Thursday, July 20, 2017

$712 million in DOT borrowing down to $0 in 2 days? Not sure it adds up

There have been a few developments regarding highway funding in recent days. So let’s pick up on this week’s proceedings regarding the DOT budget, and see where we stand.

First, let’s go into the Senate Republicans’ plans, courtesy of the Legislative Fiscal Bureau (the DOT plan is on pages 567 to 593 of this PDF). The biggest headline has been the Senate GOP’s plans to throw $350 million onto the state’s credit card to continue roadwork on Southeastern Wisconsin freeways.
Provide $350,000,000 BR in general fund-supported bonding for transportation purposes for the southeast Wisconsin freeway megaprojects program. The estimated debt service on these bonds would be equal to $633,800 GPR in 2017-18 and $7,809,600 GPR in 2018-19. Enumerate the I-94 East-West freeway project as a southeast Wisconsin freeway megaproject. Define this project as the reconstruction of the I-94 freeway in Milwaukee County, from 70th Street to 16th Street, including all interchanges, and including work on local roads as necessary for the completion of this project.
Guess they want to redo and expand I-94, even if Milwaukee social groups and elected representatives in the area don’t want it. But when the greedy oligarchs at the Metro Milwaukee Association of Commerce speak (and gives $362,500 to the Republican Governors’ Association), the GOP follows those requests.

As for the funding part, the Senate GOP would borrow $350 million of General Fund money, meaning that future payments will inevitably take from the available funding for schools, medical care, and other social services. And the extra funding is not offset by much reduction in borrowing from the Transportation Fund side, meaning that there is a total of $712 million in borrowing in the Senate GOP bill, more than Governor Walker’s proposed level of $500 million (which was all Transportation Fund-based).

That’s well above the $200 million that the Assembly GOP wanted for the 2017-19 budget, and leaders of that house said the Senate GOP “didn’t come up with something that we could live with” on transportation.

But with today came news of Governor Walker being OK with getting rid of his stupid $1-a-week income tax cut, and instead using the $200 million in General Fund money that’ll be restored to fund the roads. Assembly GOP leadership quickly leapt to agree with the Governor, saying that the cuts in borrowing that would result from that transfer comes closer to their goals.
We believe this compromise utilizes our current resources wisely by taking all or a significant portion of the proposed income tax cuts from this budget and using the savings to provide funding for our transportation system. In addition, you have offered the possibility of no new transportation bonds, which we appreciate. However, we understand there is a possibility of new bonding based on future federal appropriations and revenue-supported bonding.
That second part of the paragraph requires some more clarification, because I don’t see how $500 million borrowing - $200 million with no tax cut = $0 borrowing. Is the Assembly GOP assuming that all other portions of their prior DOT proposal from Dale (Koo-Koo) Kooyenga are going to go through as well? That plan raised $300 million for the Transportation Fund by making the state's gas tax be susceptible to the 5% sales tax (an increase of about 7 cents a gallon), while reducing the current "base" gas tax by a nickel.

The other option to reduce borrowing to $0 is to cut highway spending by $300 million, which means delays in major projects of 1-2 years. I'd like to see what the formal budget amendment looks like, because Walker is either signing off on a slight gas tax increase (which would put him on the wrong side of DC lobbyist Grover Norquist), or he's causing more delays by striking a "no borrowing" pose.

In addition, while transferring General Fund money is probably better than borrowing it (especially borrowing it from the General Fund, like the Senate GOP wanted to), that doesn’t help anything for the future. It doesn't change our $1 billion structural deficit in the 2019-21 General Fund at all, if you assume $200 million will also be sent over to the Transportation Fund in the next 2-year budget. Combine that with all of the General Fund money that is being proposed to pay for property tax relief in this budget, and it makes me wonder what future programs are going to be cut and which taxes are going to be raised if we get any type of economic or political stagnation over the next 2 years that negates the LFB's January projection of a "Trump Boom" (with a bust getting more likely by the week).

And while media may portray the developments of this week as a method of “shoring up the state’s Transportation Fund,” it looks like it’s merely trading part of the Transportation Fund’s shortfall by the possibility of increasing the one in the General Fund. Yes, it’s better than where we were, and miles better than the Senate GOP’s pile of crap. But it’s nowhere near where we should be or need to be if we’re serious about filling the many (pot)holes in the state budget. And given the mess that is TrumpWorld these days, I'm not thinking Scotty is going to get the help he needs from DC he needs to allow him to stay in GOP BubbleLand while getting the state's road needs take care of.

Wednesday, July 19, 2017

Plenty of bad in Senate GOP budget...before we get to DOT

Now that I've dug into the WISGOP Senate budget some more (and it is basically a rewriting of Gov Walker's budget), here are a few reactions. I'm going to talk about the non-DOT parts here, and will take up the DOT mess in another post.

1. The good - It finds money by dumping two of Walker's dumbest talking point gimmicks in the budget. The first is a $200 million income tax cut that the Legislative Fiscal Bureau estimated would give the average Wisconsinite around $1 a week.

The other gimmick that goes away under the Senate GOP plan was Walker's proposed sales tax holiday, which would have done next to nothing for helping the state's economy, and would have been an extra burden for retailers.

2. The not so good- Another way the Senate GOP finds more money is by getting rid of $50 million that had been set aside in a contingency fund for health care spending. This was a sensible hedge by the Joint Finance Committee since who knows how much the Feds would cover under Trump/Ryancare, but the Senate GOPs decided to use the money and roll the dice.

The Senate GOP also includes several gimmicks to cut property taxes. In addition to sticking with the $180 million in tax dollars that Walker wanted to spend to buy down the state's property tax for Forestry operations, the Senate GOPs pay back WMC by paying off $239 million to get rid of the state's personal property tax, which generally hits equipment and other business possessions.

The Senate GOP also tried to take care of the possibility of higher property taxes resulting from fewer Lottery sales by using $45 million of General tax dollars to pay back retailers who sell Lottery tickets. This enables $45 million more in Lottery sales to go to property tax reductions. If that's all you care about, I suppose that's a good thing, but $465 million is a lot of tax dollars to shell out to reduce someone's bill, and with a $1 billion General Fund deficit looming for 2019, that is not likely to be sustainable.

3. The really bad- The Senate GOP plan gets rid of Walker's proposals to expand the state's Earned Income Tax Credit (EITC) and the state's Working Families Tax Credit. Both moves will raise taxes on lower-income workers. At the same time, this proposal gets rid of Wisconsin's Alternative Minimum Tax (AMT), which overwhelmingly benefits richer Wisconsinite's. This continues the 6-year trend of Walker/WISGOP tax cuts favoring the rich, and shows yet again who this group REALLY works for.

The same applies for provisions in the Senate GOP bill that expand K-12 school vouchers yet again. Not only does the Senate GOP raise voucher eligibility to families of 4 that make nearly $54,000, but they also have other giveaways like not allowing for incomes of current voucher families to be verified, and approving the setup of "virtual private schools", where a teacher instructs from a remote location.

Combine those giveaways to the voucher lobby with prior revelations that the voucher program is taking more money and students from K-12 districts than previously thought, and now vouchers are projected to take $36 million more in taxpayer dollars than what was in Walker's original budget. And almost all of that is "paid for" by funneling away money from public K-12 districts in Wisconsin.

Now, all of that money-funneling to vouchers may make GOP donors and puppetmasters like Betsy DeVos and Scott Jensen happy, but I'm betting most of the rest of the state would hate it. Especially when school property taxes rise to make up the difference.

So this Senate GOP bill goes well beyond the binge of borrowing for roads, and while it at least admits it needs some revenue to work out, it is still badly lacking and has plenty of partisan giveaways of taxpayer dollars. It should get tossed to the curb in favor of real solutions with real fubding, but I bet some of the bad plans in Section 2 and 3 end up in the final budget...whenever that document might get passed.

Tuesday, July 18, 2017

New Senate GOP budget plan = same old failing BS

Since it's raining up North, I got a few minutes to react to the Senate GOP's "new and improved" budget plan.

First of all, it looks like Fitzgerald and the GOP Senators want to borrow $712 million for,roads, with $350 million from the General Fund.

This is a horrible idea. Apparently it's not just the DOT Fund that the Senate GOPs want to screw up, but the General Fund too. I mean, we already have $1 billion deficits in both these funds, so what's another few hundred to pay off in the future?

Oh, and it looks like the only plan they have for saving money is the same plan they've had for the last 6 years- SCREWING WORKERS, this time by eliminating prevailing wage requirements on construction programs. Hey Wisconsin blue-collars! How is that GOP vote to stick it to the book-learners working out for you tough guys?

Lastly, these guys want to give away another half-billion dollars in this budget by doing WMC's bidding and repealing the personal property tax. This will result in a significant property tax increase on homeowners, or will result in spending ANOTHER $522 million to avoid that unpleasant result.

