Tuesday, June 27, 2017

WisGOP in full meltdown as leggie leaders have bitchfest

I knew the GOP Legislature was having trouble in getting the 2017-19 budget together, and that they weren’t likely to get anything done until after that two-year cycle started on July 1. But I wasn’t anticipating that it would completely melt down like it did today.
Senate Majority Leader Scott Fitzgerald, R-Juneau, called Assembly Speaker Robin Vos’s position on transportation “laughable” as he detailed differences between the two GOP caucuses on transportation during an impromptu availability in the Capitol press room.

Vos, R-Rochester, then came to the room minutes later to return fire, insisting the only thing laughable was the idea of putting more debt on the state’s credit card to pay for roads.

The blistering exchanges came after a 40-minute meeting at the Legislative Fiscal Bureau in which both sides accused the other of breaking off talks.
Apparently Fitz thinks the idea of actually paying for projects with real money is “laughable”? And these guys are considering blowing up the Constitution over demands that Congress balance ITS budget? Ohhh, kayyy.



But then Lil’ Robbin’ decided to one-up Fitz by pulling a pout of his own.
Assembly Speaker Robin Vos says he's willing not to increase funding at all for roads if Senate Republicans and Gov. Scott Walker refuse to consider higher gas taxes or fees to pay for construction projects.

Vos said Tuesday that Assembly Republicans continue to refuse borrowing as much money as their colleagues in the Senate are proposing to pay for roads. Senate Republicans have proposed $850 million in additional borrowing but refused to consider higher gas taxes or fees.
This would be a cut to Governor Walker’s budget that comes on top of Walker/WisGOP delays that have already happened for major highway projects due to the last budget’s limits on spending (but not borrowing). Good luck selling “even less road work” to Wisconsinites who are already dealing with enough potholes and construction delays.

And another big area of the budget that was thought to be near agreement might not be that close after all



This is apparently related to Vos wanting to greatly expand voucher eligibility to families making 3 times the poverty rate, nearly double current income limit. Because apparently giving a tax break to those families for paying private school tuition wasn't enough, and Robbin' wants those people to get even more of their school costs paid for by taxpayers!

Fitz got so frustrated today that threatened to have the Senate go it alone, and not wait for the Joint Finance Committee to finish debating the budget.



That comment from Fitz about having the Senate pass their own budget and then work out a separate Assembly plan in a conference committee would delay things even further. In that instance, a conference committee would have to reach an agreement on the budget, and then both houses would have to pass the same document.

JFC member Gordon Hintz (D-Oshkosh) seems to be bemused by the GOP infighting, and offered a few “Helpful Tips to Pass a Responsible Budget” for his Republican colleagues if they wanted to learn how to share, and break the budget impasse.
Pass a long-term transportation funding solution to address the ongoing shortfall. As long as transportation funding relies on increased borrowing or delayed projects, budgets will remain difficult. If you continue borrowing, more transportation revenue is spent paying off debt and interest. Plus important building projects in the UW System will be cut in order to manage total state debt. If you raid the general fund to pay for roads, that funding comes at the expense of other state investments like K-12 public education. If you continue to delay projects, those cost increase, the state spends more on maintenance, and the problem will get worse for the 2019-21 budget. You increased fees to fund our state parks so it is hard to understand what is different here. Just fix it.
And with the added breakdown in K-12 agreements among the Republicans, Hintz said that perhaps they need to figure out what they really want to pay for, and realize that they can’t have it all in this budget of limited resources.
2. Fund your most important priorities first. If funding K-12 education is truly the most important investment, then start there and pay for Wisconsin’s public schools first. This might mean you don’t have enough money to repeal the state forestry mill tax for $180 million or fund the Governor’s increased school levy credit at the full amount. But if putting dollars in classrooms around the state is really a priority, then there should not be a disagreement.

3.Don’t create new spending programs when you are unable or unwilling to fund existing ones. If you are struggling to fund K-12 education or the UW System’s existing programs, don’t create new ongoing expenses like expanded taxpayer supported private school vouchers for kids that are already going to private school. And reconsider the new $3 million already approved for a new redundant public policy school of conservative thought.
It’s quite the troll job by Gordon, because it reminds us what a mess the GOP has placed themselves (and us) in with this house-of-cards budget. Now with no money lying around to pay for all of these pre-election talking points (and giving a kickback to their puppetmasters), they are lashing out amongst themselves like a bunch of kids who have to make grown-up choices that they are incapable of dealing with.

Yeah, I’m thinking we may have to wait a while before we get a budget in place for the next two years, even though the two-year cycle starts on Saturday. And even scarier- what happens if Obamacare repeal actually does become law, and they have to rip up the budget numbers even more?

Maybe we should give the Dems a turn at handling this, both in the Legislature and in the Governor’s chair. Seems like they might actually be more successful in getting something done, and they might not wreck the state’s finances (and cars) in the process.

Monday, June 26, 2017

CBO score on Senate GOP health care. No surprise- this bill is awful

This afternoon, the Congressional Budget Office dropped its analysis of the Senate GOP's health care bill. Obviously the big headline from the CBO analysis is the estimate that 22 million more Americans will become uninsured by 2026 than under Obamacare, making for a total uninsured population of 49 million. This includes 15 million who will become uninsured next year. and it shows almost no improvement from the 23 million in new uninsured that was in the bill that passed the House of Representatives.

So why would people become uninsured? The CBO says the largest increase will come from people being booted off of Medicaid, as the Senate bill reduces reimbursements to states.
Medicaid. Enrollment in Medicaid would be lower throughout the coming decade, with 15 million fewer Medicaid enrollees by 2026 than projected under current law in CBO’s March 2016 baseline (see Figure 4). Some of that decline would be among people who are currently eligible for Medicaid benefits, and some would be among people who CBO projects would, under current law, become eligible in the future as additional states adopted the ACA’s option to expand eligibility.
In fact, the CBO says that Medicaid's cut will get worse as the years go on, and the damage will continue well past 2026. And states would be the ones that would have to carry out the cuts as they can't afford to make up the difference.
Over the next decade, CBO projects, a large gap would grow between Medicaid spending under current law and under this bill (see Figure 2 on page 13). In later years, that gap would continue to widen because of the compounding effect of the differences in spending growth rates: CBO projects that the growth rate of Medicaid under current law would exceed the growth rate of the per capita caps for all groups covered by the caps starting in 2025.

Under this legislation, after the next decade, states would continue to need to arrive at more efficient methods for delivering services (to the extent feasible) and to decide whether to commit more of their own resources, cut payments to health care providers and health plans, eliminate optional services, restrict eligibility for enrollment, or adopt some combination of those approaches. Over the long term, there would be increasing pressure on more states to use all of those tools to a greater extent. CBO and JCT do not have an insurance coverage baseline beyond the coming decade and therefore are not able to quantify the effect on insurance coverage in the long term. However, the agencies expect that after 2026, enrollment in Medicaid would continue to fall relative to what would happen under current law.
Another large source for the 22 million increase in uninsured is due to people not choosing Obamacare exchange policies because they either won't be able to afford them after the Senate bill takes away assistance to help them pay, or they'll choose not to be insured because they no longer face a penalty for going without insurance.
Nongroup coverage. On net, CBO and JCT estimate that roughly 7 million fewer people would obtain coverage in 2018 through the nongroup market under this legislation than under current law; that figure would be about 9 million in 2020 and about 7 million in 2026 (see Table 4, at the end of this document). Fewer people would enroll in the nongroup market mainly because the penalty for not having insurance would be eliminated and, starting in 2020, because the average subsidy for coverage in that market would be substantially lower for most people currently eligible for subsidies—and for some people that subsidy would be eliminated.
Of course, we'll all pay a price when those people face medical hardship and go to the emergency room to get treated, but hey, it's FREEEEE-DUMMM!

And which group of people that is likely to get screwed the most under this bill? Low-income working Boomers - the white portion of whom is a big part of Donald Trump's base!
CBO and JCT expect that this legislation would increase the number of uninsured people substantially. The increase would be disproportionately larger among older people with lower income—particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level (see Figure 3). This section provides additional information about two major sources of coverage as well as about stability of the health insurance market.
The CBO says the part of the 50-64 population that will become uninsured will more than double under this bill, from just over 10% to nearly 25%.

On the budgetary side, the CBO does say that the Senate health care bill will reduce the deficit from current law between now and 2026, and the Medicaid cuts and the lower subsidies to help buy insurance are the reason why.



