Chrissy Schneider still trying to sell trickle-down BS- it ain't working

After the fiscal and economic disaster in Kansas and related screw-ups in the state of Wisconsin, you’d think that right-wing Bubble Boys would be backing off and not trying to float the absurd “tax cuts raise revenue” meme. But apparently Milwaukee Journal Sentinel paid mouthpiece of the Bradley Foundation columnist Christian Schneider still thinks he can try to get this garbage over on some readers.

Schneider tries to claim that because the Wisconsin budget is projected to have enough revenues to increase spending on K-12 education, that it proves that Governor Scott Walker’s tax cuts worked, and that Republicans should continue to insist that “lower taxes makes us better off.”

In fact, in Gov. Scott Walker's proposed 2017-2019 state budget, he plans to spend more in general purpose revenue (generally income, sales and business taxes) than the state ever has before. Walker's last budget spent $33 billion in tax revenue — his latest proposal spends $34.6 billion. And he can do it because tax receipts are up.

What's most interesting is that state collections have increased despite Walker and the Legislature enacting significant tax cuts over the past six years. Since 2011, Wisconsin has cut taxes almost $4.8 billion, including over $2 billion in cuts to income and business taxes. And yet receipts still continue to rise, allowing Walker to, for instance, increase funding to schools by nearly $650 million in his new budget.

In fiscal year 2016, Wisconsin took in an estimated $15.2 billion in taxes. The next year, that number increased to $15.7 billion, with recent state estimates increasing the number to $16 billion in 2018 and $16.6 billion in 2019.

This effect lends credence to what conservatives have argued all along: Allowing people to keep their own money and spend it how they wish stimulates economic activity and job growth, and thus stimulates tax receipts. When tax rates creep too high, they provide a disincentive for work, thus reducing government revenues.

First of all, Schneider sneakily includes sales taxes in these revenue totals, when sales taxes haven’t been cut at all in Wisconsin over the last 6 years (with some rare, targeted exceptions for specific businesses). And it’s not like Wisconsin has had the sales boom that Schneider theorizes would happen after income tax cuts, as Wisconsin sales tax revenues had an average growth rate of just over 4% between 2011-2016, while US retail sales outside of grocery stores, food and beverage stores and gas stations (aka- most of the places that people pay sales tax on products in Wisconsin) grew close to 5.5% a year in the same time period.

Retail sales isn’t the only place where Wisconsin has lagged in the Age of Fitzwalkerstan. Let’s go into the numbers and see what has happened with federal tax receipts for both individuals and corporations, and then compare it to what Wisconsin’s tax revenues look like. Obviously tax changes at both levels of government will affect this, but if Chrissy Schneider is correct that it’s the lower tax rates have led to higher revenues in Wisconsin, then we should be near or above the rate of revenue growth that they’re seeing in the rest of the country, right?

And let’s start in 2010, so we can see the last year under Jim Doyle and the Dems’ budget and then look at the Age of Fitzwalkerstan after that.

Change in tax revenues, 2010-2016
Individual income taxes
2010-11 Feds +21.48%, Wis. +10.04%
2011-12 Feds +3.73%, Wis +5.09%
2012-13 Feds +16.27%, Wis +6.46%
2013-14 Feds +5.94%, Wis -5.81%
2014-15 Feds +10.48%, Wis +3.74%
2015-16 Feds +0.35%, Wis +5.66%

In particular, note how badly Wisconsin lagged in 2013-14 and 2014-15, when they used the one-time bump in revenues that everyone got from 2012-13 to put new (Koo-Koo) income tax cuts in place.

Corporate income taxes
2010-11 Feds -5.38%, State +2.20%
2011-12 Feds +33.79%, State +6.30%
2012-13 Feds +12.88%, State +2.07%
2013-14 Feds +17.26%, State +4.52%
2014-15 Feds +7.20%, State +3.90%
2015-16 Feds -14.75%, State -4.17%

And it’s not like this lower corporate tax growth led to more hiring in Wisconsin, as the Walker jobs gap grew in every year from 2011 onward.



