Underfunding veterans means budget deficit grows higher

Yet another budgetary shortfall in Wisconsin has reared its head in the last 2 weeks. This time, it’s the Veterans Trust Fund, which helps to fund certain services and programs out of the state’s Department of Veterans Affairs (DVA). The Trust Fund now gives an annual report to the Joint Finance Committee, and State Senator and Committee member Jennifer Shilling noted that there isn’t enough money for the Trust Fund to operate in coming years.

The DVA report to the Legislature’s Joint Finance Committee identifies declining revenue projections and increasing program expenditures as the reason for the Veterans Trust Fund budget deficit. The non-partisan Legislative Fiscal Bureau estimates this deficit will total $46.1 million by 2019 unless corrective actions are taken.

“Our veterans and their families have made tremendous sacrifices and they deserve to be treated fairly,” said Sen. Jennifer Shilling (D-La Crosse). “This new budget deficit reveals a troubling trend that threatens the long-term solvency of the Veterans Trust Fund as well as important job creation and health care programs in our state. Whether recently returning from deployment overseas or entering the golden years of retirement, all our veterans deserve the same opportunities for success and they should not be penalized as a result of the Republican budget deficit.”

As that report shows, the Veterans Trust Fund had $20.8 million carried over from fiscal year 2012, and is now projected to dwindle to just over $2.5 million at the end of this current budget. And the only reason this fund is able to stay afloat through this budget is $5.3 million in General tax money thrown into it for 2013-14, and expenses being cut by $4.2 million compared to budget in the just-completed fiscal year. (It sure makes you wonder where those cuts came from).

What’s interesting about the moves in the last budget is that it’s a pared-down version of what Governor Walker wanted to do. Scotty wanted to shore up the Veterans’ Trust Fund by moving all surplus revenue from the state’s veterans homes into the Trust Fund, meaning the money wouldn’t be spent on services, but instead would fill up the holes. Even the GOP-dominated Joint Finance Committee said to no to that one, and we ended up with the $5.3 million, one-time transfer we had in 2013-14. (Pages 2-4 at this link explain how this all played out).

There’s also a $20.6 million hole for the Trust Fund in the next budget, with no new revenue source designated as of this time, so that’ll require some additional General Fund tax dollars, or some kind of transfer. A long-term solution is in order over just a one-year fix, as the report to the LFB shows an overall $62 million deficit between 2013-19.

So let’s add this to the list of problems we already know of for the next state budget.

1. A $642 million structural deficit due to Koo-Koo tax cuts, property tax “relief” gimmicks and spending more than we have coming in for fiscal 2014-15.

2. A $93 million Medicaid hole due to Walker’s dumb decision to TeaBag the Medicaid expansion in Obamacare.

3. $400 million over two years as a result of the $200 million revenue shortfall in FY 2013-14. And that's a number that could be even worse, as the September 1 General Fund cash balance is now forecast to be $466 million less than it was projected to be only 2 months ago.

4. And now we have $20.6 million that has to be made up for the Veterans Trust Fund

5. That makes for total deficits of… $1.155 billion.

And oh yeah, we also have $1.1 billion or so to make up in the Transportation Fund, if you want to pay for all designated needs in 2015-17. It’s quite obvious that all these giveaways by Gov Walker and WisGOP lack any semblance of fiscal responsibility, and it’s leading to a path that results in lowered services, even more deferred and unmet needs, and higher taxes in 2015.

It’s almost like these WisGOPs want it that way. Another fiscal crisis could allow Scotty to sell off the state to his campaign contributors if he’s lucky enough to survive the November election (we’ve seen a list of what some of those items would be). On the flip side, it would also tie Gov Burke’s hands when she takes over in January, and not let her reverse the huge amount of damage that has already been done by this wrecking crew. Sounds like a win-win for the ALEC bunch.

Voucher backers believe in the free market- until they don't

Bit busy myself, but wanted to direct you to Bruce Murphy's interesting column in Urban Milwaukee that came out today. Murphy took on the school voucher issue, and noted that while Wisconsin was in the top 10 for teacher salaries 25 years ago, that wasn't the case by the time the Great Recession took hit. Murphy notes that Governor Tommy Thompson used the high teacher salaries of the '80s as a wedge issue to stay in power, and passed limitations such as district-wide revenue caps and the Qualified Economic Offer, limiting annual pay and benefit increases to less than 4% during the booming '90s.