You'll also notice the $541 billion in tax cuts to rich people and corporations are being "paid for" through the measures that cause more people to become uninsured. That's a classy touch, isn't it?

Lastly, if Republicans try to claim this bill ends up lowering overall premiums, they are LYING BY OMISSION. They don't mention that cost-sharing subisidies go down, and that the CBO notes a lower overall average premium is a result of many people choosing lower-quality plans...or no plan at all.
Although the average benchmark premium directly affects the amount of premium tax credits and is a key element in CBO’s analysis of the budgetary effects of the bill, it does not represent the effect of this legislation on the average premiums for all plans purchased. The differences in the actuarial value of plans purchased under this legislation and under current law would be greater starting in 2020—when, for example, under this bill, some people would pay more than the benchmark premium to purchase a silver plan, whereas, under current law, others would pay less than the benchmark premium to purchase a bronze plan.

Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income—also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.
Not that this is a surprise, but this is an awful bill, and it needs to be sent to the dustbin.

As mentioned earlier, feel free to click on the CBO analysis and slice and dice it as you want.

Walker Debt Collectors, Inc. The source of another budget hole

If we ever start debating our budget again, there are a couple of items on the docket that deal with the state trying to get money back from people who have either failed to pay taxes, or are skipping out on other responsibilities. Unfortunately, updated information indicates that there may need to be some adjustments in the 2017-19 budget that will likely need to more cuts, because Governor Walker overstated the value of one provision, and may be overcharging Wisconsinites in another.

The first item I want to discuss relates to debt collection. As the Legislative Fiscal Bureau discusses, the state Department of Revenue (DOR) has people whose job it is to try to get back money that individuals owe to state agencies or other governmental entities, mostly for items such as unpaid fines and charges for services.
The SDC (Statewide Debt Collection) program was created as a pilot project in the 2007-09 biennial budget bill. Prior to that time, DOR contracted with private collection agencies to take actions against delinquent tax accounts. DOR believed it could generate a greater return on investment if the state were to use its own compliance and audit staff to aggressively pursue delinquent accounts that would otherwise be referred to private collection businesses. The Department has the authority to take certain actions under the SDC program, such as to attach wages, levy nonwage assets, seize monies and personal property, and negotiate installment agreements, which are not available to private collection agencies. The Attachment shows the types of collection activities that DOR may engage in under current law….

The Legislature expanded the SDC program several times during the 2015-17 legislative session. Funding was provided to DOR under 2015 Wisconsin Act 55 to increase the number of dedicated SDC revenue agents from seven positions to 18 positions and to upgrade its information technology systems so that the Department could collect debts jointly-owed to state agencies and the federal government, such as debts owed the Department of Veterans Affairs and student loan debts owed to the University of Wisconsin. Restitution payments certified as owed by the Department of Corrections or the Clerk of Circuit Court were authorized to be included in SDC agreements pursuant to 2015 Wisconsin Act 355. In addition, 2015 Wisconsin Act 59 authorized debts owed to certain ambulance service providers operating under a contract with a municipality or county to be referred to DOR under an SDC agreement. Table 1 shows information regarding SDC participation and collections since 2013-14.
Now while this sounds good to go after deadbeats (well, unless the state misidentifies the individual and tries to use collections to garnish tax refunds against innocent people….not that I’d know what that’s like), these SDC fees have also been used to bolster the state’s piggy bank in recent years. And Governor Walker wants to do even more of this.
As shown above, the fee paid by debtors to DOR has exceeded SDC program expenses by between $1.6 million and $2.1 million, or by between 157% and 362%. DOR estimates that fee revenues will exceed expenditures in 2016-17 and in each year of the 2017-19 biennium such that the transfer to the general fund will increase by approximately $5 million annually compared to the amount transferred in 2015-16. The administration estimates the additional 8.0 project positions would increase the estimated transfer to the general fund by $750,000 in 2018-19. Based on information provided by DOR, it is estimated that the amount transferred to the general fund from the SDC program would be almost $15 million (almost 400% more than estimated program expenditures) over the 2017-19 biennium if the Governor's recommendation were adopted.

12. The Committee could consider whether imposing a fee that is five times the cost incurred by DOR to collect debts on behalf of state and local units of government is an appropriate method for raising revenues that transfer to the general fund. As a comparison, private sector debt collectors are generally prohibited from collecting a surcharge above the amount of debt owed under the Wisconsin Consumer Act, but retain a portion of the repaid debt owed to the contracted entity.
But if the Legislature wants to reduce the extra fee that debtors have to pay to a level that is near what it costs to run it, the LFB says that this would reduce revenues in the budget by nearly $15 million. Even if the LFB allowed the “profit” from the fee to be limited to twice the amount it costs to run it, there’s still a budget hole above $11 million for 2017-19. And as I've frequently mentioned, there isn't breathing room in this budget to fill most of these holes.

In a related initiative, Walker’s budget has plans to hire more auditors for the Department of Revenue, with the idea of catching more tax cheats and recouping more revenue in the process. However, the LFB says those returns won't be as good as Walker advertised, partly because the new DOR agents will not be on the job for the entire budget.
The administration's estimates for the amount of revenues generated per billing agent appear slightly high, but the amount of revenues generated per central compliance agent appears slightly low. On balance, the annual fiscal estimate of revenues generated by approving these positions appears reasonable. The administration has not accounted for a non-revenue generating training period, which is plausible if most of these positions would be filled by individuals already employed in expiring tax enforcement project positions. However, the administration estimates that revenues generated by these positions would be $32 million in each year of the biennium, even though the positions would only be authorized for nine months in 2017-18. The estimate for revenues associated with these positions has been reduced by $8 million in 2017-18 to account for the shorter period of authorized employment (nine months) in that year.
And that’s assuming the budget would be signed on time for July 1, so the auditors can be hired and trained. That July 1 deadline certainly isn’t going to be met, so the longer this budget stalemate drags on, the larger that $8 million gap will grow.

Yes, these are small amounts in a budget that collects more than $16 billion in General Fund money each year. But all of these little dings hurt a bottom line that can't afford to be hurt, and the idea of the state making money off of people's debts (especially people that don't have the funds to defend themselves or have had bad luck befall them) strikes me as a bit ghoulish and excessive. Especially when these people are charged fees that are more than it costs for the state to collect the debts, which makes it a money-raising scheme instead of an attempt to maintain justice and fairness.

Sunday, June 25, 2017

WisGOP sabotage of Obamacare has come at a high cost

With all the news in DC about the Senate GOP's TrumpCare bill, I wanted to focus in on a few notes from back here in Wisconsin that relates to this issue and health care. The first was when Anthem Blue Cross/Blue Shield announced that they would not offer new plans on the ACA exchanges in 2018, and they pointed directly to the turmoil in DC and Congress's past and potential future changes to those insurance exchanges.
A stable insurance market is dependent on products that create value for consumers through the broad spreading of risk and a known set of conditions upon which rates can be developed. We are pleased that some steps have been taken to address the long term challenges all health plans serving the Individual market are facing, such as improving the eligibility requirements that allow consumers to purchase a plan outside of open enrollment and improved risk adjustment. However, the Wisconsin individual market remains volatile, making planning and pricing for ACA-compliant health plans increasingly difficult due to a shrinking and deteriorating individual market, as well as continual changes and uncertainty in federal operations, rules and guidance, including cost sharing reduction subsidies and the restoration of taxes on fully insured coverage.

As a result, Anthem Blue Cross and Blue Shield has made the difficult decision to reduce its 2018 Individual plan offering in Wisconsin to one off-exchange medical plan in Menominee County only. This decision does not affect people who previously purchased a transitional Individual or family health plan — otherwise known as grandfathered (purchased before March 2010) or grandmothered plans (purchased before December 2013) – nor does it impact Anthem’s employer-based, Medicare Advantage or Medicaid plans.
Note the part that I bolded. All of those things mentioned have been the result of Republicans in Congress trying to damage Obamacare through negligence and sabotage. With the cost-sharing subsidies being taken away and the future of the ACA being up in the air, it’s no surprise that some insurance companies aren’t willing to stick around to see what happens in 2018.

So is Governor Scott Walker going to do anything about this, to help thousands of Wisconsinites who might be in the lurch when they look for their 2018 insurance during open enrollment? OF COURSE NOT! Instead he threw out a gleeful press release saying how “Obamacare is collapsing”. Classy, caring guy, isn’t he?