Overall, the growth in revenue into state government over the last 6 years in Madison is far behind what was being sent to DC.

Cumulative change 2010-2016
Individual income taxes Feds 72.08%, State +27.12%
Corporate income taxes Feds +56.53%, State +15.40%

So the feds have had an income tax growth rate 2 ½ times faster than Wisconsin, and a corporate tax growth rate nearly 4 times faster. And much better job growth happened in the rest of the country as well as most of the Midwest in that same time period, so it shows that Schneider is clueless (and likely lying on his bosses' behalves) when he says that Walker’s and WisGOP’s tax cuts have led to better growth. Instead, Schneider should instead be saying “Thanks for keeping us above water, Obama!”

Why does this hack keep pulling a paycheck from the state’s largest newspaper again? Promoting these Bradley Foundation liars and other regressive pro-oligarch crap is why I haven’t given the Journal-Sentinel a cent for years, and won’t until they blow out dishonest brokers like Chrissy Schneider.

3.1% unemployment in Fitzwalkerstan? Don't bet on it being real

Through all of the other things going on in the state, there was another Wisconsin jobs report that was sent out by Scott Walker’s Department of Administration. And given that it was released before 9 am, you knew there was something that the Walker boys wanted people to know.

Place of residence data: A preliminary seasonally adjusted unemployment rate of 3.1 percent in May 2017, down 0.1 percent from April and at its lowest rate since October 1999. The rate remains lower than the national unemployment rate, which was 4.3 percent in May 2017.

Additionally:
•The rate of 3.1 percent is the second-lowest rate on record for Wisconsin (the lowest rate was 3.0 percent in May-July 1999).

• Wisconsin's January (3.9 percent) to May (3.1 percent) unemployment rate decline of 0.8 percentage points in 2017 is the steepest January-May decline since 1983.

And Walker’s DWD notes that their figures show that more Wisconsinites are “employed” than ever before (not a big deal, since the state’s population is also higher than ever before). All of these employment/unemployment stats were tweeted out by Governor Walker and numerous other WisGOP elected officials.

What wasn’t tweeted out by WisGOPs was this other part of the report.

Nonfarm payrolls, Wisconsin May 2017
Total jobs
May 2017 -3,100
April 2017 revision -1,700
TOTAL CHANGE -4,800

Private sector jobs
May 2017 -1,700
April 2017 revision -1,500
TOTAL CHANGE -3,200

And among the biggest sectors of seasonally-adjusted lost jobs were in manufacturing (-1,200 with revisions) and construction (-1,600 with revisions). If we focused on that part, May would be a bad jobs report.

So why is there such a difference? Let me remind you that the numbers in the monthly employment reports come from two different surveys.

Current Employment Statistics (CES): compiled from a monthly survey sent to about 5,500 employers (3.5 percent of Wisconsin employers). CES data has been shown to be volatile and subject to revision.

•Local Area Unemployment Statistics (LAUS): compiled from a monthly survey of 985 households and unemployment insurance claims. Measures the labor force, employment, unemployment, and the unemployment rate.

These numbers may be different from each other from month to month (partly due to differences in sample size and also due to variation of who is surveyed), but should generally be in the same direction over a decent span of time.

But if you look at the payroll vs household numbers from those two surveys for more than 5 seconds, and compare them to the start of the year, your BS detectors should be on full DefCon 1. Tell me how these two numbers could possibly come from the same state.

Total Non-farm Payroll Employment, Wisconsin Dec 2016- May 2017
Dec 2016 2,934,300
May 2017 2,957,100
CHANGE 22,800

Household employment/unemployment Dec 2016- May 2017
Dec 2016 2,988,100
May 2017 3,059,000
CHANGE 70,900

So household employment is three times more than payroll employment? I don’t think so. I have a hard time buying that there are tens of thousands of Wisconsinites that still live in the state, but just started working in another state in the last 5 months (which would be an explanation for this disparity of nearly 50,000 workers). There are either some serious adjustments that need to be made to the state’s household survey, or there’s a major hiring boom going on and it’ll be registered in the next 2 QCEW reports that’ll come out over the next 6 months (riiiight).

