend trips to Steve King’s race-bashfest in Iowa or the Koch Brothers’ soiree in Palm Springs. But unlike the star-fucking Wisconsin media, let’s see if some in the national poitical reportage start to take notice of these numbers, and start asking real questions, as Scott Walker’s and WisGOP’s “fiscal responsibility” doesn’t seem to be working out the way they are claiming it to be.

Thursday, January 22, 2015

Strong Wisconsin jobs continue for December. Is it real?

Apparently the country’s job boom has finally been hitting Wisconsin over the last few months. We saw further evidence of this in the Wisconsin Department of Workforce Development’s release of the December 2014 jobs report for the state. The top-line numbers are very good, with 7,600 private sector jobs added, and 5,100 overall, and November’s figures being revised up by 1,500 more private sector jobs.

The biggest-gaining sector in the state was in Construction, which had lower-than-normal seasonal layoffs in December (7,000), resulting in a seasonally-adjusted gain of 2,900. The Transportation, Warehousing and Utilities category also did well, up 1,900 with the seasonal adjustment. Manufacturing took a bit of a dip in December (down 200 jobs) but with November’s figures being revised up by 600 in that sector, even that number is better off than we knew last month. The state's unemployment rate did not change from 5.2% while the U.S. dropped by 0.2% to 5.6%, but it still indicated slight gains in both the number of people employed and in the total labor force, which should be taken as a positive sign.

It’s been a remarkable run-up of jobs in these monthly reports since June, with 46,300 private sector jobs added in the last 6 months, and 45,300 overall. It’s cut a significant chunk out of the Walker jobs gap from more than 74,000 private sector jobs in August to less than 53,000 today, and it ends the first Walker term at just over 158,000 jobs. Not exactly the 250,000 the Guv predicted, but it was apparently enough to keep a sufficient amount of Wisconsin voters from kicking him out. You can see the upswing on this chart which goes back to the start of Walker's term in office.



This all sounds good, and certainly the “Help Wanted” signs I see around Madison indicate things are in a better spot than they were at the start of this decade, at least in the Capitol City (funny how these things happen in a highly-educated liberal town where people want to move to). However, I’d approach the recent positive job reports with some skepticism. These alleged gains have yet to manifest themselves in increased tax revenues (as mentioned earlier this week, Wisconsin’s income tax revenues continue to badly lag projections), which shouldn’t be happening if the job market is truly booming. There’s a disconnect here that does not make sense, unless all of the jobs being added pay very low wages (which is a possibility, as UW-Milwaukee Professor Marc Levine noted last year that low-wage jobs were the only ones that had increased in the Age of Fitzwalkerstan).

Secondly, these figures are due for annual benchmark revisions that come out with the next monthly jobs report, which will be in early March. These revisions are often based on figures from the “gold standard” Quarterly Census on Wages and Employment, and those figures have yet to show the same amount of growth- Wisconsin still lingered in last place for Midwestern job growth in the 12 months leading up to June 2014. Now maybe that’ll change with upcoming QCEW releases, but we saw this same pattern last year, when the monthly reports indicated private sector job growth of 39,700 for all of 2013, but the QCEW said the state only added 29,723 that year.

Those caveats certainly won't stop Scott Walker from trying to take credit for the latest good job figures in this monthly report, as a way of selling his presidential campaign to unsuspecting folks from out of state. You can see why he might do this, but watch for more information over the next few weeks that confirm or deny whether we are really living through a “Wisconsin comeback” or a “dead cat bounce" that'll soon see the state reverting to the subpar job growth that has been the general rule in the Age of Fitzwalkerstan.

Wednesday, January 21, 2015

Stop the Koch-funded deceptions. Build the streetcar

With today's headlines showing preliminary approval for the Milwaukee streetcar finally being built, I would encourage you to read Bruce Murphy’s column in Urban Milwaukee on the big-money interests behind the people trying to stop the project from proceeding. Much of the funding and organizaed media campaign can be traced back to Koch front group Americans for Prosperity, as well as the Milwaukee County GOP front group Citizens for Responsible Government. Murphy’s article shows this opposition to be a minimal and weak combination of loudmouth political opportunists (Alders Bob Donovan and Joe Davis) along with anti-city Astroturf organizations. And like most things in Milwaukee’s right-wing world, these people have had to desperately resort to lies, exaggerations, and paid AM radio propagandists (Hi Icki!) to even have a semblance of a movement.