And while Walker says Wisconsinites “deserve better health care coverage options and the time to act is now,” he offers nothing to fix the problems caused by GOP sabotage of the exchanges. This includes Walker’s turning down of federally-funded expanded Medicaid, which forced many people near the poverty line to get insurance through the same exchanges that the GOP in DC are trying to screw up.

Walker claimed that other state should copy his “reforms” that opened Medicaid to all Wisconsinites living below the poverty line (while kicking off many parents and caregivers who were living above it), and Scotty tried to hype up Wisconsin’s low amount of uninisured individuals as some kind of self-promoting proof that his plans work. Well sorry Scotty, you didn’t build that, and in fact Wisconsin is lower in the national rankings since you took over after 2010 (the Census Bureau is a good source for this).

National ranking for least uninsured, Wisconsin
2007 4th
2008 5th
2009 4th
2010 5th
2011 9th
2012 7th
2013 T-7th
2014 7th
2015 T-6th

While you can debate whether Walker's decision not to take the expanded Medicaid was a good or bad thing, what you cannot deny is that it has come at a high price to Wisconsin taxpayers. We are slated to pay more than $1.1 billion a year above what we paid 6 years ago, when Walker and the WisGOP Legislature decided against Medicaid expansion.

State funding for Medicaid assistance program benefits


This cost would go higher if the Senate GOP's bill that severely cuts Medicaid becomes law, since Wisconsin taxpayers would have to make up the difference to maintain coverage. Or it would result in significant reductions in the number of people receiving Medicaid. These are the choices that would have to be made, and Scott Walker should have to be put on the spot as to what choice he would make if TrumpCare ever becomes law.

It was heartening to see Democratic Party of Wisconsin Chair Martha Laning spare no words in calling out GOP actions that have led to Obamacare's exchanges becoming less effective, and the Wisconsin budgetary difficulties that are a direct result of this WisGOP "politics over policy" mentality.

"The majority of Americans want everyone to have access to affordable health care, and yet since it's inception, Republicans in Wisconsin have sought to sabotage the Affordable Care Act.

"Gov. Scott Walker rejected the federal funds available for Medicaid Expansion and priced tens of thousands of his own constituents out of health care insurance. Adding insult to injury, it's the taxpayers who paid mightily for his decision that cost our state $679 million - and health care experts warn that the state would lose out on $37 billion in federal funds by 2025.

"It's unacceptable for Wisconsin Republicans to hold their own constituents health care hostage just to score political points with extremists instead of doing the right thing for all Americans. Wisconsin Republicans should urge their colleagues to ensure all Americans have access to health care - not supporting taking health insurance away from 23 million people."

And I was glad to hear Laning use this word, which is one that Dems should yell long and loud over the next 17 months. Because most of the problems of the ACA (other than its reliance on private insurance companies) is because of the GOP willfully damaging it, and disrupting the lives of tens of millions of Americans in the process

Saturday, June 24, 2017

The anti-WEDC- Historic Rehab Credit works- so Walker wants to limit it

I wanted to take a post to talk about Wisconsin's Historic Rehabilitation Tax Credit, which piggybacks off of a similar program at the federal level, and is used as an incentive to fix up and remodel historic homes and older structures, and turn them into new facilities that have residential and/or improved business purposes.

This tax incentive has proven quite popular in recent years, as the Legislative Fiscal Bureau says that since 2014, over $156 million in Historic Rehab Credit awards have been handed out for projects throughout the state.


Historic Rehab helped pay for some of the construction at this site

But in the state budget, Walker wanted to limit the amount of Historic Rehab Credit award to $10 million a year beginning in 2018, with potential clawback provisions allowing WEDC to take back some of the credits if the project wasn’t (yes, this is very ironic). This means that there would less of the Historic Rehab Credit write-offs and higher tax revenues coming in for the state as a result.

And Walker’s office underestimated just how big an effect this would be, as the Legislative Fiscal Bureau says that it means that many more potential projects would be affected, which would raise the amount of taxes that the state retains in future years....and raise the taxes of the individuals working on the homes and buildings.
7. The bill would limit the amount of tax credits that could be certified by WEDC to $10 million per year, beginning in 2018, and to the greater of $10 million or the amount WEDC certified between January 1, 2017, and the effective date of the bill for 2017 (Attachment 1 shows that WEDC has entered into contracts for historic credits of $10.5 million through March 24, 2017). The administration estimates that this provision would increase state tax revenues by $3.0 million in 2017-18, $14.1 million in 2018-19, $26.7 million in 2019-20, and $27.7 million in 2020-21.

8. Based on certification data for the historic credits provided by WEDC, including the final date that credits can be earned under WEDC contracts and current projections from DOR, our office has reestimated the fiscal effect of this proposal higher beginning in 2020-21. The Governor's estimates for 2017-18, 2018-19, and 2019-20 have not been revised, but the impact of the annual limit has been reestimated to increase state tax revenues by $34.0 million in 2020-21, $39.1 million in 2021-22, $44.2 million in 2022-23, $48.6 million in 2023-24, and $50.1 million in 2024-25 and annually thereafter. Once fully phased-in, the Governor's recommendation would reduce the fiscal effect of the credits to 16.6% of the current estimate.
Now, if Walker is concerned that too many Historic Rehab Credits are causing revenues to fall short and jeopardize his spending priorities (STOP LAUGHING! It might be true!), then maybe this budget provision might make sense, even if it’ll prevent a few projects from happening. The flip side of limiting the Historic Rehab credit means that less people will likely be able to use it even though they want to, as evidenced by the large number of requests and awards from 2014-2017.

If the Legislature doesn’t like that idea, and wants to keep the program operating as it has been, then the Fiscal Bureau says that it’ll cost the state $17.1 million in this budget. But keeping the current law for Historic Rehab Credits has its own problems, since this budget is already being held up due to a lack of revenues available to fund transportation and K-12 education. There may not be $17 million in breathing room in this budget to clear up without messing up some other GOP 2018 talking point that they want to preserve.

While taxes hasn’t gotten much attention as part of this budget (mostly because Walker’s tax proposals are so gimmicky and pointless),the Historic Rehab Credit shows things to be turned on its head from what we’re used to seeing in the Age of Fitzwalkerstan- a tax credit that actually works to spark economic activity and improve aesthetics and quality of life of communities. And this time it is Walker that is trying to keep it from happening (why? No idea. Is it because he's truly concerned about the cost, or because the rehabbers don’t pay him enough in donations?).

If/when the Joint Finance Committee ever meets again, let’s see how they maneuver through this, as the Historic Rehab Credit is a popular program for many community revitalizations. And even though the program seems to be working in encouraging new developments to get off the ground, it may have to go by the wayside due to past and current fiscal foolishness in other matters.

The hidden ripoff- how "dark stores" raise your property taxes

Next week, there will be a hearing in the State Assembly’s Ways and Means Committee on two bills that seek to better define how commercial properties are assessed and taxed in Wisconsin. AB 386 deals with so-called “dark store” assessments on retail and other commercial property, while AB 387 has to do with the value of leased property.

The two bills have drawn sponsorship from a wide variety of legislators from both parties from numerous parts of the state – a rare feat in this Legislature. And if you look at the ripoff that retail businesses have been trying to pull on Wisconsin homeowners, you will see why these laws should be supported by anyone that is not a puppet for corporate retailers.

The leasing bill is intriguing (it values the property based on how much a renter would pay on the open market for the space vs the current below-market deal), but I want to concentrate on the “dark store” bill, since that has been an increasing issue in local communities, particularly as some retail stores close up in light of consumer tastes shifting to online shopping (Sears at Southridge Mall in Greendale being one of the latest victims).

A lawsuit in suburban Green Bay illustrates how this controversy is playing out throughout the state.
Big-box retailer Menards and the village of Howard continue to battle over a $6.7 million difference of opinion on how much the company's store on Woodman Drive is worth.

The next round will be fought in court, now that the retailer has sued the village in a dispute over Howard's 2017 assessment of its store, on 18.7 acres at 2300 Woodman Drive….

Howard assessed the store at $12.45 million. Menard Inc., which said it spent $10.6 million on land and building costs, claims the store should be assessed at $5.8 million. Menards compares the site to closed stores that include a Beaver Dam Home Depot, a Sheboygan Sears and the long-vacant Cub Foods on Green Bay's east side.

