Thursday, January 12, 2017

Nope, still not buying Scotty's "tuition cut" gimmick

As people around the state continue to try to digest Governor Walker's announcement in this week's State of the State address on how he plans to give a tuition cut to in-state students attending classes at the University of Wisconsin System, the devil is clearly going to be in the details. Will any proposed tuition cut eat up the $42.5 million in added state funding the UW System requested for the 2017-19 budget, meaning the university will get $0 extra dollars from those 2 key funding sources? Or is there some other catch?

UW System officials are wisely waiting to see what is going to in Walker's budget proposal, which will be released next month.
"We are being cautious about commenting any further on the governor’s announcement to cut tuition until we know more details about his proposal and additional reaction by the Legislature,” System spokeswoman Stephanie Marquis said. “Until then, we will continue to aggressively pursue our common goals of college affordability and workforce development.”

The promise to backfill a tuition cut is the latest commitment to increase spending that has left some budget watchers wondering how Walker will balance the budget without resorting to the types of accounting gimmicks he criticized his predecessor for using.

He has also promised a “significant” though unspecified increase in general K-12 aid, more money for rural schools, nearly $70 million more for road maintenance and repairs, $65 million more for local road aid, $35.5 million more for broadband expansion and $10 million for a sales tax holiday.

“I find it difficult to understand how all these various promises can be fulfilled, unless you do them in very small, symbolic ways,” Wisconsin Taxpayers Alliance president Todd Berry said.
Yeah, join the club Todd. Sure, some of these proposals can be explained by shuffling around existing funds (like the broadband expansion), but some of these other initiatives are relying on money falling from the sky and/or a helluva lot of borrowing, and I want to see how this all fits together.

The other reason many budget watchers are skeptical of Walker's ability to pay for these promises is because the revenue picture looks gloomy at best. State Rep. and Joint Finance Committee member Gordon Hintz reiterated that today with a press release explaining the bad revenue numbers, and how a shortfall would stymie Wisconsin in Fiscal Year 2017, as well as the next budget.
Last January’s LFB revenue estimate predicted state revenue growth for fiscal year (FY) 2017 at 3.7%. The Governor’s Department of Administration abruptly lowered that expectation for the year ending June 30, 2016 to 2.3% in November. However, the most recent report from the DOR shows that collections for FY 2017 have been an anemic 1.2% so far. To put this number in perspective, a 1% drop in revenue will equal a $157 million hit to the Governor’s budget. If the current 1.2% tax revenue growth rate doesn’t change, the small $104 million projected budget balance carried over will be wiped out and a budget repair bill could be required to balance revenues and expenditures for the current budget year.

It is important to note that the recently reduced $104 million fund balance projection was only made possible by the Governor’s decision last May to defer payment of $101 million in debt into future budgets, instead of making the debt payment when it came due. After passing expensive, regressive tax cuts that overwhelmingly benefit the rich, the Governor has had to skip debt payments for the last two years just to keep his budget in the black. In other words, Governor Walker and Republicans have had to borrow money to pay for tax cuts each of the past two years to keep the budget in the black.

“Our state’s current budget problems are self-inflicted by a Governor who has prioritized untargeted and regressive tax cuts for the rich, at the expense of programs that increase opportunity for all Wisconsinites,” said Rep. Hintz, “His latest promises to provide increased funding for our public schools and universities suggest a delusional attempt to begin fixing the problems he created over the past six years. Short-sighted budget priorities and sluggish state economic growth have resulted in lower revenue to fund the program investments crucial to our state’s future. When he can’t cut programs anymore, he borrows taxpayer money to make up the difference. The Governor’s failure of leadership and poor decisions over the past six years have resulted in an economy where, once again, the revenues he needs to balance his budget may not be there.”
Yeah, pretty much. In fact, I am counting on those revenues not being there, but Walker coming up with some rosy scenarios, borrowing and magic asterisks to claim the money is there, and then leaving it to the State Legislature to make the real choices and try to have the numbers add up. It's pathetic and the mark of someone in over his head, but it's also par for the course for Gov Dropout.


  1. Walker - the Con artist - the political sociopath,

  2. I don't know that we need to go the full on Bernie route, but we seriously need to look again the formula for how we expect students and families to fund post-secondary education.

    I believe in the UW as one of the best financial engines in our state. Personally, if I could be assured that the money would be used to defray tuition costs, I'd proudly take on more of my WRS payment. Young people having less student debt would immediately put more spending money into the hands of twenty-something, and that would improve the economic situation in this state more than any tax reduction. In addition, it seems to me that much of the interest payments made on student loans is money that is simply lost to our economy. That money would instead stay here.

    I saw figures that LFB estimates every 1% tuition drop is about 7-8M in revenue. Wisconsin public employees took on roughly 50% of our retirement payments to the tune of about 800M. Pretty sure that's biennial. Seems to me that us taking on the full payment could cut tuition almost in half, allow us to effectively buy out the state and own the WRS outright, and perhaps restore some of the respect lost to right wing rhetoric. It would be hard, and it would be hardest on the lower end of the state's pay scale. It would mean about $350 less for me every month, but it would be pre tax. Maybe phase it in over the course of five years.

    Maybe the state would agree to meet us halfway. Matching 1 for 3 up to 3% wouldn't be bizarre among professional employees; my wife's employer matches more than that and pays bonuses.

    The perception shift alone might be worth it. The hoped for echo effect of a better economy might pay dividends in the long run with better raises. Too pie in the sky?

  3. Great plan. More pay cuts for Wisconsin's hard working middle-class professionals in order to fund regressive tax cuts for Wisconsin's rent-seeking rich....

    1. You got it. After all, people who think are the real threat, ya knooow.