If we were truly seeing job gains of 14,000 people a month (which is what the household figures say) then we’d be seeing it reflected in strong revenue numbers. We haven’t, and in fact, income tax revenues have fallen on a year-over-year basis in 3 of the 4 months measured in 2017 (including April, which is the last month that has been released to the public).

In addition, are we to believe that Wisconsin went from 15,420 jobs gained in all of 2016 (according to the “gold standard” QCEW) to 70,000 IN FIVE MONTHS? Come on. And this would not the only time Walker’s DWD has overestimated household employment and labor force. Go back to what they were saying at the end of 2016, and the DWD ended up being way off.

Household, labor force 2016. Wis DWD estimate vs revision
Household employment, Dec 2015- Dec 2016
DWD estimate +42,400
Revised +10,200

Labor force, Dec 2015- Dec 2016
DWD estimate +24,300
Revised +7,500

Notice that those revisions happened after the Bureau of Labor Statistics looked at the QCEW and saw that all attributes of the state’s jobs numbers were being overstated. And it seems likely that 2016’s pattern of “high DWD reports revised down by the QCEW” will repeat for the start of 2017, which will come out over the next few months.

But why is this happening again? While I’m not accusing Walker’s DWD of intentional malfeasance, their constant spin and happy-talk about the state’s job market along with Walker’s and WisGOP’s having to convince the Wisconsin public that their policies haven’t failed leads me to be very skeptical of these employed/unemployed numbers. And these guys would not be below juicing up jobs numbers in order to get headlines and false memes to the public ahead of an election.

Economy getting soft, but Fed still tightening up

As expected, the Federal Reserve’s Open Market Committee agreed to raise interest rates another 0.25% today, and in its statement, the Fed indicated that they were doing so because the US economy keeps expanding at a decent, steady pace.

Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

This largely makes sense, but a couple of reports released today indicated an economy that slowed in May. Retail sales disappointed, falling by 0.3%, which was the largest drop in over a year. Some of that is due to lower gas prices, but overall sales were also (barely) down for May.

Inflation sure isn’t acting like the economy is booming either, as the Consumer Price Index fell for the second time in three months. As the Fed alluded to, inflation excluding food and energy over the last 12 months is now at 1.7%, the lowest it’s been in 2 years. And average hourly earnings for workers are also being held in check, as they’re up 2.5% year-over-year, the same as it was in May 2016. A big reason behind any “gain” in real wages in recent months is because of the lower inflation, and even then, 12-month real hourly wages are only up 0.6%.

Regardless, the Fed indicates they think things will continue to get better in the near future and are going to get rid of some of their many Treasury holdings, which also has the effect of tightening money and “taking away the punch bowl” from Wall Street.

The Fed also described its plans to wind down its $4.5 trillion balance sheet, which it expects to begin this year. The program, in which the Fed would gradually reduce its holdings of Treasuries and agency securities, will decrease the Fed’s reinvestment of principal payments. Payments will only be reinvested when they exceed gradually rising caps of $6 billion per month for Treasuries and $4 billion per month for agency debt and MBS.

“The Committee currently anticipates reducing the quantity of supply of reserve balances, over time, to a level appreciably below that seen in recent years but larger than before the financial crisis; the level will reflect the banking system’s demand for reserve balances,” the Fed wrote in an addendum to its statement. The unprecedented size of the Fed’s balance sheet is a lingering a result of the extraordinary easing measures it took in response to the financial crisis.

The greedheads didn’t take kindly to this last part, and stocks dropped in the immediate aftermath of the Fed’s statement (it later recovered to end up near even). But for now, even with the soft data in the early part of 2017, it doesn’t seem like we're so bad that the Fed will stop its plans to wind down the last 9 years we’ve had of easy money, and give some incentive for people to save. We’ll see if that trend continues if we stay at or near full employment in America.