Cub Foods, on an eight-acre site, is assessed for $1.8 million and pays $40,000 a year in taxes. A redevelopment project beginning this month is projected to raise its value to $5.5 million.
That case will go to trial early next year, but for future cases, the dark store bill in the Legislature seeks to decide this question by telling assessors they should use the following criteria
1. Sales or rentals of properties exhibiting the same or a similar highest and best use with placement in the same real estate market segment.

2. Sales or rentals of properties that are similar to the property being assessed with regard to age, condition, use, type of construction, location, design, physical features, and economic characteristics…..

The bill also provides that a property is not comparable to the property being assessed if the seller has placed restrictions on the highest and best use of the property or if the property is dark property and the property being assessed is not dark property. The bill defines “dark property” as property that is vacant or unoccupied beyond the normal period for property in the same real estate market segment.

This store....


Is not this store...

The City of Wisconsin Rapids is among the latest communities to give support to the “dark store” bill, and said that it is a matter of tax fairness to keep homeowners from paying more than they should.
The goal of these bills is to avoid a large tax shift from commercial properties to other classes of property, primarily residential and small business. Alderperson Thaddeus Kubisiak, the council member who introduced the resolution, said, “this legislation will ensure that the dark store tax strategy being used by big box retail chains to cut their property tax bills in half in Michigan and other states does not take hold in Wisconsin.”

The legislation clarifies that when assessors use sales of comparable properties for determining the value of a property they must use properties that are within the same market segment and similar to the property being assessed with regard to age, condition, use, type of construction, location, design, and economic characteristics. Mayor Zachary Vruwink added, “These bills explicitly provide that assessors may not use a dark and vacant store as a comparable for property that is not dark or vacant.”
The City of Sheboygan’s Common Council also gave its unanimous support to the dark store bill this week, and pointed out how much of a tax shift happens in their community of less than 50,000 people.
Sheboygan officials said the city has already been hit by more than $550,000 in lost tax revenue in recent years following challenges by local businesses over their tax bills. The biggest loss came when the former owners of Memorial Mall won more than $800,000 in tax refunds two years ago over contested property assessments.

For the city, the mall case amounted to more than $530,000 in lost taxes between 2010 and 2016, with losses also hitting other local jurisdictions, according to information provided by the city. Local Walgreens stores have also seen reductions in their property bills following challenges to their assessments.
But the taxes aren’t really “lost”, as that $530,000 will now be an extra assessment put onto everyone else that owns property in the community, particularly homeowners. Dark-store assessments are a flat-out subsidy of retailers at the expense of the everyday resident.

And I guess that explains why the greedheads at Wisconsin Manufacturers and Commerce are opposed to this bill, because those guys want all the giveaways that they can get, no matter who else pays the price for those subsidies. For a bunch of guys who complain about paying taxes, WMC sure doesn’t mind if everyone else has to pay up for their free ride!

Any legislator worth salt needs to get behind both of these bills and shoot them through as soon as possible, before more homeowners get screwed over by (elected and donation-receiving) judges decide in favor of these retailers. Sure, dark stores and sub-market assessments might not get a rube’s blood boiling like the thought of some poor black person getting welfare, but it is a much bigger theft from the little guy.

Thursday, June 22, 2017

Dem K-12 plan goes big. Wisconsinites should listen

One of the issues still to be figured out in this budget is the largest expense of state tax dollars- K-12 education funding. And even though their party has been locked out of these closed-door GOP meetings on the budget, the Democratic members of the Joint Finance Committee decided to have a say in the debate about what to do for the next 2 years anyway, and released their own K-12 funding plan.



In looking at that Dem plan, a few things stand out as sizable differences from prior K-12 plans submitted by Governor Walker, as well as the Assembly GOP.

1.The most obvious difference is that JFC Dems are choosing General Aids to be the source of their additional K-12 funding increases, on top of Walker’s and WisGOP’s plans to have the increases concentrated in per-pupil aids. This means that poorer districts with lower tax bases and stagnant populations are likely to receive the largest benefit from the Dems’ plan.

2.The plan also gets rid of two property tax credits- the School Levy credit and the First Dollar credit) and instead folds that $1.09 billion into General Aids. The idea is that this would give districts the flexibility to use that money for classroom expenses or other items instead of requiring it to be given away as property tax relief, like today.

3.It keeps the amount of aid per voucher student at 2017’s levels, instead of increasing it like Republicans plan to do, and it gets rid of the money-funnelling mechanism where a public school district loses funding for every resident student that uses a voucher. It also sets limits on the amount of voucher students a school could take, as well as the amount of voucher students attending from a single district.

4.The end of voucher money-funneling and increased General Aids still means that property taxes for schools would be reduced $25 million below Walker’s proposed. This is even taking into account that the Dem bill allows districts to go over their revenue limits to do energy efficiency projects, and to enhance school safety.

5.It fully funds sparsity aids for small, rural school districts, instead of prorating it like in Walker’s K-12 budget, and includes funding to help forgive student loans and ongoing education costs for teachers that would take jobs in small, rural districts.

6.There are also significant increases to Special Education aids (which haven’t been increased in 8 years), money to increase reimbursement to districts that offer breakfast, and $8.7 million a year for schools to offer assistance for issues related to Alcohol and Other Drug Abuse.

An obvious roadblock to this ambitious plan is the price tag- nearly $728 million above Walker’s proposed increases to K-12 education (although it’s pretty close to the $654 million that the M&A tax credit giveaway is scheduled to cost in the next budget, now that I think of it). And do I think any of these proposals will be seriously considered as the GOP-controlled Legislature tries to break their logjam that’s already going to make this budget go past the July 1 start of the 2018 Fiscal Year? No, of course not.

But it’s a marker that Dems are throwing down, and it also counteracts the common GOP meme that “Dems have no ideas to offer.” And the Dems’ ideas match up with the proposals of State Superintendent Tony Evers’ “Fair Funding for the Future”, which seems to be a good place to be in given that Evers won 70 of Wisconsin’s 72 counties months ago as he cruised to a 3rd term in office.

So with this K-12 proposal that finally restores our public schools to their pre-Act 10 levels, it sure seems like Dems are more in line with the desires of Wisconsinites than the ALEC-owned puppets of Betsy DeVos and convicted criminal Scott Jensen that make up today’s WisGOP. And Dems would be wise to go out of their way to push that message out to the rural areas of the state that need their public schools to be supported more than ever.

WisGOP budget sins continue, no matter whose plan it is

We’re going to wrap up another week in June without any meetings of the state’s Joint Finance Committee, which means there is virtually no chance of getting the Wisconsin state budget done on time. In isolation, this isn’t a big deal in the short term, but the underlying divide between Republicans in the two houses of the Legislature seems to still be out there, and they don’t seem to be getting much closer to an overall solution, and progress is limited to fits and starts.

Given the statements from Assembly Speaker Robbin' Vos and JFC Co-Chair John Nygren in this WisPolitics.com summary, we may see some action on K-12 spending by June 30, but that the main events will still largely be held behind closed doors without Dems or the public being allowed to give input on shaping things.
The Joint Finance Committee won’t meet this week, though Nygren said it’s possible the committee will meet next week to finalize education and a few other topics where there is no disagreement. Transportation and tax cuts won’t likely be resolved before July 1, when the new budget calendar begins.

If a budget isn’t signed into law by then, funding for state government will continue at current levels. In 2015 the budget wasn’t signed until mid-July, and Vos and Nygren remained hopeful this year’s budget would be completed by then.

Vos said he preferred to continue meeting with Senate Republicans to work out a deal before scheduling another budget committee meeting.

“It’s not for lack of working on the budget, it’s just doing it in a process to try to find consensus,” Vos said.
The biggest difference is still in transportation funding, where Senate GOP Leader Scott Fitzgerald’s solution to rising debt costs and increasing potholes is to follow Governor Walker’s plan of kissing up to DC lobbyist Grover Norquist with a “no tax, no fee” pledge, and borrowing into oblivion- except Scotty Fitz and the Senate GOP want to use even more debt to hamper schools and the poor even more for the future!
Fitzgerald spokeswoman Myranda Tanck said $350 million of that borrowing would be supported by Wisconsin's general fund, which gets its revenue from income and sales taxes and pays for expenses like schools, prisons and health care for the poor, elderly and those with disabilities.

Most borrowing for roads is typically paid back by Wisconsin's dedicated transportation fund, which gets its revenue from gas taxes and vehicle registration fees.

