Sunday, May 31, 2015

The Bucks arena bill still has lots up in the air

We keep waiting for a final bill for the Milwaukee Bucks arena, and while we have an idea of the changes from the proposal that was in Governor Walker's budget, there are still some key details that need to be put on paper to see how they will work. And it's those details that I think will ultimately sink or swim the bill, and decide if it'll be folded into the state budget, or have to be a standalone bill that is debated at a later point.

First, let's go to the most recent summary of what the Bucks bill might look like, which came out Friday from the Milwaukee Business Journal, and includes comments from Assembly Speaker Robbin' Vos.
Vos confirmed a Milwaukee Business Journal story Thursday that the so-called jock tax will pay for the state's planned $55 million in bonding toward the arena. He said $4 million of the annual jock-tax collection from NBA players would be earmarked toward payments on the state's new arena debt, which is a much lower amount than Walker's original $220 million proposed state bond issue.

Details of the arena funding plan have leaked in recent days. Aspects of the proposal include the state issuing $55 million in bonds, the Wisconsin Center District issuing $93 million in debt and the city contributing a $35 million parking structure and $12 million tax incremental financing (TIF) district.

Vos said the Wisconsin Center District-funding provision will not require the district to increase any of the sales taxes it collects. However, the Wisconsin Center board could hike taxes if the board so chooses, Vos said.
If there is money directly earmarked from player salaries to this arena, then it truly is a "jock tax", and that's a notable change to what the bill had earlier You may remember that Walker tried to claim it was a jock tax, but when you looked inside the bill, it showed it was a straight-up subsidy of General Fund taxes.

The $55 million in bonds is a huge drop from the $220 million that was in Walker's original budget, and the idea is that the "jock tax" would pay that off at $4 million a year over 20 years. This obviously takes away $4 million in income tax revenues that can be used for other means, but $80 million is a whole lot less than the $488 million that the LFB estimated the state would be on the hook for with the original bill.

The City of Milwaukee's part seems relatively straightforward- they build and gift a parking structure and set aside a TIF for certain areas at or near the arena. But the obvious question is where that TIF would be, and what has changed in terms of which part of the "ancillary development" is free from property taxes. This was the biggest screw job in the original Bucks arena plan, and Bruce Murphy of Urban Milwaukee had estimated that this giveaway could have cost the City and County of Milwaukee nearly $630 million in revenues, leaving residents to make up the difference. Let's see the language in the bill that deals with property taxes and the "Entertainment district", and see if Milwaukee taxpayers are better protected in this updated deal.

The Wisconsin Center district part of the plan is intriguing, as it not only includes a back-loaded payoff time frame for their portion of the arena, but it also would change the parameters of what the district covers. Here's how the Milwaukee Business Journal described it last week.
In Milwaukee County, the Wisconsin Center District collects 2.5 percent on hotel rooms, 3 percent on car rentals and 0.5 percent on food and beverage sales. The district also receives a 7 percent hotel room tax in the city of Milwaukee.

The draft proposal for arena funding does not include an increase in those sales taxes, sources said, but it hasn't been ruled out.

The current arena-funding proposal also includes the possibility of greatly expanding the Wisconsin Center District’s turf.

Currently the district consists of the convention hall, the UW-Milwaukee Panther Arena and the Milwaukee Theatre. The draft proposal would add the new NBA arena as well as possibly the BMO Harris Bradley Center (which would be demolished after the new arena opens) and possibly other downtown Milwaukee County-owned cultural attractions.
Of course, the Wisconsin Center can raise these taxes with a vote of their elite group. Who makes up the new Wisconsin Center District Board might be a hidden factor in this bill, and we'll see if the power shifts toward Milwaukee oligarchs, the Governor's office in Madison, or with local elected officials. We don't get to vote on who's on that board, so the real way it gets changed may be through this bill.

And the biggest mystery involves Milwaukee's County's role in financing for the arena. Here's what the Milwaukee Journal-Sentinel had to say about that part with Dan Bice's and Patrick Marley's article from last week that revealed many of the aspects of this arena plan.
In the most unusual feature of the deal, Milwaukee County would "certify" tens of millions of dollars in uncollected county debt. The county, in effect, would then count on the state to recover at least $4 million of that debt a year for 20 years, a total of another $80 million that would then be funneled to the arena project.

One source said that plan could put the state at risk of having to put more toward the project. But another source said if there's a shortfall the sum could be deducted from aid the state provides the county.

A source said the Milwaukee County Board would not have a vote on the deal, including the financing piece affecting county taxpayers.

"There may be other County Board reforms that will be part of this package," said one official close to the negotiations.
These are the biggest red flags in this deal, at least in what's been revealed publically. How does this whole uncollected debt scheme work, and who is liable for the remainder of the $80 million in case the debt falls short (state or county)? In addition, I'd imagine there's an amount of debt that is planned on being collected over the course of a year, so is this $4 million over and above that amount? Or is it replacing the amount of debt that's normally collected, which takes those funds away from other County needs? That doesn't add up to me, and I want to see these provisions as written in the bill so I can have a better grip on these matters.

And the fact that the Milwaukee County Board or the voters don't get any say in how this financing will work is a major concern, and instead seems like another back-room deal with County Executive Chris Abele and the GOP leadership in the Legislature (much like how Abele got the County Board turned into a part-time organization with less power 2 years ago with WisGOP help). The County provisions seem like the two parts that would sink this deal, and are the ones that should be watched most carefully.

In all, if the Milwaukee taxpayers are protected from major property tax write-offs from the proposed development near the Bucks arena, this is certainly an improvement to the boondoggle that the original Bucks arena bill was. But those "ifs" still remain, and with the hijacking of Milwaukee Public Schools in the K-12 omnibus that cleared the Joint Finance Committee last week, shelling out state funds to help a team in a league where both owners and players are already set to get huge increases in available money in the coming years has really bad optics.

Saturday, May 30, 2015

A future structural surplus? Uhh, NO

I've noticed that Scott Walker has recently tried to peddle a talking point to the out-of-state rubes that "Wisconsin will have a $499 million structural surplus in the next budget." The Milwaukee Journal-Sentinel's Politi-"fact" even looked into the claim, and gave it their seal of approval, with the following explanation.
The [Legislative] Fiscal Bureau examined Walker’s 2015-’17 budget plan and said it would create a positive balance of $300 million in year one of that 2017-19 budget and another $199 million in year two. This is the report that Walker spokeswoman Laurel Patrick cited to back up his claim.

That adds up to $499 million, as Walker said. His own budget document published a similar number....

A reliable, independent source made that estimate, so the figure is solid. Walker, though, makes it sound like a done deal when the budget is still undergoing legislative review.

We rate his claim Mostly True.
While it's not surprising that Dave Umhoefer would follow his bosses' orders and try to prop up Walker's Politi-"fact" ratings as much as possible, this is a remarkable shallow analysis, and one that doesn't come close to holding true after the education-related actions of the Joint Finance Committee in the last month.

If you go to the LFB's paper from two months ago that produced the "$499 million surplus" talking point, you'll notice that it has some assumptions in it that are based on Walker budget language, but totally unconnected to reality. This includes an assumption of a $142 million cut in K-12 education funding in 2017-18 (essentially repeating the per-pupil cut that was projected for next year that angered so many across the state), and a $21 million backdoor cut to the UW System that was on top of all the reductions for this budget.

But in the omnibus motions that did the magic trick of giving more money while screwing up K-12 education and the UW System even worse, these assumptions were wiped out. The K-12 motion not only restored per-pupil funding for 2015-16, and increased it for 2016-17, but it also made it an ongoing base cost, which is a difference from Walker's plan, which was to have that money cut off for 2017-19, artificially pumping up the structural surplus. Add in a $5 million kicker for "High Cost Special Education" and a couple of million more to the Milwaukee/Racine voucher programs (separate from the theft of $48 million that's funneled away from public schools into vouchers statewide), and the net increase in the 2017-18 K-12 budget base is just over $203 million.

