Wednesday, February 20, 2013

To preview budget, let's do a review

With the Governor's budget being released within the next 90 minutes, I wanted to give you a brief reminder of where we stand, and what our Governor is likely to do in reaction to it.

This budget is the continuation of the radical budget of 2009-2011, which cut education funding by more than $800 million, and featured numerous corporate tax cuts and incentive programs designed to make Wisconsin "Open for Business". The result? The state finished 42nd in private sector job growth for the first full year of the Walker/WisGOP budget, and the Walker jobs gap has ballooned to well over 100,000 as the rest of the country has zoomed ahead in economic recovery. So we know the last budget did nothing to help the economy, but let's see if the argument of "we're in better fiscal shape" holds up.

The overall budget is already likely in deficit before we even see any tax cuts or other giveaways that reduce revenue. Walker's foolish plan not to take the Obamacare Medicaid expansion will play into the budget. We already know that the Legislative Fiscal Bureau has estimated Walker's plan will cost Wisconsin taxpayers an extra $14.4 million for this budget, and a total of $320 million in the next 7 years. And this doesn't even take into account the slowing in economic growth that Walker's plan will cause due to low-income Wisconsinites having to pay more for their health insurance premiums, which will keep them from spending their money on other types of goods and services.

Also recall that less than a month ago, the LFB told us that fiscal cliff resolutions led to over a quarter of a billion dollars of revenue being taken off of Walker's DOA's original projections.
...aggregate general fund tax collections will be $259.1 million less than those reflected in the report ($37.1 million higher in 2012-13, $152.7 million lower in 2013-14, and $143.5 million lower in 2014-15).

The primary reason for the $259.1 million reduction is due to the enactment of the American Taxpayer Relief Act of 2012. At the time of the November 20 report, under state and federal law, Wisconsin's estate tax would have been restored for deaths occurring in 2013 and after. It was estimated that this restoration would have increased tax collections for the state by $219.0 million ($94.0 million in 2013-14 and $125.0 million in 2014-15). The $219.0 million was included in the November report. However, Congress modified federal law so that this will not occur.
In addition, Walker's DOA said Congress's looming sequester would cost the state $188 million in federal funds for the next two years if it is not fixed in the next 9 days. Let's see if Walker's budget staff assumes a deal gets made, because if they do, and the sequester happens, that's a $188 million hole that has just opened up.

Last week also featured Walker's rollout of his Transportation budget. This was quickly exposed as the dog of a proposal that it is, because while it slightly increases funding for highways and other road projects, there won't be any tax increase to go along with it. Apparently Walker's DOT increases will rely on the sale of state-owned power plants and other assets, as well as increased borrowing, which will cause increased debt service costs both for this budget, and later ones (and WisGOP Baggers are the guys who complain about debt hamstringing our kids?). And if the sale of assets doesn't go as planned (a game those of you who suffered through Walker in Milwaukee County should be familiar with), then there's another deficit that opens up, and has to be mended.

I am also VERY interested in seeing what kind of shell game goes into the DOT and the Transportation Fund in general, because Walker has been insistent that there will not be a gas tax increase. This goes against the nickel-a-gallon recommendation that his own Transportation Finance and Policy Commission had, in attempt to Keep Wisconsin Moving. In addition, the Journal-Sentinel story indicated Walker would again attempt to move public transit aids from the Transportation Fund to the General Fund, which would suck another $212 million out of the General Fund and increase the deficit even further.

And then the last blow was Walker's recently-announced expansion of school voucher funds with very little increase in K-12 public school funds to go along with it. But if you're a "balance the budget first above all other priorities" type, this may give you a ray of hope, as the Department of Public Instruction asked for $580 million more dollars for this budget (which still was 1/3 less than the $800 million cut from it in the last one), and will probably get a whole lot less than that.

So cutting and devaluing education seems to be a spot where some of those budget holes are to be filled. Of course, that's a pretty sick set of values (choosing roads, corporate tax giveaways and failing voucher schools over public education), and more importantly, it doesn't play to Wisconsin's advantages.

As if you needed more proof of that, the ACT just released a study last week showing Wisconsin was 2nd in the nation for ACT scores among high schoolers in states that use it as its primary college admissions test (trailing only Minnesota). The ACT also said Wisconsin high schoolers scored 6 to 8 points higher in than the national average in all subjects when it came to college readiness. Maybe more impressively, Wisconsin students have scored significantly better than the national average in ACT scores, even though 71% of Wisconsinites take the test every year versus many states that only have 10-25% of their top students taking the ACT.

And yet this Governor's trying to end the huge boost our strong public education system gives to Wisconsin. Can you tell this guy's never had a real job?

So these are the known failures and deficits that already exist in the budget. The scary question is, what other surprises are hiding deep inside that huge document? I'll be giving it a look in the next few days and weeks, and hopefully we can get out ahead of the lies and lazy journalism that is sure to come for the next 4 months.

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