GOP Rep: Make big trucks pay for the repairs they cause

Midday on Tuesday, Jason Stein from the Milwaukee Journal-Sentinel emerged with a story on a new idea that might help break Wisconsin’s logjam for road funding. And it’s something that at least stands a chance of preventing the state Legislature from following Scott Walker’s plans to borrow the state into oblivion.
State Rep. Amy Loudenbeck (R- rural Rock County) has a plan that would add revenues to the state’s deficit-ridden Transportation Fund, and do so by shifting the burden away from the average Wisconsin driver and put it on the trucking industry. Loudenbeck’s proposal would put a per-mile fee onto the registrations of heavy trucks, similar to an idea that has been previously floated for all vehicles.

The per-mile fees are a way to not only add to DOT revenues, but also make the DOT less reliant on the consumption of gasoline, as vehicles become more fuel-efficient. The Milwaukee Journal-Sentinel notes that Loudenbeck’s plan to limit the new fee to trucks would make it relatively easy to carry out, and matches a law that is already in place in 4 other states.

Unlike tolling, with its tolling plazas, electronic card readers and coin machines, the per mile fee would be relatively easy to administer, she said. That's because trucking companies that cross state lines already track their miles traveled as part of a diesel tax compact between the United States and Canada known as the International Fuel Tax Agreement.

One notable exception to that would be truckers who only haul loads inside Wisconsin. They would need to start tracking that information.

Four states already place fees on heavy trucks: Kentucky, New York, New Mexico and Oregon, Loudenbeck said. Wisconsin could mimic the approach of one of those states and be on firm legal ground, she said…

The heavy truck fee could be a flat fee or be graduated by the weight or size of trucks, Loudenbeck said. If Wisconsin adopted Kentucky's 2.85 cents per mile fee, it would raise more than $250 million for the state over two years and cost truckers or their customers the same amount.

This makes a lot of sense to me, mostly because heavy trucks are a significant source of the damage to roads, and they should pay more of the freight (pun intended) to go into the costs of repair. It’s also a fee that most Wisconsinites would not pay, which makes it a lot more politically palatable than a registration fee increase on all cars or a gas tax hike.

It’ll be intriguing to see how this proposal turns out, and not just because a miles-traveled fee on trucks would be a new revenue source for WisDOT. The trucking industry and particularly Green Bay’s Schneider National are big GOP donors, and the daughter of Schneider’s owner has been mentioned as a potential GOP candidate for Senate in 2018.


Yeah, make these guys pay!

On the other side of the DOT funding question, Wisconsin’s Transportation Development Association (aka “The Road Builders”) are keeping up the heat with the release of a recent poll of Wisconsinites. The Road Builders point out that the poll indicated support of higher gas taxes and other fees, and opposition to borrowing and budget cuts as a method to handle the DOT’s deficit.

….Nearly half (47%) believe Wisconsin’s roads have gotten WORSE; only 21% believe they have gotten better.

· Walker’s handling of transportation issues is underwater. Governor Walker’s handling of transportation issues is 44% approve –47% disapprove.

· Given voters’ intensity on this issue, voters’ voice strong opposition to construction delays. Given Wisconsinites’ intensity on this issue, it is not surprising to see voters opposing the delay of highway reconstruction in the Milwaukee area; including, the Zoo Interchange by a two-to-one margin (62%-31%). 67% of voters in the Milwaukee DMA oppose reconstruction delays with 50% strongly opposing.

· They also voice strong opposition to using debt to fund road construction. Wisconsin voters support only two sources of money for transportation and road projects:
oIncrease taxes and fees (41%)
oTake money from other areas in the budget (40%)

Obviously, the Road Builders wouldn't have released this poll if it went against what they wanted, but the findings do indicate that the road funding issue is sinking in with voters (how can you avoid it when you car feels all the bumps?), and that they aren't going to accept fealty to DC lobbyist Grover Norquist and having talking points about "I didn't raise taxes" as an excuse to avoid fixing the highways.

Maybe Loudenbeck's idea of a miles-traveled fee for trucks is the start of a way for the GOP Legislature to try to work its way out of the pickle that Walker's "kick the can" mentality has put them in. But even $250 million a year isn't nearly enough to pay for the increasing needs, even if that fee were to be implemented. As I said yesterday, keep an eye on the shell games and trial balloons in these last frantic weeks, there's likely more "ideas" and head fakes to come.