Same for the UW System. Last night's UW omnibus not only added $25 million a year to the base budget (while leaving $250 million in cuts), but ended up adding funding for fringe benefits in both 2015-16 and 2016-17, instead of pushing it all into Year 2 (like it was under Walker's budget). The fringe benefit increase is also intended to continue into following years, instead of having those funds cut for the 2017-18 year, (as it was in Walker's budget), so both that and the new base amount must be figured into the structural balance.

Put those two figures into the 2017-18 base expenses, and you get a noticeable difference.

Changes since March 2015 LFB memo
K-12 increases $203.0 million
UW System increases $38.4 million
TOTAL $241.4 million

In addition, two expenses that the LFB memo counts on going down aren't going to factor in for the next budget, as the planned reductions for the School Levy Tax credit ($106 million) and WEDC "loans" ($55 million) have already happened through JFC actions, so while that may reduce overall expenses for this budget, it also washes out when we look at the 2017-19 budget. And I'm not even going to calculate the overall General Fund expense increases that may change the carryover balance or future base expenses, because those change by the bill, and I'll wait for the final product to figure it out.

But if we take the March 2015 LFB projection for the next budget, and also assume no changes in projected revenues (as the LFB did earlier this month), and let's see what we get.

Updated 2017-19 structural budget with ed. changes
2017-18 carryover +$123 million
PLUS 2017-18 revenues +$16,277 million
MINUS 2017-18 exp. before ed. $16,035 million
MINUS 2017-18 ed. expenses $241 million
MINUS 2017-18 reserves $65 million
NET BALANCE +$59 million

2017-18 reserves +$65 million
PLUS 2018-19 revenues +$16,251 million
MINUS 2017-18 exp. before ed. $16,052 million
MINUS 2017-18 ed. expenses $241 million
MINUS 2017-18 reserves $65 million
NET BALANCE -$42 million

So while the budget may be more or less balanced on a structural basis (which is a good thing), it's nowhere near a "$499 million structural surplus". And even that level of funding is disastrously low and massively unpopular, so good luck assuming that the costs can stay that low as the outrage grows over this budget (and with it, the likelihood grows that GOP legislators pay a dear price in 2016 for going along with such garbage).

There's one last note to bring up on the "structural surplus" that has made it a dishonest assessment from then day it was figured, and it goes back to the topline numbers that Walker's budget relied on to make the numbers add up when he submitted it nearly 4 months ago.

2016-17 LAPSES $699.993 million

That's $700 million in allocated expenses that aren't supposed to be spent in the second year of the budget. And the "structural surplus" assumes that another $700 million in lapses happen in 2017-18, and again in 2018-19. It's one thing to say that this combined $1.4 BILLION won't be spent, it's a whole 'nother thing to say who's absorbing those cuts, and what happen as a result. The $1.4 billion in lapses is a random number that has little to no connection to how the budget would look in those two years, and will likely not be figured in when budget requests are to be submitted in just over a year.

But that's not what Scott Walker is telling GOP rubes out of state when he says there's a $499 million surplus, so it's up to us to remind folks just how much of a stretch had to be made just to get to that number, and that it's certainly not true today.

Friday, May 29, 2015

The UW gets hurt badly, no matter what Ray Cross spins

Well, if you want to read the JFC's lame decision to keep massive cuts to the UW System, and mess with the universities' governance, here it is. The only positive in this is that the UW System Authority is taken away, but that doesn't come close to making up for the following.

1. Cut in base funding is still $250 million over these next 2 years, and undergraduate tuition stays frozen, so don't count on many of the potential layoffs and reduction of classes across the campuses to be restored.

2. Shared governance and tenure protections removed. Sure, UW President Ray Cross and Board of Regents VP Regina Miller are claiming that these standard will "live on," but would why would we believe that? Hell, the Board of Regents is becoming stacked with Walker cronies, including the son of Walker's campaign manager from the anti-public school Bradley Foundation. Tell me how you can get talent to come to a UW school when you're cutting funding, cutting their protections, and being overseen by anti-education hacks appointed by someone who was kicked out dropped out of college?

3. Allowing UW-Madison and UW-Milwaukee to contract for charter schools, but it does appear that any other campuses can do the same (gee, wonder why only them?), allow Gateway Tech to do charters in Kenosha and Racine, and a fraudulent provision that allows County Exec Paul Farrow (a massive school privatizer) to contract for charter schools in Waukesha County as well. What the fuck does this have to do with higher education? Nothing, other than likely making the potential group of applicants worse, but the voucher people have to be paid back for their campaign contributions, don't they?

There are also a couple of follow-ups from yesterday's post on the extra things outside of the base funding for the UW System.

4. The JFC motion still includes Gov Walker's $21.3 million in compensation reserves for salaries and benefits, but they split it up with $7.9 million being added in Year 1 of the budget, and $13.4 million in Year 2. The other main difference is that the $21.3 million in added funding is added to the UW System's base funding, so there isn't the back-door cut of $21.3 million looming for the 2017-19 budget like there was in Walker's budget. I suppose that's an improvement, but compared to the other crap, it's nowhere near enough.

5. The appropriations for all of the Seg Fund items were restored, along with $124,000 more for UW-Stevens Point's paper science program, for a total price tag of a bit over $2.7 million. The Indian Gaming items were also restored, and the Acquaculture facility in Ashland even got another $100,000, so that's another $1.35 million got kicked. However, all of the environmental-related items were not restored, which includes these three items.

Bioenergy Initiative $7,138,200
Wisconsin Environmental Education Board $461,000
UW Extension Recycling Education $1,100,400
TOTAL $8,699,600

Hmm, but the paper science program gets a boost. Wonder what message the GOPs on the JFC are trying to send, and what industries they might be getting the donations from? Just a blatantly corrupt and regressive move.

There's a lot more to go over in the coming days, but the final reaction I have for now is directed at UW System President Ray Cross, because Ol' Ray wants to pat himself on the back for what will be left of the once-great UW.
I want to express my gratitude to these legislators as well as the others who have worked to reduce the cut and provide the System with needed flexibilities. I know this has been a difficult budget with many tough decisions. The work of the committee illustrates a willingness to open a new dialogue and partnership between the legislature and the UW System. I am committed to working to build on this foundation to ensure a strong UW System for the future that continues our long tradition of serving students, communities and the state. - Ray Cross, UW President
ARE YOU FUCKING KIDDING ME? They deserve no "gratitude", Ray, because this group of WisGOP dingbats clearly do not care about investing in one of the few items that make this state great, and increases the state's economic competitiveness, and that's the UW System. You should be standing up for your organization like UW-Madison Chancellor Becky Blank has done, and tell these dopes that this is an unacceptable outcome. Instead, you're pulling the "Thank you sirs, may I have another" routine, and allowing these bastards to screw this System yet again once the budget caves in further (and it will).

And don't give me this garbage about "it was a tough budget," and that somehow excuses these $250 million in cuts. K-12 voucher schools are getting tens of millions of added dollars in this budget, prisons are getting millions more added to their budget, and DHS expenses keep spiraling as a direct result of refusing to take the expanded Medicaid in Obamacare. There would also be hundreds of millions of dollars available if we merely stopped cutting corporate taxes for the next 2 years. This is only a "tough budget" BY THE CHOICES MADE BY SCOTT WALKER AND THE WISCONSIN GOP, and by cutting the daylights out of the UW System and funneling money away from public K-12 schools, they have chosen to handcuff this state's future. If Ray Cross had any self-respect, he wouldn't be grateful to have 1/6 of the Governor's cuts restored. Instead, he'd RESIGN and throw the middle finger at these regressive jackholes on his way out the door.

