Funding public schools? Local control? Not in Fitzwalkerstan!

In Wisconsin, there have been strict limits imposed on local school districts on the amount they can raise on property taxes for a long time, but those limits have been made even tougher since the Age of Fitzwalkerstan began in 2011. In the last 4 ½ years, local districts have only been able to raise revenues by the amount of net new construction (with a few exceptions), which often has required total property taxes having to be frozen or even cut in some circumstances, regardless of whether that was a desired outcome from the local school board.

The one way around these constraints would be if residents of a district would approve a referendum allowing the district to exceed those revenue limits, and increase property taxes. This is a tactic that has been happening with increasing regularity in Wisconsin, as over 200 such referendums were held in 2014, the most in over a decade. This pattern repeated this Spring, with 74 different school referendums going to the voters in April 2015. In addition, Wisconsinites have generally been OK with what the schools want to do, as the referendums succeeded at a 76% rate last year, and at a rate near 70% this Spring.

This background leads into what the Wisconsin State Journal’s Molly Beck reported on Sunday. Apparently some Republicans in the State Legislature have a problem with the choices those citizens are making, because passing the referendums allow property taxes to go up, which goes against the tax-cutting claims they made on the 2014 campaign trail.

So the WisGOPs’ solution to the “problem” of communities agreeing to tax themselves to maintain and/or improve their schools via referendum? Get rid of those damn referendums!

One bill — yet to be introduced but available in draft form — would require school boards to ask voters to approve referendums only during the traditional spring or fall elections, and prohibit school boards from going back to voters for two years after a referendum is rejected.

Currently, school boards can hold special elections for referendums and can go back to voters during the next scheduled election if a question fails.

Another bill bans school boards from exceeding their state-imposed revenue limits in order to pay for energy-efficiency projects — an exception to levy limits that lawmakers created in 2009.

So much for the GOP being the “party of local control.”

It also shows that the moves made in prior budgets by the WisGOP Legislature and Governor Walker were merely one-time gimmicks designed to give an impression to voters of “lower taxes”, which suckered some of those people into keeping the GOP in power during the next election. These gimmicks include the “tools” of Act 10, which took money out of the wallets of teachers and staff to try to make up for huge cuts to public schools in the first Walker budget of 2011-2013 (it didn’t quite do so, but it sounded good to the rubes). This was followed by an unfunded $406 million giveaway in 2014 that lowered the amount of property taxes that went to the state’s technical colleges, but couldn’t be used to improve services or instruction.

Those bullets have now been used up, but the budget deficits, reduced funding and increased needs for these schools remain in 2015. Instead of restoring the cut funding to public education, the WisGOPs in power continue to funnel money into vouchers for private schools while over 55% of Wisconsin public school districts lost state aid in this school year, which helped lead to the referenda held in 2014 and 2015 to keep the public schools running.

This seemingly dumb choice of the WisGOP Legislature to disallow local communities to raise taxes and maintain public schools as they see fit makes doesn't seem to make sense if you care about governing or getting the best results for society. But they make more sense when you realize how many of these guys got in power. Former Assembly Speaker/convicted criminal Scott Jensen and the voucher lobby have spent millions to obtain and expand GOP majorities in the State Legislature, and the voucher movement needs public schools to fail in order to justify receiving more dollars from taxpayers. So if the public schools can be starved of revenue, they will be more likely to (literally) crumble, bolstering the argument for a new for-profit or religious organization to swoop in and take those students, and the taxpayer dollars that come with them.

Combine that with a right-wing fiscal policy of "low taxes over all other priorities (no matter how much it screws things up)," and these otherwise idiotic bills make more sense. They are designed to pay back the voucher donors that got the Wisconsin GOP in power, and are designed to pose for holy pictures to Bradley/ALEC/Koch oligarchs for “holding the line” on taxes. And it is those voucher and oligarch groups who are being given higher priority than the actual Wisconsin citizens that want to support their local schools.

This sure doesn’t sound like a sustainable plan for economic growth to me. Neither does it sound like anything resembling unobtrusive, "smaller government," or any type of democracy I'm aware of. But then again, when have today’s Wisconsin Republicans (motto for their puppetmasters: “Fuck you, pay me!”) ever cared about any of those things since taking power in 2011?