Right now, I see no extra money being added in revenue that pay for this WISGOP Fantasyland plan, which makes me wonder what is getting cut to pay for it. School aids? Shared revenues? Medicaid?

Here's one thing I do know. SCOTT FITZGERALD AND THE SENATE GOP HAVE NOTHING. They've merely doubled down on the same poser BS that has already delayed this house-of-cards budget by 3 weeks. And I'm betting it'll be held up for a few weeks more, if this empty, no-solutions proposal is an indication.

Sunday, July 16, 2017

Little mid-Summer break

I could talk a lot about issues of the day. But this is the view from Vilas County

Current air temp- 72. Low tonight, 45. Between that and no work, I will take it. It just amazes me that people who live here vote for so many legislators who don't care about how special these scenes are (cough-Tom Tiffany- cough- Sean Duffy)

Saturday, July 15, 2017

Social Security is secure- if we choose it to be

A couple of days ago, the Board of Trustees for the US's Social Security program released its report for 2017. As always, it had some interesting numbers and projections, starting with the typical long-term outlook that is often quoted as politicians debate the future of the program.
Annual OASDI cost exceeded non-interest income in 2010 for the first time since 1983. The Trustees project that cost will continue to exceed non-interest income throughout the 75-year valuation period. Nevertheless, total trust fund income, including interest income, is more than sufficient to cover costs through 2021, so trust fund asset reserves continue to grow. Beginning in 2022, cost exceeds total income, and combined OASI and DI Trust Fund reserves diminish until they become depleted in 2034. After trust fund reserve depletion, continuing income is sufficient to support expenditures at a level of 77 percent of program cost for the rest of 2034, declining to 73 percent for 2091. Figure II.D2 depicts OASDI operations as a combined whole. However, under current law, the differences between scheduled and payable benefits would begin at different times for the program’s two trust funds: in 2028 for DI (disability) and in 2035 for OASI. (Social Security for older people).
Not much different than what we have seen in the past, and this graph from last year largely holds, except that the cut in benefits for 2034 would be 23% instead of 21%.

Combining this graph with the updated numbers in this week's Social Security report, it means is that there is a "cliff" that would hit in 17 years that would require either a 23% cut in benefits, or Uncle Sam would have to do what he does with every other program that spends more than it takes in- by borrowing money to make up the difference.

What that chart doesn't show is that the $2.8 trillion in the Social Security trust fund isn't just laying around, it's earning income in low-risk investments. As a result, there was more money in that trust fund at the end of 2016 than there was in 2015.
The trust fund investments provide a reserve to pay benefits whenever total program cost exceeds income. Combined trust fund reserves increased by $35.2 billion for 2016 because income to each fund, including interest earned on trust fund reserves, exceeded total expenditures. At the end of 2016, the combined reserves of the OASI and the DI Trust Funds were $2,848 billion, or 298 percent of estimated expenditures for 2017. In comparison, the combined reserves at the end of 2015 were 305 percent of expenditures for 2016.
So Social Security's trust fund ran a $35 billion surplus in 2016, and has enough money in its bank account to pay for nearly THREE YEARS of benefits even if the taxes that fund it were to go away.

Also worth noting is this passage later in the trustees' report, where they note how much money is NOT taxed for Social Security, due to the cap on taxable earnings for the program (which the report says is $127,200 for 2017, meaning all payroll income above that is taxed at ZERO).
The ratio of taxable payroll to covered earnings (the taxable ratio) fell from 88.6 percent for 1984 to 82.6 percent for 2000, mostly due to much higher increases in wage levels for very high earners than for all other earners. From 2000 to 2010, the taxable ratio varied with the business cycle, rising during economic downturns and falling during recoveries. Specifically, the taxable ratio rose to 85.7 percent for 2002, declined to 82.4 percent for 2007, rose to 85.2 percent for 2009, and was 82.6 percent for 2015.
The flip side of that is pointing out that over 1/6 of Amercians' payroll earnings are not taxed for Social Security which leads me to bring up a simple reform that would likely solve any future funding issues with Social Security. Simply make the tax even for everyone.

Quick math indicates that the Social Security rate could be cut from the current 6.2% (employee) + 6.2% (employer) to 5.2%- + 5.2%, and if we made the rich pay the same percentage as the rest of us, and extended that 5.2% rate to all payroll earnings, it seems like it would raise the amount of revenue going into Social Security. It would be a $67.5 billion tax cut for everyone making income below $127,200 (using 2016's Social Security report), another $67.5 billion tax cut for employers, and that money would be made up and then some (by around $12-$13 billion a year) by imposing that tax on all payroll earnings, including those over $127,200.

Perhaps this evening of Social Security taxes would also have some positive macroeconomic effects, as giving massive amounts of money to high-end earners becomes less worth it for employers...and for CEOs to give themselves. At the same time, smaller employers who don't pay big-time salaries get a minor tax break, and the 90%+ of us that work for a living also get a tax cut. I strongly believe that there is more bang for the buck for the economy for those two groups to benefit, as they are more likely to spend it on activities that actually grow the economy, as opposed to rich people and corporations who tend to save/hoard their money, or spend it on less productive activities like gambling on Wall Street and buying politicians.

But that reality of a slanted-but-fixable tax system and a still-strong Social Security program didn't stop GOPs on Congress from trying to claim the program was in trouble. Buried in a national story mentioning that Social Security was going to give old people their largest raise in 6 years (at 2.2%), is this bit on finger-wagging from a Trump Administration official.
"Congress must act to ensure the long-term fiscal viability and sustainability and survival of Medicare and Social Security," said Health and Human Services Secretary Tom Price. "There are a great many ways that the situation can be addressed. The bottom line is that it must be addressed."
Hey Tommy, I'd worry more about the fiscal viability and sustainability of Americans facing medical emergencies due to inadequate health care, but that's just me.

Bottom line, Social Security is as stable as ever, and merely needs a small tweak on the revenue side or more political will to spend on it to continue as the successful program it has been for the last 80+ years. The only thing we might really have to worry about is if debt costs and our federal budget deficit goes up to maintain the program. While the debt part has its own concerns, there is no way Social Security ever goes "bankrupt"...unless members of Congress choose not to pay it.

These 3 1/2 minutes of facts from America's Favorite Politician are as true now as it was when he did it for the "Koch Brothers Exposed" movie a few years ago (with a few cameos from our own Lyin' Ryan!). The only difference is that the Social Security Trust Fund has about $300 billion more in it than when this video was taken.

Friday, July 14, 2017

Now it's the US budget that's messed up!

Interesting Friday afternoon news dump out of DC, and for once it didn't involve Russia.
The White House said Friday that worsening tax revenues will cause the budget deficit to jump to $702 billion this year. That's a $99 billion spike from what was predicted less than two months ago.

The report from the Office of Management and Budget comes on the heels of a rival Congressional Budget Office analysis that scuttled White House claims that its May budget, if implemented to the letter, would balance the federal ledger within 10 years. The OMB report doesn't repeat that claim and instead provides just two years of updated projections.

The White House budget office also says the deficit for the 2018 budget year that starts on Oct. 1 will increase by $149 billion to $589 billion. But lawmakers are already working on spending bills that promise to boost that number even higher by adding to Trump's Pentagon proposal and ignoring many of Trump's cuts to domestic programs.
These figures are independent of what might happen with the GOP's attempts to repeal and replace Obamacare, but the lower revenue projections should not be a surprise, as yesterday's Treasury statement shows that revenues continue to slump in the 2017 Fiscal Year.

Change in US revenues vs FY 2016
FY 2017 budget +5.9%
FY 2017 year-to-date 1.6%

And as alluded to in the article, the news of higher deficits and lower revenues comes one day after the Congressional Budget Office gave its evaluation of the Trump Administration's first budget. Interestingly, the CBO did say that the Trump Administration's budget would reduce the deficit by a total of more than $3.4 trillion over the next 10 years compared to current law, but that would be because of severe cuts in domestic spending, including Medicaid.
A decrease of $2.0 trillion in mandatory spending (which is spending for programs generally governed by provisions of permanent law), including a $1.9 trillion reduction in spending for health care, as well as cuts to income security programs and student loans;

O A decrease of $1.9 trillion in discretionary outlays (which result from funding provided or controlled by annual appropriation acts) stemming from substantial
reductions in nondefense discretionary spending and from sharply lower outlays for military operations and related activities in Afghanistan and elsewhere
(known as overseas contingency operations, or OCO); and

O A decrease of $0.3 trillion in net interest costs because of lower deficits.
The flip side of that is the CBO says that the Trump Administration's promises of 3% GDP growth isn't close to what they think will happen over the next 10 years, and that the Trump Administration's proposed tax cuts will not magically pay for themselves.
CBO projects that revenues under the President’s budget would total $3.6 trillion (or 8 percent) less than the Administration estimates for 2018 through 2027. CBO attributes the bulk of that difference, about $3.4 trillion, to differences between its economic projections under current law and those of the Administration under its proposed policies.
Related to this, the CBO estimates average GDP growth in the US to be 1.9% over the next 10 years under this Trump budget, not really any different than the 1.8% average growth that they predict for current law.

