Tuesday, November 25, 2014

Justice- Ferguson style, and Waukesha County style

I'm disgusted by what seems to be an obvious lack of justice regarding the decision to not charge Ferguson, Missouri police officer Darren Wilson with any crimes after Wilson shot unarmed teen Mike Brown 12 times and killed him. But it's not just the racist overtones of letting a white cop get away with shooting a black kid. It's also that it's yet another example of how the connected and powerful continue to get away with crimes (apparently including murder) solely because they have the right status and enough money to do so. If you're not in the "inner circle", then you're on your own, and the law won't help you. In fact, if you try to seek justice, it's likely that those more rich and powerful than you will use their advantages to make it a very tough hill to climb. And the cheering from racist a-holes supporters of Darren Wilson is very sickening. Are you telling me that a guy who at the very least failed to responsibly be the adult in the incident despite having a position of authority, and now stands to make big money from paid interviews and wingnut welfare (until his George Zimmerman-like self-destruction inevitably happens), is considered some kind of victim? You gotta be freaking kidding.

There's only one good moment from last night's events in the St.L area. And it's this, where a guy in a Guy Fawkes/ V for Vendetta mask jumped into Fox News' racist-porn party.

Fuck those guys, indeed.

In the "connected white person" world, it pays to be buddies with those that are in the inner circle of "justice." Look at how this has worked in Waukesha County, Wisconsin, where then-District Attorney Brad Schimel threw a case in 2010 to allow former Wisconsin Assembly Speaker Scott Jensen to get out of prison on corruption charges. This freed up Jensen to funnel huge amounts of money to get GOP candidates elected to the State Legislature through his work the school voucher lobby, including a reported $850,000 in this last election cycle, with the payback coming in the form of those GOP legislators getting more taxpayer dollars for their unaccountable privte and religious schools. Or how Milwaukee County GOP official Christopher Wiesmuller can take a Scott Walker aide across county lines to Waukesha County, actively work with the aide to cover up evidence in the John Doe case, and act so heinously that he was later reprimanded by the Wisconsin Office of Lawyer Regulation. But Waukesha DA Schimel, who knew of these actions, chose to let Wiesmuller go without one criminal charge being filed.

Schimel's reward for choosing GOP loyalty over fair justice? He ended up being the GOP's candidate for Attorney General this November, and the voters of the rest of the state were dumb enough to vote him in, where no doubt this back-scratching routine will repeat itself on a statewide level. With that in mind, don't expect any charges or legal action to follow Public Service Commission Board member Ellen Nowak, despite serious impropriety. Nowak is a Scott Walker appointee to the PSC Board (her previous job was... chief of staff to the Waukesha County Executive), and showed whose side she was on when she appeared on a panel with the CEO of a large state utility, and seemed to give advice to energy executives on how to screw over users of alternative energy. This is part of an overall rate scheme that will in effect raise the utility costs for small residences while cutting the costs for large (read: corporate) users.
Ellen Nowak, a regulator for the Wisconsin Public Service Commission, and Wisconsin Energy Corp. (WEC) Chief Executive Officer Gale Klappa participated in a panel together at a utility industry conference in June. Her discussions with Klappa at the conference should have disqualified her from voting on a pending rate case, said Bryan Miller, a co-chairman of the Alliance for Solar Choice...

Wisconsin Energy had initiated the process for raising its rates in April. Less than three weeks after the Edison Electric Institute event, the company submitted a detailed proposal that included a fixed fee for customers with solar power, sometimes called distributed generation or D.G.

That proposal was approved Nov. 14 by the commission 2-1, with Nowak voting in favor. She was appointed by Governor Scott Walker.

“The traditional rate design will no longer work with the growth in the D.G. environment,” Nowak said on the panel. “We need to make more of the fixed costs more in line with fixed charges, particularly so those customers who don’t participate in DG are not paying for those who do.”
It's also telling that it's Bloomberg News that's running this report, and not the Milwaukee Journal-Sentinel or other state media. Hmm, think JournalComm might be getting a benefit from this new rate system and possibly be receiving nice ad revenues from these utility companies, and that's why they're not very willing to look into Nowak's connections and sketchy behavior? Guess it pays to be connected.

