Foxconn frights and other cartoonish corporate giveaways in Wisconsin

Great series of cartoons in the Progressive on Foxconn. You can click here for the full series, but here are a few of them.

Let me also remind you that in addition to these advantages, tax handouts and subsidies, Wisconsin taxpayers are also shelling out for Walker officials making campaign stops informational sessions around the state to tout Foxconn as a business partner.

Foxconn also is slated to get checks from the State Treasury because their corporate taxes were already near-zero under prior Walker/WisGOP tax cuts. Which brings me to another cartoon from Isthmus's Alan Talaga, who says that we should have concerns for the oligarchs that might have to pay a little more in taxes if Tony Evers is able to repeal "The Big Giveaway" (aka the Manufacturing and Agriculture tax credit) for Wisconsinites and businesses that make $300,000 or more.

Last week also featured Foxconn Days at UW-Madison, where the corporation got free PR and connections to UW-Madison Engineering students in exchange for the possibility of Foxconn giving a matching donation to UW. Talaga notes that a main beneficiary of this recycling of tax dollars through Foxconn (and positive PR that comes with it) will be...Foxconn.

Ex-WEDC CEO reminds us of how failed, unfit Walker and WEDC are

Saturday's headline speaks volumes. STATE GOVERNMENT | EX-SECRETARY SAYS WALKER LIED

Paul Jadin: Scott Walker 'defamed' economic development agency to shift blame for failed jobs pledge.

Paul Jadin was the first CEO of the Wisconsin Economic Development Corporation (WEDC), which was created in one of Scott Walker's first acts upon taking office in 2011. Matt DeFour's in-depth, detailed story in the Wisconsin State Journal begins with Jadin telling Governor Scott Walker that he was considering leaving WEDC in 2012 to take a new position with a Madison-area economic development organization.

Originally, Jadin said that Walker wanted him to stay on, but Scotty had a change of heart when he realized how it could help the Governor avoid criticism.

But the next day, Jadin said, Walker’s chief of staff and then Walker himself called back with a surprising message: Jadin should take the job because WEDC and its secretary would be blamed for the state falling short of Walker’s campaign promise to create 250,000 jobs in his first term.

“I hope you understand that I cannot be accountable for the job numbers,” Walker said, according to Jadin.

Jadin said he told the governor it was foolish to blame an agency the governor had created to carry out his pledge and at the time led as board chairman, but Walker, Jadin recalled, didn’t respond to that concern.

But when has Scott Walker EVER taken responsibility for anything going wrong? This "Unintimidated" grifter always tries to pawn his many failures off on others while taking credit for good things he has little to nothing to do with, and never cares about any results beyond politics and campaign donations.

And by the way, more than 6 years after Jadin left WEDC, Wisconsin is STILL short of 250,000 jobs added in the Age of Fitzwalkerstan. If we had merely kept up with the rate of growth in the rest of the nation, Wisconsin would have added nearly 400,000 jobs in the last 92 months. And that gap has grown in every year.

The State Journal article also reminds us of a major WEDC corruption story which helped lead Jadin to want to get out of that crooked slush fund.

Jadin said friction with the governor’s office began after an internal dispute with then Department of Administration Secretary Mike Huebsch over what turned out to be a bad $500,000 loan made in late 2011 to a Walker donor, which the State Journal first reported in 2015.

Huebsch had originally urged the agency to give a $4.5 million loan to Building Committee Inc., whose owner had given $10,000 to Walker’s 2010 campaign. Jadin ultimately signed off on a half-million dollar loan to the company, which never paid it back and has since folded. Jadin said Huebsch ultimately pushed for an additional $1.5 million loan and didn’t drop it until Jadin said he would only agree to it if Walker himself signed the contract, which didn’t happen.

That's the loan to the infamous William Minahan, who had a scam where the money was allegedly designed to improve the energy efficiency certain commercial buildings. As we found out in 2015, that's not where the money went, but the Walker Administration wanted to keep giving Minahan money anyway.