Tanck said paying for the new borrowing Fitzgerald supports would cost the state's general fund a total of $8 million in the next budget.
This is a horrible idea that somehow not only continues the problems of excessive debt in the Transportation Fund, but also raises expenses in a General Fund that already is looking at a $1 billion deficit starting in 2019, in part due to similar borrowing stunts that have been pushed off debt payments into future years.

To their (limited) credit, the Assembly GOP doesn’t seem too keen on keeping the cycle of “borrow and pay later” as a strategy for DOT funding, as both Vos and Nygren are saying that continued reliance on borrowing without a long-term plan on revenue isn’t an acceptable answer to them (Vos called more borrowing “a Band-Aid to us.”).

But the real problem with this budget remains the same issue that hit most places run by Republicans after a while- tax cuts to the rich and corporate mean that there isn’t enough revenue to fulfill all the needs that still exist (along with a refusal to raise taxes for items such as transportation). At the same time, gimmicks that were used to balance the books have already had their benefits be used up. In Wisconsin these gimmicks include the one-time savings of Act 10 (and the resulting damage to the economy), skipped debt payments, and massive DOT borrowing. Now these bills are coming due.

And there is little evidence that there will any kind of population or job boom or outside help from DC that’ll bail this budget out. In fact, Wisconsin’s population growth has slowed to near zero and 2016 featured our slowest job growth in 7 years. On top of that, the Trump/GOP gang in DC wants to cut spending and/or pass the burden of paying for programs down to the states…when states like Wisconsin don’t have enough money to begin with.

The GOPs that are huddling in the Capitol won’t say that in public, but I sure will. It is their negligence and “politics over policy” mentality that has caused this mess of a budget, and no solution they will end up with over the coming weeks (or months?) will solve the problems that they have caused.

Wednesday, June 21, 2017

In DC or in Madison, closed-door, GOP-only legislation is bad news

With the state budget still in a three-way logjam between Assembly Republicans, Senate Republicans, and Republican Governor Scott Walker, there were plans for a closed-door summit Tuesday at the Capitol between legislative leaders to try to get things moving on a budget that is supposed to be passed into law within 10 days.
Assembly Speaker Robin Vos, R-Rochester, and Sen. Scott Fitzgerald, R-Juneau, are set to meet tomorrow with representatives from the Legislative Fiscal Bureau to “discuss a number of outstanding budget issues,” according to Fitzgerald spokeswoman Myranda Tanck.

Tanck declined to name the issues, saying she couldn’t “guarantee they will get to all of the outstanding items nor what exactly will come up.”

Individuals with knowledge of the meeting said K-12 education would be on the agenda, as Assembly Republicans and the Senate GOP try to reconcile differences surrounding per-pupil funding levels and approaches to low revenue limits, among other things.
Notice who’s not part of those meetings? DEMOCRATIC LEGISLATORS AND THE PUBLIC. Sounds just like DC and the TrumpCare bill, doesn’t it?

This has gotten so bad that even some Republicans are going public and saying that WisGOP leadership should clean up the secrective way they have been handling the budget. It’s a draft proposal that’s being sponsored by Rep. Scott Allen and Sen. Steve Nass (!), is intended to limit the last-minute add-ons and notorious “999” maneuvers that seem to be coming more frequently and in larger scale in recent years. These are ideas that more of us from all political persuasions should get behind.
The bill provides that the Joint Committee on Finance may not consider or take executive action on any motion relating to the biennial budget bill unless the motion has been distributed to all members of JCF at least 48 hours before JCF considers or takes executive action on the motion. The motion must also be posted on the Legislative Fiscal Bureau Internet site at least 48 hours before JCF considers or takes executive action on the motion.
That works for me, because these sneak-attack omnibuses are garbage that don’t help anyone but the inner circle of connected individuals that are telling their puppets in the Legislature to insert these things.

However, there is a loophole in this bill that might need to be ironed out.
The provisions of the bill, however, do not apply to a motion that relates to an emergency, as determined by three-fourths of the members of JCF, or to a motion that contains minor substantive differences from a motion that has met the bill's requirements.
The ¾ threshold to define an “emergency” sounds like a lot, but it would simply be a 12-4 party-line vote among the GOPs that currently control Joint Finance today. By that definition, they could just yell “Emergency!” and nothing would change from the secrecy and last-minute omnibuses of today.

So maybe make that threshold be 13-3 (so a minority party member has to say “yes”), or make it only so that items outside of the 2-year budget document are the only ones that can be “emergencies”, so this designation is limited to items such as repairs from a storm, where money needs to be released immediately.

Even with the Kochs’ Americans for Prosperity and the Racine Journal-Times offering public support for the “Budget Transparency Act”, I don’t see the GOPs in legislative leadership taking the hint in June 2017. Instead, WisGOP’s legislative leadership is following the example of Mitch McConnell’s GOP Senate and preferring to do their work in the dark, without any input from the other party or the taxpayers that pay their salary.

And just like what’s happening in DC, the GOPs were reporting "progress" in the budget talks, but we in the public have no idea what that really means and no documents that can help us figure out what's changed. You can bet we won't find out until the Joint Finance Committee calls a hasty meeting to cram through much of these outstanding budget issues, and the outcome won't end up helping anyone except for a few self-interested jagbags and their politicians they own.

Monday, June 19, 2017

Senate GOP K-12 plan has familiar problem- WHERE'S THE MONEY?

Even though the 2017 Fiscal Year ends a week from Friday, there is still plenty left to decide on the 2-year state budget that is supposed to be in place for July 1 (even though it likely won't be in place). One of the biggest items of debate involves K-12 spending, where Assembly Republicans came out with a plan a couple of weeks ago that would allow for some reallocation of money that would give more flexibility for districts who are currently not allowed to spend as much per student as richer and larger districts (I discussed much of this proposal in this post).

Well today, we found out through the Journal-Sentinel's Jason Stein that the Senate GOP is working out a K-12 plan of their own. Like the Assembly GOP, the Senate GOP plans would push more money toward school districts with low revenue and spending limits, but it wouldn’t use property taxes to do it.
GOP senators have come up with an education framework that would use state money to help those districts — meeting part of the Assembly's goal — while also accommodating Walker's target of holding the line on property taxes.

Senate Majority Leader Scott Fitzgerald (R-Juneau) confirmed the plan and said he and his colleagues are still discussing how much state money to pour into it.

"It's the same concept that the Assembly had targeted," Fitzgerald said. But "the state would pay for it."
If the Senate GOP wants to trade state funds for extra funding and keep property taxes down, that makes sense in theory. Except there’s one big thing missing- THERE’S NO STATE MONEY TO GIVE OUT.

As I’ve mentioned several times throughout this budget process, Scott Walker’s original 2017-19 budget had only $12 million in breathing room built into it, and a $1 billion deficit looms for the next budget. And with the Legislative Fiscal Bureau saying last month that they saw no need to increase revenue projections, and some expenses being re-estimated to end up costing more than what was projected in the budget, that tightness hasn’t subsided over the 4 months this budget has been debated.

Now, maybe some funds can be cleared up by getting rid of Gov Walker’s stupid plans for a sales tax holiday, and perhaps legislators could avoid losing $200 million in revenue to give a $1-a-week income tax cut. And maybe that extra money is enough to have the state backfill this revenue limit increase to low-spending schools.

But we haven't heard that the WisGOPs are going to dump the $1-a-week income tax gimmick, and even if they do, using state money to give relief to low-revenue districts means extra spending will be projected in the next budget (and there already isn’t enough state funding to pay for what's already on the books, let alone more). So there’s a connected shoe to drop here on taxes, either in the 2017-19 budget talks, or in the next 2 years. Because the math tells you that there is no way that WisGOP can continue all of these pre-election property tax handouts and the related state spending increases without raising taxes on someone in some other fashion.

That part of the shell game is what we have to watch for in these coming weeks, because that’s likely to be buried in some late-night maneuver that WisGOP isn’t going to want to promote. I’m not seeing how else they can pull off their big talk of “lower taxes and more spending.”

Hey SCOTUS- I got a redistricting map for ya!

The biggest news affecting Wisconsin didn't happen in the state today, but instead happened in DC, as the US Supreme Court chose to give a closer to look as to whether the Wisconsin GOP illegally gerrymandered the state in 2011.
The U.S. Supreme Court agreed on Monday to decide whether the U.S. Constitution limits how far lawmakers can go to redraw voting districts to favor one political party over another in a case that could have huge consequences for American elections....