Thursday, May 28, 2015

Restoring the UW System would restore many other programs

Tomorrow we get to find out if the Joint Finance Committee's Republicans make good on their hints that they will remove Governor Walker's plans to spin off the UW System into a separate authority in the state budget. This would restore the System to what it is today, an agency with legislative control of items such as funding and tuition levels, but one of the more interesting things about removing the UW System Authority would be that a number of other decisions have to be made as a result.

That's because the System Authority would have removed a number of appropriations for individual programs that the UW System currently operates, and would have left it up to the System and the UW Board of Regents to choose to either defund and end these programs, or cut other UW funding to keep this running. So if the Authority goes under, then these appropriations would still exist. Many of them were funded from other funds that aren't related to tax dollars, but are funds that were to be "banked" with the proposed System Authority, so the balances of those funds would have to be adjusted if these programs are restored. These include the following SEG-funded items:

BadgetNet and other IT services $1,054,800 million
Rural Physician Residency Assistance Program $750,000
Physician and Dentist Assistance Loans $250,000
Environmental Programming $300,000
Discover Farms $249,800
Center for Cooperatives $133,300
TOTAL $2,737,900

There are also several environmental research and outreach programs that were going to have its separate funding go away under Gov Walker's budget, with some sizable investments being in serious danger of being removed if the System Authority were to be created. Most of these are also SEG funded, but obviously throwing money out of those funds will depelete the balances there, and might lead to tax dollars being a better source to fill in the needs.

Bioenergy Initiative $7,138,200
Wisconsin Environmental Education Board $461,000
UW Extension Recycling Education $1,100,400
TOTAL $8,699,600

There are also 3 programs that currently use $1,153,700 in Indian Gaming funds that would likely need to continue to be funded with the demise of the System Authority plans. I touched on this about a month ago when Indian Gaming funds were first being discussed in the budget, as Gov Walker was originally planning to bank this extra money into the General Fund, and leave the UW System to fend for itself if it wanted the programs to continue. The Legislative Fiscal Bureau describes what these 3 tribal-related programs deal with.
The Department of Administration transfers funds annually from tribal gaming receipts to the UW System for the following purposes: (a) the physician and dentist and health care provider loan assistance programs ($488,700); (b) the [Ashland, Wisconsin] aquaculture demonstration facility ($417,500); and (c) programming at UW-Green Bay ($247,500). (related to the nearby Oneida Nation). These funds are deposited in the UW System's program revenue appropriation for funds transferred from other state agencies.
So while it's not as big a deal as trying to restore some of the $300 million cut to the UW System, these separate programs are almost $12.5 million in combined funding that weren't in the budget, and if the JFC doesn't choose to come up with that money, a lot of these UW-backed community programs, outreach and research (which is the definition of the Wisconsin Idea) may well go by the wayside.

Lastly there is the lingering question of how to pay for the benefit costs of UW employees. With the UW Authority being set up to start in 2016, the plan was to give $21.3 million as a one-time bump to take care of added salaries and fringe benefit costs, then cut that $21.3 million out of the next budget and have the UW Authority figure it out. But if the Authority doesn't happen, and the UW System remains as a typical state agency, then this idea sort of goes out the window. In addition, the Legislative Fiscal Bureau points out that the proposed freezing of in-state tuition for the next 2 years brings another complication, because many UW jobs are funded through tuition revenues, and those benefit costs are still going to go up, even if the tuition doesn't.
The Governor's budget would freeze tuition for resident undergraduate students in both years of the 2015-17 biennium, which would prohibit the Regents from increasing tuition for those students to generate the tuition revenues required to fund the tuition portion of increases in fringe benefit costs during the biennium. Because additional tuition revenues would not be available to fund the tuition portion of fringe benefit costs for UW employees during the 2015-17 if the tuition freeze is approved, the Committee could provide additional GPR funds to cover these costs. Based on data provided by DOA, it is estimated that the tuition portion of the fringe benefit cost increases would be $3,219,600 in 2015-16 and $5,435,900 in 2016-17.

14. The Governor's budget would permit the Board of Regents to increase tuition rates for nonresident undergraduate and for all graduate and professional students. In April, 2015, the Board of Regents approved tuition increase for the 2015-16 academic year for nonresident undergraduate students and resident and nonresident graduate students at La Crosse, Milwaukee, Parkside, Platteville, Stevens Point, Stout, and Whitewater. In addition, the Regents increased per-credit tuition for graduate cost recovery programming in the School of Education and implemented a surcharge for international undergraduate students at Platteville and eliminated the tuition plateau for four graduate programs and approved a tuition rate equal to tuition for the Master of Business Administration program for the new Master of Science in Computer Science program at River Falls. The Regents also approved tuition increases for nonresident undergraduate students and for resident and nonresident graduate and professional students enrolled in certain programs at Madison in 2015-16 and 2016-17. The graduate and professional programs effected by the tuition increases are the School of Business graduate programs, the Global Real Estate masters program, the Doctor of Pharmacy program, the Doctor of Medicine program, the Doctor of Veterinary Medicine program, and the Doctor of Nursing Practice program. In addition, the Regents approved a surcharge for international undergraduate students at Madison.

15. According to the Board of Regents documents, the tuition increases and other changes approved by the Board in April, 2015, are estimated to generate additional tuition revenues of $24.6 million in 2015-16 and $44.0 million in 2016-17. Of these amounts, $21.0 million in 2015-16 and $40.4 million in 2016-17 would be generated by UW-Madison. These additional tuition revenues could be used to fund the tuition portion of increases in fringe benefits during the 2015-17 and other costs. However, increases in nonresident undergraduate and resident and nonresident graduate and professional tuition were not approved for all UW institutions. These institutions, which include Eau Claire, Green Bay, Oshkosh, Superior, and the UW Colleges, would not have additional tuition revenues with which to fund these costs.
So that could mean another $8,655,500 that has to be sent back in, on top of the $150 million-a-year cut to base costs. And the lack of increased out-of-state and graduate tuition at many of the non-Madison schools really puts those institutions in a major crunch, because it comes on top of the fact that those schools already rely more on state funding than Madison does, due to Madison's large amounts of federal grants, donations, and self-supporting entities. So when state aid is cut like it is in Walker's budget, the non-Madison schools get hit worse.

So while the headlines for the UW System's portion of tomorrow's budget meeting will likely deal with whether the UW System Authority will be eliminated, and whether then Joint Finance Committee will add any funding back to the UW System to reduce the huge cuts Gov Walker planned in his budget (if there IS any money available), these special funds and the compensation left over for UW employees will be a factor in these decisions as well. And it's yet another area where Gov Walker has left the heavy lifting to the Legislature to figure out, with a whole lot of Wisconsinites having their current employment and educational situation being thrown into turmoil in the process.

Wednesday, May 27, 2015

Soccer as crooked as Wisconsin politics?

It's maybe not the biggest sports story in America today, but it sure is in the rest of the world. 14 people associated with FIFA have been arrested, and will be sent to federal court to face numerous charges, including racketeering, money-laundering, and wire fraud. FIFA allegedly took pay-play to obscene levels when it came to choosing the sites of its major events, with kickbacks and related corruption.
The Justice Department, F.B.I. and I.R.S. described soccer’s governing body in terms normally reserved for Mafia families and drug cartels, saying that top officials treated FIFA business decisions as chits to be traded for personal wealth. One soccer official took in more than $10 million in bribes, Attorney General Loretta E. Lynch said..