What's kind of been hidden with all of the discussion with Trumpcare bill and the increasingly obvious TrumpRussia collusion is that we only have 2 1/2 months to get a new budget through before the government shuts down. In addition, Congress likely has to raise the debt ceiling this Fall, and with revenues falling short and the current-year deficit rising, that will likely need to happen sooner than later. And a lot of those GOP nutbags in Congress won't want to go along with that.

So it's not like things are going well in DC anyway, but this disappointing budget news indicates that things may be getting soft economically and fiscally, which is likely the one thing that has kept Trump from hitting "Bush/Nixon nadir" in approval. And it also makes me wonder if those bad numbers are going to be trickling down to the state level, either in the form of Federal budget cuts, or in the form of lower state tax revenues. We're not heading toward recession at this time, but the federal budget news may be a flashing yellow light to pay attention to.

Thursday, July 13, 2017

Disasters keep striking, but Walker budget has less $ to recover

Now that the rains have finally gone away in Southeastern Wisconsin, the cleanup and damage assessments can begin. Heaviest hit seems to be western Racine and Kenosha Counties, including what the police chief in Burlington calls “unprecedented” flooding, with all 4 bridges over the Fox River closed, and thousands still without power.

Governor Walker and Assembly Speaker/hometown boy Robbin’ Vos parachuted into Burlington today to survey the damage, and Walker issued a state of emergency to activate the National Guard and allow for other forms of immediate state assistance. But long-term, there will likely be need for road and bridge repairs associated with these floods, and barring federal help from FEMA, the state may have to be burdened with picking up a decent amount of that bill.

Unfortunately, the floods happened less than 2 weeks after the end of the 2017 Fiscal Year, which means it falls into the next budget. And Scott Walker’s 2017-19 budget plans to cut the amount of tax dollars that is set aside for disaster assistance (as noted in PDF Page 323 of the Legislative Fiscal Bureau’s rundown of the Governor’s budget. These funds are regular tax dollars that are sent over to the Transportation Fund, and are in addition to the $1 million that is regularly set aside in the Transportation Fund for disasters.
Make the following changes to the disaster damage aids transfer appropriation: (a) a decrease of $2,450,000 in 2017-18 to reflect the removal of first year funding from the base; and (b) an increase of $788,200 in 2018-19 to reflect an increase in the estimated amount needed to fund disaster claims in the 2017-19 biennium. 2013 Wisconsin Act 20 established a sum sufficient appropriation from the general fund to fund a transfer to the transportation fund in the second year of each biennium equal to the amount of disaster aid payments made in that biennium in excess of $1,000,000 for any single disaster event. The transfer was estimated at $6,500,000 in 2016-17 under 2015 Act 55. However, this amount was subsequently reestimated to the current base level of $2,450,000 to reflect slower than expected reimbursement claims for damage related to a 2011 storm in northwest Wisconsin (will that have to be paid in this next budget?). The Governor's recommendation would remove the 2017-18 base funding amount and fund the estimated transfer at $3,238,200 ($2,450,000 base funding plus the $788,200 increase) in 2018-19.
This now means that more money needs to be put back into the budget to keep funding for disasters at the same levels that we had for the last budget. And we don’t have that extra money lying around to add back in.

Another disaster that hit this week was in northeastern Wisconsin, where there was yet another incident involving a large animal farm that requires cleanup.
The owners of Neighborhood Dairy reported the spill Monday and have installed a temporary clay dam to contain the runoff.

An agricultural runoff specialist with the Wisconsin Department of Natural Resources said it’s not known how much manure entered Dutchman’s Creek located outside of Freedom, southwest of Green Bay.

Ben Uvaas said Neighborhood Dairy reported at least 20,000 gallons of manure were released from a holding pit.

"The farm estimates 20,000 gallons was lost from the pit," Uvaas said. "So out of that a fraction, a percentage would have gotten to Dutchman’s Creek. That’s probably the best estimate we’re ever going to have for this."
And James Rowen at The Political Environment notes that just adds to the list of manure spills, in an excellent post that also mentions the Walker DNR's inaction and slow-walking of new rules in recent years, despite increasing contamination and spillage from these large farms.

Seeing way too much of this.

For cleanup of these types of spills, the DNR is often called in to help defray some of the damage and put in remediation measures. But that is another provision where the Governor plans to use fewer tax dollars for 2017-19, and instead will deplete the state’s Environmental Fund to deal with runoff pollution (see Page 348).
Reduce by $3,152,500 annually the sum-certain GPR transfer to the nonpoint account of the segregated environmental fund. The bill would reduce the annual GPR transfer from $11,143,600 to $7,991,100. However, the GPR reduction would be offset by a transfer of $3,152,500 each year of the 2017-19 biennium from the environmental management account of the environmental fund.
And even with the transfer from the Environmental Management Account, you will see that the fund condition statements for Wisconsin’s Environmental Management and Nonpoint Accounts (which is at the end of this paper from the Legislative Fiscal Bureau), you will see that what is set aside for operations and cleanup efforts is slightly DOWN form what was allocated in the recently-completed Fiscal Year. And once that money is gone, you’re on your own when it comes to dealing with the mess and contamination that is caused by those mega-farms and their lack of regulation.

In addition, the LFB notes the budget bill is written in such a way that the reduction in tax dollars going to the Nonpoint Fund is permanent, but the transfer from the Environmental Management Account is not.
…the nonpoint account is estimated to begin the 2017-19 biennium with an available balance of approximately $6.6 million. Nonpoint account expenditures are estimated to exceed revenues by $1.6 million in 2017-18 and $1.9 million in 2018-19. Account balances would be sufficient to support such expenditures, and the June 30, 2019, available balance under the bill is estimated to be $3.1 million. It should be noted that transfers from the environmental management account are one-time, while the reduction in GPR transfer would be ongoing under the bill. As a result, adjusted base expenditures in 2019-21 are anticipated to exceed ongoing revenues by approximately $4.4 million annually.
Which means the next budget has to come up with at least another $1.3 million just to maintain operations (before inflation), or has to cut $1.3 million from operations dealing with nonpoint pollution and related issues.

Fortunately, DNR and DOT disaster assistance has yet to be decided on in the delayed 2017-19 budget, so perhaps the recent floods and runoff stories would encourage legislators to at least restore funding to the prior budget’s levels. Heck, maybe to it to handle what seems to increasing needs to deal with these disasters.

But the fact that the extra step would have to be taken because of Governor Walker’s lack of preparation funding speaks volumes. Of course Walker would try every nickel-and-dime trick to squeeze out money of necessities just to clear room for another campaign talking point. And bleeding out programs that protect the environment is just the way the Koch-ALEC crew likes it.

Maybe the WisGOPs should have shot this budget through when they had the chance, because it seems like with every day it gets delayed, some other complication springs up that makes the budget gaps even harder to close.

Wednesday, July 12, 2017

Hypothetically, will Ryan screw over his flooded-out constituents?

With the record rains and floods in Walworth, Racine and Kenosha Counties over the last 2 days (and possibly more to come tonight), it's seems possible that there will be enough building damage and washed-out roads to require assistance from the Federal Government.

Also interesting is that this severe flooding is happening in the district of one Paul Ryan, Speaker of the House of Representatives. You'd think this would increase the chances of this part of Southeastern Wisconsin to get assistance. However, given what Ryan did in 2013 in a similar situation when it came to giving assistance to the East Coast after Superstorm Sandy, I'm not so sure that's the case.
Among the 179 Republicans who voted "no" are several lawmakers who were elected in 2010 in the Tea Party wave and who promised to rein in federal spending. There were also prominent committee chairmen, such as Dave Camp of the House Ways and Means Committee, Fred Upton of the Energy Committee and Jeb Hensarling of the Financial Services Committee, who were among the bill's opponents.

Another "no" vote: House Budget Committee Chairman Paul Ryan of Wisconsin, the GOP's 2012 vice presidential nominee. Ryan was also among the 67 Republicans who voted against the first installment of Sandy aid earlier this month.
Ryan's excuse at the time was that the aid being given out was too much, wasn't paid for with taxes and would be mismanaged. So if Ryan was being honest at the time of the Sandy vote, then he'll probably vote against giving the people in his district assistance for a similar act of climate change God.

I mean, we know Ryan vote against the Sandy aid was totally out of principle, and had NOTHING TO DO with the fact that the funds were heading to liberal blue states and would disproportionately help minorities in big cities.