Top officials in Gov. Scott Walker's administration pushed to get Building Committee the initial loan and worked to get more for the company. But the jobs agency had to pass on giving the company more funding from state taxpayers after finding numerous problems with the firm and being told that owner Bill Minahan was promising some of this second proposed loan to pay a leasing debt on cars such as a 2010 Maserati and a 2011 Nissan 370Z luxury sports car ....

WEDC officials' alarm didn't stop them from persuading three counties to allocate $4.5 million for Building Committee from a federal program meant to spur energy conservation, according to hundreds of pages of emails and other documents recently released under the state's open records law. Those federal incentives were never used because, even with the subsidies in hand, Building Committee was unable to get the financial backing it needed to proceed with its project.

WEDC officials never told those counties about the concerns that had made them email each other with statements like "Yikes!" and "I can't believe we are actually going to do this" about earlier proposed help for Building Committee.

Your tax dollars at work.

And does anyone believe WEDC isn't pulling a similar routine today, as it hands out tens of millions of dollars with little oversight or open discussion of the projects? Even more alarming, WEDC is actively promoting Foxconn while they are supposed to be verifying Foxconn is actually creating jobs and investments before they get their billions of tax dollars, and making sure Foxconn is living up to the terms of their contract.

But this cronyist sketchiness has always been the intelligence of WEDC's design. Go back to the September 2014 article at PR Watch that discussed WEDC's sleaziness and tax-funded failures at length, and recall the words of former WEDC Chief Compliance Office Molly Regan.

When she approached the WEDC vice president who approved the expenditures, she says the list of receipts was plucked from her hands: "I don’t know how you got this," the official said. "I am just going to take it and shred it." When she complained about this incident to WEDC legal counsel, she was chastised for not "trusting" her co-workers. Regan submitted her resignation that day.

Reflecting on what went wrong at WEDC, Regan points to the prevalent attitude there of serving Walker’s needs and the needs of his top lieutenant, Mike Huebsch.

As she explains:

I was once told by an administration higher up, 'We have one customer, and our job is to make him look good. . . . Huebsch is the prince, Walker is the king.'

This weekend's story with Paul Jadin is a stark reminder of the combination of pay-for-play corruption, awful results, and excuse-making that have defined Scott Walker's time in office. And we will continue to underperform and waste taxpayer dollars in the WEDC slush fund unless this incompetent grifter is tossed out of the Governor's Office in 16 days.

Wisconsin gains international attention..for their costly, failed policy on Corrections

Just ahead of November’s elections The Economist looked at the Corrections policies of two Upper Midwest states with Governor’s seats up for election and noted “Wisconsin Is Twice as Likely to Imprison People as Minnesota”.

Why is this happening? The Economist notes that while both states have put more people in prison over the last 40 years, Wisconsin saw its population grow more than twice as fast as Minnesota’s, and Wisconsin taxpayers pay a lot of money as a result. This is especially true as inmates stay longer and get older behind bars.

The states diverged after the 1970s, when “liberals in Wisconsin saw ourselves as twinned with Minnesota”, says Kenneth Strait, a researcher in Wisconsin. Inmate populations (in prison and county-run jails) rose fast, partly because of hardening sentences in both states. Minnesota had locked away 132 inhabitants per 100,000 in 1978, which jumped to 434 people by 2015, says the Vera Institute of Justice. Wisconsin’s sentencing was tougher still: its inmate population leapt from 178 to 925 per 100,000 residents.

Wisconsin’s 35,000-strong jail and prison population now far exceeds Minnesota’s 16,000. Wisconsin’s prisons guzzle state funds at twice the rate of next door: $150 is spent for every Wisconsinite to $74 per Minnesotan. A growing body of elderly lifers with soaring medical bills will push costs much higher. At times, state funding for prisons—about $1.2bn, or $38,000 per prisoner yearly—exceed spending on Wisconsin’s university system.