Self-insurance scam to die on Thursday. Not a moment too soon

We already knew that even Scott Walker’s fellow Republicans on the Joint Finance Committee weren’t planning to go along with Scotty’s scheme to self-insure state employees. But some others that may be wavering have a fresh bit of evidence ahead of Thursday’s JFC meeting.

That’s because the Legislative Fiscal Bureau took a deeper look at Scotty’s plan, compared it to reality, and says that “several calculation errors were identified.”

Specifically, errors resulted when estimated ACA and self-insurance savings for all expenses of group health plans administered by the Department of Employee Trust Funds (ETF), including local plans and contributions from retirees and employees, were converted into the amounts of GPR savings that would be realized by state employers. In total, savings were overestimated by approximately $16.8 million GPR over the biennium (difference of $0.1 million shown in Table 4 is due to rounding). Table 4 shows the overall GPR funding that was reduced under the bill and a reestimate of the amounts based on a corrected application of budget allocations: 36.9% is equal to the state employer share of total program costs noted previously (81.8%) multiplied by the percentage used by the administration to budget for state employer GPR expenses for health insurance (45.1%). As shown in Table 4, the bill estimates were based on Segal's midpoint projections of savings. [Segal Consulting is the GIB's consulting actuary for health benefit programs.]…

8. Corrected figures for the Governor's recommended budget provisions, which are based on Segal's calculation of the ACA health insurer fee and self-insurance savings as well as DOA's budget allocations of GPR funding for state employers, are provided in Table 5 below. Amounts are separately indicated for compensation reserves and the UW System. It should be noted that the figures in Tables 4 and 5 only represent a correction to the bill's calculations based on assumptions of the state's actuary and the administration. The figures do not represent projections or assumptions made by this office. If the Committee approves the Governor's recommendation to self insure and adopts the administration's estimates, an additional $16,832,400 GPR over the biennium would be needed.

OOPS! Looks like Scotty’s scheme will require nearly $17 million more in taxpayer dollars to add up. Then add in another $2.2 million in stop-loss insurance that may be prudent to avoid having to pay massive medical bills, and the total additional money becomes $19 million! Not a good thing when Walker’s 2017-19 budget had only $12 million in breathing room to start.

Also, this jeopardizes the last $30 million of Walker’s proposed increases to K-12 per-pupil aid, as that was based on the state lapsing $30 million of the self-insurance savings, and then adding that $30 million to the K-12 totals. That majority of that $30 million now wouldn’t be there to send to K-12, and it’s hard to see a source of funds where they come up with the difference.

In addition, Walker’s Department of Administration estimated that staying with the old system would result in a 10.4% increase in premiums over the next 2 years, which helped to explain the “need” for the switch. The LFB says that would be above than recent history indicates.

Final premium increases for calendar years 2009 to 2017, which would include any cost shifts to employees or draw-downs of reserves, averaged 3.7%. The only years in this period in which significant draw-downs of reserves and cost shifts to employees did not occur were 2011 and 2017. The average preliminary bid increase for these years was 7.5%, and the average final premium increase was 4.0%. Additionally, based on information in Table 6, negotiations with participating health plans reduced estimated premium expenditures by $19 million to $56 million each year (approximately $31 million annually on average). State health program reserves were used in seven of nine years to reduce program costs. Due to the dynamic nature of negotiations, health program reserves, and other factors, it is difficult to predict the final percentage increase in health program expenses.

To further keep costs to taxpayers down, LFB notes that legislators could choose to tap the reserves in the state health program, which current total $144.0 million, and well into the safe zone where some of that money could be taken to cushion premium increases.