Some of the payments were funneled through intricate schemes. After committing fraud, bribery and money laundering, prosecutors wrote, defendants covered up those payments in various ways: using fake consulting contracts to funnel illegal payments; sending money through associates working in banking or currency dealing; creating shell companies in tax havens; hiding foreign bank accounts; using safe deposit boxes; and “bulk cash smuggling.”

And some payments were old-fashioned bribes, like one involving South Africa’s bid for the 2010 World Cup. Mr. Warner, then a member of the FIFA executive committee, directed an associate to fly to Paris, accept a briefcase full of cash in $10,000 stacks from a South African bid committee member in a hotel room, and return the briefcase to Mr. Warner in Trinidad.

Later, a Moroccan bid committee member offered Mr. Warner $1 million in exchange for his vote, but that person was outmaneuvered: the South African bid committee had arranged a $10 million bribe in exchange for the votes of Mr. Warner and two co-conspirators on South Africa’s behalf. All three ultimately voted for South Africa, the indictment says.
Back in Wisconsin, Scott Walker and his donors look at that setup and ask "Why didn't you just call it free speech? That's what we do! Then we can claim it's not money-laundering or racketeering!"

And who was all over the corruption of FIFA a year ago? British comedian John Oliver, who nailed just how scummy FIFA President Sepp Blatter and his organization was, and how much of a controlling scam FIFA runs during the World Cup. This is up to and including superseding local laws and literally allowing people to be worked to death!

Yes, the language is NSFW, but after watching that segment and seeing the allegations in the charges that just came down on FIFA officials and their associates, I'd say John might have been going light on them.

Tuesday, May 26, 2015

How can we fix roads and not borrow money?

Continuing with my previous topic on lower state aids to local communities leading to more local taxes in Wisconsin, I wanted to talk about the revenue picture in Wisconsin's Transportation Fund, and what it means for the state budget. This will be one of the huge topics that will be decided as part of the wrap-up of budget deliberations in the Joint Finance Committee this week, and I wanted to bring up where the Transportation Fund stands, and what could be done to make it more sustainable for the future.

First of all, let's review where the Transportation Fund stands for this budget. As the Legislative Fiscal Bureau told us last month, the Transportation Fund is in better shape than it appeared to be when the budget was released a few months back, in contrast to the struggles that are plaguing the General Fund.
The revenue estimates upon which the Governor's transportation budget was based were generally conducted in the fall of 2014, at the time of the Department of Transportation's biennial budget request submittal. Since that time, actual collections through the first several months of 2014-15 have improved base year projected revenues. Along with a sustained outlook for collections for fund revenues, primarily from the motor fuel tax, this results in higher estimated total revenues to the fund in the 2015-17 biennium. Revised debt service estimates lead to lower net appropriations than originally estimated. When combined with a larger estimated opening balance, the revised revenue and spending estimates for the 2015-17 biennium, under the provisions of AB 21/SB 21, produce an estimated closing balance of $84.7 million.
So there's a bit to play with if need be, but the problem is that the $84.7 million would only make a tiny dent in the amount of borrowing that's part of Gov Walker's budget, as the LFB describes in another paper.
3. The Governor's 2015-17 budget recommendations would authorize $1.3 billion in transportation-related bonds ($1,343.2 million in transportation fund-supported bonds less $43.0 million in rescinded GPR-supported bonds for passenger rail). Table 2 lists the biennial transportation fund-supported bond authorizations, by program, over the past six biennia, and the proposed level of bonding under AB21/SB21. [Since the focus of this section is on transportation fund debt service, GPR-supported bonds issued during these biennia are excluded from this table.] Except for $5.9 million annually spent on DOT administrative facility construction projects, transportation revenue bonds have historically been exclusively issued for the major highway development program. However, under the Governor's recommendations, transportation revenue bonds, for the first time, would be authorized for the southeast Wisconsin freeway megaprojects program ($392.l million).
That $1.3 billion is by far the most that has been borrowed in the state Transportation Fund over the last 12 years, and combined with previous borrowing over the last several years, it means that more and more dollars in the Transportation Fund are going to have to be used to pay off debt in the future.

Debt service costs, Wis Transportation Fund
2013-14 $294.2 million (actual)
2014-15 $331.6 million
2015-16 $363.6 million
2016-17 $408.3 million
2017-18 $443.1 million
2018-19 $442.4 million

And that's assuming no new money that'll be borrowed past the $1.3 billion in this budget, a highly unlikely scenario given that the Zoo reconstruction and the I-94 and I-90 expansion projects will probably go on past 2017. So it seems that continual borrowing is something that needs to at least curbed, and the best way to do so while still getting the roads fixed is to add revenues.

Which leads to this paper from the LFB that talks about the various options that can generate those extra revenues. The first involves following through on the DOT's original budget request, and raising the gas tax by a nickel a gallon.
9. This option (Alternative 1) would, effective August 1, 2015, increase the current 30.9 cents per gallon motor vehicle fuel tax rate by five cents per gallon to 35.9 cents per gallon. Estimated revenues to the transportation fund would increase by $151,400,000 in 2015-16 and $167,200,000 in 2016-17. In addition, transfers to the conservation fund associated with the increase in the motor vehicle fuel tax rate would increase in 2016-17 as follows: (a) $2,142,400 under the motorboat formula; (b) $852,800 under the snowmobile formula; (c) $337,400 under the all-terrain vehicle formula; and (d) $37,500 under the utility terrain vehicle formula.
While the LFB notes that raising the gas tax by a nickel would put Wisconsin a few cents above our Midwestern neighbors by a few cents, we also don't collect any sales tax from gasoline, and don't have any toll roads that help to pay for the roads.

The flip side of the higher gas tax is that Wisconsin generally has a relatively low $75 annual fee for vehicle registration. This is below Illinois' flat fee of $101, and well below the fee for newly-registered cars in Iowa and Minnesota, who base their registration fee on both the age and value of the vehicle. In Iowa, a new $40,000 car will cost you $414 a year to register, and in Minnesota, it's $521!

Interestingly, one of the options in the DOT's budget request involved having a similar "new car fee" that was paid when a person purchased a new vehicle, and the LFB talks about how this would work were the JFC to resurrect that idea.
This option (Alternative 2) would create a registration fee, effective October 1, 2015, for the initial, private registration of new, light passenger vehicles (including automobiles, vans, sport utility vehicles, and light trucks with a gross vehicle weight of 8,000 pounds or less, and motorcycles) equal to 2.5% of the manufacturer's suggested base retail price (MSRP), which would be defined to exclude destination charges. Municipal-plated and farm-use-plated vehicles, as well as commercial vehicles with a gross vehicle weight in excess of 8,000 pounds, would be exempt from the fee. As an example, the purchaser of a vehicle with a base MSRP of $32,000 would be required to pay a fee of $800.
This would only be a one-time fee, and wouldn't have to be paid in future years, but it would give a nice bump to the Transportation Fund, to the tune of $379 million over the 2 years of the state budget.

If the "new car fee" seems a bit much, another option is to raise the yearly registration rate for all cars and light trucks, which wouldn't raise as much money as the "new car fee", but everyone would pay it uniformly, and it would shore things up a bit more.
Revenues to the transportation fund would increase by an estimated $34.7 million in 2015-16 and $46.7 million in 2016-17 under a $10 increase, by $69.3 million in 2015-16 and $93.4 million in 2016-17 under a $20 increase, and by $104.0 million in 2016-17 and $140.1 million in 2017-18 under a $30 increase.
And perhaps the most controversial idea that's been thrown on the table for raising revenues in the Transportation Fund comes from a potential "bike tax". This is in response to Governor Walker's plans to get rid of a requirement for bicycling and pedestrian pathways to be included with new road projects. It currently applies to all Wisconsin DOT projects that aren't freeways or massively rural, and the LFB says backers of the legislation indicate that such a "bike tax" would allow for bike/ped provisions to stay as part of these road projects.
11. Following the Department's briefing of the Committee, DOT was asked a follow-up question regarding the use of bicycle registration fees in other states. In response, the Department cited proposals in Washington and Oregon to impose excise taxes on bicycle sales of $5 to $20 and $25, respectively. Further, in the past year, this office has also received frequent inquiries about the potential revenue from a bicycle registration fee. The reasoning behind such inquiries is often based on the argument that the transportation fund is a "user-based system," whereby users of the state's transportation infrastructure pay into the fund and these revenues are expended to support that same transportation infrastructure. Bicyclists and pedestrians benefit from the use of the state and local highway systems, but, relative to those activities, do not pay directly into the state's transportation fund for this use. As an argument for repealing this law, some have contended that activities and programs that are not directly supported by transportation fund user fees should not receive state transportation fund revenues.