Campaign finance bill is defintiely scummy, probably unconstitutional

You've probably heard about the campaign finance bill that passed the Wisconsin Assembly on Wednesday night. In addition to doubling direct contribution limits, there are a number of provisions that further encourage dark-money and third-party interests to exert even more control over state elections, and all Democrats in the Assembly recused themselves from voting on the bill, claiming that this was a conflict of interest to slant the field before their next election.

GOPs in the Assembly called the Dems' move a "stunt" and derided the tactics. Well of course it was a stunt, since EVERY ASSEMBLY GOP VOTED FOR THE BILL to allow it to pass, so the outcome wasn't changed. But it was a good stunt, because this is not a bill that is in the best interests of anyone other than big money and their puppets in the Legislature, and the bill is not likely to stand if challenged in the courts.

In addition to increasing the amount of direct contributions, the Assembly-passed bill also allows open coordination between candidates and third-party interests, as long as those third-party interests don't say "magic words" such as "vote for/against candidate _____," allowing for obvious corruption and money-laundering without having to put the candidate's name behind it. Assembly Speaker Robbin' Vos tried to argue that this bill simply codified the decision by the WMC's 4 judges in the Wisconsin Supreme Court in the John Doe case, and didn't go further than what was already settled at the U.S. Supreme Court.

But the Wisconsin Democracy Campaign's Matt Rothschild shows the flawed reasoning that Wisconsin Republicans gave in their claim that these changes fit 2010's Citizens United decision. Because as naïve as the reasoning in Citizens United was (claiming that candidates wouldn't be corrupted by what SuperPACs did or said), it openly called for disclosure of information to the public, and wanted to keep a wall of separation between special interests and a candidate. I'll add bolding for emphasis.

First, nowhere in Citizens United does it say that candidates can coordinate with so-called outside or independent groups. In fact, the entire distinction in Citizens United (and in the landmark 1976 case, Buckley v. Valeo) between “independent expenditures” and direct campaign contributions rests on precisely the fact that there is no coordination.

“By definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate,” the Court noted in Citizens United. It maintained this distinction on the grounds that “independent expenditures,” because they are not coordinated with the candidate, do not pose a significant problem of quid pro quo corruption....

Second, far from limiting disclosure of expenditures, the Supreme Court in Citizens United went out of its way to endorse disclosure.

It said: “Disclosure is a less restrictive alternative to more comprehensive regulations of speech.”...

And it saw disclosure as a way to mitigate corruption:

“Prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”

Hiding who a donor works for is the exact OPPOSITE of this, and Robbin' Vos and other Republicans openly said that provision was put in to protect a business from public blowback resulting from the people knowing which candidates their owners and employees were paying off.

So it seems likely that this bill would be struck down if it was ever signed into law, unless the federal courts and Supreme Court of the United States completely reverses what they said 5 years ago. Which makes it an arrogant and pointless exercise, in addition to the obvious scumminess behind the bill and its supporters.

But this is the Wisconsin GOP's SOP- to gain political advantage and remove any checks on their power, and claim "liberal activism" if anything gets in the way of that steamroller (you know, things like LAWS AND COURT DECISIONS). This pattern was summed up in an excellent floor speech by State Rep. Gordon Hintz, who added up all of the GOP's election-slanting and abuses and expansion of power since the start of 2011, and showed how this mentality has failed the people of Wisconsin, both morally and economically.

Low-income credits cut with less use. Vouchers? Not so much

A recent post by an excellent Wisconsin budget analysis site drove me to look into what happens when certain incentives and expenses are used on a less-than-expected basis, and the numbers that I found were quite surprising, although the slanted use of those policies and resources shouldn’t.

It started from reading this post from the Wisconsin Budget Project, which noted that the state’s Homestead Credit accounts for less and less in terms of purchasing power, even if low-income Wisconsinites are able to qualify.