The justices will take up Wisconsin's appeal of a lower court ruling last November that state Republican lawmakers violated the Constitution when they created state legislative districts with the partisan aim of hobbling Democrats in legislative races. The case will be one of the biggest heard by the Supreme Court during its term that begins in October.

The case involves a long-standing practice known as gerrymandering, a term meaning manipulating electoral boundaries for an unfair political advantage. The lower court ruled that the Republican-led legislature's redrawing of state legislative districts in 2011 amounted to "an unconstitutional partisan gerrymander."

A panel of three federal judges in Madison ruled 2-1 that the way the Republicans redrew the districts violated the U.S. Constitution's guarantees of equal protection under the law and free speech by undercutting the ability of Democratic voters to turn their votes into seats in Wisconsin's legislature.
The unfortunate news is that SCOTUS also stayed that lower court's decision requiring the Legislature to redraw the maps by November 1, which means the current districts stay in place until the decision.

Given that SCOTUS won't rule on the case for the better part of 12 months, it probably makes sense that the districts can't be redrawn before the 2018 elections, which means GOPs get a "mission accomplished" for the 2010s, since only the 2020 elections would be affected (maps will get redrawn anyway after the 2020 Census). Granted, the precedent that could be set would be a much bigger deal in the long-run, as it would give limits to partisan hackery in redistricting. But for Wisconsin politics, the damage from this gerrymander will have already been done.

However, if SCOTUS does get pissed off at WisGOP and feels the need to redraw Wisconsin's districts ASAP, I'm glad to be of assistance. With a huge boost from Twitter superstar/redistricting fan BobbyBigWheel, and the awesome Dave's redistricting website, I worked out a new Assembly map of Wisconsin.

To give a comparison, here's what the current, 99-member Assembly redistricting map looks like.



And here's what my map looks like. I tried to ignore the hometown of a legislator, and generally ignored the partisan leanings of a place. I did keep in mind which areas could be majority-minority districts in the Milwaukee area (both African-American and Hispanic), and tried to keep cities, counties and metor areas together as much as possible.



One of the biggest changes between my map and the current WisGOP one is in Western Milwaukee County, where I tried to end districts at or near the county line. This results in one Wauwatosa-centric district and a district largely based in West Allis/West Milwaukee, instead of the current WisGOP imperialism that splits up Tosa and ‘Stallis into numerous districts, with the voting power of those Assembly districts and Leah Vukmir’s Senate district residing in Waukesha County.



You'll also see that I repeated the pattern on the North side of Milwaukee County, where I put Whitefish Bay, Brown Deer and Glendale together. This avoids the atrocity that we see now where Whitefish Bay is in the district as Mequon and Grafton, and Brown Deer and part of Glendale are in the same district as Germantown and Menomonee Falls. All of these communities are currently "represented" by State Sen. Alberta Darling, who really speaks for the WOW Counties, and not where she lives in Milwaukee County.

I also tried to keep Appleton and Green Bay regions together, particularly on the Senate side (each 3 Assembly seats = 1 Senate district), which is different than the current WisGOP maps where the countryside is included to dilute pro-Dem city votes in those areas.



Lastly, I wanted to make sure suburban and rural Dane County wasn’t being watered down by more conservative districts to the east and north, like the current WisGOP map does. So you’ll see those districts are almost entirely within Dane County, and stay within the Madison TV/radio market. This avoids the issue of having someone like Joel Kleefisch live in Oconomowoc, but “represent” Eastern Dane County under WisGOP's maps.



And while WisGOP would still be likely to hold the Assembly in a 50-50 year under this statewide map, due to “Great Sort” reasons, it wouldn’t be near the absurd levels that they have today, and would result in actual changes of power when the people demand it. That would lead to a level of responsiveness to the public that should be better for a whole lot of us that live in this state. And maybe we could start to get this state back towards sanity and stop falling further behind without any needed changes occurring.

I'd been working on this on and off for about a month as a spare-time brain teaser (yes, this makes me a nerd), but feel free to let me know what you think.

Sunday, June 18, 2017

Household vs payrolls? Which number's closer to the truth?

Just a quick follow up from my questioning of the significant difference between Wisconsin's payroll "jobs" survey, and the household "employed/unemployed" survey.

Let's add a wider perspective of other states into this equation, based on Friday's release of the state-by-state jobs figures by the Bureau of Labor Statistics. If you go by the payroll figures over the last 12 months, Wisconsin is in its typical place during the Age of Fitzwalkerstan- in the bottom half of job growth in the Midwest, and well behind our neighbors in Minnesota.

Change in private sector jobs, May 2016 - May 2017
Minn +1.86%
Mich +1.64%
Ind. +1.36%
Iowa +1.31%
Wis. +1.22%
Ohio +1.09%
Ill. +0.70%

But if you look at the household survey, the numbers are very different. This chart shows the 12-month difference in jobs reported in the payroll survey and number of people described as "employed" in the household survey, and you'll notice that while some states are right in line, other states like Ohio and Wisconsin have major gaps.



Which goes back to my point from a few days ago- why is there such a huge gap in these two surveys in Wisconsin, and which number is likely to be correct? one thing that I want to see is if this disparity is reduced over the next few months.

Seasonal vs. non-seasonal totals, March - May 2017
Payroll jobs
Non-seasonal total +69,300
Seasonally adjusted +11,700

Household employment
Non-seasonal total +54,300
Seasonally adjusted +29,500

Yes, it looks like Wisconsin is adding jobs above and beyond the typical increase in April and May as the weather warms, but can you explain how this is such a difference? When the total number of people reporting as employed becomes more than twice as many people working when the "seasonal adjustment" hits? That has to be changed in the upcoming months, and let's see what happens to those unemployment numbers in the coming months- particularly when we constantly hear businesses complaining about the inability to find workers in a time when workers are usually added.

The answer will likely become clearer in the next 2 1/2 months leading up to the next release of the "gold standard" Quarterly Census of Employment and Wages (QCEW) in early September. But there are jobs reports in the meantime to come out, and we need the picture to clear up soon enough.

Saturday, June 17, 2017

WisGOPs want DC to do what they won't in Wisconsin- reduce debt

You may have heard that the Wisconsin Assembly passed a resolution this week that was promoted by the American Legislative Exchange Council (ALEC), and calls for a convention to pass changes to the US Constitution. You can read State Rep. Chris Taylor's column on what a load of crap this oligarch-driven movement is, and how dangerous it could become.

But I wanted to concentrate on the fiscal arguments which were used by Wisconsin Republicans to pass this resolution. They claimed that the US's national debt was a fiscal problem that threatened to destabilize the country, and required this drastic measure.
During debate in the Assembly on Wednesday, several Republicans cited a nearly $20 trillion national debt as the reason that states need to push for a federal balanced budget amendment.

"If you look at history, at the great empires, it wasn't the sword that brought those empires down, it was the financial burden," said Rep. Dale Kooyenga, R-Brookfield. "One of the greatest threats to our national security is excessive debt."
Assembly Speaker Robbin' Vos also used the "$20 trillion number" as a scare tactic, and implied a Constitutional Convention to pass the balanced budget amendment (and any other piece of ALEC crap they decided to try to jam through) would be a way to keep Congress in check from the "dangers of overspending".

But these Republicans need to take care of their own backyard first, and need to learn a little about government finances before they start trying to slash federal spending (and make no mistake, that would be what they would do. Raising taxes on the rich to shore up the regular budget and Social Security/Medicare is not something the ALEC crew will consider).

Let's go into detail about two terms that are frequently thrown around in this "balanced budget" talk, since many people mess them up, including elected officials. And then we will also show why Federal finances and state finances should not be put on the same level, and I will leave out the obvious point that states don't have a military that can be called into wars and other international issues.

1. Deficit/surplus- The difference between revenues and expenses in a given amount of time. Part of this calculation includes payments on debt in a given year or years, but doesn't reflect the overall amount of money that has to be paid out over time. In addition, when people like Robbin' Vos and other ALEC stooges say "states have to balance their budgets," they are referring to the amount of money coming in and out in that year. What they aren't mentioning is that borrowing isn't taken into account in a state's "balanced budget", except for the amount of money used to pay off debt (aka "debt service") in a given year or biennium.