By the time the Great Recession hit, Wisconsin school spending was near the middle of the pack nationwide, and teachers were already being paid below the national average.

Thompson’s approach ended the days of big contract gains for teachers. By 2007-08, Wisconsin had dropped to nearly the median in school spending, with per-pupil expenditures of $10,791, just 4.7 percent higher than the national average of $10,297. As for salaries, Wisconsin’s teachers ranked 23rd nationally, at 93 percent of the average pay nationally.

This was a stunning transformation and Thompson’s most overlooked impact as a governor. He also championed school choice, which began to drive down per pupil spending even further by providing an absurdly low voucher payment. In the most recent school year, a choice school received just $6,400 per student. That’s less than any state but Utah spent per pupil, according to a ranking done by Governing Magazine, and that was based on 2011 data. Odds are Utah passed that spending level in the last three years.

But in typical Republican fashion, by giving them several concessions, it simply whetted their appetite to take more, and in recent years they have increased the gutting of public-schools gutting through cuts in state aid, and increases in the the taxpayer-funded "school choice" program, better known as vouchers.

As Murphy points out, the level of vouchers are well below the per-pupil amounts that are spent at most top public schools in the Milwaukee area, with students that often have additional needs due to their low-income circumstances. So it's not increasing investment in education in any way, and the lagging results of Milwaukee voucher students shows that it's not leading to better outcomes. So what's the game here (other than funneling taxpayer dollars to campaign contributors)? According to Murphy, it's GOP magical thinking that doesn't apply to any other industry.

Meanwhile, Republicans have expanded choice, meaning even more schools will be under-funded. They have also opened the doors to more voucher payments for private school students, 75 percent of whom were already attending private schools. In short, this money will simply go to families who were already paying for an education. Inevitably, it will mean less money in the already shrinking pot of money for public schools statewide.

Republican school choice supporters originally argued it would result in a better education for students than Milwaukee Public Schools. That was the entire rationale for that then-radical change. But as more and more research showed voucher students do about the same or worse, on average, than MPS students, Republicans began switching to arguing that choice schools were cheaper....

I don’t know where every Wisconsin legislator is sending his/her children for school, but I doubt many are choosing schools where the per-pupil spending is below that of nearly every state in the union. Yet the policies and messaging of Republicans is telling us over and over that you can run schools on the cheap.

Meanwhile, it may take years for the impact of the cheap schools movement to be felt. Children attend school for 13 years or more and it can take awhile for the impact of lower spending to be felt on the quality of teachers attracted and the achievement of students. The general wisdom when it comes to other services and products that we buy is that “you get what you pay for.” Why would education be the exception?

Good question Bruce. Of course, maybe WisGOP doesn't care about providing a better education that would increase Wisconsin's talent pool and make it a more desirable place for a business to locate. Maybe they just care about grabbing more political power by weakening teachers'unions (remember what Senate Majority Leader Scott Fitzgerald said during the 2011 Uprising? I do), and then using the "savings" from budget cuts as an excuse to cut taxes and hamstring the state budget in the future. Then, as the state hits another fiscal crisis, it'll require more privatization and selling off of assets and services to campaign contributors private providers.

Nahhhh, that would be cynical and disgraceful. Can't be that.

Jonathan Steitz's many levels of FAIL

Apparently GOP State Senate candidate Jonathan Steitz was given some air time on Mike Gousha's show over the weekend, and made quite the ass of himself. You can click here to watch the clip yourself, while I'll rely on the reports and transcripts, because I don't need to waste my time listening to someone who's goal seems to be becoming yet another ALEC cabin boy from the 262.

Let's go over a few of Steitz's comments, shall we? First, here's Steitz's reasoning behind wanting a 0% income tax in Wisconsin.

The states that have no income tax, nine states in the union that don't tax regular wages, they have far exceeded the rest of the country as far as economic releavance and job growth.

If this sounds familiar, it should, as Gov Walker's Administration floated it out there last winter, and it was immediately laughed away. But for the hell of it, I looked into the 7 states (2 others have specific exceptions that make some people pay income taxes- Steitz doesn't mention that) that don't have an income tax, and I noted in that article that there was little correlation between states that have 0% income taxes and higher income levels or job growth. Yes, the Stetizes of the world may bring up booming Texass, but they conveniently leave out places like Nevada, which had the 2nd highest unemployment rate in the nation (7.9%) as of May 2014, and more than half those states currently have unemployment above 6.0%. According to the last monthly state-by-state jobs report, 4 of those 7 states had employment gains that were "statistically significant" over the last 12 months, which is not a different proportion than the 24 of 43 states with income taxes that did the same.