Of course, I'm just speaking in a hypothetical, since we don't know if there will be enough damage from the floods to meet the FEMA threshholds for relief. And we know what Purty Mouth Pau-lie thinks about hypotheticals.
House Speaker Paul Ryan (R-Wis.) dismissed the most recent disclosures of Donald Trump Jr.’s meeting with a Kremlin-linked lawyer for dirt on Hillary Clinton, telling reporters that he wanted to wait on various Russia probes to conclude before commenting.

Ryan said he didn’t wasn’t “gonna go into hypotheticals” when Kasie Hunt from NBC asked if he would personally meet with an official from a rival foreign government for dirt on a political opponent.

Such a punchable piece of human garbage.

WisGOP dysfunction could mean budget "solution" = years of highway delays

Nearly 2 weeks after the start of the 2017-18 Fiscal Year, Wisconsin still doesn’t have a budget. And if the comments from Assembly Speaker Robbin’ Vos are any indication, we aren’t going to have a budget for a while. And even if something does get through, it is going to ridden with (pot)holes and other unmet needs that will keep this behind.

Vos indicated to the media today that the Senate Republicans were not willing to take on new taxes or fees in this budget, which left him resigned to the fact that the revenue increases he and other Assembly Republicans wanted wouldn’t become law. Which means there’s only one solution left if Vos’s goal of reduced borrowing is to stay in place.
Vos said that means he has accepted there won't be any new revenue from increased gas taxes or vehicle registration fees for roads projects -- new revenue sources he asked Senate Republicans and Gov. Scott Walker to consider for what he has called a "long-term solution" to a troubled transportation budget.

But passing a state budget with his support would mean Senate Republicans need to agree to a budget without new bonding unless a way to pay for it is part of the package.

Vos' comments suggest lawmakers are closer to a scenario that would spell trouble for highway work in every corner of the state. A budget with no new money or borrowing for roads would force sweeping delays to highway projects -- both those currently under construction and those slated for future work.

"The budget is worse shape than the federal budget and the deficit in the transportation fund is way too high and we are not able to pay for the projects that are necessary by continuing to bond because that just makes a bad situation worse," Vos said after a meeting he had with Gov. Scott Walker and Senate Majority Leader Scott Fitzgerald.

What that means is that there would have to be a cut in spending in the neighborhood of $500 million for highway projects. And we have a good idea about which projects would be affected, since the Legislative Fiscal Bureau has already given us an indication from their budget papers on the DOT (outlined as Solvency Scenario 1 and Alt. A2 in this paper).

Delays of Wis hwy projects with no extra funding
US 10-Hwy 441 (Appleton)- Delayed from 2020 to 2022
US 18/151-Verona Rd (Madison)- Delayed from 2019 to 2020
Hwy 15 (New London)- Delayed from 2021 to 2022
I-39/90 from Madison to Ill Border- Delayed from 2021 to 2024

The LFB adds that a similar scenario would exist in Southeastern Wisconsin, as the Zoo Interchange and I-94 North-South projects work would be slowed past 2030 if the Governor’s cutbacks on those projects were to hold (and they would have to under a “no-tax, no-fee, no-borrowing” scenario).
Given the remaining, $878.2 million in estimated costs associated with these existing projects, if the Governor's recommended biennial funding of $121.9 million is maintained over time, both projects could be completed in slightly more than 14 years ($878.2 million / $121.9 million per biennium). This calculation includes no adjustment for the inflationary costs that would occur beyond the current schedule of 2022-23. Further completion delays would occur if the Governor's 2018-19 funding level, the base year funding ($50.7 million annually) for the next biennium, is provided on an ongoing basis. In addition, if maintained over time, former Secretary Gottlieb indicated that an ongoing biennial funding level of $121.9 million would mean that the reconstruction of all planned southeast Wisconsin freeway megaprojects could be completed over a 70-year schedule ($4.3 billion in estimated costs / $121.9 million per biennium). Similarly, this completion schedule would not include the effects of inflation.
Good luck selling “even more potholes and years of orange barrels!” to voters in 16 months, WisGOP.

Because that outcome is unlikely to be accepted by GOPs looking to be re-elected, that means it is extremely likely that our budget isn’t going to be signed in this month. Heck, this comment from Wee Wobbin’ indicates that Joint Finance might not even meet until the last week July, and it also seems to give a hint about how the power dynamics really work inside the WisGOP Legislature.

Vos isn’t on the Joint Finance Committee, but Darling is. So why would Vos be a decider when that Committee meets or does not meet, and what kind of arm-twisting and/or campaign donations is Vos holding over these guys? It seems to go along with Vos asking several right-wing groups last week for advice on how to pay for the roads instead of talking to the people or (gasp!) legislative Democrats.

The last couple of days of floods and storms can’t be helping this massive mess of a DOT budget, with numerous roads closed and/or washed out after several inches of rain hit southern Wisconsin. Some of the worst damage hit Vos’s hometown of Burlington, which is now under a state of emergency along with other parts of Racine County.

And as the budget mess reiterates, a Wisconsin Republican Party which eschewed governing for 6 years in favor of using state government as a means to enrich their allies and punish their enemies now can’t work together because they don’t know how to actually stand for anything other than hating on Democrats.

Actually, I take that back- they do like to throw talking points around about “lower taxes”, except now they cannot find the money to pay for the roads that they need to fix in their communities.

At the very least, Robbin’ Vos’s threat to impose further cuts and delays on highway spending is a great illustration of the high cost of this low tax mentality (of course, Robbin’ also wants to give school vouchers to families making $73,000+ on top of their private school tuition tax cut, so let’s not dub him “Mr. Fiscal Responsibility” quite yet). Just like in DC, Republicans in Madison are finding that dealing with reality doesn’t work so well when you can’t distract the rubes by blaming all of their problems on Obama.

Maybe the two GOP seats in the Oklahoma State Legislature that just flipped to the Democrats in special elections this week are a harbinger that people are starting to be finished with this ALEC, trickle-down crap as it screws up the finances of GOP-run states. 2018 is coming, whether Wisconsin has a budget by then or not.

Tuesday, July 11, 2017

Is Wisconsin going to get Fox-Conned?

Wisconsin media has started throwing out increasing amounts of talk about iPhone manufacturer Foxconn possibly locating one of their new factories in the state. Monday’s article in the Milwaukee Journal-Sentinel is typical of the coverage, and described the latest moves in Racine County, which seems to be the favored site if the factory is located in Wisconsin.
Last week, Assembly Speaker Robin Vos and two other leaders in the Legislature said in a memo that Foxconn wants to locate in southeastern Wisconsin, bringing up to 10,000 jobs. At the same time, the legislators suggested that the development was being threatened by delays in providing money to improve I-94 through Racine and Kenosha counties.

Vos, a Republican, represents most of southern Racine County.

Racine Mayor John Dickert has said representatives of an effort to land Foxconn have approached the city about providing water and sewer service to a potential large plant outside the Racine limits, along the interstate. The city provides water to Mount Pleasant.

And the Racine County Board held three closed-door sessions in June to discuss committing public money to unnamed “competitive multisite economic development opportunities.”

After the most recent session, on June 27, the board took the unusual step of approving — unanimously and without discussion — a special $500,000 letter of credit to the area’s economic development organization to cover expenses related to unspecified economic development projects.

Is this coming to Racine?

All of this sounds promising, but I got two simple questions for all of this Foxconn talk. “How much are they asking for?” and “How much will this cost us?”

Part of this is hinted at in the article, as Racine is talking about extending water and sewer service to an out-of-town site, and Robbin’ Vos is claiming that upgrading I-94 in the area would be a major help in landing the project. And there is clearly some kind of tax-free incentive deal being put together to encourage Foxconn to come to Wisconsin, and would likely involve breaks at the state level (with income and corporate tax write-offs?), and the local level (in the form of free land and property tax write-offs?).

So why is all of this negotiating going on in secret? Is it because the elected officials in WisGOP and Racine County don’t want the people to know how much they are planning to give away to this company before they have the photo op? And is this part of the reason that the state budget is being held up because they are trying to tuck away some kind of package for Foxconn where they get massive write-offs that can be cashed in before one iPhone rolls off the line? It sure doesn’t seem like there is going to be a lot of public discussion about what we will have to pay to get Foxconn to come here.

Look, I think it’s great if we can get factories to be set up here if a business thinks that Wisconsin is a worthwhile place to locate because of a strong workforce and infrastructure. I even don’t have a problem with offering some kind of short-term help in the form of Rehab Credits, enterprise zones, and/or TIF funding. The caveat to that is there must be clawback provisions if the company fails to deliver on its promises, and possibly assistance to a community to make sure local taxpayers aren’t being stuck with a major bill.

I have ZERO confidence any of that would be part of a Foxconn deal. This screams “corporate welfare giveaway” and “big jobs announcement with little to show for it,” and would be right in line for the type of gimmicky garbage that will be part and parcel of Scott Walker’s 2018 campaign (I’m not going to go into the possibility of campaign kickbacks that might happen with such a deal).