This is what distresses me most about the state of events in both Ferguson and in Wisconsin. There is a small, incestuous group of cronies that is perverting justice, and using that legal advantage to get even further ahead of the average person than their large bank accounts already allow them to. In the meantime, the rest of us don't see the courts as a place that the evildoers and exploiters can be kept in line, even if they break the law and do damage to average people. And if that trend gets much worse, there will be plenty of other Ferguson-type riots from people who do not believe the legal and legislative system will work for them, and they're going to use other, more destructive means to change a situation they cannot accept.

I don't get why this awful situation has to get worse, but it seems it has done so over the last decade-plus. And what does it take to stop this state's and this country's trend toward becoming a full-fledged banana republic?

Monday, November 24, 2014

Lower growth revisions show Wisconsin deficit may get worse

The Wisconsin Department of Revenue finally released an updated Wisconsin Economic Outlook last week. This used to be a quarterly report but the frequency of this release has been slowed in recent years, and this report was only the second of 2014, 9 months after the first one came out in January (and conveniently released after the November elections).

In the wake of this report, the good folks at the Wisconsin Budget Project noted that the DOR lowered the amount of current and future-year economic growth compared to their last report. That’s important to bring up because the budget “surplus” that was projected earlier this year was based largely on these stronger growth numbers for both the state and the nation as a whole, leading the Wisconsin GOP-run Legislature and Walker Administration to add in further tax cuts to “give back” the surplus. As the Budget Project points out
The January economic report was issued in conjunction with increased state revenue projections, which helped persuade state lawmakers to enact substantial tax cuts. But over the last 10 months the estimates of Wisconsin’s economy, i.e. the state’s “gross domestic product” (GDP), have changed as follows:

•The anticipated [U.S] GDP in 2014 is now $152 billion less (-0.9%) than assumed in January.
•The estimate for 2015 is $210 billion lower than previously anticipated (-1.1%).
•The anticipated 2016 GDP is now $234 billion less than estimated in January (-1.2%).
The higher figures were used by Wisconsin’s Legislative Fiscal Bureau to forecast a $1 billion surplus this January. But now with the lower growth in these years, the potential revenue growth for the State of Wisconsin should also be lowered, which would increase the already-large deficit that is forecast for these next two years as a result of Walker/WisGOP tax cuts and one-time gimmicks that spent out the projected surplus.

It’s not just U.S. GDP that was lowered in the DOR’s November forecast compared to prior years, but also a number of local and national economic stats. And the lower numbers for 2014 also lower the base for future years, increasing the gap (much like how Wisconsin’s revenue shortfall in 2013-14 has set off larger deficits in future years).

Personal Income forecast, U.S., Wis. Economic Outlook
2014 +4.6% in Jan, +3.6% now ($147.8 billion lower)
2015 +5.0% in Jan, +4.7% now ($207.4 billion lower)
2016 +5.3% in Jan, +5.3% now ($223.4 billion lower)

Total job growth, Wisconsin, Wis. Economic Outlook
2014 +41,000 in Jan, +39,600 now (-1,400)
2015 +48,600 in Jan, +34,200 now (-15,800)
2016 +50,700 in Jan, +42,600 now (-23,900)

That last stat kind of seems like a big deal, where the state is projected to add nearly 24,000 fewer jobs over the next 3 years than it the DOR thought it would 10 months ago. Obviously, fewer people working would likely lower revenues from the previously estimated amounts for those years, and could portend yet another reason that we could face a huge budget crisis in the coming months.

When the Wisconsin Department of Administration released its revenue estimates and budget requests last Thursday, the Wisconsin Budget Project returned with another blog post to sum up the situation.
The bottom line is that state lawmakers rushed through a package of tax cuts this year – despite early warning signs that tax revenue was starting to fall short of the projections, and that their actions were creating a severe imbalance between revenue and spending. If they are unwilling to roll back any of those tax cuts, they will have to cut more than $2.4 billion from current commitments and agency spending proposals to balance the budget this year and in the next biennium.