In addition, 3 of those 7 states without income tax have median households incomes below the U.S. as a whole, so the low tax burden can't be proven to trickle down into higher overall incomes. But where there IS a correlation is that 4 of those "0% income tax" states are in the top 8 for amount of people who lack health insurance, while Wisconsin's uninsured rate was well below all of those states in 2012. So a reduction of services is certainly something we could look forward to if Steitz were to get his way.

But when did reality make Baggers like Steitz think twice about their stances? In fact, he doubles down on this, claiming that the state wouldn't need to increase the sales tax to 13%, as would be required in a dollar-for-dollar offset of income and sales tax.

Steitz expressed support for an increase in state sales tax to defray the costs of the change, but anticipated increasing the tax to "high single digits," lower than double-digit estimates needed to wholly replace funding. He said the change would be enabled by a reduction in spending, as well as increased economic activity.

"I don't think you need to look at how you replace the revenue," Steitz said. "The problem with government is not that we don't have enough money coming in, it's that we have too much money going out."

Oh really, Jon? First of all, we do have a problem with not enough money coming in, because we're looking at a likely revenue shortfall of $200 million or more for the fiscal year that just ended last week. With a balanced budget BEING THE LAW, we do need these numbers to match up (funny how these "business guys" don't get this part). We also have a significant problem with money going out already, as witnessed by the billions in borrowing put into Walker's last budget, and the $93 million Medicaid deficit caused by the policies of our "reform-minded governor".


What a marooon!

Somehow, I don't think Steitz's Tea Party plans to "reduce spending" don't include the common-sense move to accept Obamacare's Medicaid funding, which would reduce state spending by at least $119 million. But then again, I don't know for sure, because Steitz won't say what he'll cut? C'mon Jonny- will it be more cuts to the UW System and having tuition skyrocket? More cuts in state aid to local governments (at a time when cities already don't have the cash to fix their roads and some will likely add wheel taxes to make up the difference)? Does Jonny want prisoners to be let out early? Or does it mean more slashes to public schools- causing property taxes to go through the roof?

Oh wait, Jonny's got an idea for that last one. As John Peterson at Democurmudgeon says "$12,000 savings accounts controlled by parents, what could go wrong?" That's right, Steitz wants to give all Wisconsin parents $12,000 and end any concept of community public schools- just let the money go out willy-nilly. In addition to not saying how the state could be able to afford to administer a program with so many recipients, and then shell out $12,000 a child on top of it. And we've already seen plenty of examples of voucher schools in Wisconsin shutting its doors after taking state money and leaving the kids out in cold (remember our friends at Life Skills Academy who hightailed it down to Florida this January?). So I don't see a need to cause a whole lot more of this failed ALEC-backed corporatization of one of our few remaining strengths.

Steitz's talk about "economic competitiveness" is especially rich, because the district he wants to "represent" would be especially hurt by Steitz-supported policies. The 21st Senate District was gerrymandered to include most of the areas in Racine and Kenosha Counties surrounding the cities of Racine and Kenosha, with the idea of making that Dem-held seat more Republican. Well, that area includes the huge outlet mall in Pleasant Prairie and soon-to-be-opened Amazon warehouse near Kenosha. Think those guys are going to be happy with a sales tax going from 5% to 8% or 9%, especially when the sales tax at Illinois' Gurnee Mills outlet mall is 7.5%, and most of Lake County, Illinois is in the 7% range? That's not something that's going to encourage people to shop and buy things in your area, now is it? And if those commercial properties start going under due to a lack of sales, guess who has to make up that difference? That's right, local property taxpayers in the 21st Senate District.

In addition, do you think gutting services and screwing up public schools will convince FIBs to pick up roots and decide to live across the border? I would think the opposite would occur, and this low-service mentality would really hurt the chances for the Southeastern Wisconsin to keep drawing commuters that work in Illinois. According to US Census data, over 20,000 Kenosha County residents work in Cook and Lake County, Illinois, and more than 2,300 in Racine County do the same. Those people likely could live in a lot of communities in the Land of Lincoln and make for an easier commute, so why would you make Wisconsin a less desirable place to locate and live in by destroying public services and acting like a backwards-ass red state?