The annual DOA budget report, which was released last Thursday, shows that spending for the credit dropped again in the 2014-15 fiscal year and was 9% below the anticipated amount. A major reason for the decline is that the formula for determining eligibility and the size of the credits is not adjusted annually for inflation. The practice of indexing the Homestead formula was ended in 2011, even though almost all the other significant elements of the state tax code are annually adjusted for inflation.

Thanks in large part to that change, fewer people meet the income eligibility standards, the value of the average credit is declining, and the total value of the credits has declined by almost 25% since 2011. The following chart illustrates the 31% decline in the value of the credits since FY 2005, based upon the inflation adjusted amounts.

In addition to the value of the credit going down due to inflation, it appears fewer are taking it at all, as evidenced by the plunge in expenses over the last 4 years. This has meant that the amount of money going out in Homestead Credits ends up being less than budgeted, resulting in a large source of the Fiscal Year 2014-15 “savings” that appeared in the Annual Fiscal Report. As shown on page 32 of the document, there was $116 million set aside in the 2014-15 budget to pay for the Homestead Credit, but only $106.4 million was paid out, allowing $9.6 million to go back into the General Fund and fill budget holes.

And the Homestead Credit was far from the only provision that this occurred in. These are the largest lapses for tax credits in the last fiscal year, and note the large giveback from Wisconsin’s Earned Income Tax Credit, which was also reduced in 2011 as part of Governor Walker’s first budget. This also may indicate the lessening of the credit is discouraging people from taking it at all.

Tax credits with lapses over $1 million, FY 2015
Enterprise Zone Jobs Credit $17.32 million
Homestead Credit $9.64 million
Veterans & Surviving Spouses Prop Tax Credit $6.37 million
Earned Income Tax Credit (GPR portion) $6.03 million

Some of these large lapses drove adjustments in this latest budget, reducing the size allotted for 2015-16, as shown on the Shared Revenue and Tax Relief and General Fund Taxes part of the LFB’s summary, and the state budget document itself. Here are some of the credits that got their budgets reduced to match recent use.

Reductions of certain tax credits, 2015-16 budget
Homestead Credit $116.0 mil to $112.5 mil (-$3.5 million)
EITC $44.3 mil to $36.4 mil (-$7.9 million)
Vets, Surviving Spouses Prop Tax Credit $32.37 mil to $28.4 mil (-$3.97 mil)

Interestingly, the credit with the largest lapse from lack of use was the Enterprise Zone Jobs Credit, but that got bumped UP by over $5 million dollars for this Fiscal Year. I find that decision and the priorities it shows….noteworthy.

Regardless, reducing the money set aside for those other three credits result in a “savings” of over $15 million in this fiscal year alone. The positive part is that this allowed for budget holes to be filled without raising taxes or cutting services, but the bad part is that is lessens the chances of lapses at the end of the fiscal year. And with $1.1 billion in lapses built into the 2015-17 budget, that’s not a good thing.

On a related note, the AFR also lists the outcome of what are considered Sum-Sufficient expenditures, which are basically entitlements that have a number set aside each year in the budget, but the amount of those expenses could be above or below what is actually paid. This also featured some interesting numbers.

Lapses of over $1 million, sum sufficient expenses, FY 2015
State Senate $3.17 million
Milwaukee Parental Choice Program $2.97 million
State Assembly $2.13 million
Disaster Aids- Public Health Emergency Quarantine $1.39 million
Circuit Courts $1.21 million
Legislative Documents $1.13 million

Interestingly, the Courts, Assembly, and Legislative Documents all got increases in their 2015-16 budgets (relatively small ones that total $3.1 million, but still). The Senate had a small decrease of $217,000, and the Disaster Aids were kept at the same $2.5 million level of the previous year (makes sense, you need to be ready when bad things happen).

But these adjustments are tiny compared to what we’re seeing with the Milwaukee School Choice Program. Given that nearly $3 million lapse and the program largely staying as-is, if anything, this program should have its budget cut for next year. But instead, it’s being given a $6.9 million INCREASE in the 2015-16 budget, allowing for $9.9 million in added money to go into Milwaukee vouchers compared to what it spent last year. That $9.9 million could have been used in a lot of other ways, but given that Scott Jensen and the voucher lobby got many Republicans elected in 2014, they have to get their favors cashed in. So is anyone surprised that the taxpayer money is designated for their group instead of other needs?