If lawmakers insist on making additional tax cuts, that will require even deeper cutting in the public investments that are critical to Wisconsin’s economic vitality, such as our public schools and universities.
With state revenues reflecting that lowered amount of hiring and economic activity, and revenues coming in below the DOA’s rosy scenarios are indicating, it may be closer to a $3 billion gap that has to be closed. But then again, Walker and the WisGOPs have been apt to choose politics over sensible policy, as long as it suckers enough low-info and mis-info’d voters into keeping them in power. So from that perspective, maybe these two rounds of Koo-Koo tax cuts worked.

But those reckless tax cuts and the deficits that they have led to are going to cause a whole lot of hard times to those of us outside the WisGOP “inner circle.” Not that the insider’s club at the Capitol really cares about that.

Saturday, November 22, 2014

Wisconsin deficit already spiraling higher

The deficit that resulted from Thursday's Wisconsin Department of Administration's summary of budget requests and revenue projections were bad enough. To review, $197 million must be made up in the next 7 months, and over $2.2 billion more in the 2 years after that. But those numbers may be soft-selling how badly the situation really is, and Friday's release of October's numbers from the Wisconsin Department of Revenue indicate that the deficit may grow larger.

At first glance, the October figures look disastrous, as total revenues were down 3.7% compared to October 2013, and income taxes were down a stunning 11.0%. But I also know that approximately $55 million a month is being reduced due to the changing of the withholding that began in April, so I add in that amount, and...the numbers still aren't good. Income taxes still end up down 3.7% compared to last year, and adjusted total revenues were up less than 1%. That's well behind the 5.0% that the DOA projected for revenue growth in this fiscal year, and even fell behind the 3.5% that the LFB originally projected back in May. Based on the first four months of FY 2015, I projected all major components of the State of Wisconsin's revenues, to see where we're on track to end up at June 30, and the numbers I am comparing this to are the figures from the 5% revenue gains that were projected in the DOA report.

Projected Wisconsin revenues vs. DOA projections FY 2014-15
Individual Income Tax- DOWN $306.3 million
Sales Taxes- UP $33.5 million
Corporate Taxes- DOWN $19.2 million
Excise Taxes- In line, I'll say even.
Other taxes- No real difference

Being $292 million short on revenues from the DOA's rosy scenario would mean that Wisconsin would have a $489 million shortfall in this fiscal year, much more than the potential year-end deficit that Scott Walker faced in 2011 when he claimed the state was "broke" and had to institute Act 10 as a result.

In addition, if that revenue shortfall were to hold, it would lower the base in the following years, and cause those years to have higher budget deficits than the massive ones the DOA is already predicting. If you keep with the 2.9% average revenue increase that Wisconsin has seen over the past five years (straight from otherwise-BS assumptions that the GOP's Co-Chairs of the Joint Finance Committee pulled out before the election to claim the budget was in "surplus"), the deficit numbers for the two years in the next budget are as follows:

Deficit in Fiscal Year 2015-16 $1.364 billion
Deficit in Fiscal Year 2016-17 $1.575 billion

Obviously, there's a long way to go between now and June 30, 2017. But if there is no turnaround in the downward trends on revenues or the increasing amount of expenses (BadgerCare Plus enrollments have consistently gone up in the 6 months after Walker's Obamacare-related changes happened in April 2014), those bad numbers could worsen, making it extremely likely that there will be some kind of budget repair bill to fix the deficit for the 2015 Fiscal Year.

That's not the only bad budget news that broke on Friday, as WKOW's Greg Neumann posted an excerpt of his interview with Wisconsin DOT Secretary Mark Gottlieb, who previously asked for $751 million in tax and fee increases to pay for needs in the upcoming budget. Neumann quotes Gottlieb in a story on Friday as saying the Transportation Fund deficit is now as high as $900 million, with the assumption of that DOT budget is to fill much of that hole with hundreds of millions of dollars in transfers from the General Fund. With the General Fund's red ink growing by the day, it becomes less likely that those funds can be transferred over to the DOT, and that means there would have to be even more tax increases and/or cuts in aid and projects at the DOT as a result.