With that in mind, I’d like to clear up some misconceptions about the streetcar project. Given that I have had dealings with both the City of Milwaukee and the Federal Transit Administration in my past career, I think I can help explain the different agencies and funding involved, and show you that almost all Wisconsinites will not pay a DIME toward this project, unless they choose to use it themselves when visiting the Brew City.

First of all, the streetcar project will be built using federal money that goes to the City of Milwaukee, and this money from the U.S. DOT’s Federal Transit Administration can only be used for rail-type transit such as a streetcar. Before he became a reporter for Urban Milwaukee, Jeramey Jannene gave a good timeline of this issue for onmilwaukee.com 6 years ago, explaining that the source of funding for this project goes all the way back to 1991. Squabbling over whether to have a bus lane on Milwaukee’s freeways led to some of the money to be taken back, and then some other parts went into Milwaukee-area freeway projects such as the Marquette Interchange, leaving $91.5 million specifically earmarked for start-up costs for an electric-based transit system in downtown Milwaukee.

In the late 2000s, the debate on what to do with the money came to a head with two familiar Milwaukee-area elected officials butting heads, and ultimately having the situation resolved by an act of Congress.
2007-2008 - Tom Barrett and Scott Walker each pushed the issue of the $91.5 [million] much more publicly. Barrett unveiled a plan that included a downtown streetcar loop and two express bus lines, and talked of reconfiguring existing bus service to work with new, express service. Walker unveiled an express bus plan scant on details, but complete with attacks on the Mayor's plan. It appeared he had the intention to simply cut all standard bus service in the areas to be served by express buses. Both, being career politicians, cleverly avoided any mention of the money needed to operate such a system after building it.

September 9th, 2008 - Tom Barrett and Scott Walker debate the merits of their respective proposals at a forum at Marquette moderated by Mike Gousha. Barrett offers to split the $91.5 million 50/50 in person to Walker (an idea he had been proposing for weeks if not months prior), Walker refuses.

March 2009 - Senator Herb Kohl and Representative David Obey include an earmark provision in the bill that became the Omnibus Appropriations Act of 2009 that divided the $91.5 million between the City of Milwaukee and Milwaukee County. Milwaukee County received 40% ($36.6 million), with the City of Milwaukee receiving 60% ($54.9 million). Barrett and Walker are each now free to pursue using their respective allocated funds to build a new mode of transit service in Milwaukee.
The Milwaukee County portion of the funding went toward buying new buses in 2012 and 2013, in an attempt to reduce the backlog of maintenance and fleet needs that had ballooned under Walker. The City of Milwaukee’s $54.9 million has yet to be used, and can only be used for rail-based systems such as light rail or streetcars – it cannot be repurposed to buses or other transit without another act of Congress (much like how the state’s $800 million of high-speed rail money could not be used for other transportation needs, as we all found out in 2010 and 2011).

Which brings us to where we are today. If you look at the actual bill that was procedurally delayed today (and likely to be passed next month), you’ll see that the City already has the money set aside for the non-federal share of the streetcar line.
Further Resolved, That the $44.0 million local share of capital costs for the Phase 1 Starter System and $15.0 million local share of capital costs for the Lakefront Streetcar Line shall be funded as follows:

· $9.7 million - Tax Incremental District No. 49 (Cathedral Place); previously approved through adoption of Common Council File Number 110372.

· $18.3 million - Tax Incremental District No. 56 (Erie/Jefferson Street); subject to Common Council adoption of File Number 141264.

· $31.0 million - Tax Incremental District No. 82 (East Michigan Street); subject to Common Council adoption of File Number 141263.
This simply sets aside funding in a TID with the idea that property values and development will occur on and near the streetcar line, and that the added property values will then help reduce the property tax burden for homeowners and businesses throughout the city. Now you can debate whether funding streetcar development is a good use of a TID (I say yes, others may disagree), but you don’t get to say that funds are being diverted from other needs such as cops or libraries or street repair, because that’s not the truth.

And if you’re concerned about ongoing costs of operating the streetcar, the legislation notes that the City has in its hands $3.18 million dollars from the FTA on a CMAQ air-quality grant that helps defray those costs. This is the same type of CMAQ grant that the Milwaukee County Transit System has used to operate its express buses since 2012, including four new routes that started up this month. The City also plans to use revenue from fare-paying customers, corporate sponsorships, and (if necessary) Parking Fund revenues to pay for the locally-based costs of running the streetcar.