If we’re going to be working on such a plan, officials at the state and in Racine County need to be open with the public, tell us where the site is, tell us how much extra infrastructure will have to be built for this factory, and tell us how many tax dollars are going out the door to this company instead of being invested into roads, schools, and a quality of life that would attract enough talent and make companies want to locate here without gigantic subsidies.

There’s no guarantee Foxconn will ever actually create the jobs they promise. Go back to March and read this Washington Post story talking about how Foxconn pulled the “we’ll bring a factory here” routine with the state of Pennsylvania 4 years ago, and never followed through on its promise.
In 2013, Foxconn’s chairman sent a jolt through this state capital when he said his company — best known for making Apple iPhones in China — would invest $30 million and hire 500 workers for a new high-tech factory in central Pennsylvania.

Locals were giddy. Foxconn had a small office here, but this seemed like the start of an entire new industry. Pennsylvania’s governor boasted about the deal. The Brookings Institution think tank hailed Foxconn’s decision as a sign of U.S. manufacturing’s strength.

But the factory was never built. The jobs never came. “It just seemed to fade to black” after the announcement, recalled a local official. It was the start of a mystery, created by a chief executive known to promise projects all over the world that never quite pan out. Yet few people seem to notice. Foxconn and others continue to get credit for deals that never take place. In December, Pennsylvania’s economic development staff was still touting the $30 million factory that never was.
So let’s see if anything happen, even if there is some kind of Foxconn jobs announcement in the coming months. The consistent cycle of “media-covered job announcement followed by few jobs and eventual layoffs” that we’ve seen throughout the WEDC-centered Age of Fitzwalkerstan is also an ominous sign. Again, I don’t want to say I’m opposed to the idea of Foxconn coming here. But it sure seems like a lot talk is going on about “potential new jobs”, and nowhere near enough is being discussed about how much those jobs will pay, how much the taxpayers will pay to this company, and what ripple effects will there be for the local economy wherever Foxconn may locate.

One last thing- if Wisconsin’s unemployment rate is truly at 18-year lows (a sketchy enough claim on its own), then where are we going to find the workers that will want to work at what is likely to be bargain-basement wages at Foxconn? The same pro-WisGOP corporate hacks that want this deal are the same ones that complain about labor shortages, which is in no small part due to the fact those businesses offer the lowest weekly manufacturing wages in the Midwest. So if we’re at surplus employment, where do these workers come from, and does that mean that other existing businesses will suffer if their current workers leave to go to work at Foxconn?

We need to talk about this NOW, as this state is already facing major budget troubles (with another $51 million hole revealed on Tuesday) before it chooses to give away millions more to another corporation. This is especially true because we have a Governor and Legislature that only seems to care about having a set of “it’s working” talking points, and they don't care about what happens after the photo op with suits and shovels gets on the air.

Due to Illinois beating Wis to the budget, we have a new $51 million hole

Even though our already-delayed and no-cushion state budget couldn’t afford another hit, it got one this Tuesday afternoon when a Legislative Fiscal Bureau memo revealed that Wisconsin now owes the state of Illinois nearly $51 million more for the next two years?

So how did this come out of nowhere? Because of the recently-passed Illinois budget which raised taxes to help try to stem some of their fiscal mess. But why would that affect Wisconsin? Because of the tax reciprocity deal the two states have between each other.

Basically, the two states allow residents that work in the other state to have their state of employment take out its typical amount of taxes withheld, and then one state sends money to the other to make up the difference between the two sums. In this case, the reciprocity payment between Wisconsin and Illinois is based on the difference between what Wisconsinites owe in Illinois taxes and what Illinois residents owe in Wisconsin taxes based on “personal service income.”

The LFB defines personal service income by “wages, salaries, commissions, and fees earned by an employee”, but other forms of income (mostly based on assets and business income) are not part of this reciprocity agreement.This means that the reciprocity agreement with Illinois takes two forms- the first is in the payback between states for the out-of-state employee income (which the employee never has to deal with), and the second involves sending taxes to the other state for the asset-related income.

The LFB says this makes it easier than having to file two sets of taxes and adjusting it back on a tax form.
…Without the agreement, Wisconsin residents working in Illinois would first pay taxes to Illinois and claim a credit for those taxes against the taxes owed to Wisconsin. Illinois residents working in Wisconsin would do the same, first paying taxes to Wisconsin and claiming a credit for those taxes when they pay taxes to Illinois. Without reciprocity, Wisconsin income tax collections would be lower by an amount that is approximately equal to Wisconsin’s payment to Illinois. For income other than personal service income, Wisconsin residents who earn that income in another state pay tax on that income to the other state and then claim a credit for that tax when they calculate their Wisconsin income tax.
With that in mind, the recently-approved budget in Illinois raised income tax rates from 3.25% to 4.95%, which means that Illinois now will get back even more money from the state of Wisconsin as a result of Cheeseheads going south for work.
In the Governor’s budget, Wisconsin’s income tax reciprocity payment to Illinois is estimated at $66,046,000 in 2017-18 and $67,667,000 in 2018-19. Earlier this year, this office arrived at similar amounts after reviewing the Department of Revenue’s (DOR) calculations of those estimates. This office and DOR have re-examned the reciprocity payment estimates in light of the provisions in Illinois P.A. 100-0022 increasing Illinois’ individual income tax collections in 2017-18 and arrived at similar results. The recently enacted Illinois Tax provisions are expected to increase Wisconsin’s 2018-19 reciprocity payment by an estimated $22,833,000 to $90,500,000. However, based on income tax collections for both states through June, Wisconsin’s 2017-18 reciprocity payment is now estimated to be $64,000,000, or $2,046,000 lower than the amount in the Governor’s budget. Combined, the reestimates for the two years are $20,787,000 higher than the amounts in the Governor’s budget.

The Illinois tax changes will also result in Wisconsin residents claiming larger credits for taxes paid to other states. Higher credit amounts will first occur in tax year 2017, and higher credit amounts in subsequent years will affect estimated tax payments. As a result, Wisconsin individual income tax collections are estimated to be lower by $12,900,000 in 2017-18 and $17,200,000 in 2018-19. When combined, the reciprocity and tax credit changes are estimated to adversely affect the general fund’s positon by $50,887,000 in the 2017-19 biennium.
So there you go, and now budget writers have to figure out where to find $51 million in a budget that had only $12 million of breathing room to start with. There's a sad irony here, because if Wisconsin had passed their budget on time, this would merely be an informational note that might have to lead to adjustments if revenues fell short. But because the budget is not complete, we have to adjust the 2017-19 budget to account for this $51 millon adjustment. Nice work, WisGOP!

In addition, $40 million of that increase is in year 2 of this budget, meaning that our structural deficit goes up by $80 million for the 2019-21 budget, which is $80 mil on top of the $1 billion General Fund deficit that we were already facing.

Interestingly, Wisconsin had their tax reciprocity agreement with Minnesota end in 2009 after then-Minnesota Governor Tim Pawlenty complained about Wisconsin delaying its payments (because so many more Wisconsinites work in Minnesota than the other way around). As a result, the many Twin Cities workers that commute in from St. Croix County and other parts of western Wisconsin have to file two sets of taxes, unlike Wisconsinites that work in Illinois.

Wisconsin did pay back $59.7 million owed to our neighbors to the west in 2011, but this issue of how much Wisconsin owes still lurks beneath the surface without a formal agreement with Minnesota. As a result, the Minnesota Legislature passed a bill last month using some of their surplus money to pay back state residents that have their job in Wisconsin.

Of course, a good way to reverse all of these lost revenues in reciprocity is to have jobs in Wisconsin that pay enough to have people stay here (and have out-of-staters want to work here) instead of go out of state for work. And as long as Wisconsin has the lowest weekly manufacturing wages in the Midwest, and as long as Chicago and the Twin Cities outpay Milwaukee and Madison and Green Bay/Appleton for top-level talent, this trend of Wisconsin losing funds due to tax reciprocity will continue.

And because Illinois (in particular) offers better pay and opportunities than here, the Wisconsin budget has to make a $51 million adjustment in a budget that doesn’t have $51 million to give away. Naturally, the WisGOP line that they’re trotting out is “yes, but the higher taxes in Illinois will encourage more people and businesses to come here.” You know, the same Texass-style “Open for Business” line of BS that hasn’t done a damn thing to raise our wages, competitiveness for talent, or amount of tax revenues over the last 6 years in Wisconsin.

We won’t see any effect (if there is any effect) of FIB migration for a few years anyway. In the meantime, the pre-election Christmas Tree of gimmicks that Scott Walker presented in February continues to wither, giving increasingly less room for presents. Not what we needed to see in a budget that is nearing 2 weeks overdue, and an economic outlook that doesn’t seem to be getting much better than the mediocrity we have today.

Monday, July 10, 2017

RW oligarchs get Vos's ear on DOT. The rest of us? Nope!