The Group Insurance Board approved a program reserve policy in August, 2011, recommended by the state's health program actuary at the time, Deloitte Consulting, to maintain a fund balance that equals 15% to 25% of the sum of: (a) 100% of annual self-funded medical claims; and (b) 20% of annual fully-insured medical claims. The policy has not been modified since its adoption in 2011. Table 7 provides the actual amounts of year-end reserves (2016 figures are unaudited) for the past five calendar years and the estimated amount of year-end reserves that would correspond to the Board's reserve policy based on actual or estimated medical claims expenses for the same years. As shown in the table, as of the end of calendar year 2016, program reserves were $18.4 million greater than the maximum 25% medical claims benchmark and $68.8 million more than the minimum 15% medical claims benchmark.

So if the Joint Finance Committee chose to take enough reserves to get down to that 15% minimum level, the costs to taxpayers to stay in the current system would be $1.4 million less than what it would cost to self-insure ($3.6 mil if you include the stop-loss insurance).
And if the anti-Obamacare Walker Administration want to claim that self-insurance keeps the state taxpayers from potentially paying some of the ACA’s fees that are scheduled to hit (which LFB has estimated down to $21 million)? That theory seems pretty damn stupid, since we have no idea what the ACA will look like (or what any replacement might look like, since the GOP Senate is hiding it from the public), so why would we have those potential fees even enter in the equation?

Thankfully this dog of a self-insurance scheme is going to be put down tomorrow before we find out about more hidden costs and overstated savings. But again we see more money going out the door to cover things when we don’t have any funds coming in to replace them. Even scarier, dealing with self-insurance and Corrections (Thursday’s main topics) are the “easy” items left for JFC. The real train wrecks are yet to come.

No taxes + no fees = spending cuts and long waits for Wis highway work

Driving back from a family wedding yesterday, as soon as I hit the state line and saw the "Open for Business" sign, I felt the THUMP that told me I was back onto Wisconsin's battered highways. With that in mind, I wanted to dig more into the state's transportation funding issues, and particularly look into the DOT's highway program. Scott Walker claims that there are no delays imposed as part of his budget, but what he's not telling Wisconsinites is that those projects were delayed last year, and there's much less spending than we had 8 years ago due to a lack of resources.

Yes, there is $145 million scheduled to be carried over on July 1, and $101 million in cushion for the 2017-19 budget. But do not forget some of that is due to the Walker’s Administration choosing not to spend $44.8 million of that money on major highway projects today, and instead they banked that money so they could use some of the carryover funds to pay for things in this next budget (when the same work will cost more due to inflation).

Even with the use of that $44.8 million in banked funds, Walker’s 2017-19 DOT budget only planned to spend an extra $28.75 million (+4.5%) on major highway projects than what is projected for 2015-17. The Legislative Fiscal Bureau also notes that each of the last two biennial amounts involve less highway spending than what Walker’s first two budgets had, despite growing needs.

6. The 2011-13 and 2013-15 biennial budget acts provided $743.6 million and $728.4 million for the major highway development program, respectively. Before the contingent bonding reduction noted above, the 2015-17 budget provided program funding of $685.9 million resulted in the delayed, estimated completion dates of several major highway development projects (noted in Attachment 3). Then, in October, 2016, the program's funding was reduced by $44.8 million to $641.1 million in the biennium.

This means that several big highway projects will not be complete for at least 2-3 years, despite Walker’s claims that his budget will offer no further delays (leaving out that some of these have already been delayed). And other large projects won’t start in this 2-year cycle.

Estimated completion date for Wis highway projects
I-39/90 Madison Beltline to Illinois State Line 2021
US 18-151/Verona Road (Madison) 2019
US 10-Hwy 441 (Appleton area) 2020
Highway 15 (New London) 2021

Estimated start dates for Wis highway projects
I-43 Milwaukee and Ozaukee Co’s 2019
I-94 in St. Croix County 2019

Walker also proposed cutting nearly $293 million in funding for the Zoo Interchange projects and in expanding and improving I-94 from the Milwaukee airport to the Illinois state line. The LFB says that this will mean that you will see orange barrels throughout those parts of Southeastern Wisconsin for many years.