By the way, that $6.9 million increase in budgeted Milwaukee vouchers is on top of the $18.5 million in additional budgeted funds for vouchers throughout the rest of the state, and an additional $4.1 million that’ll go to charter schools. And yes, both of these programs also underspent their allotments last year by a total of just over $900,000.

This shows just how policy changes in Wisconsin have reduced the ability of low-income people to take advantage of tax credits, which then causes large lapses in those credits and the excuse to cut the amount of money set aside for them in the future budgets. In return, there are extra funds available to be directed toward special-interests like voucher schools, who continue to get additional funding despite failing to use up what they were given in previous years.

Interesting how these things work out, eh?

WPR poll confirms Wisconsinites fed up with Walker, GOP act

The biannual Wisconsin Public Radio poll from St. Norbert College came out yesterday. While I’m a bit skeptical of this poll’s history, due to its relatively low response numbers and jumpy numbers in terms of party ID, there are a few tidbits of data to look into.

First of all, Wisconsinites are very upset with the way things are going under the “leadership” of Gov Scott Walker and the Wisconsin GOP.

“Right direction, Wrong direction?”
Right 36%
Wrong 57%

Walker approval
39% Approve or Strongly Approve
60% Disapprove or Strongly Disapprove

14% Strongly Approve
40% Strongly Disapprove

I’ll add that those “right track, wrong track” and Walker approval questions were asked before the State Legislature legalized political corruption, and the Assembly voted to politicize the state’s elections oversight and expand the role of big money in elections this week. Both moves have been done with Walker’s tacit approval after Scotty and his campaign staff were investigated (and some of them convicted) for wrongdoing, so I’d guess both these are numbers are, if anything, worse today.

Walker’s failed 10-week soiree into the 2016 presidential race also angered most Wisconsinites in this poll, as evidenced by the following responses. They didn’t like that he ran for president, they felt it hurt the state, and they don’t want him to run again for Governor.

Did presidential run give you a more positive or negative view of Walker?
Positive 22%
Negative 58%

Was Walker’s presidential run positive or negative for Wisconsin?
Positive 20%
Negative 66%

Should Walker run for a third term in 2018?
Favor 33%
Oppose 62%

Huh, funny how being exposed by a national media outside of the Wisconsin cocoon did that to Gov Dropout. Now the key is not to relax and allow the paid-off Wisconsin media to let Scotty off the hook for what he did to us.

This poll also had a taste of what these Wisconsinites thought about the candidates that remained the 2016 presidential race. The GOP race was a jumble (Ben Carson, Marco Rubio and Donald Trump all statistically even, and no one above 20%), and the Dem race featured Hillary Clinton with a 47-42 lead over Bernie Sanders with Joe Biden not considered to be in the race (which is the correct assumption after today).

Those numbers are intriguing, but what I found more interesting was looking at the head-to-head matchups that the St. Norbert Poll asked about. Both Dems have leads, and double-digit leads against Trump and Jeb Bush.

But note the differences in the spread between the two Dems.

vs. Trump
Clinton 50-39
Sanders 55-37

vs. Bush
Clinton 49-39
Sanders 52-38

vs. Carson
Clinton 49-45
Sanders 48-42

So Bernie leads against all 3 Republicans by a wider margin than Hillary does. It’s similar to this week’s CNN poll which showed Sanders being statistically even with Clinton’s margin against the potential Republican candidates, and doing better against Trump. So at least early on, the argument of “Hillary is more electable” doesn’t hold water. I’m not saying you shouldn’t vote for Hillary if you think she’s the best candidate, but the argument of "I like Bernie but can’t vote for him because he can’t win a general election" is not true in October 2015.

As mentioned earlier, take this with a grain of salt, as it's a 600-person poll heavily influenced by primary voters. But it certainly seems to indicate there is pushback against the GOP in Wisconsin, in light of the bad antics of Gov Scott Walker and the Wisconsin GOP. And it also shows a competitive presidential primary race within both parties, with signs that indicate Bernie Sanders is doing better among crossover/Independent voters. Long way to go, but any new bit of data is usually helpful in figuring out the state of play. 