12. As a means of addressing these concerns, the Committee could choose to retain the current law and create a statewide bicycle registration fee of $25, which would be paid by consumers at the time of initial purchase, for bicycles with wheels of 20 inches in diameter or more. [Alternative #B2]. Revenue from this fee would be collected from bicycle vendors by the Department of Revenue and deposited into the transportation fund. There would likely be a lag before any revenue would be collected, as a collection mechanism would need to be established. In addition, it could be expected that there would be some level of fee evasion (such as Wisconsin residents purchasing a bicycle in another state to avoid this fee). Absent other factors that could affect revenue collections and assuming a 10% evasion rate in 2015-17 and a 50% reduction in collections during 2015-16 due to this lag factor, it is estimated that potential revenue would be equal to $2.4 million in 2015-16 and $4.8 million in 2016-17.
Of course, there's no guarantee that the money would be used all for bike/ped improvements (unless it's written into the budget along with the bike tax), so maybe it's just a way to get extra money into the Transportation Fund without Scott Walker have to tell Grover Norquist and the fossil fuel industrialists that he raised gas taxes. Or it's a way for petty Republicans to try to get even with Mary Burke and her family for being the owners of Trek Bicycle. Either seems like a plausible explanation with this crew.

Anyway, there have been rumblings that both GOPs and Dems on Joint Finance aren't keen on the $1.3 billion in borrowing that Scotty threw into the budget to avoid having to raise any revenues, so we'll see if they choose any or all of these options, and if they adjust the spending side once there's more money in there. You can bet this will the subject of yet another last-minute multi-part omnibus, so it's important to know the options that are out there before the JFC GOPs dump their package on Friday night.

Local taxes going up to fix roads all over Wisconsin?

Even with shared revenues projected to stay stable in this budget, it is proving difficult for Wisconsin’s local governments to keep up, a few years after using the “tools” in Act 10 that were supposed to solve all those problems. So that means many of these localities are short on state aids, and when combined with the limitations in their ability to raise property taxes to pay for these needs, they’ve got a funding problem.

As a result of this crunch, 15 Wisconsin Republican legislators and 2 Democrats (mostly from rural and/or northern Wisconsin) have introduced a bill that would allow for a local sales tax to be instituted to take a sizable amount of road repairs off of the property tax. The legislation is Assembly Bill 210, and following a minor tweak to the bill by State Rep. Dean Knudson, the Legislative Reference Bureau says it would do the following.
Under this substitute amendment, with the approval of the electors in the county at a referendum, a county may impose an additional sales and use tax at the rate of 0.5 percent of the sales price of tangible personal property, goods, and services sold or used in the county for maintenance of streets and highways. The county may impose the tax for four years. If the county wishes to extend the tax, it must be approved again at a referendum. The substitute amendment requires the county to retain a portion of the tax revenue and distribute the remainder to the towns, cities, and villages in the county to maintain, repair, and construct streets and roads. The county distributes the revenue using a formula based on road miles and population. Finally, for each year in which a county imposes the tax, the county and each municipality that receives the tax revenue must expend on highway or street maintenance and repair an amount equal to the average of the amount it spent for such purposes in the previous five years from sources other than the tax, plus the average amount of the tax revenues it received in the previous five years.
The last part about a minimum amount of highway/street repair is what was added in Knudson’s amendment, and seems to be intended to “lock in” the sales tax for added street and road repairs. The amendment also mandates that the sales tax be county-wide, instead of imposed community by community, but with some of the money being sent down to municipalities within the county.

The Assembly’s Transportation Committee held a hearing on the local “sales tax for streets” bill, but a formal vote in that committee that could have come today was removed. It seems possible that such a measure could be folded into the state budget as Transportation issues are discussed on Friday, as an excuse to conserve state aids for street repair.

And that isn’t the only method outside of the property tax that local communities in Wisconsin have taken to in recent years to fund their street repairs. 6 municipalities and 3 counties in the state have “wheel taxes” that are tacked on to a person’s vehicle registration fee, and they include high-population areas such as Milwaukee, Appleton, Beloit, Janesville, and Saint Croix County. 5 of those 9 were just added in the past year, and Beloit doubled their local fee from $10 to $20 for 2015.

It’s telling that many of the sponsors of the “local sales tax for streets” bill come from areas that have such a wheel tax (including Knudson), or may soon be considering one. Installing a sales tax could be a substitute for such a wheel tax, and is a way for local areas to grab needed revenue from non-residents that use the roads which need to be fixed (this would seem especially in tourist areas up North). It also may be an easier way to hide the tax from constituents, as it would be paid as a portion of the regular sales tax throughout the year, and avoids the surprise of seeing an extra $10 or $20 on their next bill from the Bureau of Motor Vehicles.

There is another local sales tax option for places which rely heavily on tourism, and that’s the Premier Resort Tax, which is already in effect for both Wisconsin Dells and Lake Delton, as well as the northern communities of Bayfield, Stockholm and Eagle River. Channel 12 in Rhinelander reports that the Joint Finance Committee approved a measure last week which would add that city to the list, with a 0.5% sales tax on “tourist-related items.” Voters in Rhinelander approved of the new sales tax by more than 2-to-1 in an advisory referendum last month, and the local newspaper article written at the time of the vote explains why they felt it was needed.
The alternative would have been to raise property taxes about 10 percent to raise the $400,000 that the tax is anticipated to raise each year. This would have asked the residents of Rhinelander to shoulder all the costs of maintaining roads and streets used by the many people who come into town on a daily basis. The tax will be borne by commuters and residents alike.

"We educated everybody," [Rhinelander City Administrator Blaine] Oborn said. "That's the conservative number that we're starting with for budget purposes. But it will be $400,000, at least."…

Now comes the hard part of where to start spending the money first.

"Asphalt's very expensive, and we've got $2 million right in the short-term immediate repairs on our wish list," Oborn said. "But over the years, this will go a long way in catching up on our roads. So we really appreciate the support of the voters and getting this tool."
What’s clear from Administrator Oborn’s words is that the restrictive, tax-limiting policies of Scott Walker and the GOP-run Legislature over the last four years hasn’t provided nearly enough funds to local communities to handle the growing infrastructure needs. And since the Governor’s budget does not increase aids for local streets for either 2016 or 2017, which keeps those aids at a lower level than they were at in 2011. In the absence of that state aid in the Age of Fitzwalkerstan, it’s left up to the local communities to raise the taxes to get those potholes fixed.

What’s interesting is that it seems like Wisconsin is slowly evolving toward this local sales/wheel tax-based system in paying for its local roads, in a time when the state refuses to step up, leading to a sort of back-door “tax reform” that starts to uncouple property tax from being such a large generator of local revenue. Wonder if that trend will carry over into other services as well?

Monday, May 25, 2015

A minor bit of budget help before a big week

If I'm reading the Legislative Fiscal Bureau's budget papers right, budget deliberations in the Joint Finance Committee should finish with a flurry this week, as all outstanding topics left to be decided are on the docket.