If you look at the Wisconsin Department of Transportation’s budget request for 2015-17, there are no state operating funds currently being set aside for a Milwaukee streetcar project, nor are any funds being requested, and the City of Milwaukee’s proposed legislation does not count on getting any (the resolution does ask for a “dedicated local funding source for public transit in Milwaukee County” - much like what existed in the former SE Wisconsin RTA). So why should suburbanites care about whether the CITY wants to build its streetcar line in the CITY? In fact, the start of a streetcar line’s operation could open up MCTS for some efficiencies, as the bus system could cut back on some of their downtown buses since the streetcar would be a duplication of service, and instead use their limited resources to give or increase bus services to other parts of the county. You would think that would be a good thing for the ‘burbs, in addition to the positives that would come from having a more vibrant anchor city with new development and an image that the Milwaukee area is moving forward.

Honestly, a lot of the complaints against the streetcar just seem to be based in the Walker-esque “divide and conquer” mentality from a group of anti-city right-wingers. These people don’t like Mayor Tom Barrett, don’t like transit in general, and are more than willing to shill for the Kochs and the Bradleys on AM radio and elsewhere in right-wing bubble world if it gives them a few more dollars and public attention. And they often like to dump on the state’s largest city and economic engine because….it makes their mediocre selves feel superior? And stopping the streetcar would be a “victory” for the righties that would result in.....what?

The useful idiots that are being used by people such as the Kochs and Bradleys to obstruct the streetcar are people who don’t really care about how tax dollars are being used (many of these dimwits don’t seem to even know the sources and limitations of the funds that I’ve laid out above), and they don’t care about improving the quality of life for the City of Milwaukee by making it more attractive for businesses and employees with talent. They just want to stamp their feet like the adolescents they are, and don’t offer any solutions to these issues of transportation and economic development other than a cynical demand to get their way and get more money out of it for themselves. There is no concept of a "big picture" in Milwaukee-area right-wing world.

Which is why these ignoramuses should be laughed out of the public debate, and their wasteful and pointless delay tactics should be ignored and ridiculed. After 6 years of debate and numerous stall tactics by the big-money oligarchs, it is well past time to get the Milwaukee Steetcar built.

Tuesday, January 20, 2015

December revenues widen Wisconsin's budget hole even further

Another month, and another subpar report on Wisconsin tax figures from the state’s Department of Revenue. This time, it shows that income and corporate taxes collected are going down even faster, and even sales tax growth slowed some. The state’s overall tax intake also on the decline.

Wisconsin tax revenues, Dec. 2014 vs Dec. 2013
Income taxes -3.2% vs Dec 2013
FY 2015 Year-To-Date -6.4% vs FY 2014 YTD

Sales taxes +3.7% vs Dec 2013
FY 2015 Year-To-Date +4.7% vs FY 2014 YTD

Corporate taxes -11.2% vs Dec 2013
FY 2015 Year-To-Date -8.0% vs FY 2014 YTD

Excise taxes -2.1% vs Dec 2013
FY 2015 Year-To-Date -2.6% vs FY 2014 YTD

Total taxes collected -2.6% vs. Dec 2013
FY 2015 Year-to-Date -2.6% vs FY 2014 YTD

To control the damage from that report, the DOR quickly followed with this document, which tries to indicate that revenues are doing juuuuust fine, and that there’s nothing to worry about. However, a quick look inside the numbers shows that there is plenty to fear from what our current and future budget numbers are likely to hold.

Let’s start with the income tax figures, since those make up the majority of the state’s General Fund revenues. These figures have been down compared in Fiscal Year 2015 compared to Fiscal Year 2014 in no small part due to two rounds of Koo-Koo tax cuts, and the moving of withholding tables in April 2014 that have reduced the amount of money that was coming in to the state (what, you didn’t notice the extra $10 a paycheck you got?). The Legislative Fiscal Bureau estimated this change in withholding tables to be equivalent to about $55 million a month (as noted under Provision 16 on Page 10 of this PDF). As a result, it is only fair to adjust the income tax figures accordingly, to make an apples-to-apples comparison, which means that we should add $330 million to the income tax totals for FY 2015 at this time.