Stay on this story, because you can bet the fiscally-ignorant and paid-off Eastern Wisconsin media will continue to ignore what is truly becoming a fiscal crisis in Wisconsin. And if the Dems in Wisconsin had any guts or smarts, they'd be blaring this story wide, and pre-empting potential one-time gimmicks that Walker might try to plug this exploding deficit.

Friday, November 21, 2014

Wisconsin jobs up in October, still lagging behind U.S., neighbors

Yesterday featured another monthly jobs report from the Wisconsin Department of Workforce Development. In general, it was a decent number, with 4,000 private sector jobs created in October 2014, while September’s private sector jobs total was revised down by 300, for a total increase of 3,700. Not bad, but slightly below the national rate of growth, since the U.S. as a whole added 209,000 private sector jobs (214,000 jobs overall) in October, and the previous months were revised up.

When you plug those figures in, it means that while the Wisconsin numbers went up in October, the Walker jobs gap has grown yet again, now just below 71,800 private sector jobs, and 66,000 jobs overall.

Wisconsin’s job growth was strangely uneven in October, as manufacturing employment went up by 5,400 seasonally-adjusted jobs, but the rest of the state’s private sector LOST 1,400 jobs, and the “Professional and Business Services” sector dropped 3,500 jobs last month. It’s the sort of report that makes me want to see where the November figures end up, because it almost seems like the seasonal adjustment for October threw a lot of figures off.

Job change, Wisconsin Oct 2014, non-seasonally adjust. vs seasonal adjust.

Manufacturing +400 non-seasonally adjusted , +5,400 seasonally-adjusted
Prof.-Bus. Services -500 n.s.a, -3,500 s.a.
Leisure-Hospitality -7,000 n.s.a, +1,500 s.a.
Trade +3,600 n.s.a, -1,300 s.a.
Government +12,900 n.s.a, -3,900 s.a.

While Wisconsin’s drop in unemployment to 5.4% is also nice (particularly given that it’s in a month where the participation rate went up), that merely matches the 0.1% drop nationwide, and the state stays 0.4% below the national rate. The 2.3% drop in unemployment in Wisconsin during the Age of Fitzwalkerstan isn’t near the 3.3% drop in the rest of the country since January 2011, as the Obama Recovery has continued. And with the Bureau of Labor Statistics releasing the monthly jobs figures for all states today, we can see that Wisconsin's job gain was less than a majority of our Midwestern neighbors, and we were especially dwarfed by our neighbors across the St. Croix, who added more than twice as many private sector jobs as we did.

Change in private sector jobs, October 2014, Midwest
Minn +10,200 private, +9,500 overall
Ohio +8,400 private, +1,000 overall
Mich +7,200 private, +7,200 overall
Ind. +5,300 private, +7,300 overall
Wis. +4,000 private, +100 overall
Iowa +2,300 private, -200 overall
Ill. -2,000 private, +900 overall

Democratic-run Minnesota has now gained 46,300 private sector jobs over the last 12 months, while Wisconsin has only created 31,000, despite us having a higher population and job base than Minnesota (hopefully we can at least beat them on the football field a couple of time in the next 8 days). And Wisconsin is still barely out of the cellar for private sector job growth in the Midwest over the 45 months that Scott Walker has been in office, just nudging past Illinois in recent months.

These overall stats show why that despite the last couple of months going well in Wisconsin, it's sickly hilarious to hear Scott Walker try to talk up Wisconsin’s job growth on his national “pleae take me seriously for President” tour. Because a minute of research from national journalists would show Wisconsin still badly lagging the Obama Recovery, and much of its Midwestern neighbors, since the Age of Fitzwalkerstan began in January 2011.

Thursday, November 20, 2014

Right on cue- at least $2.4 billion in deficits for Wisconsin

Yep, just as I suspected. The Wisconsin Department of Administration summarized the state’s budget requests and estimated revenues for the next budget, and what do you know? We have a $2.2 billion deficit in the next budget, along with another $197 million to make up in the next 7 months! This is the DOA report that I talked about earlier this week, and you can click here to see all of the nuts and bolts from it.