I'll go more into topics like the UW System, Transportation, and DNR's Stewardship Fund and Science positions as the week goes on. But it does appear that there will be a few more dollars that the Joint Finance Committee will have to play with as a result of numerous re-estimates of provisions and costs, based on updated information that has occurred between the Governor's submission of the budget more than 3 1/2 months ago. I'll touch on a few of those numbers in this post.

One of the biggest breaks the state got from these re-estimates came from lower-than-anticipated costs in paying off debt, as the LFB says there will be nearly $22.7 million in savings due to a couple of reasons.
Since the introduction of AB 21/SB 21, DOA Capital Finance has provided updated information on the estimated debt service payments for the 2015-17 biennium included in the bill. This office has reviewed those estimates that and projects that GPR debt service payments could be reduced by $12,165,000 in 2015-16 and $10,519,100 in 2016-17.

These reestimated lapse amounts are associated with: (a) $10,729,500 in 2015-16 and $3,994,000 in 2016-17 to reflect the updated estimates of GPR-supported bonds issuance affecting the 2015-17 biennium, as well as the 2015 Series A general obligation bond issue and the 2015 Series A general obligation bond refunding bonds issues carried out since AB21/SB 21 were introduced; and (b) $1,435,500 in 2015-16 and $6,525,100 in 2016-17 to reflect lower interest costs than those included in earlier estimates.
So thank the Federal Reserve for bailing out a small part of this deficit-ridden budget, maybe some of that could be used to drop the $1.3 billion in borrowing for the Scott Walker's highway building binge, or to lessen some of the $300 million in cuts to the UW System, or fill in some other gap that still exists in this budget.

There are also new figures for several tax credits. Some of these will come in less than previously estimated, and help the budget, and some will have bigger write-offs, causing more difficulty for the budget. Here's the rundown, with the lower tax credits being listed as negative, and higher tax credits being positive.

Adjustments to tax credits
Veterans and Surviving Spouses Property Tax Credit -$5.4 million
Illinois Reciprocity Payments -$12.0 million
EITC -$4.0 million
Jobs Tax Credit -$24.6 million
Enterprise Zone +$13.8 million
Expired Tax Credits +$0.3 million
Change of two credits to Sum Suff. -$1.1 million
Angel/Seed Investment +$8.8 million

NET CHANGE -$24.2 million

So there's another break, and barring any last-minute surprises in revenues or some other kind of complication, this is pretty much what we have available. So these new factors have added a cushion of around $47 million. Obviously, that's a very small amount in a budget of well over $31 billion in General Fund dollars, but it's worth keeping our eyes out to see if the JFC takes any action with these savings, or if they don't. And while it's nothing compared to the huge topics and big-ticket budget items that are coming up, any little grab of savings to salvage an awful and austere budget is needed in times like this.

Why would Northwoods legislators hurt Northwoods tourism?

Memorial Day weekend is the unofficial kickoff to Wisconsin's major tourist season, and I wanted to go into some of the numbers generated from the Wisconsin Department of Tourism on jobs and money that comes from tourist-related industries. From these figures, I created a per-capita figure, which gives a rough estimate of which counties get a disproportionate share of their income from tourism. A lot of the counties at the top of this list shouldn't surprise you, but it is worth noting which areas get and need high tourism dollars, and who could feel the hit if a number of people decided not to go there in a given year.

Sauk County being Number 1 is hardly surprising- it's the home of the Lake Delton side of the Wisconsin Dells area (where most of the water parks are) as well as Devil's Lake and many other naturally beautiful areas. In fact, Sauk County grabs the 3rd most tourism dollars out of any county in the state, with $928.8 million in direct spending last year. Other top counties include Door County, the Dells-area Adams County, along with several counties in the Northwoods and the Lake Geneva-based Walworth County. On a political side, it's interesting to note that Sauk, Door and Adams Counties are areas that have swung towards Democrats in recent years (albeit not fast enough in Adams and Door Counties for midterms), while the Northwoods and Walworth County have generally turned towards Republicans, especially in midterm years.

With that in mind, and with the clear boost to the state's economy that the state's natural beauty gives, why are the Republicans elected from the Northwoods in the State Legislature pursuing policies like this?
The measure would require the Department of Natural Resources to use more land in six state forests. The proposal by Sen. Tom Tiffany (R-Hazelhurst) and Rep. Mary Czaja (R-Irma) would boost the amount for such cutting from 67% to 75%.

Currently, there are 296,775 acres designated for intensive timber harvesting in the Brule River, Black River, Coulee, Peshtigo River, Northern Highland American Legion and Flambeau River state forests.

State forests have other categories not earmarked for the most aggressive type of logging, but the changes sought by lawmakers would lump in other land for heavier cutting.

The changes could mean adding more logging on nearly 37,500 acres.
The article notes that logging and other "forest products" industry still has a strong presence in Wisconsin, quoting a Forward Wisconsin publication that says 52,000 people are employed in those fields (mostly in printing, paper-making, and similar types of jobs). But given that Czaja and Tiffany represent Northwoods areas that are homes to the forests, but not many of the factories processing these products, why are they siding with the downstate manufacturers instead of protecting and promoting scenes like this?

(Picture is courtesy of the Town of Lake Tomahawk website, which is filled with similar pictures).

Maybe it's because these GOP legislators are ignorant. Look at this article from earlier this month on Sen. Tiffany's attempts to gut the DNR's science staff, especially on topics that could have major effects on outdoors activities that draw many visitors to the state.
Proposed cuts at the Wisconsin Department of Natural Resources' science bureau could potentially block the agency’s continued work on climate change and chronic wasting disease management.

Why those areas in particular?

Many observers believe it's because they're the pet peeves of Sen. Tom Tiffany. Although the Hazelhurst Republican hasn’t announced he is behind the proposed cuts, he has been critical of DNR research since the cuts in Gov. Scott Walker’s budget were announced, called climate change "theoretical." He has also penned scathing columns about the department’s efforts on CWD management and the state’s bobcat harvest quotas, which he thinks are too low.
Or maybe he's just bought. Remember that Tiffany and State Senator Rick Gudex were elected in 2012 to the State Senate with strong backing from Wisconsin Manufacturers and Wisconsin Club for Growth, who got a lot of money laundered to them from GTac Taconite, with the intent of relaxing mining rules for a large, open-pit mine they planned in Iron County. Can't have those pesky regulations protecting the environment and scientists warning about the effects of bad air quality getting in the way of wringing a few more dollars and political influence out of an area, can we?

Take another look at that chart at the top of the page, which shows how tourism is an outsized part of the economy of the Northern Wisconsin. Wouldn't a sensible business development strategy might be to keep a high quality of life for current and future generations to enjoy over selling out the landscape for a few short-term businesses (or even for businesses that never happen, as we found out with Gogebic Taconite earlier this year)? Then again, when have corporations ever cared about the attributes of something that looks like this, when there's a buck to be made off of the trees in this picture?

A summer without tourists visiting these areas would devastate the local businesses that rely on thousands of people to come from other places as the weather warms. So maybe the message should be sent to those in the 715- if you want us city slickers to keep on coming up to your area and keeping it economically afloat, maybe you shouldn't be voting for anti-environment sellouts like Tom Tiffany and Mary Czaja. Can the voters of these areas have enough to self-respect to appreciate and protect what they have, and stop voting in regressive slugs to "represent" them in Madison, before the GOP legislators take it all away? Because if they don't act in the 2016 elections (when Tiffany and GOP Reps face re-election up North), it'll be done a whole lot faster than they think, and the great Northwoods will quickly descend into abandoned Appalachia.