But apparently Steitz wants Wisconsin to act like a backwards-ass red state. Check out this quote from the Wispolitics.com story that accompanies the Gousha interview.

Van Wangaard, R-Racine, held the district before the lines were redrawn and lost in a recall election in 2012 that was spurred by his vote for Gov. Scott Walker's collective bargaining changes.

Steitz, R-Pleasant Prairie, said the changes in the district boundaries allow for a more conservative candidate to win.

"I think Van was the perfect candidate for the 48 percent Republican district that the 21st used to be; this is now almost a 60 percent Republican district," Steitz said on the program, produced in partnership with WisPolitics.com.

First of all, the fact that Steitz thinks that he only has to care about the "60 percent Republican" part of the district means he'll be yet another partisan, "divide and conquer" ALEC boy that couldn't care less about anyone but the fraction of a fraction that'll vote for him. Haven't we seen enough of that disastrous mentality? Second of all, that district isn't "60% Republican", as it went approximately 54-44 GOP in the 2012 elections. Yes, that makes it hard for a Dem to win, but not impossible in the right circumstance.

And given that the GOP is offering up a dope like Steitz and a retread like Wangaard for this district, this may be one of those circumstances. After Jonny Steitz's absurd performance on TV this weekend, it sure makes Randy Bryce seem like the more legitimate candidate, doesn't it?

Bigtime June jobs report shows economy has thawed

Right before the Holiday weekend, the Bureau of Labor Statistics released the jobs report for June. In addition to the interest surrounding a typical jobs report, this came on the heels of a startling revision of 1st Quarter GDP, which showed the economy didn't shrink by 1.0%, as we thought in May, but by 2.9%. This was the worst mark since the end of the Great Recession in mid-2009 (we had a minor reduction in Q1 2011, and growth in every other quarter), and given that the jobs report not only gives a new month of data, it also has 2 months of revisions, so we'd have numbers for all 3 months of the 2nd Quarter of 2014.

Well, the numbers weren't just good, they were great. 288,000 jobs added, 265,000 in the private sector, and the unemployment rate fell by 0.2% down to 6.1 % - the lowest in nearly 6 years. April and May were revised up as well (by a total of 29,000 jobs) so we had 317,000 more jobs than we knew previously, and job creation was strong throughout Q2 2014.

Change in jobs, April-June 2014
April 2014 +304,000 (+278,000 private)
May 2014 +224,000 (+224,000 private)
June 2014 +288,000 (+262,000 private)
TOTAL +816,000 total (+764,000 private)

At the same time, unemployment dropped by 0.6% between March and June, from 6.7% to 6.1%. Compare that to the jobs numbers in the first three months of 2008, as the Great Recession was starting to kick into gear.

Change in jobs, January-March 2008
Jan 2008 +15,000 (+3,000 private)
Feb 2008 -86,000 (-115,000 private)
Mar 2008 -80,000 (-106,000 private)
TOTAL -151,000 (-218,000 private)

In other words, the U.S. is doing more than 320,000 jobs a month better than we were at the start of 2008. And the start of the lighter recession of 2001 also had jobs decline in 2 of the first 3 months of that year. So no, it doesn't seem like a recession-like pattern here in 2014. In fact, the U.S. has had 12-month private sector job growth between 2.25 million and 2.49 million for more than a year- a sustained level of growth that hasn't been seen since the Clinton presidency in 2000.

What it also does is that it puts a lot of the claims of "it's working" by Scott Walker and WisGOP to shame. Because the evidence is even more overwhelming today that it is the national economic recovery that is leading to Wisconsin job creation, and Walker/WisGOP policies are keeping us from reaping more benefits from that. In fact, if Wisconsin had kept up with the 2.1% rate of private-sector job growth that the U.S. is seeing, we'd be adding more than 50,000 jobs a year. Instead we're lucky to add 30,000 in a 12-month period (and have only gained 10,200 through May). I've now updated the Walker jobs gap charts, as the upward revisions for April and May means the state is in the hole by 58,000 private sector jobs, and more than 51,000 jobs overall.