Oh, it’s not “at times”. Every year since Walker took office that Corrections spending has exceeded the amount of state tax dollars that go into the UW System, including the Fiscal Year that just ended on June 30, and the one that we are currently in.

Even the Governor that presided over “lock em up” measures like Truth in Sentencing (promoted by a 30-something suburban legislator named Scott Walker) now admits that mentality hasn’t worked out well for Wisconsin.

Tommy Thompson, a Republican governor for 14 years, also regrets overseeing a boom in prisoners. “We warehouse them. Constantly building prisons is not the way to go. Minnesota is not, and their crime is no worse than ours”, he says. He is keen to lead a reform programme, but says state politicians “are afraid as hell” of change. Mr Walker won’t even visit his own prisons, declaring there’s “no value” in doing so.

What could reform include? Mr Thompson wants vocational studies and early release for perhaps one-third of current prisoners. Kelly Mitchell, of the Robina Institute at the University of Minnesota, says various combined efforts are needed. A start would be setting up an independent sentencing commission like one she used to run in Minnesota. It advises legislators on how any new law would affect prison numbers and its cost to taxpayers. Even tough-on-crime legislators soon turn more cautious when obliged to include such information in their bills, she says.

A rethink of sentencing also makes sense. Minnesota has reduced penalties for infractions such as drug offences, as it tries to cut revocations. The state also uses problem-solving courts that aim to correct non-violent offenders’ behaviour without recourse to jail time. The rewards such courts offer can be as cheap as cinema or bus tickets, or applause from judges, lawyers and parole officers, but they work.

But smart policy means that Republicans can’t pander to fearful suburba-trash who think that people (of color) who committed a crime are second-class citizens, and keeping "those people" second-class allows the suburba-trash to claim moral superiority for their mediocre lives.

The Republican Governors' Association is still trying this 20th Century playbook in their latest ad in Wisconsin.

ELECTION: New RGA TV ad knocks Evers for ‘dangerous idea’ to cut prison population in half https://t.co/pKrRnwxkUz pic.twitter.com/Iy6KlCrcpr

— WisPolitics.com (@wispolitics) October 19, 2018

The use of the Soccer Mom is a nice touch. And given that race-baiting talk radio is a major influence in WisGOP, Wisconsinites continue to have to pay big bills while the state’s largest metro area stagnates in no small part because of the economic apartheid that WisGOP policies promote.

The Economist also notes that Minnesota is more likely to have local governments handle smaller criminal cases, instead of locking up those criminals at the state level.

One of the biggest differences is that Minnesota sends only convicted felons to prison, giving counties and jails charge of those awaiting trial or whose offences are minor. Counties and jails turn out to be likelier to release offenders for (cheaper) community supervision. That only works, however, given enough funds for treating mental health and addiction, plus training for those who supervise offenders.

Wisconsin needs change there. Lower spending on its social services means addicts and the mentally ill are “consciously channelled into prison,” argues Ms [Pamela] Oliver, the [UW-Madison] sociologist. She says local authorities have a financial incentive to push patients off their own welfare budget and into state-funded prisons. That helps explain why so many mentally ill people are behind bars. The msdf, for example, reports that 62% of inmates have diagnosed mental-health problems. That no sunlight penetrates its double layer of walls and tinted windows may be a factor, too.

And part of the reason that those troubled individuals are “consciously channeled into prison” is because cash-starved local governments in Wisconsin often don’t have the resources to handle the increased social services that a Minnesota-style system would require. Instead, Wisconsin has strangled local governments in the Age of Fitzwalkerstan in order for Walker and WisGOP to have a talking point of “local property taxes”.

This has put some communities into desperate situations. Ashland County asked its citizens back in August whether they should raise their property taxes by $1 million to handle the extra costs that have resulted from a 150% increase in drug arrests in the last 6 years and spiraling costs to place children in out-of-home care. The referendum failed, but you can bet it won’t be the last time we’ll hear about local communities needing to come up with more money to handle addiction and mental health needs that seem to multiply by the year.