Sunday, May 24, 2015

Howard Dean wins the Internet today

And on a related note of corruption, read John Peterson's post from today at Democurmudgeon, where he indicates that legislation is out there that might put the WEDC/WHEDA merger back on at a later date, even after Gov Walker made a big show out of reversing himself and putting off that growing of the slush fund merger.

You always have to stay on these d-bags, because they'll sneak something in the moment you're not looking. Look for more of that later this week with more Joint Finance subjects to take up.

Friday, May 22, 2015

Lower Wisconsin unemployment isn't always a good thing

I was taking advantage of an amazing weather day on the Memorial Union Terrace, so I didn't get to this until now. Yesterday featured the release of the April Wisconsin jobs report, and it was a classic case of how initial looks can be deceiving.
Place of residence data: A preliminary seasonally adjusted unemployment rate of 4.4 percent in April, down from 4.6 percent in March. The 4.4 percent rate is the state's lowest rate since April 2008 and is lower than the national unemployment rate of 5.4 percent in April. Wisconsin's total employment grew by 44,600 year-over-year while the number of unemployed declined by 33,900. Additionally, the state's labor force participation rate of 68 percent outpaced the national rate of 62.8 percent.

 Place of work data: The state added a statistically significant 50,900 total non-farm jobs and 48,500 private sector jobs from April 2014 to April 2015 (seasonally adjusted). Other statistically significant changes include a year-over-year gain of 11,000 jobs and a month-over-month gain of 3,600 jobs in manufacturing, along with year-over-year gains of 8,200 jobs in construction and 4,500 jobs in financial activities. Wisconsin added 5,400 private-sector jobs over the month, and private-sector job totals remain above pre-recession levels.
Sounds really good at first glance. But take a look on page 3, and you'll see this stat when it comes to figuring the unemployment rate.

April 2015 Wis labor force vs March 2015
Change in labor force -14,000
Change in employment -6,400
Change in unemployment -7,600

So that's why the unemployment rate dropped- 14,000 people left the work force! And that shrinking labor force has been the trend in Wisconsin for the last 3 months.

Wisconsin labor force
January 2015 3,120,800
April 2015 3,096,000
Change -24,800

In fact, if the labor force stayed at January's higher level, and total employment in the survey remained the same, Wisconsin unemployment would be 5.2% instead of 4.4%

The monthly jobs report also included the preliminary release of Wisconsin's numbers for the "gold standard" Quarterly Census on Employment and Wages, which goes through the end of December 2014, and I'll contrast this passage
A gain of 35,736 private-sector jobs with 17,560 jobs added in three major sectors: construction, manufacturing and professional services.
With this passage from the December 2014 Wisconsin jobs report four months ago.
A 12-month gain in private-sector jobs by a statistically significant 54,100 from December 2013 to December 2014 on a preliminary basis (seasonally adjusted), which is the highest December-to-December gain since 1999.
So that "massive" job gain has dropped by nearly 18,400 jobs as the more accurate data has come in.

If I didn't know better, I'd swear there's something behind the Walker Administration's initial releases constantly being better than the reality we find out later. I'm not saying there is, but it's becoming a disturbing pattern.

Wednesday, May 20, 2015

And now....back to WEDC trying to hide more stuff

Yes, that K-12 education bill has gotten us a bit off-track, because it's so regressive and was done in such a sneaky, underhanded fashion. But let's not forget what's coming up tomorrow, and that's the Joint Finance Committee's discussion of WEDC's budget.

And while Gov Walker is claiming that now wants to change the $55 million grant/regional loan program that's in the WEDC budget, let's keep our eyes on the JFC to see if they actually follow through with it. You may remember that proposal for also having this great passage.
7. As noted, details of the program have not been developed and it is unknown what the structure or composition of the regional organizations would be under the program or how specifically those dollars would have to be disbursed in the region. The bill would require WEDC to approve the structure, regional investment strategy, and administrative guidelines of the regional loan funds for each regional organization. In addition, each regional organization would have to make a report to WEDC, as would be required by the Corporation.
Yes, let's trust WEDC and their Board to come up with a fair strategy, and to make these companies follow through on their reporting requirements. On second thought, let's not, and if the GOPs on the JFC have an ounce of decency, this $55 million will be banished out of the budget entirely. We'll see if they do it.

Here's another item in tomorrow's meeting that hasn't gotten as much attention- where WEDC is trying to shield itself from certain Open Records laws. WEDC operates an information sharing system called the In Force Network, where WEDC workers, corporates, and other oligarchs trade information and other "development opportunities," and they don't want the casual citizen to find out what's been discussed, claiming that it's the equivalent of a closed office door. Of course, once the heat started rising on WEDC's shadiness, the Walker Administration did some serious backtracking, as you'll see in the second paragraph.
3. WEDC states that proprietary information of users on the In Force Network is confidential if the user is working with a company on a project, unless the information is shared with a partner or a WEDC employee. All state agencies and authorities may withhold records or documents from public access by applying a balancing test to determine if public interests favoring secrecy outweighs those favoring disclosure. The Corporation has raised concerns that, while its current policies retain confidentiality for information stored on the In Force Network, its current statutory exemption from the open records law does not include an exemption for personal or financial information stored by its users on the network. In response to programmatic audits performed by the Legislative Audit Bureau, WEDC collects detailed data from companies that receive awards, including personnel and payroll data. WEDC states that certain businesses that would otherwise apply for grants, loans, and tax credits offered by the Corporation do not feel comfortable with the possibility of subjecting their company's records, or their personal finances, to the state open records law and choose not to participate in economic development programs offered by the Corporation. The administration has requested the proposed statutory exemption from the open records law for information stored on the In Force Network to address these concerns.

4. On April 13, 2015, the administration sent a letter to the co-chairs of the Joint Committee on Finance requesting a number of modifications to the bill to address drafting errors and to clarify the Governor's intent. In that letter, the administration requested a modification to clarify the Governor's intent by deleting the recommended exemption from the open records law for records consisting of information on the In Force Network, or other similar CRM maintained by WEDC, unless the information is published to the In Force Network or other system by the Corporation or another economic development organization. Instead, the administration requested an exemption from the open records law for all information on the In Force Network, or other CRM maintained by the Corporation, that is stored to that network/system, including any state authority or state agency, federal or local governmental unit, or economic development organization. Additionally the person storing information to the network/system would remain the custodian of the information while it is in the custody of WEDC. Access to information stored on the network/system would be determined by the custodian of that information in accordance with state law.

5. The Committee could choose to modify the bill, as recommended by the administration, to more accurately reflect the Governor's intent. Under this alternative, a person would remain the custodian of any information that the person stored on the In Force Network or similar CRM maintained by WEDC and anything stored by that person on the network/system would become exempt from the state open records law. It is unclear to what extent information stored by a person on the network/system, and what types of information, might become exempt from public inspection under this provision as compared to current law.
Yeah, I'm not quite trusting these guys, especially when it's taxpayer dollars and write-offs that are being used as the bait for many of these companies to relocate and/or expand. Given the issues that have developed with WEDC in recent weeks, I'm guessing more shelter from oversight and accountability isn't the way to go.

And the third paper on WEDC also allows for looser regulations on WEDC grant recipients. I touched on this in an earlier post, but I'll reiterate a couple of passages here.
1. The budget bill would increase from $100,000 to $500,000 the threshold for when a grant or loan recipient must engage a CPA to determine whether the funds were expended in accordance with the grant or loan contract. WEDC has stated that the current threshold can be costly for persons receiving awards of less than $500,000 as compared to the benefit received by the recipient. According to WEDC, the typical cost of obtaining a schedule of expenditures from a CPA is $5,000, which would represent 5% of a $100,000 grant or loan award....