And now the state has to gain 5,600 private-sector jobs for June just to keep up with the rest of the country, so anything less than that should be seen as a disappointment on top of an already-bad record. The "5.7% unemployment is lower than the U.S. rate" talking point is quite lame as well, as the state's "unemployment advantage" was much higher when Walker took office than it was today. In WisGOP's defense, both them and the U.S. have seen decent drops in unemployment since the end of last year.

Wisconsin unemployment vs. US rate, 2011-2014
Jan 2011- Wis. 7.7%, US 9.1% (Wis. -1.4%)
Dec 2013- Wis. 6.3%, US 6.7% (Wis. -0.4%)
May 2014- Wis. 5.7%, US 6.3% (Wis. -0.6%)
TOTAL CHANGE SINCE JAN 2011 Wis -2.0%, U.S. -2.8%

And this lower unemployment trend continued in the U.S. in June, dropping another 0.2%. So no, we're not heading into recession. If anything, our steady job growth seems to be picking up steam. We'll see if it continues for the second half of 2014, and even though he won't say it in public, I bet Scott Walker is hoping it does as well. It might be his best chance to convince enough suckers Wisconsin voters to give him another term.

The fight for American independence and freedom must continue

On this country's 238th birthday, leave it to the great Charles P. Pierce to hit it on the head this Independence Day. He brings up that while our Founding Fathers wrote a remarkable document that charted a new path in the world (and I highly recommend you read it yourself, if you get the chance), freedom was not something all Americans were given at the time.

They knew they were doing it. They knew a lot of things, of course. They knew they were committing what the entire rest of the human history would have reckoned to be treason. They knew they were formally declaring war, although there is no declaration of war present anywhere in the document they signed, and they knew the formidable nature of the military arrayed against them. But they also knew they were committing themselves, and the nation they were seeking to form, to a constant redefinition and expansion of the nature of freedom. They knew they were leaving themselves, and the nation they were seeking to form, wide open to charges that they had pronounced a cause of rebellion while guilty of the same offenses against Nature and Nature's god of which they were accusing a feckless monarch and his blundering ministers. (At his most acidic, Samuel Johnson wondered, ""How is it that we hear the loudest yelps for liberty among the drivers of negroes?") The New England merchants and smugglers knew it. The Pennsylvania Quakers knew it. The slaveholders of the South knew it, and they knew it so well that they had a passage critical of the institution of slavery excised from the document that was written by one of their own. But they knew it anyway, and they were scared to the depths of their sin-wracked souls. The document was silent on slavery, but slavery was assumed in every syllable.

And we had to have a bloody Civil War that started 85 years after the Declaration of Independence to give rights to black Americans (on paper, anyway). And we had to have decades of struggle to make sure women got those same rights, and to guarantee those God-given rights of citizenship to people of color. And Pierce reminds us that we are still far from perfection on this topic today.

The explosive in that time bomb is not yet exhausted. There have been small detonations throughout our history. You can hear them every time freedom is extended and every time it changes form as it moves forward. There also have been small detonations throughout our history every time we fell short of the promise of those words, the promise that is the essential charge in the device.

How is it that we hear the loudest yelps for liberty from the jailers of Guantanamo, from the keepers of the black sites, from those willing to hand our inalienable rights to faceless men in the cubicles of the intelligence bureaucracy? How is that we hear the loudest yelps for liberty from paymasters of torturers?

The time bomb laid beneath history 238 years ago is a time bomb of pure conundrum, and the people who put it there knew that the essential engine of democracy is paradox, noble bluffs to be called, high-minded promises in savage conflict with each other. And they knew that, too, all of them, when they piled the dirt atop the time bomb they had laid beneath history, wiped their hands daintily, and walked away.

238 years later, we still have oligarchical oppressors threatening our rights to life, liberty, and the pursuit of happiness, and the ability for us to determine the leaders that will guarantee those rights. I'll remind you of another quote from a main author of the document we celebrate today.

I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country. -Thomas Jefferson

This concern is true more than ever in 2014, with the Hobby Lobby case giving extra power to companies to control the contraceptive options of their employees, and with oligarchs trying to eradicate all political campaign finance limitations and disclosure laws (which is the real endgame of the Walker supporters in John Doe Deux). The Battle at Yorktown didn't guarantee this country's greatness, and our future greatness seems in great peril. It is our duty today, on the 4th of July, 2014, to rededicate ourselves into making this a more perfect and better union. Or else we could have it all taken away from us.