But in the absence of new thinking and investments at the state level, the cycle of costly Corrections and subpar social outcomes continues in Wisconsin. And it won’t stop until Walker and WisGOP are thrown out by the taxpayers that have had to shell out big bucks for the regressive policies that are now getting international attention….and derision.

Who pays in Wisconsin? Not the rich, unlike Minnesota.

With tonight's gubernatorial debate and election looming in 18 days, it seems worthy to give a look at the recently-released “Who Pays?” survey for 2017 from the Institute on Taxation and Economic Policy. This annual study goes into the tax structures of all 50 states and looks at which income groups pay which types of state and local taxes.

As the “Who Pays?” analysis of Wisconsin shows, 85% of Wisconsinites pay just over 10% of their income in state and local taxes, but the top 5% of taxpayers pay less.

Why is this? Because both the sales tax and property tax tends to take up a higher percentage of income among lower-income individuals, and the relatively progressive income tax doesn’t make up enough to even it out.

This makes Tony Evers’ idea of rolling back the M&A giveaway for people who make more than $300,000 all the more justifiable, as it evens up a Wisconsin tax structure that currently favors the rich. And given that the top chart shows a $200,000 family income to be in the top 5% of Wisconsinites, it’s really hard for Scott Walker and/or WMC to claim that move would mean “everyday people are having their taxes raised” – because they are not.

In addition, ITEP notes that the middle and upper classes have a higher burden in this year’s survey because of the GOP’s Tax Scam coming out of DC, which lessens the chances that those people in particular will write off those taxes next Spring.

The 6th edition of Who Pays does not include the impact of the federal deduction for state and local taxes (SALT) because policy changes in the 2017 federal Tax Cuts and Jobs Act temporarily limited the extent to which the SALT deduction functions as a generalized offset of state and local taxes.

This reality has brought up the ends of state taxes compared to where Wisconsin stood in the same survey 3 years ago, including the lowest income levels, the peak amount of people in the top 20-40% area of income, and even the highest incomes (of course, the richest people get the bigger Federal tax cut under the Tax Scam, so don't shed too many tears for them).

It’s sadly telling that even with the relatively regressive nature of Wisconsin’s state and local tax system, ITEP says there are 33 states more regressive than us. This is especially true of states like Washington, Texas and Florida that have no income tax, and states with flat income taxes like Illinois and Indiana (funny, GOPs never bring up Illinois’ regressive tax structure when they complain about what a fiscal wreck the state is).

We frequently compare Minnesota to Wisconsin on this page, and for good reason. Not only are the states similar in population and demographics, but Minnesota has consistently beaten Wisconsin in almost all measures of economic growth and quality of life since 2011.

And ITEP says that Minnesota has the 4th most progressive tax structure of any state in America, with the lowest percentages being paid by the poorest individuals, and the richest 1% pay the highest tax rates.

When you compare the Minnesota chart to Wisconsin’s, there are 2 items that stand out for me.

1. Wisconsinites in the bottom 95% of incomes pay a higher % in state and local taxes than the bottom 95% of Minnesotans do, but the top 5% pay notably less.
2. Minnesotan families make more money at every cutoff point on this chart, and generally enjoy a “premium” of 8-15% over Wisconsinites.

Bottom 20%
Minn Up to $25,400
Wis. Up to $22,100

20%-40%
Minn $25,400 to $43,600
Wis. $22,100 to $39,400

40%-60%
Minn $25,400 to $70,700
Wis. $39,400 to $65,000

60%-80%
Minn $70,700 to $115,300
Wis. $65,000 to $100,300

80% to 95%
Minn $115,300 to $227,900
Wis. $100,300 to $198,000

Top 5% to top 1%
Minn $227,900 to $573,500
Wis. $198,000 to $512,600

So there’s no proof that the higher taxes on the rich in Minnesota have done anything to hold their low-unemployment, growing state back, or limit salaries for anyone at any level. It makes it absurd for Scott Walker and WMC and other right-wing oligarchs to claim that doing so in Wisconsin will slow down the already-subpar growth that we’ve had the last 7 years.