To review, we ended 2014 Fiscal Year on June 30 at a net balance of $516.9 million. And now with the DOA report, the deficit blows up this way.

ENDING FY 2014 BALANCE +$516.9 million
ENDING FY 2015 BALANCE -$132.1 million
MINUS required reserves -$65 million
TOTAL TO BE MADE UP BY JUNE 30, 2015 $197.1 million

2015-17 budget
FY 2016 REVENUES $15,540.4 million
TOTAL EXPENSES $16,636.4 million
DEFICIT IN 2015-16- $1.096 BILLION

FY 2017 REVENUES $16,125.5 million
TOTAL EXPENSES $17,243.6 million
DEFICIT IN 2016-17 $1.118 BILLION

And by the way, those revenue numbers from DOA are quite rosy. They anticipate a 4.98% increase in revenues for Fiscal Year 2015, while the Legislative Fiscal Bureau has only estimated a figure near 3.5%. I estimated adjusted revenues to be up 3.74% based on the figures through September (we’ll see October’s numbers tomorrow), and if that 3.74% holds up for the rest of the fiscal year, the amount that needs to be filled by June 30, 2015 increases to around $391 million - above the $279 million in the state's rainy day fund.

With that in mind, I’ll take you back to a document that the LFB wrote two months ago, in light of the $281 million revenue shortfall that hit in Fiscal Year 2014, which followed two rounds of Koo-Koo tax cuts that Gov Walker signed onto.
Revenue Shortfall Provision. Section 16.50(7) establishes a separate process that must be followed if there is a larger revenue shortfall. Under this provision, if at any time after enactment of the biennial budget, the Secretary of Administration determines that previously authorized expenditures will exceed revenues in either year of the biennium by more than 0.5% of the estimated GPR appropriations for that fiscal year…the Secretary is required to immediately notify the Governor, the presiding officer of each house of the Legislature, and the Joint Committee on Finance of the revenue shortfall.

Following this notification, the Governor is required to submit a bill to the Legislature containing recommendations for correcting the imbalance between projected revenues and authorized expenditures. Further, if the Legislature is not in a floor period at the time of the Secretary's notification, the Governor is required to call a special session of the Legislature to take up the matter of the projected revenue shortfall and to submit a bill dealing with the shortfall to the Legislature for consideration at that special session.

It is important to note that s. 16.50(7) gives the Secretary of DOA discretion as to how and when the determination of a revenue shortfall is to take place. Once that determination is made, the Governor is required to submit recommendations correcting the imbalance between revenues and expenditures. However, the statutes do not specify a time frame for either the DOA Secretary’s determination or the submission of the Governor’s recommendations.
But don't fear, Walker DOA Secretary Mike Huebsch is claiming that there won’t be a need for such a budget repair bill in the coming months, because they’ll use currently-undisclosed methods to close the budget gap.
The challenges of fiscal year 2014-15 are largely a result of adverse federal tax law changes commonly referred to as the federal fiscal cliff, which impacted many states. This led to tax planning distortions that were a consequence of both the 3.8 percent surcharge on investment income included in the Affordable Care Act and the expiration of capital gains tax reductions, both of which took effect in 2013 (both moves haven’t exactly crashed the stock market, now have they?). This meant that in 2012 taxpayers divested at the expense of future years, negatively impacting state tax revenues. This was a risk my department highlighted in this report two years ago (this didn’t stop Walker and the WisGOPs from cutting taxes based on that one-time bump in revenues), and referenced in the Annual Fiscal Report last month.

However, through continued prudent management of agency resources, the shortfall noted above will be addressed and the current biennium will end in balance.
Huebsch uses the always-fun “uncertainty” excuse, which gets a double “BULLSHIT” because it not only does it blame tax changes due to the implementation of Obamacare that have already been in effect for more than one fiscal year, but in addition, federal tax revenues went up by 8.9% in the just-completed federal fiscal year, and the country's having its best job growth in the last 15 years. Yeah, not really buying into that one.