Adjusted income tax revenues YTD, FY 2015 vs FY 2014
FY 2014 YTD $3.617 billion
FY 2015 YTD $3.714.8 billion (+2.7%)

A 2.7% increase in income taxes looks good on first glance, and that $330 million in added revenue also means the adjusted overall tax revenue increase is just under 2.3%. But this hides a second concern that will become more apparent in the coming months, because what goes down must come back up when it comes to adjustments for this. And the LFB spells out how that’ll happen.
In 2014-15, withholding taxes will be reduced for twelve months, which will be partially offset by lower refunds (and larger remittances) paid in the Spring of 2015. However, the lower refunds will reflect only nine months of reduced withholding taxes in calendar year 2014 (from April through December), which means there will be a second one-time loss in 2014-15. Beginning in 2015-16, the reduced withholding taxes will be offset by lower refunds and higher remittances during the tax filing season [in Spring 2016].
That’s right, we’re looking at lower tax refunds for this year, so I hope you didn’t blow all of that $10 a paycheck already.

As a result, income tax collections should go up compared to 2013-14 solely on the basis of these lower tax refunds. Here’s my crude calculation of how that adjustment will work:

Jan ‘15 adjust -$55 million due to lower withholding vs 2013-14
Feb ’15 adjust -$55 mil for withholding, +$165 mil for lower refunds
Mar ’15 adjust -$55 mil for withholding, +$165 mil for lower refunds
Apr ’15 adjust NONE for withholding, +$165 mil for lower refunds
May- June 2015 no adjustments either way.
NET CHANGE IN ADJUSTMENTS +$330 million

So now that we know the adjustments for income taxes, let’s go back to the DOR projection of revenues, and see what needs to happen to hit the target by the end of June.

Jan-June 2015 change needed to hit DOR income tax target
Adjusted income tax change needed +9.9%
Current adjusted income tax change FY 2015 +2.7%
PROJECTED SHORTFALL $247.5 MILLION

We can do the same analysis for the other 3 main taxes in Wisconsin as well, and you’ll notice corporate taxes are especially lagging (calling Dr. Morbius!).

Jan-June 2015 Sales tax change needed to hit DOR target
Sales tax change needed +3.7%
Current sales tax change FY 2015 +4.7%
PROJECTED SURPLUS $26.3 MILLION

Jan-June 2015 Corp. tax change needed to hit DOR target
Corp tax change needed +16.1%
Current corp tax change FY 2015 -8.0%
PROJECTED SHORTFALL $118.4 MILLION

Jan-June 2015 Excise tax change needed to hit DOR target
Excise tax change needed +3.7%
Current excise tax change FY 2015 -2.6%
PROJECTED SHORTFALL $24.6 MILLION

I’ll be generous and assume all of the remaining minor taxes add up to the DOR projections, so based on these four categories, here’s what we get.

Projected budget revenue pace vs DOR projections, FY 2015
Income tax -$247.5 million
Sales tax +$26.3 million
Corporate tax -$118.4 million
Excise tax -$24.6 million
ESTIMATED TOTAL SHORTFALL $367.6 MILLION

And remember, the DOR estimated a $132 million budget shortfall for this fiscal year even with their rosy revenue projections, so add $367 million onto that, and you are right at $500 million that has to be made up in the next 6 months. And with another $735 million or so that must be added onto the $2.2 billion deficit for the next budget, because the revenue shortfall means a lower base to start from, you're looking at a looming 2015-17 deficit near $3 billion.



Yep, we're still in the ditch, and no matter how the Walker appointees try to spin it, we’re going to stay there, barring some miraculous boom in revenues between now and the end of June. And as Sunday's Packer debacle reminded us, the only miracles in these parts recently seem to be the negative kind.

Monday, January 19, 2015

The reckoning of the morning after

Yeah, I can't see myself forgetting that Packer meltdown yesterday. To see your team blow a chance like that....this really hurts. You never know if a chance that good will come around again.

How unlikely was this loss? I'll let ESPN's win-probability and X and O guru Bill Barnwell explain, with my added thoughts in italics.
When [Seahawk QB Russell ] Wilson had his fourth interception of the day bounce off Jermaine Kearse’s fingertips and into Morgan Burnett’s hands with 5:04 left, the Packers were up by 12 points and had the ball near midfield. ESPN Stats & Information estimates that Seattle’s chances of winning in that exact situation were a lowly 3.9 percent. Take the team with the best point differential in NFL post-merger history, the 2007 Patriots, and have it travel back in time to take on the worst team in post-merger history, the 1976 Buccaneers, in Tampa Bay. The Bucs’ chances of winning that game per the log5 method are 4.3 percent, narrowly better than where the Seahawks stood with a little more than five minutes to go.