Not that many of the ITEP's findings should surprise you, but it's another bit of evidence that perhaps the relatively regressive way we have been going across tax policy in Wisconsin isn't the way to continue. Maybe instead we should be encouraging investments and quality of life that attracts high-wage and high-level talent, and the success of Minnesota indicates that maybe we should stop giving the free ride to the rich and corporate that hasn't led to better job growth or wages.

Hintz shows there's no highway money left under Scotty's shell game

Just ahead of tomorrow’s debate, Dem Assembly Leader Gordon Hintz has produced an LFB memo that lays out the ways Scott Walker and his DOT spokespeople (hi, Christian Schneider!) have deceived and covered up just how bad things are when it comes to paying for Wisconsin highway projects.

First of all, Walker’s WisDOT was claiming that they had saved a ton of money with lower-than-expected bids (aka “let savings”). But the LFB says the problem is that the current State Budget already counted on saving a lot of money for 2017-19, and cut funding accordingly.

DOT indicates it has realized $167.7 million in savings during the 2016-17 through 2018-19 period (to date). However, of this amount, $130.4 million of these Page 4 savings were already accounted for by the Legislature in establishing the program funding levels under 2017 Act 59. Therefore, while the $130.4 million in project savings did occur, over the three-year period no additional projects will be funded associated with these savings. Rather, these savings were used to reduce the funding levels needed under Act 59 necessary to fund the same level of program work over the three-year period. As a result, only $37.3 million ($167.7 million - $130.4 million) in program savings are available for advancement of project work in the biennium.

Even worse, the LFB notes that contract costs have come in $19.4 millon above budgeted amounts for the first 3 months of this Fiscal Year, and 2018’s savings total fell more than $11 million short of that goal. Which means that there won’t be the same level of savings to squeeze out when the next budget starts.

The same situation exists for the $70 million that Walker claimed was saved on I-39/90 south of Madison last month. Much of that money never existed in the first place, and unlike what Walker claimed at that press event, the project isn't going any faster than expected.

The Department indicates that it has advanced $70.0 million in major highway development project work on the I-39/90 project between Janesville and Edgerton in the 2017-19 biennium. Although DOT indicates it has realized $77.7 million in major highway development savings during the 2016-17 through 2018-19 period, the program's funding was reduced in 2017-19 during biennial budget deliberations to reflect $48.2 million of these anticipated savings in the biennium. Therefore, it appears that DOT could fund about $29.5 million of the $70.0 million advancement on the I-39/90 project using these the remainder of these savings (as reflected in Table 2, $77.7 million savings - $48.2 million in savings reflected in Act 59). It may be that the remaining $40.5 million required to fund such a schedule advancement ($70.0 million advancement - $29.5 million available) is explained by DOT's comparison of "base budget" project schedules to schedule of those projects Page 5 as funded. The Department also notes that the overall completion date of the mainline portion of the I-39/90 project (excluding the "beltline" interchange in the Dane County) remains late 2021.

Nice try Scotty, but not only do you have to find another $40 mil to pay for I-39/90 between Janesville and Edgerton by June 30, you dishonestly tried to claim those few miles meant the whole project was being sped up when it is not.

On the other side, the Walker Administration is also trying to claim that adding money internally to a project’s budget means savings later when spending comes in less than that amount. The problem is that the LFB says this extra money was never set aside in the State Budget in the first place, so it can’t be “saved.”

Of the $246 million figure referenced by the administration, it appears that the remaining $78.3 million ($246 million - $167.7 million) reflects the Department's reasoning that the "above base" funding level provided under Act 59 (and subsequent budget adjustments) may be used to advance projects as compared to a "base budget" project schedule. However, as discussed earlier, the Act 59 funding level establishes the baseline SHR and major highway development project schedules for the biennium and the use of these funds reflects the level of project work expected to be completed in the biennium.