And oh yeah, the state has to give an additional transfer of $25.75 million to the Transportation Fund this fiscal year (because Walker's DOA held it back in the last fiscal year to make the FY 2014 balance look better ahead of the election), and has passed a 4% increase in many local road and transit aids that has to be paid off. So the real question is how will the Walker folks intend to make up the few hundred million dollars in unspecified cuts that will undoubted have to happen, and when will they tap the rainy day fund to pay off some of their fiscal recklessness.

Hmm, maybe some national reporters might want to ask that of our fair Governor as he’s galavanting around the country while his state goes broke, claiming he hasn't raised taxes while Walker's DOT asks for $750 million+ in tax increases and higher fees to expand expressways as a payback his buddies at the Road Builders. There are a lot of us in Wisconsin who pay Scott Walker’s salary that’ll be interested in these answers.

Tuesday, November 18, 2014

Bucks arena- jock tax ups and downs, and JournalComm's big payoff

In light of last week’s attempted shakedown of billionaire Milwaukee Bucks owner Marc Lasry by pissant Assembly Speaker Robbin’ Vos, (leading to Lil’ Vossy getting skewered by Bruce Murphy today at Urban Milwaukee), let’s get back to talking about the prospects for a new Bucks arena.

When the change in ownership happened last April, Lasry and fellow new Bucks owner Wes Edens indicated that they would pay $100 million out of their own pockets toward a new arena, and outgoing Bucks owner Herb Kohl said he’d chip in another $100 million himself. There are also indications that naming rights and/or other investors could contribute another $100 million toward the project, making the total private investment reach $300 million. The rest would likely be made up by some kind of public funding or incentives, and estimates indicate that the total cost of a new Bucks arena would be between $400 million to $500 million, which means the public would be on the hook for $100 million to $200 million.

With that in mind, the Wisconsin Legislative Fiscal Bureau released a report last week which looked into the possibility of using what’s known as a “jock tax” to pay for the public funding side of the Bucks arena. I mentioned the jock tax issue in relation to the Bucks arena a few months ago, but what it basically does is split up the salary of athletes and other entertainers into the number of days they are in a given state, and then taxes them accordingly.
As an example, assume that an NBA player that is a resident of Florida has 210 duty days in a year, and two of them are in Wisconsin. In this case, the player’s allocation percentage would be 0.95% (2 divided by 210). Therefore, 0.95% of the player’s compensation for services rendered as a team member would be taxable in Wisconsin. If the player’s total compensation for services rendered to the team was $2 million, then $19,000 of that compensation would be taxable in Wisconsin. However, if the player was a resident of one of the four [tax] reciprocity states (Illinois, Indiana, Kentucky or Michigan) none of his compensation would be taxable in this state.

This office obtained information regarding NBA players and other employees who were potentially subject to Wisconsin income tax as of December, 2012. After conducting a search of tax returns filed for tax year 2012, the Department of Revenue indicates that these individuals, in the aggregate, paid state income taxes of approximately $10.7 million in that year.
The LFB then projects out how this may work in terms of generating funds for a new arena, which they assume will be built by the state borrowing the money and then paying back the costs via the jock tax.
…Assuming a flat, 20-year repayment structure on the bonds issued for a new stadium facility for the Milwaukee Bucks, $10.7 million in annual revenues associated with the estimated amount of existing state income taxes on NBA players and other employees subject to the state’s individual income tax could support approximately $150 million in state general obligation bonding, based on current interest rates. The total 20-year cost to repay the $150 million in general obligation debt would be $214 million, which includes $64 million in interest costs.
$150 million toward the arena would likely be enough to make the project whole, and with the NBA’s salary cap likely to go up significantly in future years due to the huge TV contract that it signed last month, that also makes it likely that a jock tax would add even more than $10.7 million a year down the road, meaning that it would pay for any overruns, or the jock tax could be retired in less than 20 years.

