Friday, March 4, 2011

More fun and games with the big budget (geeky)

So I've finally gotten around to some reading about Gov. Walker's 2-year (July 1, 2011- June 30, 2013) budget proposal. I highly recommend the Budget in Brief over the 1,300+ page kahuna with all the details. But here's a few highights that go into the added budgetary gimmicks of Gov. Walker and the Koch-heads.

1. Around page 73 comes the information on added pension and health insurance premiums for state and local employees. These increases, which the unions indicated they would accept 2 weeks ago, would cut spending by about $30 million for this biennium (taking care of most of the current budget in need of "repair"), and $326 million for the 2011-13 one. It's a nice chunk of change, and while a bit severe for my taste, is real progress, but it's not a free lunch cut. The $98 million in health contributions are pre-tax dollars, so if you assume a 6.5% tax rate for a $50,000 single earner, that's over $6 million in reduced income tax revenues.

I'm not even mentioning the reduced sales and tax and economic activity that would result from hundreds of thousands of households losing 10-15% of their after-tax income. But does Scotty's budget mention that reduced revenue? No, of course not. So there's a hole that probably reaches the tens of millions of dollars that's magically assumed to disappear.

3. Now you're probably saying, "but Jake, the economy is going to take off and that'll add revenues through higher income, corporate and sales taxes. (you were saying that, right?) Well, Walker's budget guys sure don't think so, as they illustrate starting on page 79. They estimate job growth to be all of 140,600 jobs added between the end of 2010 and the end of 2013, a yearly rate that's barely above last year's growth of 32,600. But wait, I thought there were supposed to be 250,000 new jobs by 2014? Walker's own budget indicates that they'll be about 47,000 below that pace if he's still around in 3 years. HMMMMMM....

In fact, Walker and the WisGOPs are gloomy about the economy in general. They anticipate job growth nationwide of 1.4% for 2011 or about 150,000 jobs a month, which is interesting to note given that today's monthly jobs report clocked in at 192,000 new jobs. Maybe they're working it out with the GOPs in Congress to screw up the economy in the second half of the year to give Obama trouble, and that's where it comes from (don't bet against this being a strategy, by the way).

Another suspicious number is the 1.6% inflation estimation for 2011. Inflation was already up 0.8% between November and January, and that's before the gas spikes and $104 oil hit. Now inflation certainly sucks the big weenie when it comes to purchasing power and in costs such as gasoline for State Patrol cars, but it also raises sales tax and excise revenue, because those costs are often based on a % of the price of the product. It's kind of the same way people could get jacked by higher property taxes because their property values shot up. So, much as I said earlier, don't be surprised if current-year revenues "suprise" on the upside.

3. This budget has NO LAYOFFS. In Appendix 5, you will see that not many positions get eliminated in reality. After you throw out the changes due to the Dept. of Commerce UW-Madison and the UW Hospitals being spun off of state government (the jobs aren't being reduced, just moved) the budget mentions that all 735 vacancies over a year old will have their position eliminated, 269 positions go due to the consolidation of a couple of juvy facilities, and 59 more are due to a couple of sexual offender facility closings. After those 1,063 positions are taken care of, there are basically no other position changes! Sure, some jobs get shifted from this department to that, but there aren't these massive drops in the number of workers that will be around 2 years from now.

Which begs the question- how can you lay anyone off if no one is in the jobs being taken away? Especially when requests for eestimates of retirement benefits from state employees are up 50% from this time last year. Heck, Walker and co. can't even tell the state unions where the layoffs will come from.

I'll tackle some of the other absurd parts of this budget (like cutting aid to schools and municipalities without allowing them to make up the difference) at a later point. But if you needed more proof that Gov. Dropout is all about union-busting and posing for national media instead of taking care of our budget issues, there it is. To call this budget a shaky one is to say that Charlie Sheen has been a wee bit off-center recently.

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