Seattle needed just about everything to go right from that point forward, and as you already know, that’s exactly what happened. Outside of Lynch narrowly stepping out of bounds on a wheel route that otherwise would have been the first touchdown in Seattle’s comeback, the Seahawks suddenly exhibited an ability to cast miracles on demand. Of course, there was the expected onside kick, a 21.1 percent shot that went Seattle’s way in a spot where the game all but surely would have ended had the Packers recovered. More on that in a moment. There was the only 2-yard Hail Mary you’ll ever see, a two-point conversion that somehow fell into the waiting arms of Luke Willson. (that play absolutely killed me, how Ha-Ha Clinton-Dix and the rest of the Packer defense just stood around and let that crap get completed). That play ended up saving Seattle’s bacon when the Packers were able to kick a field goal on their ensuing drive. With a defense riddled by injuries, it was a blessing that the Seahawks won the overtime coin toss, never giving the ball back to Aaron Rodgers & Co.
Of course, it never should have come down to a 1 in 25 chance of losing, because this game should have been put away well before the last 5 minutes. Barnwell notes that Packer Coach Mike McCarthy deciding to kick field goals two times from the 1-yard-line in the 1st Quarter ended up costing the Packers a total of 2.6 points in win expectancy. Now maybe the play-calling menu was a little light due to Aaron Rodgers not being as mobile as normal (so rollouts and run-pass options were less likely), but if even 1 of those 2 attempts to go for it work, that's 7 points vs. 6, and even getting stuffed leaves Seattle in horrible field position, which often ends up resulting in points for the Pack within the next 2 possessions.

But the even more egregious coaching error comes from the fact that the injury-riddled and tired Seahawk defense wasn't exactly tested by the likely NFL MVP in the 4th quarter. And that's where me and Barnwell have a special issue with the way this game ended up, and why I look to the sidelines for the reason behind this collapse.
The first was the more egregious of the two. Taking over on their own 13-yard line with 6:53 to go after a 57-yard drive that led to a field goal on their last possession (a really good drive that featured a key 3rd-down conversion pass to Richard Rodgers) , the Packers took over and got ultra-conservative. They ran twice with James Starks before calling for a hitch route to an isolated Andrew Quarless versus linebacker K.J. Wright on third-and-4, which fell incomplete under some pressure from Wright. It was the same play call that won Green Bay the game against Miami late in the fourth quarter, but that was versus abysmal coverage linebacker Philip Wheeler; Wright is one of the better linebackers in football.

The second drive was mostly circumstance. After the interception, the Packers ran the ball with Lacy for a loss of 4, at which point the Seahawks called timeout. I can understand wanting to run clock on the next play, which went for a loss of 2 and another timeout. At third-and-16 and with the clock stopped, a third running play seems reasonable enough.
The results are bad enough, 6 plays, 2 yards, 2 punts, and only 2:52 taken off the clock. But let's note that the mix was 1 pass, 5 runs, when you have the best QB in football and Seawhawks star DB Richard Sherman is playing with one arm. Running the ball may take time off the clock and/or force the other team to take timeouts, but you know what's even more effective at that? GETTING FIRST DOWNS. Sure enough, on the Packers' drive to tie the game at the end of regulation, 3 straight pass plays netted the team 42 yards. Yes, Seattle wasn't playing as tight on defense given the end-of-game situation as they may have been when they were losing and pressing to make a play, but that also opens up opportunities for the Packers' 3 wideouts and Rodgers' usually-strong accuracy. It's just an idiotic, risk-averse strategy to grind the ball into the line at a time when the Seahawks are selling out for the run.

And when you're the Green Bay Packers and lucky enough to have the best QB in the game in his prime, you don't let opportunities slip away like this. The only positive for me in this disastrous Packer loss is that it has happened after I've lived to see the Pack make 3 Super Bowls and win 2. If this was the 1995 season, and 21-year-old Jake was watching this giveaway without having ever seen the Pack in the Super Bowl in his lifetime? I might not be out of bed or able to even read anything about the game, instead of continually shaking my head and seething like I am today.

Fuck it, onto college hoops season.