Now here’s the downside to any type of jock tax being put in place – the state wouldn’t be levying any additional tax on these NBA players and personnel, it’d merely funnel the money into a separate account that can only be used toward a Bucks arena. It essentially would decrease the revenue available for state government, since those millions of dollars can’t be used for other General Fund needs like it is now. So while it would keep the general taxpayer’s money out of the funding equation for the Bucks arena, what’s concerning to me is that this move would still have statewide effects. The $10.7 million+ of lost revenue would result in cuts elsewhere, or it would have to be made up through some other kind of tax increase or other form of added revenue. And when we may have an estimated $2.5 billion budget deficit already in the next budget, adding to the red ink might not be a great plan.

The location of a Bucks arena is obviously another key component to this question. It was reported by Milwaukee Magazine’s Jim Owczarski last month that the team is considering a purchase of the current Journal Communications building across 4th Street from the Bradley Center and the building next to it on State Street, with the arena possibly facing the Milwaukee River across 3rd Street. Owczarski quotes the local Milwaukee alderman in the story as seeming to prefer the JournalComm site to building on the site of the old Bucks arena at the MECCA (now known as the UWM Panther Arena).
An arena that has sightlines to the green space of Pere Marquette Park and the river is appealing to the Bucks ownership group.

Fourth District Ald. Robert J. Bauman said that while he has no direct knowledge of any negotiation between Journal Communications and the Bucks – "I don't know that specifically, but I'm not surprised – it's a logical area of exploration for them" – he did say Journal Square makes sense as a location for a new multi-use facility.

"If that site is big enough by itself, then I think that's a very viable option," he said. "If they have to span 4th Street and also demolish the (UWM Panther) Arena, as well – that's going to be a big, big political argument.
Putting the arena in that spot definitely could look cool if done right, Owczarski has a new blog post up today that gives an idea of how the arena might look, with the arena floor perhaps being underground.

The corporate side of this potential deal has some intrigue as well, as the soon-to-be-merged Journal Communications likely could use the money from a potential sale of its headquarters, and JournalComm needs Bucks games on AM620 to keep listeners in winter. This is especially true considering that the soon-to-be-Scripps-owned Station of Sykes now has no Badger sports, which means at least a 2-month gap of no major sports programming between the end of Packer season and Opening Day at Miller Park if the Bucks leave.

When you put these two items together, it’s no surprise that JournalComm’s paper and media have been pushing hard for this new Bucks arena, as they stand to get quite a payoff from it (yet another reason not to trust their outlets). But given that the 2017 deadline is approaching for the Bucks to have an arena deal in place, or else the NBA could buy the team back and likely would move it elsewhere, we will get to find out soon enough just what the entire package looks like, who’ll be paying up, and who’ll be getting paid off.

DOT budget part 2- How it'll drive our deficit higher

This is the second part of my analysis of the Wisconsin Department of Transportation's budget request, and its plans to use General Fund tax dollars to fund items in the Transportation Fund.

The first part I want to bring up relates to funding of transit. Transit systems are currently given state assistance through the Transportation Fund, and while it appears the DOT budget request plans to keep Transit in the Transportation Fund (unlike what Gov Walker has requested in his last two budgets), General Fund money will be used for the state's funds. The argument the DOT gives for doing so goes like this.
The purpose for transit operating aids in Wisconsin is defined in section 85.20(2), Wis. Stats., in part to promote the general public good. While this statutory purpose was defined years ago, it has never been more evident than today. With changing demographics, lifestyles, and societal influences, transit services have grown beyond transportation and mobility to truly serving the general public good –jobs, economic development, education, commerce, and health. Therefore, it would be seem that funding for state aids serving the general public good should come from general public revenues.

Transit services do not however provide any revenues to the state’s Transportation Fund. User fares go toward the costs of the service and the systems themselves pay few state Transportation Fund revenues. Funding transit services with Transportation Revenues, therefore, directs fees paid by users of other modes of transportation to a service serving the general public good. Funding transit operating aids from the state’s general fund, rather than the Transportation Fund, would further strengthen the concept of and relationship between user fee revenues and investments in transportation infrastructure.
In other words, since transit operators generally don't pay much if any Transportation Fund taxes (city bus systems generally are exempted from paying gas taxes), they don't need to be getting Transportation Fund dollars. Hmmm.....