Last week, Assembly Speaker Robbin’ Vos and other Assembly GOP leadership asked several business groups and right-wing organizations for their ideas on how to close the state’s continuing $1 billion budget deficit in transportation. Vos gave the groups until today to get back to him, and a few of them actually took Robbin’ up on the offer.

Among the respondents were the Republican megadonors at Wisconsin Manufacturers and Commerce, who sent their info back on Friday. I know this will shock you, but WMC preferred method of “paying for” projects comes through cutting wages of construction workers, preempting local environmental regulations, and privatizing DOT engineering services (despite proof that this is more expensive than keeping engineering in-house).

But the few WMC revenue measures they asked for naturally chose for methods that make the typical motorist pay over corporations and trucking companies.
Gas tax and fee increase: The WMC Board of Directors voted to approve a legislative agenda earlier this year that included a provision to support a gas tax increase of up to five cents per gallon, and a registration fee increase on automobiles and light trucks of up to $25 per vehicle.

Diverting the PECFA (the state’s petroleum cleanup fund) tax for roads: Utilize the two-cents per gallon currently being collected for the PECFA program to pay for transportation funding, while paying for the PECFA program obligations with another dedicated revenue source.

Transfer additional General Fund Revenue: Allocate additional General Fund revenue to the Transportation Fund either by increasing the current 0.25% transfer, or transferring a portion of the sales tax from motor vehicle sales and/or motor vehicle parts and accessories.
Does WMC come up with specifics on how to pay for those bigger transfers out of the PECFA and General Funds, or what extra taxes have to be raised to make up this difference? OF COURSE NOT. They either assume that extra money will fall out of the sky and make everything OK, or (more realistically) they favor additional cuts to education and local government aids, but don't want to admit it. Classy bunch.

WMC also seems to favor Governor Walker’s plan for a $341 million bailout from DC, and the extra borrowing that the state would take on from it, a ridiculous stance that makes Walker look like a foolish hypocrite, but well in line with WMC’s belief in having the taxpayers subisidize their business any chance they get.

But then WMC waffles and says the increased gas and registration taxes really don’t need to be looked into because Governor Walker and Senate GOPs won’t go for it, and after all, the GOP Assembly should concentrate on “controlling costs” by screwing workers and the state’s environment. Yes, these are the “business geniuses” drawing up our economic policy.

And Wal-Mart has also chimed in to say they join WMC in backing a 5-cent-a-gallon gas tax increase IF they could also get rid of the state’s minimum markup law. Getting rid of the minimum mark-up would clear the way for Wal-Mart to undercut other gas stations, and potentially drive them out of business (you know, the same way Wal-Mart has done to local retail all around America).

Quick sidenote to that Wal-Mart – the Lisa B. Nelson that wrote that reply as Wal-Mart’s head lobbyist in Wisconsin isn’t the same person as the ALEC CEO. The Wal-Mart lobbyist is merely a typical WisGOP hack that went through the revolving door for bigger bucks. But it is a pretty damn funny coincidence.

The bigger story in this whole “ask for ideas” stunt by Vos is that it tells you who he really listens to. Vos has never gone in front of the people to get their feedback for how to fund the DOT, and has certainly never asked Legislative Democrats for their thoughts (Vos told CLAN Radio 1130 2 weeks ago that “The Democrats are totally irrelevant”). But instead, it’s the thoughts of donors and other oligarchs that matter to Wee Wobbin’.

You wonder why this state keeps lagging the rest of the country when you have an ALEC-GOP crew that doesn’t give a crap about what the overwhelming amount of the state might be asking for? Particularly when it comes to solving the billion-dollar deficits that prior ALEC-GOP policies have left us with?

PS- Hey! I got a new Phil Hands cartoon to use for this topic in the future!

Sunday, July 9, 2017

Sinclair-Tribune merger = more RW crap in Wisconsin!

You may have heard about John Oliver's recent takedown of the right-wingers at Sinclair Broadcasting. That piece was partially driven by Sinclair's plans to buy Tribune Media, which was announced in May. Tribune owns or is affiliated with 173 stations, and it's one of the first mega-mergers to happen after the FCC voted in April to allow corporate broadcasters to buy a bigger share of stations by discounting the importance of UHF frequencies.

Oliver points out that if the merger is allowed, a lot more local stations would likely be getting Sinclair's "must carry" pieces on their newscasts, which makes Fox News' Islamophobia and "whiny white victim" mentality look like level-headed, balanced analysis.

And yes, there is a Wisconsin angle here.

Current Sinclair stations
TV18 Milwaukee
My24 Milwaukee
Fox 11 Green Bay
CW 14 Green Bay
Fox 47 Madison

Current Tribune Media stations
Fox 6 Milwaukee

Gee, as if we don't have enough right-wing crap in Milwaukee media. Now we are looking at 3 of the 9 (?) local stations in Milwaukee being owned by these right-wing dingbats, including the main broadcaster of Packer games.

FYI- Tribune also is associated with Antenna TV and This TV, which has affiliates all over the state and shows reruns of shows from the '60s, '70s and '80s. Not sure how the Sinclair deal and its "must carry news" plays in there.

Watch and boycott accordingly. Liberal media MY ASS!

UPDATE- And look what just dropped on Monday, as the TrumpRussia scandals goes directly to Fredo and former campaign manager Manafort!

Again, boycott accordingly.

ALEC/GOP still seems fine with UW being underfunded, mediocre

Late last week, the UW Board of Regents signed off on the budget for the 2017-18 school year, and you can take a look at the full $6.22 billion document right here. As Nico Savage of the Wisconsin State Journal notes, the UW budget is based on what was approved by the Joint Finance Committee last month, which includes a restoration of $25 million that was a required lapse of expenses for the 2016-17 Fiscal Year. Yes, I know that the state budget is still held up, but there aren't many changes in state funding that are happening to the System anyway, which isn't a good thing since it comes after a $250 million cut in state aid in the prior budget. (I referenced this back in May).

In fact, 70% of the overall budget increase of $92 million is at UW-Madison, mostly due to increased enrollment and higher tuition for out-of-state and graduate students, along with more money from Bucky's self-supporting entities. In contrast, 3 4-year campuses (Milwaukee, Stevens Point and Superior) will have less total funding funding in 2017-18 than they had this year, and UW Colleges and Extension are also looking at cuts in total money available. This partly helps explain why the UW Board of Regents chose to reallocate more money to the non-flagship schools, and away from Madison.
Under the operating budget proposal released Monday, UW officials would not distribute the $25 million increase using the enrollment-based formula they typically use to divide money among institutions — a plan that directs the lion’s share of funding to UW-Madison.

Instead, they would use a different formula that shrinks UW-Madison’s allocation of the new money by more than two-thirds: Whereas the campus would have received an additional $9.4 million under the prior formula, it stands to receive $2.9 million.

Other System campuses would in turn get bigger shares of the state money — UW-Milwaukee would be the biggest beneficiary, receiving an additional $1.7 million.

UW-Whitewater would get an extra $1 million, while other System institutions would receive between $205,300 and $423,600 in additional funding.
As a damn proud Badger, you may expect me to be angry about this, but I don’t have much of a problem with this decision. The non-Madison campuses rely on state aid and tuition more than Madison does, because Madison has much more funding through research and its larger donor base.

GPR/Tuition as % of total budget
Madison 29.6%
Rest of UW System 49.6%

But as UW Professor Don Moynihan brings up, you’d think a “pro-business" State Legislature would then allow Madison to raise more of its own revenues through tuition to make up the difference and continue its ability to invest.

Of course, that's not going to happen under the state budget as it stands, because the GOP talking point of "low cost" is more important to them than having UW-Madison (and the state as a whole) maintain its excellence and attract talent. Which means Madison will likely continue to lag when it comes to paying for their staff when compared to their peers, a problem when you consider that Madison had to pay $23 million in additional compensation and supplies in 2015-16 just to hold on to who they had.

The Board of Regents item that did piss me off came at the meeting on Friday, where new Walker-appointed UW System President John Behling shot his right-wing mouth off. Not only did Behling say that the tiny increase in state aid in this budget proved that giving in to WisGOP by eradicting tenure and UW self-governance was "the right move", but he also had this brilliant idea.

Current and former UW professors quickly called out the absurdity behind Behling's "run UW like a corporation producing widgets" mentality.

But John Behling is reflecting the vision that the ALEC/GOP crew wants from higher education. They don't want universities to produce independent research that benefits the public good or to produce well-rounded, citizens that can recognize things past their own noses and advance our society. They want higher education to be nothing more than subsidized help that produces workers for the corporations they own. This seems doubly true when the ALEC/GOP LEgislature and Walker cronies on the Board of Regents comes to dealing with the over-ejukayted liberals in Madison (aka- the only place in Wisconsin that's actually attracting talent and having big-time economic growth).