The money's there for roads- why not use it?

I could discuss the legalizing of corruption by the Wisconsin Legislature today, but it's so depressing and sickening, and I really don't feel a need to drive things down today. So instead I want to talk about a real problem that needs to be solved at the Capitol- the unpopular cuts in road repairs that were the result of GOPs choosing to live in Bubble World during the state budget, and refusing to raise revenue or borrow for those projects.

This ongoing discussion of highway funding in Wisconsin continued today, with Governor Scott Walker telling his buddies at Wisconsin Manufacturers and Commerce why he wanted more money to go towards roads. Walker gave his blessing to DOT Secretary Mark Gottlieb to ask for the extra borrowing in a letter sent yesterday to the GOP co-chairs of the Joint Finance Committee.

The request will ask for $200 million of the $350 million in General Fund borrowing that was set aside for JFC approval in the 2015-17 State Budget, with $125 million going to major highway development, and $75 million going to state highway maintenance. In the letter, Gottlieb argues that investing these funds saves higher costs later on, and keeps the state’s infrastructure development on track.

….Approving the additional bonding early in [State] FY 16 will:

· Reduce the declining condition of state highways. An investment in infrastructure now will prevent more costly repairs later.

· Maintain a more consistent highway program. Avoiding large fluctuations in funding supports a state transportation industry and promotes more competitive pricing.

Gottlieb goes on to say that the remaining $150 million in contingent borrowing will be requested from JFC at a later point, which would reduce delays on large road projects in Northeast and South Central Wisconsin from 2 years down to 1 year.

But Walker’s and WisDOT’s plans met opposition on this idea from one of the people that received Sec. Gottlieb’s request.

Sen. Alberta Darling (R-River Hills), the co-chairwoman of the Joint Finance Committee, said Senate Republicans would be unlikely to support the Walker administration's request. That's because the governor has cut bonding in other areas but hasn't been willing to address the persistent funding gaps in the state's road fund that are driving up borrowing in that area, she said.

"We're in a very tight box, and the governor has put us in this box," Darling said.

But there’s a simple answer to help Bertie Dahh-ling avoid extra borrowing and allow Scott Walker to keep his Road Builder supporters happy, and it won't even involve raising taxes or fees. Just use the money that’s already there.

I alluded to this last week, and if you look at the Appendix of the recently-released Annual Fiscal Report for the state of Wisconsin, you’ll see the Transportation Fund’s balance sheet on Pages 4 and 5. Then compare those numbers to the projections in the State Budget for 2015-17.

Wisconsin Transportation Fund
Projected starting balance, 2015-17 $63.8 million
Actual ending balance FY 2014-15 $203.8 million
Amount above 2015-17 budget projection $140.0 million

So my question is simple. Why can’t we use that extra $140 million as cash to pay for projects, which means some of these delays on projects can be removed, and we’re not borrowing from the General Fund to do it? This seems like an win-win all around, buys some time for next year to see if things improve further, and wouldn’t put the Transportation Fund in a further hole for the 2017-19 budget (since the ending balance is the same as projected).

All it would take is a bill approved by the Joint Finance Committee and the State Legislature to do so. And with 2016 elections looming, you’d think this would be the type of “getting things done without kicking the can down the road” action that would be approved of on both sides of the aisle.

Is this just too easy, or am I missing something here?

O Canada!

Say hello to PM Trudeau, apparently!

Huh, you mean that going against climate change, imposing austerity and appealing to racism really didn't work out for Stephen Harper and his party may be on the way of getting historically blown out of power.

And I guess the Koch Brothers aren't as good as rigging the election machines across the border as they are in the States. HAH! I Kid! I kid! (I kind of kid).

Let's hope that 2010s "new idea" and advancement thinking can spread it's way south a bit in the next 12 1/2 months, eh?

U.S. revenues reduce deficit, save Wisconsin budget

With all of the economic reports that flew out of Wisconsin this week and the Dems' presidential debate on Tuesday, this bit of news out of D.C. may have slipped by your notice.