This is how a state's debt can rise while a state budget is balanced, and their expenses to pay off the debt may even be lower. This is much like how you may take out a mortgage or pay for something with your credit card, but your checkbook balance won't change other than when you make payments to pay back that debt. Another important difference is that when we hear the Federal Budget is running a deficit, that's because the Feds count ALL spending in their budget as it happens, regardless of whether they are borrowing or paying "cash" for their services. When we run a deficit in DC, most of the funds are paid back by selling Treasury Bonds and notes, including buildings and highway construction that are usually "off the books" in Wisconsin's calculation of a "balanced budget."

If this ALEC convention were ever to happen, we'd need to define whether borrowing could also be taken off the books in DC. If so, it's possible not much would change at all, but it doesn't seem like the definition of a "balanced budget" is ever given when these bills come up. This difference between federal deficits and state "balanced budgets" is never mentioned, perhaps by design by the ALEC crew to scare the average dope into approving of spending cuts that harm their own communities.

2. Debt- The total amount of money that is owed and has to be paid off at some point. That time period could be 30 days from now, or it could be 30 years, and it could be refinanced down the road into better terms or extend the time that the bills should be paid off. I bet many of you owe more on your houses + credit cards + student loans than what you make it a given year, but I also bet you're not claiming bankruptcy, because you are confident in making enough money now and in the future to be able to eventually pay these items off. But Robbin' Vos and Koo-Koo Kooyenga are crying crocodile tears about the alleged "Strongest Country in the World" not being able to pay its bills because it has racked up nearly $20 trillion in debt. That number sounds like a lot, but that debt takes a variety of forms, and some of it includes 30-year US Treasury Bonds and Social Security and Medicare payments on young workers that won't have to be paid for 40 years.

In fact, if you look at the Federal Government's debt payments during the Obama Presidency, it hasn't really hurt our overall budget that much. In recent years, we are paying less for interest on the federal debt than the $244 billion that we paid 20 years ago in 1997. Low interest rates and a declining deficit throughout most of the Obama presidency means that these expenses have been stable for much of the 2010s, with the only notable increase coming in 2016.



Of course, the economy has grown throughout that time period shown, so revenues have been more than sufficient to cover these extra expenses. This means there is no immediate debt crisis issue to worry about in America, although if you want to care about what happens in the future as Boomers retire and fewer people replace them, then you may have a point. But the size of our country's debt isn't causing any real fiscal strain as of now, and with us coming on 6 straight years of our 10-year note being below 3%, and a current 10-year yield of 2.16%, lenders aren't showing concern about taking our debt or debt-related inflation any time soon.

(Side note, this reference page from the Congressional Budget Office is a great place to find historical budget information, so you can cut through the BS).

And you know who else doesn't care about adding debt? Scott Walker and the WisGOP Legislature. Heck, Walker and Senate GOP Leader Scott Fitzgerald seem to be fine with borrowing the state into oblivion to repair roads rather than make people pay another dime in gas or property taxes. This includes the possibility of using General Fund borrowing to do it, even though that would squeeze funding for schools and human services in future years.

That's not a new trend either. Since Scott Walker and the Wisconsin GOP have taken power in 2011, Wisconsin's General Obligation debt (for regular government borrowing) and total debt (which includes items like debt for the Transportation Fund and other dedicated funds) have risen, and both are now at record levels.





(numbers are taken from Wisconsin's Comprehensive Annual Fiscal Report (CAFR) as well as the offering document for the state's latest plans to refinance $342 million in debt)

What's ironic is that while the debt for our Federal Government won't cause any problems in our current budget (other than interest rate risk from more borrowing or possibly increasing the deficits in future budgets from increasing debt payments), increasing debt is a problem for the 2017-19 and 2019-21 budget because those debt payments have to be accounted for every year, and the payments count against a "balanced budget". If those debt payments go up, then it crowds out other state spending in that given 1-2 year period.

Of course, the ALEC crew is fine with this, which is why they want to impose this stupid requirement on the federal government, because as State Rep. Jimmy Anderson (D-Fitchburg) pointed out, this could lead to cutting programs like Social Security and Medicare, which is something that Republicans could not away with if they tried it as a standalone bill.
"If that's what you want, there's a process to accomplish those goals that doesn't require a constitutional convention," Anderson said. "They're called elections. Run on it. Run on cutting Medicare. Run on cutting our military budget. Run on dismantling the federal government."
But Jimmy, then Republicans would have to actually admit to their bad policies and fiscal recklessness from cutting taxes for unproductive rich people and corporations, and that's not something they want the voting public to know.

And if Koo-Koo Kooyenga and Robbin' Vos are so concerned about the size of our debts at both the state and national level, then maybe they should stop supporting tax cuts to the rich and corporate that are a big reason behind that problem. Until they say that, they truly don't give a damn about the national debt, and are crying crocodile tears as an excuse to screw over poor people and other constituencies that aren't GOP donors. It's well past time that these duplicitous dimwits be called out for their cynicism and fiscal illiteracy.

Chrissy Schneider still trying to sell trickle-down BS- it ain't working

After the fiscal and economic disaster in Kansas and related screw-ups in the state of Wisconsin, you’d think that right-wing Bubble Boys would be backing off and not trying to float the absurd “tax cuts raise revenue” meme. But apparently Milwaukee Journal Sentinel paid mouthpiece of the Bradley Foundation columnist Christian Schneider still thinks he can try to get this garbage over on some readers.

Schneider tries to claim that because the Wisconsin budget is projected to have enough revenues to increase spending on K-12 education, that it proves that Governor Scott Walker’s tax cuts worked, and that Republicans should continue to insist that “lower taxes makes us better off.”
In fact, in Gov. Scott Walker's proposed 2017-2019 state budget, he plans to spend more in general purpose revenue (generally income, sales and business taxes) than the state ever has before. Walker's last budget spent $33 billion in tax revenue — his latest proposal spends $34.6 billion. And he can do it because tax receipts are up.

What's most interesting is that state collections have increased despite Walker and the Legislature enacting significant tax cuts over the past six years. Since 2011, Wisconsin has cut taxes almost $4.8 billion, including over $2 billion in cuts to income and business taxes. And yet receipts still continue to rise, allowing Walker to, for instance, increase funding to schools by nearly $650 million in his new budget.

In fiscal year 2016, Wisconsin took in an estimated $15.2 billion in taxes. The next year, that number increased to $15.7 billion, with recent state estimates increasing the number to $16 billion in 2018 and $16.6 billion in 2019.

This effect lends credence to what conservatives have argued all along: Allowing people to keep their own money and spend it how they wish stimulates economic activity and job growth, and thus stimulates tax receipts. When tax rates creep too high, they provide a disincentive for work, thus reducing government revenues.
First of all, Schneider sneakily includes sales taxes in these revenue totals, when sales taxes haven’t been cut at all in Wisconsin over the last 6 years (with some rare, targeted exceptions for specific businesses). And it’s not like Wisconsin has had the sales boom that Schneider theorizes would happen after income tax cuts, as Wisconsin sales tax revenues had an average growth rate of just over 4% between 2011-2016, while US retail sales outside of grocery stores, food and beverage stores and gas stations (aka- most of the places that people pay sales tax on products in Wisconsin) grew close to 5.5% a year in the same time period.

Retail sales isn’t the only place where Wisconsin has lagged in the Age of Fitzwalkerstan. Let’s go into the numbers and see what has happened with federal tax receipts for both individuals and corporations, and then compare it to what Wisconsin’s tax revenues look like. Obviously tax changes at both levels of government will affect this, but if Chrissy Schneider is correct that it’s the lower tax rates have led to higher revenues in Wisconsin, then we should be near or above the rate of revenue growth that they’re seeing in the rest of the country, right?

And let’s start in 2010, so we can see the last year under Jim Doyle and the Dems’ budget and then look at the Age of Fitzwalkerstan after that.

Change in tax revenues, 2010-2016
Individual income taxes
2010-11 Feds +21.48%, Wis. +10.04%
2011-12 Feds +3.73%, Wis +5.09%
2012-13 Feds +16.27%, Wis +6.46%
2013-14 Feds +5.94%, Wis -5.81%
2014-15 Feds +10.48%, Wis +3.74%
2015-16 Feds +0.35%, Wis +5.66%

In particular, note how badly Wisconsin lagged in 2013-14 and 2014-15, when they used the one-time bump in revenues that everyone got from 2012-13 to put new (Koo-Koo) income tax cuts in place.