George Carlin had it cornered 20+ years ago, and it's worse today.

Saturday, July 8, 2017

June jobs good, but let's not go too crazy

While much of the national news may be focusing on what's going on in Germany, there was a US jobs report that came out yesterday. And the news was pretty good.
Total nonfarm payroll employment increased by 222,000 in June. Employment rose in health care, social assistance, financial activities, and mining. Employment growth has averaged 180,000 per month thus far this year, in line with the average monthly gain of 187,000 in 2016....

The change in total nonfarm payroll employment for April was revised up from +174,000 to +207,000, and the change for May was revised up from +138,000 to +152,000. With these revisions, employment gains in April and May combined were 47,000 more than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 194,000 per month.
That was above general expectations of around 180,000, and even the slight tick up in the unemployment rate from 4.29% to 4.35% wasn't that bad, as household employment (+245,000) and the labor force (+361,000) grew well. Overall, the jobs report reiterates that the economy continues to grow as the current expansion started its 9th year this month.

The biggest sector of the job market that saw increases were in health care and "individual and family" social assistance service, adding a combined 48,000 jobs in June. What makes those figures extra intriguing to me is that Trumpcare would cut Medicaid and other access to these services, which would likely reduce the growth of jobs in those industries. So are Trump and the GOPs going to continue to try to mess with something that's giving them good jobs numbers, along with a health care bill that's giving them bad poll numbers?

Trump also promoted "bringing back mining" as a key part of whatever economic strategy he might have. And on the topline, the Bureau of Labor Statistics says the"Mining" sector has added over 14,000 jobs in the last two months. But then you dig down into those figures, and you notice this oddity.

Mining jobs April 2017 - June 2017
"On-site" mining jobs -400
Support activities for mining +14,500

If the mining jobs aren't happening on site, doesn't it seem that those support activities would also dry up soon, especially with oil prices staying below $50 a barrel? Could be something to watch in the near future.

What the Trump Administration and most media didn't mention yesterday is the source of one of the other large increases in yesterday's jobs report - Local Government, which "added" 35,000 jobs due to lower-than-normal seasonal layoffs (158,000 layoffs, and over 377,000 in local education). This seems to be related to the survey date, which was in relatively early June, and that makes me wonder if that figure will "snap back" in July when more people are done working at schools and other local government outlets, and lead to a similar decline.

It also helps explain a lot of the "upside surprise" of June's 222,000 total job increase. Private sector jobs only went up by 187,000, which were basically in line with estimates, and isn't much different than the trend that we have seen over the last 12 months (an average of 175,000 a month). Slower than the more robust 200,000+-a-month pace we were on in the few years prior to 2016, but still solid and nothing that indicates recession is near.

Wage growth continues to be "meh", only up 4 cents an hour (0.18%) and 2.38% for the last year. Not much different than what we saw in June 2016 (in fact, slightly less), and the theory that claims "wage growth is right around the corner in this tight labor market" keeps being proven wrong. Wonder how much longer blue-collars are going to have patience with Trump to change their mediocre lot in life if that continues...unless it's some other reason that makes them like the guy (wink).

So overall, a good job report for June, but you can see where it isn't any kind of blowout report that would be part of an economic boom. So if it feels like "same old, same old" for the economy 6 months into the Trump presidency, you're probably correct to feel that way. Then again, that may be a good thing compared to the crap that might be happening if Trump really was getting his regressive, trickle-down agenda into law!

Friday, July 7, 2017

Walker's "have Trump bailout DOT" plan a hypocritical, weak-sauce FAIL

Now that I'm back at home, I have some time to discuss our Fair Governor's absurd FAIL of proposed budget deal on transportation funding.

Let's first look at what Scott Walker proposed (and our media dutifully reported on), and I'll explain how this fits into the big picture of the DOT budget, and in past decisions from Walker.
First, we propose reducing transportation fund supported bonding by $200 million in this budget by using an improved transportation fund balance, project cost savings, and other administrative actions. We believe this can be accomplished while continuing to keep projects on schedule.
That's nice, but none of this is information is particularly new- we found out 6 weeks ago that the Transportation Fund would have $145 million to carry over into this budget, and $101 million at the end of it. Walker is simply going to use up the extra money, draining the DOT Fund's balance to near $0 by the end of 2019, "lower costs" by screwing workers, and perform some accounting tricks. There will be no additional repairs to the roads done beyond what's already in the state budget (which is in itself a cut from what was requested by the DOT), and this would likely mean that the budget hole for 2019-21 would actually become bigger, since there's no more money to carry over there.

Walker also mentioned that the state will stop paying off debt from the Petroleum Inspection Fund by the end of 2019, which would allow that money (collected with a 2-cent-a-gallon tax on gas) to be funneled over into the Transportation Fund. That's nice, but a quick look at the Petroleum Inspection Fund shows that this extra money amounts to around $26 million a year, or $52 million for a biennium. That's not going to do much to reduce a state Transportation Fund with a projected deficit of $1 billion for 2019-21, with more needs to pay for after that.

But it's the other part of Walker's "plan" from yesterday that proved that Governor Dropout is all out realistic ideas when it comes to dealing with the state's ability to fix the roads.
Second, approve contingency bonding for the Southeast Freeway Megaproject program.

Interstate 94 North/South, the Zoo Interchange and Interstate 94 East/West are high profile projects in southeastern Wisconsin. We propose contingency bonding that would be linked to additional federal funding for mega projects. Wisconsin is well positioned to qualify for additional federal funding to help support mega projects.
So this not only asks for a bailout from the Trump Administration and GOP Congress is the form of more federal money, it also then asks the Legislature to approve more borrowing if that money were to arrive. In one swoop, this explodes Walker's earlier talking point of "lower borrowing" and makes Walker look absurdly hypocritical when it comes to taking federal money.

Remember, this is the same Scott Walker who turned down guaranteed money from the Obama Administration to expand Medicaid funding (and instead has chosen to make Wisconsin taxpayers shell out billions more out of their own pockets in the last 4 years). This is the same Scott Walker that turned down hundreds of millions of dollars of federal funding for rural broadband and high-speed rail. But now Scotty wants a one-time bailout from DC to pay for road projects to try to get through the 2018 elections, with no guarantee of future funding being available?

And oh yeah, this is the same Scott Walker who said 30 days ago he backed a Constitutional Convention to force Congress to balance its budget and rein in spending. But now Scotty wants the US DOT to give him (aka SPENDING) hundreds of millions of dollars instead of banking it....when banking the money would reduce our deficit and debt. Hell, Scotty himself ordered $45 million in Wisconsin's transportation fund to be banked so things looked better for this year, instead of actually fixing the roads. Did Gov Dropout think this shameless and obvious hypocrisy wouldn't be noticed?

This is enough to make Walker's plan laughable on its face, but even worse was when we found out how they were planning to get their federal bailout. That information came later on Thursday as part of a memo from the Legislative Fiscal Bureau responding to a request from State Rep. Gordon Hintz. Hintz was asking the LFB "What happens to DOT projects if the state budget is delayed?", and the LFB first explained how federal highway funds can be redirected to other states if there are extra funds lying around, due to other projects costing less than expected, or never happening in the first place.
In August of each year, the Federal Highway Administration redistributes states' unused federal obligation authority (the amount of state highway aid available in any given federal fiscal year). In order to be eligible for receipt of these funds in 2017, states must submit a list of projects by July 19 that shows the state's ability to "obligate" any funds received by the end of the federal fiscal year (September 30). DOT indicates that delays in lets due to a delay of budget passage of three months or longer could limit the Department's ability to obligate federal funds, which could make the state ineligible for some federal redistribution in 2017-18.
So actually, Wisconsin is in danger of not being able to use that extra money if they didn't have a budget in place that showed how they would use those extra dollars from DC.

Bad enough, but here comes the part where Walker's bailout request is mentioned, and where the LFB says it is a very bad idea for the Walker Administration to expect to get anything close to the amount that they want for the bailout.
In an analysis provided to this office, DOT officials indicate that the Department may submit a larger-than-typical request for redistribution funds, totalling $341 million, which they indicate could result in a larger amount of redistribution aid received by the state than in past years. If this amount were obtainable, a delay in the passage of the budget would likely limit the state's ability to obligate sufficient state funds to match this federal amount. However, any expectation of a significant increase to the state's share of this federal redistribution funding should be tempered by the following considerations: (a) in past years, regardless of the size of the state's redistribution request, the amount of aid received has been similar to the state's obligation authority as a percentage of the national total (on average, slightly less than 2% of the national total); and (b) the Department's potential $341 million request may include $211 million of project work related to the southeast Wisconsin freeway megaprojects, which would require a minimum state match of $52.8 million. This match would require $41.3 million more in state funding than is included under the Governor's 2017-18 recommendations for this program.
This catch-22 of Walker's DOT proposal relying on more Federal money but being less likely to get that money because they have no state budget and therefore no money to chip into those projects was noted by WKOW's Greg Neumann and (amazingly) a lobbyist for one of the BubbleWorld "no-tax" RW groups holding up the DOT budget- Wisconsin Manufacturers and Commerce.