One place that the state has been helped out in its DOT budget problems is through extra money coming down from DC. Not just in its heavy swapping of federal money for state funding to pay for highway projects last year (as I noted yesterday), but also in redistribution aid, where left-over money from other projects around the country got sent back to Wisconsin.

Subsequent to the passage of Act 59, additional federal funds have been made available to the state highway program. In June, 2018, under a s. 13.10 action, the Joint Committee on Finance approved supplemental program funding of $6.8 million for the SHR program due to the availability of additional federal highway aid in 2017-18. More recently, in August, 2018, DOT received $90.8 million in annual redistribution of federal highway aid (the state's share of any remaining federal highway moneys in federal fiscal year 2018).
Because the state had already budgeted $43.9 million of this amount in its state highway programs during the 2017-19 budget process, $46.9 million of this amount remains and is available to fund additional state highway project costs in 2018-19.

Bottom line- LFB says that most of the “extra money” WisDOT has to play with for highway funding isn’t nearly as much as the $246 million that Walker and WisGOP have been claiming.

Actual “play money”, WisDOT highways 2017-19
State highway savings not budgeted $37.3 million
Federal redistribution $53.7 million
MINUS $40.5 million to pay for new I-39/90 work
TOTAL “PLAY MONEY” $50.5 million

Oh, and LFB notes that the upgrading of several previously smaller, local roads near Foxconn isn’t accounted for in the project highway budget. The $134 million that the Walker Administration decided to dump into that project with no public discussion is on top of the $252 million being spent to upgrade I-94 near Foxconn, and Walker claimed it would come from that $50.5 million in play money.

Since there isn’t enough to take care of all the Foxconn work, it means at least $83 million is going to be cut elsewhere in the state over the next 9 months and/or not be available for when we need even more money for 2019-21. Hintz said that the Governor’s deceptions and foolishness on road funding has to end.

“If Governor Walker worked as hard at fixing our transportation funding crisis as he does covering it up through financial shell games, we may be in a different position today. Transportation used to be a priority that state leaders of both parties invested in because everyone understood the importance of good roads to our economy. No amount of excuses or deception is going to hide the consequences of Governor Walker’s transportation mismanagement. As Governor Walker faces the political fight of his life, his credibility on transportation funding is in worse shape than Wisconsin’s crumbling roads. It appears they just made up numbers.”

“If it wasn’t clear by now, as long as Governor Walker is in office we will never fix our transportation funding crisis. Every day, Wisconsinites drive on the 6th worst roads in the nation; facing extended delays, risking their safety and damage to their vehicles. No matter how many times the Governor holds a roadside press conference, he cannot change the fact that we’re postponing projects and spending nearly double the amount of revenue on debt service as when he took office in 2011 (a number that grew in 2018). This is the perfect representation of a governor more concerned with his political future than getting the job done.”

And as we found out today with a 4th former Walker Cabinet member criticizing Walker to be “politics first, reality second”, this type of flailing incompetence is the hallmark of a Grifter Governor who’s never tried to be responsible in dealing with the state’s problems.

Sept jobs report gives more proof of Fitzwalkerstan's decline

We had a closely-watched September Wisconsin jobs report come out this afternoon. I’ll spare you the Walker Administration’s spin and give you the numbers.

To the credit of those doing the report (who are not the Walker hacks that “interpret” the results), they played it straight, releasing a bad jobs report less than 20 days before the elections.

Change in jobs
All jobs
Oct 2018 -1,100
Sept -1,400
TOTAL CHANGE FROM SEPT REPORT -2,500

Private jobs
Oct 2018 change -900
Sept 2018 revision -1,600
TOTAL CHANGE FROM SEPT REPORT -2,500

Household survey
Employed -7,500
Labor Force -7,000

It was that drop in the labor force that kept unemployment from going higher, and reiterates that a lot of Wisconsin’s low unemployment rate is due to a lack of people wanting to live in a state run by corrupt regressives vs economic growth (unlike fellow low-unemployment states Minnesota and Colorado, as noted in this post).