With this in mind, the DOT budget request asks for $275.8 million in added General Fund money, with almost all of that increase being used to fund transit and some intriguing new transit proposals that are in the budget request (such as $30 million to help transit systems buy new vehicles, and $20 million to establish new routes and/or re-establish ones which had to be cut in recent years). But this may prove quite difficult to fully fund, as the General Fund pays for a lot more than just Transit Aids, which means yet another agency has to try to muscle in and get a piece of what are already very limited funds (you’ll see how limited in a bit).

The other spot involving General Fund money paying for Transportation involves a transfer from the General Fund into the Transportation Fund, where the money can be used for any Transportation Fund program. This number was set at 0.25% of General Fund taxes in 2011 (item Number 5 in this document has more info on it), and $110.3 million was added on top of that in the last budget. Now, the DOT budget request wants to up the amount even further, and in doing so gives an ominous warning about future General Fund revenues.
Amend s. 16.5185 Wis. Stats. to increase the transfer from the General Fund to the Transportation Fund from an amount equal to 0.25 percent of the moneys projected to be deposited in the general fund designated as “Taxes” in the summary in s. 20.005 (1), to an amount equal to 1.00 percent.

The effective date of this change is June 30, 2016….

Under current law gross state revenue for the Transportation Fund from all sources, not including proceeds from the sale of GO and TR bonds is expected to fall 2.6 percent in the 2015-2017 biennium compared to the 2013-2015 biennium. Available state revenue is expected to drop 4.3 percent compared to the 2013-15 biennium. As a result, the Department is proposing an increase to the existing continuing General Fund transfer first authorized in 2011 Wisconsin Act 32.
Why would state revenue drop 4.3% compared to this current budget? Is the revenue picture even worse than the LFB has indicated it is? Are there some other kind of tax giveaways to come or funds being blocked off that lowers the amount of funds available for use? That’s the kind of statement that leads to more questions than answers, and it gives me another reason to give a look at what the Department of Administration will hint at when it releases its summary of budget requests and revenues later this week.

What we do know is that between the proposals that would use of GPR funding for Transit, and the increased transfer of General Fund money for the Transportation Fund, this means the total amount of General Fund money being used by the DOT would be upped to $548.36 million over the 2015-17 budget. That's up $275.8 million above the adjusted base amount in the budget, and $476 million above what the LFB estimated for a transfer when it estimated the structural deficit back in May. So let's add that $476 million to the $2.1 billion General Fund deficit that is already in existence for the next budget, so that puts us around $2.5- $2.6 billion in the red for this upcoming budget in the General Fund. In addition, if the warnings of a state revenue drop are correct, then that deficit will blow much higher, because the $2.5 billion deficit not only assumes all budget requests would be paid for, but it assumes revenue growth of 2.9%. RUH ROH!

The options to dig out of this budget mess were limited even further this November. That’s because the constitutional amendment approved by voters on November 4 disallows any transfers back from Transportation to the General Fund if the General Fund runs short or if the Transportation Fund is overfunded. So the General Fund is now unable to be bailed out if the Transportation Fund’s tax and fee increases (mentioned in this post) get more money of out Wisconsinites than expected, or if costs end up lower for the many road projects that are proposed. That’s a huge reason why I voted NO on that issue, and the siloing off of those funds could come home to hurt the state’s finances in a big way over this next budget, if the DOT budget request is any indication of where the state truly stands.

This is why we need to be vigilant over whatever numbers come out in these coming months, because the hints from the DOT's budget request and plans to transfer funds from the General Fund to the Transportation Fund indicates a huge budget deficit, likely worse than the situation Scott Walker faced when he took office in 2011- and the "tools" of Act 10 have already been used up. Keep your eyes peeled and be ready to follow the bouncing balls in what is sure to be a budget built on rosy assumptions and a lot of shell games.