Corporate income taxes
2010-11 Feds -5.38%, State +2.20%
2011-12 Feds +33.79%, State +6.30%
2012-13 Feds +12.88%, State +2.07%
2013-14 Feds +17.26%, State +4.52%
2014-15 Feds +7.20%, State +3.90%
2015-16 Feds -14.75%, State -4.17%

And it’s not like this lower corporate tax growth led to more hiring in Wisconsin, as the Walker jobs gap grew in every year from 2011 onward.



Overall, the growth in revenue into state government over the last 6 years in Madison is far behind what was being sent to DC.

Cumulative change 2010-2016
Individual income taxes Feds 72.08%, State +27.12%
Corporate income taxes Feds +56.53%, State +15.40%

So the feds have had an income tax growth rate 2 ½ times faster than Wisconsin, and a corporate tax growth rate nearly 4 times faster. And much better job growth happened in the rest of the country as well as most of the Midwest in that same time period, so it shows that Schneider is clueless (and likely lying on his bosses' behalves) when he says that Walker’s and WisGOP’s tax cuts have led to better growth. Instead, Schneider should instead be saying “Thanks for keeping us above water, Obama!”

Why does this hack keep pulling a paycheck from the state’s largest newspaper again? Promoting these Bradley Foundation liars and other regressive pro-oligarch crap is why I haven’t given the Journal-Sentinel a cent for years, and won’t until they blow out dishonest brokers like Chrissy Schneider.

Thursday, June 15, 2017

3.1% unemployment in Fitzwalkerstan? Don't bet on it being real

Through all of the other things going on in the state, there was another Wisconsin jobs report that was sent out by Scott Walker’s Department of Administration. And given that it was released before 9 am, you knew there was something that the Walker boys wanted people to know.
Place of residence data: A preliminary seasonally adjusted unemployment rate of 3.1 percent in May 2017, down 0.1 percent from April and at its lowest rate since October 1999. The rate remains lower than the national unemployment rate, which was 4.3 percent in May 2017.

Additionally:
•The rate of 3.1 percent is the second-lowest rate on record for Wisconsin (the lowest rate was 3.0 percent in May-July 1999).

• Wisconsin's January (3.9 percent) to May (3.1 percent) unemployment rate decline of 0.8 percentage points in 2017 is the steepest January-May decline since 1983.
And Walker’s DWD notes that their figures show that more Wisconsinites are “employed” than ever before (not a big deal, since the state’s population is also higher than ever before). All of these employment/unemployment stats were tweeted out by Governor Walker and numerous other WisGOP elected officials.

What wasn’t tweeted out by WisGOPs was this other part of the report.

Nonfarm payrolls, Wisconsin May 2017
Total jobs
May 2017 -3,100
April 2017 revision -1,700
TOTAL CHANGE -4,800

Private sector jobs
May 2017 -1,700
April 2017 revision -1,500
TOTAL CHANGE -3,200

And among the biggest sectors of seasonally-adjusted lost jobs were in manufacturing (-1,200 with revisions) and construction (-1,600 with revisions). If we focused on that part, May would be a bad jobs report.

So why is there such a difference? Let me remind you that the numbers in the monthly employment reports come from two different surveys.
Current Employment Statistics (CES): compiled from a monthly survey sent to about 5,500 employers (3.5 percent of Wisconsin employers). CES data has been shown to be volatile and subject to revision.

•Local Area Unemployment Statistics (LAUS): compiled from a monthly survey of 985 households and unemployment insurance claims. Measures the labor force, employment, unemployment, and the unemployment rate.
These numbers may be different from each other from month to month (partly due to differences in sample size and also due to variation of who is surveyed), but should generally be in the same direction over a decent span of time.

But if you look at the payroll vs household numbers from those two surveys for more than 5 seconds, and compare them to the start of the year, your BS detectors should be on full DefCon 1. Tell me how these two numbers could possibly come from the same state.

Total Non-farm Payroll Employment, Wisconsin Dec 2016- May 2017
Dec 2016 2,934,300
May 2017 2,957,100
CHANGE 22,800

Household employment/unemployment Dec 2016- May 2017
Dec 2016 2,988,100
May 2017 3,059,000
CHANGE 70,900

So household employment is three times more than payroll employment? I don’t think so. I have a hard time buying that there are tens of thousands of Wisconsinites that still live in the state, but just started working in another state in the last 5 months (which would be an explanation for this disparity of nearly 50,000 workers). There are either some serious adjustments that need to be made to the state’s household survey, or there’s a major hiring boom going on and it’ll be registered in the next 2 QCEW reports that’ll come out over the next 6 months (riiiight).

If we were truly seeing job gains of 14,000 people a month (which is what the household figures say) then we’d be seeing it reflected in strong revenue numbers. We haven’t, and in fact, income tax revenues have fallen on a year-over-year basis in 3 of the 4 months measured in 2017 (including April, which is the last month that has been released to the public).

In addition, are we to believe that Wisconsin went from 15,420 jobs gained in all of 2016 (according to the “gold standard” QCEW) to 70,000 IN FIVE MONTHS? Come on. And this would not the only time Walker’s DWD has overestimated household employment and labor force. Go back to what they were saying at the end of 2016, and the DWD ended up being way off.

Household, labor force 2016. Wis DWD estimate vs revision
Household employment, Dec 2015- Dec 2016
DWD estimate +42,400
Revised +10,200

Labor force, Dec 2015- Dec 2016
DWD estimate +24,300
Revised +7,500

Notice that those revisions happened after the Bureau of Labor Statistics looked at the QCEW and saw that all attributes of the state’s jobs numbers were being overstated. And it seems likely that 2016’s pattern of “high DWD reports revised down by the QCEW” will repeat for the start of 2017, which will come out over the next few months.

But why is this happening again? While I’m not accusing Walker’s DWD of intentional malfeasance, their constant spin and happy-talk about the state’s job market along with Walker’s and WisGOP’s having to convince the Wisconsin public that their policies haven’t failed leads me to be very skeptical of these employed/unemployed numbers. And these guys would not be below juicing up jobs numbers in order to get headlines and false memes to the public ahead of an election.

Wednesday, June 14, 2017

Economy getting soft, but Fed still tightening up

As expected, the Federal Reserve’s Open Market Committee agreed to raise interest rates another 0.25% today, and in its statement, the Fed indicated that they were doing so because the US economy keeps expanding at a decent, steady pace.
Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.
This largely makes sense, but a couple of reports released today indicated an economy that slowed in May. Retail sales disappointed, falling by 0.3%, which was the largest drop in over a year. Some of that is due to lower gas prices, but overall sales were also (barely) down for May.

Inflation sure isn’t acting like the economy is booming either, as the Consumer Price Index fell for the second time in three months. As the Fed alluded to, inflation excluding food and energy over the last 12 months is now at 1.7%, the lowest it’s been in 2 years. And average hourly earnings for workers are also being held in check, as they’re up 2.5% year-over-year, the same as it was in May 2016. A big reason behind any “gain” in real wages in recent months is because of the lower inflation, and even then, 12-month real hourly wages are only up 0.6%.

Regardless, the Fed indicates they think things will continue to get better in the near future and are going to get rid of some of their many Treasury holdings, which also has the effect of tightening money and “taking away the punch bowl” from Wall Street.
The Fed also described its plans to wind down its $4.5 trillion balance sheet, which it expects to begin this year. The program, in which the Fed would gradually reduce its holdings of Treasuries and agency securities, will decrease the Fed’s reinvestment of principal payments. Payments will only be reinvested when they exceed gradually rising caps of $6 billion per month for Treasuries and $4 billion per month for agency debt and MBS.

“The Committee currently anticipates reducing the quantity of supply of reserve balances, over time, to a level appreciably below that seen in recent years but larger than before the financial crisis; the level will reflect the banking system’s demand for reserve balances,” the Fed wrote in an addendum to its statement. The unprecedented size of the Fed’s balance sheet is a lingering a result of the extraordinary easing measures it took in response to the financial crisis.
The greedheads didn’t take kindly to this last part, and stocks dropped in the immediate aftermath of the Fed’s statement (it later recovered to end up near even). But for now, even with the soft data in the early part of 2017, it doesn’t seem like we're so bad that the Fed will stop its plans to wind down the last 9 years we’ve had of easy money, and give some incentive for people to save. We’ll see if that trend continues if we stay at or near full employment in America.