U.S. Treasury Secretary Jacob J. Lew and Office of Management and Budget (OMB) Director Shaun Donovan today released details of the fiscal year (FY) 2015 final budget results, which show significant and continued progress in reducing the deficit. The deficit in FY 2015 fell to $439 billion, $44 billion less than the FY 2014 deficit and $144 billion less than forecast in President Obama’s FY 2016 Budget. As a percentage of Gross Domestic Product (GDP), the deficit fell to 2.5 percent[1], the lowest since 2007 and less than the average of the last 40 years. In dollar terms, the FY 2015 deficit was the lowest since 2007 as well.

I guess you can tell that the deficit has been shrinking because it never comes up as an issue in the presidential election, but the reason why that deficit shrunk in the last year is what I want to focus in on.

Government receipts totaled $3,249 billion in FY 2015. This was $228 billion higher than in FY 2014, an increase of 8 percent. As a percentage of GDP, receipts equaled 18.3 percent, 0.7 percentage points higher than in FY 2014. The increase in receipts from FY 2014 can be attributed to a stronger economy. Growth in wages and salaries made collections of individual and payroll taxes strong throughout the year. Corporation income tax collections also increased in FY 2015 due to growth in taxable profits. Other miscellaneous receipts also increased, primarily due to fees and payments enacted under the Affordable Care Act that were collected beginning in FY 2015.

In fact, federal spending went up by 5% in FY 2015, but the revenue increases outpaced it, and that's what lowered the deficit.

In fact, if you go deeper into Thursday's Treasury report, that increase in income and corporate tax revenues becomes apparent, and is the clear driver of the increase in receipts.

Change in tax receipts, FY 2014 vs FY 2015
Income tax
FY 2014 $1,394,567
FY 2015 $1,540,802 (+10.5%)

Corporate tax
FY 2014 $320,731
FY 2015 $343,797 (+7.2%)

Now, those increases in taxes don't reflect who's getting those gains, or that our economic problems are solved and that there isn't a lot of room for improvement in our still too-unequal economy. But they certainly help the country's bottom line, and these increases have generally been helping state budgets, since incomes and corporate profits get taxed at the state level as well. So let's see how those increases translated at the state level in Wisconsin, especially since the Annual Fiscal Report was just released on Thursday, which will have the state's revenue numbers.

Granted, the fiscal years from state vs federal are in slightly different months (state is July 1- June 30, federal is Oct 1- Sept 30), but they should largely work in tandem. So let's see what Wisconsin's change in revenues was compared to the U.S.

Income tax change FY 2014 vs FY 2015
U.S. +10.2%
Wis. +3.7%

Corporate tax change
U.S. +7.2%
Wis. +3.9%

So Wisconsin's increase in tax revenues badly lagged the increase in the rest of the country. This would reflect the slower job gains that the state has had vs the rest of the country (as shown by the Walker jobs gap), and also the corporate tax cuts enacted by Scott Walker and the Wisconsin GOP over the last 4 years. Granted the U.S. doesn't have a national sales tax like Wisconsin does, and that was a source of budget strength for the state, with sales taxes up 5.7% vs FY 2014. But given that income taxes make up over half of Wisconsin's tax revenue, the sales tax bump still doesn't allow the state of Wisconsin to come close to the U.S.'s 8% increase in tax receipts in the last fiscal year, as we were up only 4.3% vs the last fiscal year.

And because Wisconsin needs a 4.6% increase in General Fund taxes just to keep next year's budget on track, that lagging is not a good sign. This is especially true as we see evidence of a slowing U.S. economy, declining stock market, and likely lowering of revenue growth at the federal level. We haven't seen the release of Wisconsin revenues for the first three months of Fiscal Year 2016, but they should be coming shortly, and that should give a first indication whether we will hit that 4.6% increase, or start falling short.

But what the U.S. Treasury report shows is that the state's $135 million cash balance (AND NO, THAT'S NOT A SURPLUS) is due to strong revenue growth throughout the country, and has nothing to do with "pro-growth" policies of Scott Walker or the Wisconsin GOP. In fact, Wisconsin has trailed the rest of the nation in seeing benefits from this economic recovery, and any mention of the positive year-end cash balance should be followed with two words. "THANKS OBAMA!"