Given the remaining, $878.2 million in estimated costs associated with these existing projects, if the Governor's recommended biennial funding of $121.9 million is maintained over time, both projects could be completed in slightly more than 14 years ($878.2 million / $121.9 million per biennium). This calculation includes no adjustment for the inflationary costs that would occur beyond the current schedule of 2022-23. Further completion delays would occur if the Governor's 2018-19 funding level, the base year funding ($50.7 million annually) for the next biennium, is provided on an ongoing basis. In addition, if maintained over time, former Secretary Gottlieb indicated that an ongoing biennial funding level of $121.9 million would mean that the reconstruction of all planned southeast Wisconsin freeway megaprojects could be completed over a 70-year schedule ($4.3 billion in estimated costs / $121.9 million per biennium). Similarly, this completion schedule would not include the effects of inflation.

2017-19 is not the only two years that Walker has been taking money out of Southeastern Wisconsin freeways. Total expenses for Wisconsin highway work have declined since Jim Doyle’s last budget in 2009-11, with a cut of over $400 million between then and 2017-19… before inflation. In addition, note how funds have been reallocated to projects outstate.

Expenditures for highways, Wisconsin 2009 vs 2017
State Highway Rehab 2009-11 $1,545.8 million
State Highway Rehab 2017-19 $1,701.6 million (+$155.8 million)

Major non-SE Wis Hwy Development 2009-11 $713.6 million
Major non-SE Wis Hwy Development 2017-19 $669.9 million (-$43.7 million)

SE Wis Freeways 2009-11 $643.0 million
SE Wis Freeways 2017-19 $121.9 million (-$531.1 million)

Proportion of DOT highway spending
2009-11
State Highway Rehab 53.3%
Major non-SE Wis Hwy Development 24.6%
SE Wis Freeways 22.2%

2017-19 proposed
State Highway Rehab 68.2%
Major non-SE Wis Hwy Development 26.9%
SE Wis Freeways 4.9%

The only way this trend of lower expenses and deteriorating roads can be reversed is to come up with more money. But how? The $93 million in extra funds for the next 2 years doesn’t come close to filling the needs that exist today, let alone fill in the cuts in spending that Walker’s and WisGOP’s past budgeting have caused. The amount that has to be set aside to pay off debt continues to rise in the Age of Fitzwalkerstan, so more borrowing makes things even worse for the future. Tolls wouldn’t start raising money for at least 4 years. And there’s no extra money in the General Fund to tap (hell, we have another $1 billion deficit there starting in 2019).

As the budget bounces ahead (well, it'll go forward at some point, right?), I’ll talk more about ways that we can could up with the money to pay for these projects, even if it means Walker has to break his “no-tax, no-fee” promise to DC lobbyist Grover Norquist. And part of that will look into whether Walker’s talking point about a “9.9% increase in highway maintenance” will ever be put into state roads that continually are being washed out and falling apart in the Age of Fitzwalkerstan.

But in the meantime, the state’s major highways are slated to take a significant step back as things stand under Governor Walker’s budget, and the WisGOP Legislature’s attempts to fix it open up new problems for the rest of this house of cards. Keep your eye on the budget shell game and the moving parts associated with this.

Jackpot in Cali means Wis budget still messed up

Late Saturday night, Governor Walker and legislative Republicans in Wisconsin got some bad news on their 2017-19 plans, and it came from an unusual source.

Jackpot! A lucky lotto player in California had all the winning numbers after Saturday's Powerball drawing, lottery officials said.

The grand prize reached an estimated $447.8 million.

The winning ticket was sold at a store in Menifee, southeast of Los Angeles.

Why does this matter to the Wisconsin state budget? Because most of the proceeds from the state’s lottery are kicked back to taxpayers in the form of property tax relief. The winning jackpot means the Powerball resets to $40 million, meaning there is no chance of another massive Powerball jackpot spurring ticket sales between now and the end of June. This means that the projections that the Legislative Fiscal Bureau gave last month on lottery sales will likely hold for the rest of the 2017 Fiscal Year, and therefore this winter’s property tax write-off will also likely be as the LFB predicted.

The LFB notes that Powerball and other Lotto games have the biggest variation in sales based on how big the jackpots are, and the lack of massive jackpots has caused those sales to fall significantly from 2015-16, when Powerball hit record levels.