A Wisconsin jock tax for Bucks arena?

Lots of recent news regarding the Bucks arena question in the last week or so, and I wanted to discuss one proposal in particular.

1. Let's go back to something new Bucks co-owner Marc Lasry mentioned in a meet-and-greet with the media last week that some kind of tax or other public financing would be part of a new arena. And that any package will have to be figured out in the relatively near future.

Lasry, speaking at a joint Milwaukee Press Club-Rotary Club of Milwaukee event, did not specify a strategy for generating public support or approaching elected officials. He did mention that they plan to talk with “the governor” — Scott Walker — “and a number of other people.”

Lasry and Edens have pledged a combined $100 million to an arena project and former Bucks owner Herb Kohl has pledged another $100 million. A new arena is projected to cost in the neighborhood of $400 million. He also reiterated the sense of urgency around building an arena to meet an NBA deadline of the 2017-2018 season for the Bucks to produce a home venue that meets the league’s current standards. The Bucks play in the 26-year-old BMO Harris Bradley Center in downtown Milwaukee.

“The problem we have is in our agreement with the NBA if an arena is not built, the NBA has the right to take the team back,” Lasry said. “I think we’ve got three or four years to do that. So we’re under huge pressure to do it."

So this means about $200 million is needed in some kind of fashioned to build the arena. Some of this can be done through naming rights (as was done with Miller Brewing Company with the Brewers' stadium), but there's still a good $100 million or more that'll have to be put in by the public.

2. And Gov Walker did say something about a possible source of those funds last week. The Milwaukee Business Journal got the Governor on the record mentioning that his administration is going to look into what is often called a "jock tax."

Walker told me he likes the concept of calculating a concrete figure for state and local tax revenue from player salaries — Bucks players and visiting team players pay income tax for games here — as well as sales tax on concessions, merchandise and tickets.

“What’s the actual amount of revenue we get particularly from income tax that are prorated for the visiting teams as well as the Bucks?” Walker said. “...Beginning with that at least as a premise, it justifies saying if we don’t do anything, ‘This is the dollar amount that we’d lose.’ So let’s try and look at are there any solutions?”

Walker said he does not want to include economic impact estimates or multiplier calculations on the impact of Bucks games on, for example, restaurants and bars near the BMO Harris Bradley Center.

The Metro Milwaukee Association of Commerce (aka the Journal-Sentinel's REAL bosses) also seems on board with a jock tax idea, and estimates it could raise $8 to $10 million a year, which would mean the $100 million in public funding could be paid off in something like 10-15 years.

From a policy standpoint, there are a few questions that should be cleared up. First, how much should the jock tax be, and what's the limit on it (especially for Bucks players, who would be forced to pay it a lot more if there's no limit)? I'll quote ESPN's Zach Lowe again, who tells a great story about how Memphis and Tennessee's jock taxes forced fringe players like the Grizzlies' Chris Johnson to play for practically nothing.

But the Tennessee tax is strange, according to Ron Klempner, the interim head of the NBA players’ union, and several other tax experts who have addressed the issue. Any NBA player who is on a team’s roster during any game in Memphis has to pay a flat tax bill of $2,500 for that game. (The same goes for NHL players who pop into Nashville to face the Predators.) The tax applies to a maximum of three games, so that no player pays more than $7,500 per calendar year, Klempner says. The flat rates apply to each player, regardless of his individual income level, and they also apply to Memphis players; Marc Gasol, Zach Randolph, and Tony Wroten all wrote $7,500 checks to the state of Tennessee for last season.

Except the money doesn’t go to the state — another of Tennessee’s jock tax quirks. It goes to the operators of the Grizzlies’ arena, who happen to also own the franchise, Klempner says. The state doesn’t see a dime, at least not directly. The theory is that arena operators will use the extra cash to spruce things up, draw more celebrated acts, and spend in other ways that will ultimately bring more visitors and money to the Memphis area...

One last quirk: The jock tax applies only to certain jocks — NHL and NBA players. Players in the NFL are exempt. So in the end, Johnson earned about $54,000 from those two 10-day deals (eight games played) and had to start his tax prep with a fat $7,500 check to the ownership group that waived him. “I didn’t know much about that tax,” Johnson said Thursday in Las Vegas, where he is playing for the D-League’s Select team at NBA Summer League. “But when I got my check, I noticed there was a lot of money taken out for a 10-day. I mean, I was a little … $2,500 is a lot of money.”