The overall trend isn’t great either, as in their own monthly reports the Walker Administration has reported private sector job losses in 4 of the last 6 months, and less than 5,000 private sector jobs have been added since March. The overall numbers for the last 6 months are slightly better at 11,700 (6,800 new government jobs? SMALL GOVERNMENT CONSERVATISM).

It also gives a last look at the Walker jobs gap ahead of November’s election. It grew again by in September, and by quite a bit, as the US was adding jobs while the state was losing them. The Walker jobs gap is now just below 150,000, and has continued to rise in 2018.

Can anyone look at those charts and say “Oh yeah, this is a winning direction for the future”? Yet the Walker Administration keeps doubling down on this losing strategy, as they continue to use tax dollars to promote Foxconn in other parts of the state in a time when Main Street employers aren’t adding jobs and not enough people are coming here in the first place to continue the small amount of growth that we have had.

You can have all the fake photo ops at campaign contributors that you want, Scotty. The numbers tell the real story, and you are not worthy of a 4-year contract extension.

Minor budget "surplus" hides DOT shell games, exposes rising cost of Walker policies on vouchers, Medicaid

Monday featured the release of Wisconsin’s Annual Fiscal Report, and it got surprisingly little attention from both the media and the respective candidates for Governor. But I wanted to dig into a few items to see where we stand now, and what 2018’s figure portends down the pike.

Let’s start by going back to June, when the LFB gave us updated projections of what the 2017-19 budget would look like. It accounted for the post-budget, pre-election spending spree by Walker and WisGOP that included reinsurance subsidies for ACA, added funding for small, rural schools and one-time gimmicks like the sales tax holiday and the $100-per-child rebate (remember those poll-driven handouts? Sure changed things, didn’t they?).

I’ll also include the preliminary FY 2018 General Fund tax revenues from the Wisconsin DOR, which came out about 6 weeks ago.

Wisconsin budget balance 2017-19, LFB June projection
2017-18 beginning balance +$579.0 million
2017-18 projected ending balance +$547.3 million
PLUS 2017-18 actual revs vs. proj +$18.4 million
TOTAL PROJECTED 2017-18 FINAL BALANCE $565.7 MILLION

2018-19 beginning balance +$565.7 million
2018-19 projected ending balance $200.1 million

Interestingly, the LFB projected deficits for both FY 2018 and (especially) FY 2019.

So let’s compare to what the Annual Fiscal Report said this week. First of all, the final FY 2018 balance came in slightly above expectations, at $588.5 million, meaning there was an actual surplus of $9.5 million. At first glance, it looks like this is because transfers of excess fees and other revenues were $44 million above expectations, and was offset by slightly higher expenses of $21 million.

But the reason why those expenses were higher is the oddity. Back when the WisGOP Legislature and Walker pushed through the $100 Child Tax Credit in February, the money was allocated to the 2018-19 Fiscal Year because the money was to be paid out in September 2018, which is well after the July 1, 2018 start of FY 2019. But for some reason, the AFR has that one-time payment shown in the Fiscal Year that just ended. Is that because the Walker Administration wanted to put together a talking point of “look at how much we handed out to Wisconsin parents?”

Regardless, it really didn’t work out, not politically (because Evers has the same small lead he had before the checks were handed out), and because out of the $122.1 million that was set aside for that gimmick, only $93.6 million had been sent out, according to this report. Maybe they’re holding back the other $28.5 million for late claims, but it seems like an odd move to put that amount in this year’s report, as leaving it out would have made the bottom line appear to be $682 million instead of $588.5 million.