On-line game sales appear to be lower in 2016-17 than estimated in October, 2016, primarily because large Powerball jackpots, which can increase sales dramatically, have not been generated in 2016-17 as often as they were in 2015-16. The Powerball game accounted for slightly more than 48.5% of all on-line (lotto) game revenue in 2015-16. In 2015-16, there was an occasion when the Powerball jackpot grew high enough to attract weekly sales of more than $20.0 million for at least a two-week period. In 2016-17, there have been no weeks in which Powerball sales have exceeded $5.0 million. Average weekly sales for Powerball tickets in 2015-16 exceeded $2.15 million per week. By contrast, in 2016-17, average sales through April, 2017, have been about $1.52 million per week. Total Powerball sales this year are not likely to reach the estimate of sales made in October, 2016. The reestimate of on-line ticket sales in 2016-17 would decrease from $232 million to approximately $213.5 million….

10. Under the October, 2016, estimate, the opening balance of the lottery fund on July 1, 2017, would be $12,350,300. The 2016-17 payout certified in October, 2016 was $185,311,200 and the actual amount paid out in March was $183,433,000 which produces a balance of $1,878,600 to add to the opening balance. In addition, reestimating 2016-17 [total] lottery sales [down] to $597.3 million has the net effect of decreasing the 2017-18 opening balance to $6,378,000. The net effect of these changes, also, decreases the amount available for the lottery and gaming credit in the 2017-19 biennium.

And that’s why Walker and other WisGOPs are disappointed by someone winning the Powerball- there’s less money they can use for property tax relief.

Walker’s budget projected that there would be $167.7 million in 2017-18 and $169.35 million in 2018-19 in lottery proceeds that could be kicked back to property taxpayers. But when the Legislative Fiscal Bureau looked at the actual numbers, they ended up not being so rosy for homeowners.

Lottery Credit 2017-19, LFB re-estimates vs budget
2017-18 $156.75 million (-$10.95 million vs Walker budget)
2018-19 $165.1 million (-$4.25 million vs Walker budget)

The Lottery Credit falling short means that property taxes will be higher than what was projected by the LFB a few weeks ago. Rough math indicates that this difference is only $7 this year and $2.50 the next year, but that small difference means that property tax bills would be projected to be higher in Winter 2018 than Winter 2014, even with stupid budget gimmicks like a $27 property tax cut to get rid of the state Forestry tax, and an increase in the School Levy Credit (total price tag for these gimmicks - $267 million).

If you watch last week’s edition of Wisconsin Eye’s Rewind, JR Ross of WisPolitics mentions how obsessed Walker is with having a talking point of “lower property taxes on an average Wisconsin home.” Which is why I don’t think it is coincidence that state budget talks derailed right around the time that the Legislative Fiscal Bureau came out with their budget paper showing that the Lottery Credit was going to be lower than expected, and raise property taxes beyond 2014’s levels.

Now Walker (and apparently Senate leader Scott Fitzgerald) are stuck, because they want to claim these property tax decreases ahead of the 2018 elections, but there is no money available to make up the difference while also taking care of numerous other needs that are supposed to be paid for in this house-of-cards budget. That $267 million sure would come in handy to fill those holes, wouldn’t it?

As I’ve said before, what is the point of borrowing ourselves into oblivion on roads, making small school districts have to fold up and consolidate, or making the state’s largest city have to cut the amount of cops on the street just to say “we cut your property taxes by $40”? But this is what you get when you have today’s WisGOPs in power, because they believe in political campaigning instead of governance.

When you have a party so consumed with gimmickry and AM radio talking points that they have to actively root against someone hitting the Powerball in order to make their budget work out, you have a party that isn’t fit to lead. Now the rest of the state budget is likely to be “fixed” some time in the next few weeks by trying to sneak through a last-minute pile of crap that will solve none of the problems, won’t make anyone happy other than GOP campaign contributors, and will stagnate the state’s economy even more in these next couple of years.

THEY GOTTA GO.