It must be noted that Tennessee just dumped their locally-based jock tax for the NHL's Predators and NBA's Grizzlies after complaints from the players' associations of both league. But it seems that the Memphis and Nashville situations would be similar to Milwaukee's in that the extra jock tax would be used locally and for arena-related improvements, so the precedent is there.

My second question on the jock tax is- do you limit it only to the Bucks, or would you levy it on all users of the new facility, including the Admirals, Marquette coaches and personnel, musical artists giving concerts, and the various other events it might hold?

Third, how do you make sure this tax is segregated from other taxes and go solely to this arena, and not be a target to be stolen to fill in budget holes or other needs?And on the flip side, is the "jock tax" for the arena ONLY, or the arena and a nearby development, or does it go to the City and/or County? And how do you guarantee the funds go to the arena and not somewhere else?

And lastly, there's an obvious question as to whether you're discriminating against one group of workers (NBA players and other entertainers) compared to numerous other types of business that may have people making a portion of their income on visits to Milwaukee and other places in Wisconsin. Is this a cue to start cracking down on a number of other professions that may be dodging Wisconsin taxes by failing to report money they made here? That might not be an answer a governor who gets tons of out-of-state donations from businessmen would want to explain.

3. As for other jock taxes themselves? They're legal and relatively common. As Walker alludes to, Wisconsin does a version of this when visiting players come to play the Brewers, Packers or Bucks, and it's often reflected on a player's overall tax return as "income gained in a different state." Jonathan Nehring at Taxaball.com wrote an article last year that used Packer QB Aaron Rodgers as an example of how players get hit with these "jock taxes " mentioning that Number 12 could have filed at least 9 state income taxes in a typical year, based on regular season play (Wisconsin and 8 road games in other states). Then Rodgers could write off those state taxes paid to other states when he files his Wisconsin tax return (for example, if Rodgers pays $50,000 in "jock taxes" to those other states, he takes off $50,000 out of the taxes he's owed to the state of Wisconsin for the whole year). NBA and MLB players have to file many more of these state returns, given that they're traveling to more cities and states throughout their respective seasons.

There are certainly issues that need to be cleaned up associated with "jock taxes" that are already in effect. NFL players Jeff Saturday and Hunter Hillenmeyer sued the City of Cleveland last November for making them pay a similar local tax, claiming that the tax was unfairly levied on them. Saturday said he was injured in the Colts' 2008 game vs the Browns, didn't make the trip, and should not have been subjected to it (the Cleveland tax commissioner disagreed). Hillenmeyer's complaint is that the City of Cleveland based its tax on 1/20th of his Bears' salary in the years he played in Cleveland (4 pre-season games + 16 regular season), and should have instead charged him based on "duty days", which is related to how many days a player works (which includes practice, off-season workouts, and related non-game days).

Hillenmeyer is also arguing that items such as roster and signing bonuses shouldn't be subjected to the jock tax, as those are given regardless of whether he is still on the roster at the time the Bears would have played Cleveland. This is related to a question of "home residence" for players, which I assume is where off-the-field income like endorsements is accounted for. This leads to an interesting article that Nehring wrote last week asking if LeBron James's home state was really Ohio (where he grew up and still owns a house) or if it's in Florida (which has no state income tax, and where LeBron lists as "home"). As of now, the Ohio Supreme Court has sent the Saturday/Hillenmeyer case to mediation before hearing it, but it could be worth watching, partly out of curiosity (yes, I'm a geek about these kinds of things), but also to see if there are further rulings given on the legality and form of future "jock taxes".

There's a shockingly large amount of material you can find online discussing jock taxes, and I recommend this Baseball Prospectus article that goes into how that league deals with the situation for their players. But as a funding mechanism for the Bucks' arena? Show me the bill, show me who exactly is being taxes, show me how much it'll raise, and how the money will be set aside, and I'll see if it's worthwhile. I'd rather see a new arena tied into a larger development, like a large TIF district or something else that'll be geared toward the community as a whole instead of specifically targeted to one or two facilities. I don't like the Wisconsin Center District setup for the same reason- give that sales tax to the city or county and allow the overall area to benefit.

But I'm also not going to actively say NO until I see how all the pieces fit together. And we probably won't see the public financing piece of this puzzle for several months, so stay tuned.

