Tuesday, July 4, 2017

Overdue budget = no damage yet, but DOT needs to be figured out soon

Even with the July 1 Fiscal year beginning over the weekend, my state employee self was at work yesterday, and will be back at work tomorrow. 3 Wisconsin State Journal writers teamed up to help explain why that is, and why Wisconsin state government hasn’t shut down despite the fact that no state budget is in place. As a result, our state parks and beaches are still open unlike New Jersey ...well, with the exception of a privileged few.

Wisconsin's K-12 public school districts aren't too concerned about the budget uncertainty yet, largely because their risk with funding from 2017 to 2019 is a positive one.
Department of Public Instruction spokesman Tom McCarthy said because districts aren’t facing a cut in state funding it’s not immediately significant. In other words, school districts will likely end up with more money to spend instead of less, eliminating the prospect of laying off teachers after the school year begins.

Not knowing exact aid levels on July 1 isn’t that big of a deal for districts unless budget deliberations are expected to extend beyond August, he said. School districts often settle their final spending plan after July 1 and don’t receive their first payment from the state until the school year is under way.
This is true, and because Walker’s budget features no increases in General Aids for next year anyway, there isn’t much of a guessing game to be played by districts for how much they will get.

One notable exception for that is the portion of last month's Assembly GOP K-12 package that would give $18.3 million more to K-12 General Aids. That same Assembly bill allows for higher property taxes in low-revenue districts, but many of those decisions on property taxes come this Fall, and again, that would allow for more spending for districts as opposed to having funding taken away.

The problem is that if there isn’t an indication how large the increases might be to per-pupil or other categorical aids for next year, then many districts might decide to be conservative about hiring staff or offering more types of classes. This would mean another year of cutbacks and/or higher property taxes at public schools, which is NOT what Walker and WisGOP wanted to see. The other side of the risk is to assume that the hundreds of millions of additional aids will come in, and then if those increases don’t happen, there would be sudden cuts in this school year (bad enough) or a drawing down of reserves that leads to higher taxes and more cuts for 2018-19- (right before the 2018 elections, so even worse for WisGOP).

Many other agencies are also looking at increases in the 2017-19 budget, but most will assume that any increases will be decided in the near future, and there should not be any cuts in services starting this week or likely even in July. But the State Journal reporters say there is one area of that would definitely be damaged by a sizable delay in the 2017-19 budget – DOT highway construction.
The major highway development program, which funds large highway expansions, would see a 45 percent funding cut in the next two years, from $641 million to $352 million, if no new budget is enacted.

Two such projects currently under construction are in Dane County: the Interstate 39-90 expansion from the Madison area to the Illinois state line and the Verona Road expansion from Raymond Road to McKee Road, also called Highway PD. Others include expansions of Highway 15 in Outagamie County and Highway 10/Highway 441 in Winnebago, Outagamie and Calumet counties.

The southeast Wisconsin freeway megaprojects program, which funds the reconstruction and expansion of Milwaukee’s Zoo Interchange and of Interstate 94 south of Milwaukee, would take an even bigger hit with no new budget. Its funding would decline by nearly 93 percent, from about $415 million in the last budget to just $30 million in the new one.
The reason highway construction would slow to a crawl is because much of that is funded by borrowing. With no new budget, the state can only use the money is has coming in through items like the gas tax and vehicle registrations, and can’t pull out the credit card for the rest.

And a sizable delay may be in offing. If you take a look at the comments from Assembly GOP Majority Leader Jim Steineke from his appearance on Mike Gousha’s show over the weekend, you can see where we might be waiting a while for this budget to be done.
“The Assembly has proposed solution after solution after solution, and all we keep hearing from some senators is ‘no,’ but no real solid plan coming back other than running up the state’s credit card to pay for things,” Steineke said.

Without an agreement, Steineke said the budget would revert back to spending levels from two years ago, which could result in projects being delayed or shelved.

“We’re going to have to come to some kind of agreement or we’re going to end up at the base budget from two years ago,” Steineke said. “If that’s the way we’re heading, I think it’s a disservice to the state, but it’s better than putting more costs onto the credit card that we can’t afford.”
This is why it's ironic that Transportation is the area that is most likely to be harmed by a budget delay in Wisconsin, but also is the main issue that seems to be causing that budget delay. And those colliding realities makes me wonder if doing the DOT budget as a separate bill might not become the outcome we see, as was floated by Joint Finance Co-Chairs Alberta Darling and John Nygren back in May.

That would allow new revenue measures like a heavy truck fee or gas tax hike to go through, but also would allow the Senate to go around the 5 GOP Senators that said on Friday that they would not vote for any fee or tax increase. A complication with that idea is that would mean Democrats would be the deciding votes in the Transportation bill (at least in the Senate), and God forbid the GOPs give up any type of control or listen to anyone that doesn’t live in their Bubble of Bullshit.

From what I can tell the real action (or consequences from inaction) on Wisconsin’s budget will be happening over the next few weeks. So let’s see which direction is taken by the Republicans in control of state government- cooperation with Democrats to get a majority-approved DOT bill through, or sticking with power-at-all-costs, perhaps at the expense of having no budget in place at all, and even more delays and potholes cropping up on our highways.


  1. From the State Journal:

    WMC said Wednesday it welcomes Assembly Republicans’ offer. The group also said, “WMC is pleased that the punitive tax on heavy trucks appears to be dead.”

    “Any discussion of revenue increases must include meaningful reforms to reduce costs and spend our current resources more wisely,” said Scott Manley, a spokesman for the group.

    No problem, Scott. Let's start that process by not incurring more debt.

    While we're at it, dropping the M&A tax credit should do just fine as part of the package. If things are going so great in this state and we don't even have workers to fill the job openings, why are we still priming the pump?

    I think a portion of WDEC's budget would be better used on infrastructure too. Better roads will do more for development than patronage dough.

    There's no question that heavy trucking is a major impact, and they should be part of the solution.

    But roads are for everyone. Roads are groceries in the store, tourists in hotels, and products of all sorts being exported. Bad roads mean more repairs for all of us who drive them.

    Going forward, I think the costs should be spread widely to reflect this rather than the standing position of using mostly gas tax and reg fees for the DOT budget.

    1. Well stated. WISGOP has chosrn tax cuts and WEDC-style giveaways to corporations instead of investing in infrastructure and schools.

      Although it is funny to hear Robbin' Vos now admit that roads and other investments are factors in businesses deciding to locate in a place. Huh, you mean regressive tax cuts and wage suppression isn't the cure-all? Imagine that!