Even if WisGOP somehow got the budget together in time to send that $341 million request to the US DOT in 11 days? Recent history shows that Wisconsin might get 10% of that.

Wisconsin's amount redistributed US DOT funds
2012 $29.9 million
2013 $32.6 million
2014 $39.5 million
2015 $36.5 million
2016 $30.1 million

So this means our Fair Governor managed to make himself look economically illiterate, hypocritical, and scared yesterday (Walker later melted down on Twitter with a bizarre whiny tweet that included a can of Miller Lite). And given that Legislative Republicans seemed to respond to Walker's empty pose with at best a shrug, and at worst a "go away", you can expect this budget stalemate to continue well beyond the 1 week it already overdue.

And as long as Republicans continue to operate in a Fantasyland where they're more concerned with sucking up to DC lobbyist Grover Norquist and their campaign donors instead of COMING UP WITH THE MONEY TO FIX THE DAMN ROADS, and maybe working with someone outside of their BubbleWorld of Bullshit, this mess will continue.

Thursday, July 6, 2017

Austerity Scotty now wants a bailout from DC?

Getting ready to hit Summerfest after I (hopefully) watch the Brewers finish off the Cubs, but one quick thought on our Fair Governor asking for a $341 million bailout from Donald Trumpfor our DOT.

This is money that is "left over" from other projects throughout the nation, and "banking" that money would reduce our deficit and/or can pay down our debt. And the same Scott Walker that wants more spending sent our way is the same Scott Walker who supports a Constitutional Convention with the ALEC-supported purpose of...reining in Federal spending.

Is Walker this stupid, incoherent and economically illiterate? Or does he think the average WISGOP voter is?

More thoughts tomorrow.

Wednesday, July 5, 2017

We weren't Illinois before Walker, and aren't like the FIBs...yet

I wanted to take a bit to discuss the budgetary mess in Illinois, which WisGOPs try to use as justification for their bad policies ("look at Democrat-run Illinois! You don't want us to be like them!"). Illinois was being threatened to have their credit rating cut to "junk" if they did not reach a budget deal to solve a budget deficit estimated at over $6 billion.

In no small part, this fiscal crisis is due to the state's decades-long trend of borrowing and can-kicking when it came to paying their bills, and the July 1 Fiscal Year arrived without a budget in place between the Democratic-run Legislature, and GOP Governor/oligarch Bruce Rauner. Over the Independence Day weekend, the Illinois Legislature sent a bill to Rauner that would raise the state's flat income tax from 3.75% to 5%, and also raise its corporate tax rates. Rauner vetoed it on Monday, but that veto was quickly overridden by the Illinois Senate, and the Illinois House seems set to override tomorrow, which would turn the tax hikes into law, a move that credit agencies are cheering as a step toward fiscal stability (although the state has many steps to go).

In addition to all of the borrowing from both Republican and Democratic administrations, one of the main reasons Illinois has become such a complete fiscal mess is due to their underfunded (and comparatively lavish) pensions for public workers. The Khan Academy put together this kinda-awesome video explaining how it got there by 2012, and the situation has not improved in the 5 years since then.

WisGOPs and other right-wingers frequently cite Illinois as a reason that Wisconsin had to bust public employee unions with Act 10. There was one big problem with that statement. In 2011 WE WERE NOTHING LIKE ILLINOIS ON THESE ISSUES. Not in having their type of fiscal mess, and because our pensions have always been among the best-funded in the nation.

Let's go back to February 2011 as Walker was introducing the legislation that became Act 10, and note this breakdown by the Huffington Post’s Zach Carter
According to the Pew study, Wisconsin had about $77 billion in total pension liabilities in 2008. But according to that same Pew study, those liabilities were 99.67 percent “funded,” giving Wisconsin one of the four-highest of such ratios in the nation. Other states had funding ratios as low as 54 percent. For comparison, expert analysts and the Government Accountability Office consider an 80 percent level to be a good benchmark for pension fund stability, while Fitch Ratings considers 70 percent adequate.

Pension accounting relies on a very long-term outlook. When the state calculates its pension liabilities, it adds up the total expected pension expenditures for the entire lifetimes of everybody currently receiving a pension and all employees expected to receive pensions. That outlook routinely eclipses 30 years, depending on the ages of state employees. A $77 billion liability is only a problem if the state has no realistic way of meeting those expenses over that 30-plus year timeframe. But the Wisconsin pension system actually does have the vast majority of that money — in fact, in 2008, the pension fund had 99.67 percent percent of that $77 billion total on hand. If all of the assets in the fund had simply been sold at market values on June 30, the resulting cash would have been enough to pay 99.67 percent of the state’s total pension payouts for decades to come.

According to the Wisconsin pension fund’s own 2010 annual report, the system had $69.1 billion in total assets at June 30, 2010, while paying out $3.7 billion in benefits over the course of the previous year. The value of those assets has since risen. According to Dave Stella, secretary of the Wisconsin Department of Employee Trust Funds, the retirement system’s assets were worth $79.8 billion at the end of last month. The most recent solvency test for the fund was conducted for the fund’s operations at Dec. 31, 2009. At the time, the funding ratio was 99.8 percent. The next solvency test is scheduled for June of this year.
Walker knew these facts when he took office, but he was counting on the average dope not to figure this out when he introduced Act 10, to trick them into thinking public employee benefits were causing a fiscal crisis, and to play “divide and conquer” by ginning up resentment against those public employees having those benefits.

6 years later, the strong status of the Wisconsin Retirement System (WRS) which covers most public employees is still in place, even with the stock market crash of 2008 being “smoothed out” through 2012. These figures are courtesy of last December’s report from the Legislative Audit Bureau.

Funded ratio, WRS Dec 31, 2015
Total Net Position (assets) $88.5 billion
Total Pension Liability $90.1 billion

Even if there is a year when the Wisconsin Retirement System's assets don't reach its benchmarks in a year the stock market flatlines or declines (it assumes a 7.2% increase each year), the WRS can either increase required contributions from employees and taxpayers, and/or reduce pension payouts in a given year. So there is rarely a significant drop in the funded ratio, and if there's a year where the market does well (as it's done in this stupid Trump rally), those costs are less and there's a nice bump for your retirement account.

And here's a dirty secret you never hear from Walker or other WisGOPs. Act 10 did next to NOTHING to improve our funded ratio. All it did was change who was paying those contributions, shifting it more onto state employees and away from other taxpayers. And any help to the state budget in the form of “savings” to the State of Wisconsin were promptly blown by Walker and WisGOP on tax cuts, which explains why we have such serious constraints on our budget despite a better economy (Thanks Obama!) and the decreased amount of taxpayer funding into the pensions.

Now compare that to Illinois’ fiscal problems with their pension fund, as outlined in a recent report from CNN.
[Moody's credit officer Ted] Hampton said Illinois treated the pension fund as a "financial cushion" that could be relied on to provide fiscal relief. He also pointed to a tendency to delay paying bills and chronically underestimate spending needs.

"All of these problems are governance and management weaknesses," Hampton said….

Illinois is also notorious for using one-time financial tricks that masked the scale of its growing fiscal problems.

"Republicans and Democrats would stand up and say they passed a balanced budget, but it wasn't -- and they knew it," said Diana Rickert, vice president of communications at the Illinois Policy Institute, a free market-oriented think tank.
Wait, claiming fiscal balance where it doesn't exist? One-time tricks and hopes things will work out at a later point? Why does that sound familiar...

Oh wait, that's like when Scott Walker's administration skipped debt payments to keep the budget "balanced", in the same budgets where they increased borrowing for roads. There's also the 2017-19 proposals to use state tax dollars to “buy down” items such as the state Forestry Tax, and to give pre-election bumps in per-pupil aid, while deferred debt and previous tax cuts add up to a $1 billion deficit in the next budget.

No, we are not Illinois at this time. But between blatant pay-for-play corruption, openness to tolling roads, and reliance on "borrow and spend for everything and hope we don't have to pay up" budgeting mentality, you can see where Wisconsin is heading that way under today's GOP. Heck, I bet Scott Walker is a huge Cubs fan, since Chicago owner Tom Ricketts gave Walker's failed superPAC $5 million in 2015 (and has funneled God knows how much through right-wing dark money).

As the FIBs can tell you, sooner or later, the tune in the "musical chairs" budget game will stop at some point, often when a recession hits, and rough choices have to be made. Scott Walker and the WisGOPs are hoping that game stops at a time when Democrats in Wisconsin that will be forced to clean up their mess. Which would enable WisGOP to fall back to their favored position- bitching and blaming others for the problems their bad policies have caused.