Own goal for WisGOP- Medicaid deficit blows up

(yes, I had to stick in a cheap soccer reference today)

I mentioned this in the comments of my post on Friday mentioning that the state's revenue shortfall was now nearing $200 million. There was other bad budget news in Wisconsin on Friday, as the quarterly Medicaid report to the Joint Finance Committee indicated that the General Fund shortfall for that program had exploded from $20.3 million to $93 million in the last 3 months.

So why did Medicaid fall so deep into the red? Let's go to the report and find out.

...enrollment of adults without dependent children in Badgercare Plus has been higher than assumed in Act 20, the 2013-15 biennial budget. The budget had assumed childless enrollment would reach approximately 99,000 by the end of FY15. (June 30, 2015) Through May 2014, 103,126 individuals had already enrolled. The fast pace of enrollment can be attributed in part to the outreach efforts undertaken by the Department and numerous community partners to inform individuals of BadgerCare Plus changes implemented on April 1. While enrollment has outpaced budget assumptions, it shows the Governor's goal of providing access to Medicaid coverage to those individuals living in poverty. (Those last two sentences kill me, because Wisconsin spent the lowest amount of money per capita out of any of the 50 states on Obamacare outreach, trying to TeaBag it as much as possible- and now they're trying to take credit for so many people signing up).

It is difficult to predict enrollment growth (in BadgerCare Plus) for the rest of the biennium....Adopting a cautious approach from a fiscal standpoint, this estimate assumes childless adult enrollment will reach 135,000 by June 2015.

And here's the killer part about these extra costs. THE STATE COULD HAVE AVOIDED ALL OF THEM. How? By simply accepting the expanded Medicaid funding in Obamacare, which would have had the feds take 100% of those costs associated with these new signups between now and the end of 2016, and only falling to 90% in 2020. Instead, Walker decided opposing Obama and showing off for GOP national types was more important than being fiscally responsible, and chose to cover these individuals under traditional Medicaid, making the state pay approximately 42% of those costs. It is a decision that was estimated at the time to cost state taxpayers an extra $105 million (later upped to $119 million) and cover 75,000 fewer Wisconsinites, and now those blown cost savings are even higher with more low-income childless adults enrolling.

Walker and WisGOP's other gamble as part of this TeaBagging of Obamacare was to throw off tens of thousands of parents and caretakers from BadgerCare Plus, and instead make them get insurance through Obamacare's federal exchanges. In addition to being cruelly disruptive to these people's lives, the cynical intent was to overload the exchanges in the hope that they wouldn't work well. But after the initial difficulties with the Obamacare website in October, Wisconsinites were able to get coverage, and enrollment numbers far exceeded the feds' expectations, with more than 140,000 people getting coverage.

Oddly enough, the state's DHS did say that the Medicaid deficit would be even worse, except that they were "successful" in ending state coverage for many of these parents and caretakers.

The higher enrollment for those childless adults is partially offset by lower-than-projected growth for BadgerCare Plus parents and children. Under the Governor's entitlement reforms, parents and caretakers above 100% FPL transitioned to private coverage in the federal insurance marketplace as of April 1. Act 20 also assumed that caseload for parents below 100% FPL and for children would increase through the biennium due to the federal individual insurance mandate and possible changes in employer sponsored care. Actual enrollment through May for these two groups is below budgeted assumptions, and this estimate assumes slow growth through FY 15.

This shouldn't shock you too much, I predicted we'd have this type of shortfall when I looked at the DHS enrollment figures for April and saw the huge increase in childless adults (you can click this link to see the figures through May, it's mostly the same story). What makes me angry about it is that it is a self-inflicted wound that could be healed tomorrow by simply doing the right fiscal thing and take the Medicaid funding. But Walker is still operating under the delusions that he's some kind of 2016 presidential contender and that being against Obamacare would be a winning position among non-racists with IQs over 80, so he and his WisGOP buddies in the Legislature won't take this obvious step that's a win-win for both the budget, and the people of Wisconsin.

And so our deficit in Wisconsin continues to balloon, and these new Medicaid numbers along with the revenue shortfall show we not only are looking at a structural deficit around $1 billion for the next budget, we also have to mend this current budget, as the $100 million cushion built into it won't be enough. Guess it's yet another Walker mess that Governor Burke will have to dig us out of in 6 months.