Sure, a lot of that left-over money is getting spent out in the next Fiscal Year (along with another $243 million of this alleged “surplus”), but you’d think it would make for a good talking point. The Walker Administration’s silence about this makes me think even they know the AFR’s numbers are shaky.

A few other line items in the “Sum Sufficient” expenses (ie., entitlements that have to get paid regardless of how much money is set aside in the budget) stood out.

1. The state spent $1.76 million in Special Counsel expenses for outside lawyers, almost double the $986,000 that was set aside. That’s on top of last year’s $1.03 million, which was overran its budget by more than $400,000. Hey, when WisGOPs like Brad Schimel, Robbin’ Vos and Scott Fitzgerald try to defend gerrymandering and wreck Obamacare, it has its costs!

2. The state spent nearly $336 million on voucher schools, charter schools, and “scholarships” so kids with special needs could have their voucher school pay for the extra services. In fact, that special needs scholarship program exceeded its budgeted amount, and ended up costing over $3 millon. Meanwhile, regular special ed aids for public schools haven’t been changed since Walker took office 7 years ago.

3. General Fund-supported debt payments dropped by more than $23 million compared to 2016-17, likely due to large-scale refinancing of debt by the Walker Administration that kicks the payoff for that debt into future years. On a related note, they’re refinancing another $362 million in debt this week, and repaying that amount over the next 10 ½ years.

I also want to look at Wisconsin’s Transportation Fund, especially given that “Say Anything Scotty” is now promising Wisconsin towns that he’ll give a huge increase in road aids to them if he gets re-elected.

Based on the topline numbers, you can see where that extra $53 million might be there for the towns, if everything else holds up.

Wis Transportation Fund
2017-18 beginning balance +$219.1 million
2017-18 ending balance +$350.9 million ($131.8 million)

Based on the original projections in the State Budget, the Transportation Fund was supposed to be losing around $65 million a year for this budget cycle, but instead it gained nearly $132 million. How did this miracle happen?

Simple. Walker’s DOT simply got other levels of government to pay the bills, particularly Uncle Sam.

2016-17 vs 2017-18 Transportation Fund expenses
2016-17 State Spending $1.714 billion
2016-17 Federal, Local, + Agency Spending $945.7 million
TOTAL SPENDING $2.659 BILLION

2017-18 State Spending $1.652 billion (-$62 million)
2017-18 Federal, Local, + Agency Spending $1.256 billion (+$311 mil)
TOTAL SPENDING $2.909 BILLION (+$250 MILLION)

In fact, WisDOT spent $124 million less on highway improvements in FY 2018 than they did in FY 2017, but let the Feds and others pay $135 million more to make up the difference. Pretty easy to have a better bottom line when you get someone else to pay for your bills.


If there's so much money for DOT, why is there so much of this?

It’s also funny how Scott Walker’s DOT has no problem with using Federal money when it comes to filling Scott-holes and dealing with other road projects. And relying on Federal money to avoid raising taxes and fees might have worked last year, but it doesn’t seem like much of a long-term solution when the Trump Administration wants to cut back the share of what it pays for road projects, leaving the states and locals to pick up the rest.

Ironically, Walker takes the exact opposite approach when it comes to expanding Medicaid. Scotty claims that federal money can’t be taken now because some time in the future the money (or 90%-100% share of funding) might go away. So instead Wisconsin has spent billions of dollars covering people on our own dime in the last 4 years instead of taking those funds from DC. And that cost went up by $850 million in Fiscal year 2018 compared to 5 years prior, with costs rising consistently in every year except for 2017.

And the Wisconsin Department of Health Services is projected to need another $623 million in the next budget, according to DHS's own budget request.

But despite the rising costs of vouchers, health care and the bigger shell games involving property taxes, there was enough money banked from prior austerity and our current debt-fueled Bubble that there was a decent amount of money left over on June 30, 2018. Unfortunately, most of that is likely to be gone by June 30, 2019, while the needs to fix the roads and fund our schools will still be there and the gap will continue to grow without a change in direction.