6. The bill would no longer require recipients of WEDC grants or loans to submit a schedule of expenditures of the grant or loan funds, which currently must include expenditures of any matching cash or in-kind match, signed by the director or principal officer of the recipient to attest to the accuracy of the schedule of expenditures. The Corporation indicates that a schedule of expenditures would still be created by an independent CPA on behalf of the recipient in order to attest to the accuracy of the expenditures; however, the recipient would no longer have to submit the schedule to WEDC.
The paper goes on to say that this would have exempted 44% of WEDC's grants in 2013-14. These provisions are also a nice way for the Walker Administration to take care of the "problem" of a lack of oversight of WEDC loans and grants- they'll simply remove the reporting requirements!

I fully expect the Dems to destroy the Walker Administration tomorrow as these items come up, and reiterate their calls for an emergency meeting to go along with their requested federal investigation. But the real story will be to see if the GOPs on the Joint Finance Committee are also angered and/or feeling the heat from these WEDC scandals, and decide not to allow the Walker boys to allow this slush fund hide any additional information. And we'll see if they finally pull the plug on an agency that has seemed to accomplish nothing other than to funnel taxpayer dollars to Walker donors, with any growth or business improvement being a mere accident.

EDIT- Mr. Unintimidated backtrack on the Open Records exemptions as well. These guys are really running scared right now, aren't they?

Vouchers > public schools last night. By the numbers

I wanted to recap the fiscal side to the sickening K-12 education bill that was jammed through the Joint Finance Committee late last night, because there are a lot of claims out there, and a look at the numbers will show just who the real winners in this bill are. I’ll give you a hint, it’s not public schools or communities that rely on them.
Here’s the 29-page motion that was developed in secret by the Wisconsin GOP and unveiled last night. And I’ll go over a few of the big parts of this.

School Levy Credit They’re going to still give away $105.8 million in each year, but instead of “double-paying” that in year 2 of the budget, they’ll just have the payment be in July of each fiscal year, same as before. This does cause an increase in the state’s GAAP deficit, as mentioned under Alternative #4 in the Legislative Fiscal Bureau’s paper on property tax credits.
Under AB 21/SB 21 [the Governor’s Budget Bill], the additional $105.6 million would be paid in July, 2016, relative to the 2015(16) tax year, and in June, 2017, relative to the 2016(17) tax year. By continuing to make the payment in July, rather than June, GPR expenditures would be reduced by $105.6 million in 2016-17, relative to the Governor's proposal [Alternative #4]. This modification would not affect the property tax estimates displayed in Table 1. Instead, this change would make $105.6 million GPR available for other purposes in 2016-17, but would increase the GAAP deficit by an estimated $80.2 million.
And that extra $105.6 million made available for Year 2 of the budget is what was grabbed to help pay for the increases in funding to K-12 schools in this omnibus. It’s the only way that a large sum of money could be added to the already-tight budget while still allowing it to balance (although as you’ll see, we may be heading over the edge anyway).

School aids The baseline K-12 aids stay the same as in Governor Walker’s budget (no change year 1, up 2.4% in year 2). But the source of contention was the $127 million that was cut from per-pupil aids in the Year 1, with $142 million added back in Year 2, for an $18 per-pupil change from 2014-15 (at $150 a student) to 2016-17 ($168 a student). In order to smooth out these wild fluctuations in K-12 funding, the GOPs on the JFC did some creative accounting, and the Per-Pupil aid paper from the LFB is a good source to follow along with.

The first step that was done was to get rid of the $150 cut for school year 2015-16, which is a total of $126.8 million. The problem is that there isn’t enough money available in 2015-16 to pay for all of that, as the Governor’s budget only gave $27 million of cushion beyond the state-required reserve limit. So how did they solve that problem? By shoving all of the increases into Year 2.
Provide $126,842,300 GPR in 2016-17 for per-pupil aid payments based on 2015-16 enrollments. Specify that, on a one-time basis, this aid be paid on a delayed basis on the second Monday in July of 2016. Specify that this delayed payment would be considered as moneys appropriated in 2015-16 for the purposes of calculating an increase in categorical aid funding per pupil.
Then they will add another $69.34 million for per-pupil aid in 2016-17, resulting in a new total of $196.18 million, or $250 per pupil. In addition, this amount is expected to be ongoing, so this means that the new base for future years becomes that $196.18 million, adding nearly $110 million to the state’s structural deficit for 2017-19.

If that’s all there was to this bill, with no further shuffling of funds, there might be a bit of concern about unfunded tax breaks and kicking the can down the road, but I’d think most people would be happy with the outcome. But the problem is that this is not all there is, as the voucher expansion and other provisions cut out a sizable amount of the K-12 funding increase.

The first part is easy enough to figure, and I mentioned this earlier this week. It uses the open enrollment basis to re-distribute aid from a child’s home district to the voucher school, albeit at higher amounts for vouchers ($7,210 for K-8 and $7,856 for high school vs. $6,647-$6,755 for open enrollment to public schools). This moves $18.4 million in year 1 and $29.4 million in year 2 from all K-12 districts vouchers, and the added per-pupil aids also play a role here, as the vouchers get another $4 million from the current program, while Milwaukee and Racine public schools have $1.3 million sent away from school aids based on that.

The often online-based “independent “2r” charter schools” also get a nice kickback in this bill, to the tune of $1.25 million, which also is taken away from public schools. The only extra help the public schools get are a one-time shot of $5 million in High-Cost Special Ed. Aid in year 2 (and some of that can go to CESAs and charters), and they get back $4.0 million due to the removal of a Walker plan for a Charter School Oversight Board, which would have given that money to operators of charter schools (they don’t need that with all the extra voucher money being thrown around).

So let’s add up the totals and see what we get. We’ll even allow for the assumption of “no loss of per-pupil aid in 2015-16, even though that money will be delayed into the next fiscal year.

Total K-12 public school aids, 2015-16
Per-pupil increase $0
MINUS voucher expansion -$18.4 million
MINUS current voucher program -$123,000
MINUS 2r charters -$108,000
TOTAL CHANGE IN AIDS -$18.6 million

Total K-12 public school aids, 2016-17
Per-pupil increase +$69.34 million
PLUS High-Cost Special Ed +$5.0 million
PLUS No Charter School Board +$4.0 million
MINUS voucher expansion -$29.4 million
MINUS current voucher program -$1.20 million
MINUS 2r charters -$1.14 million

TOTAL CHANGE PUBLIC SCHOOLS 16-17 vs 14-15 +$28.0 million
TOTAL CHANGE VOUCHERS 16-17 vs 14-15 +$51.8 million

You’re reading that right. Under last night’s surprise omnibus bill, Wisconsin’s voucher schools got a bigger two-year bump in state aids than the K-12 public schools got under this bill. Now you see why the voucher lobby spent all that money to get GOP puppets put into the Legislature last Fall, and now those extra taxpayer funds give a sizable pot of money that can be kicked back Scott Jensen and other lobbyists, and to throw behind more GOP puppets in future years.

It’s why Wisconsin’s voucher game isn’t a bad scam if you’re in on it. But for the vast majority of us that aren’t, and actually care about educational outcomes, it’s a sickening recipe for disaster, and a major harm to Wisconsin’s ability to generate and attract talent. This is what Scott Walker really meant by “Open for Business”, and it has nothing to do with growing our economy.

Tuesday, May 19, 2015

Wisconsin public schools screwed even worse than we thought

I just read this, and I am stunned and sickened, maybe more than I was when I first read the "budget repair bill" that became Act 10.
Co-chair Alberta Darling, R-River Hills, and Rep. Dale Kooyenga, R-Brookfield, proposed the Opportunity Schools and Partnership Program for the Milwaukee district. Under the plan, failing schools would be put under the control of a commissioner who would be appointed by the county exec.

Up to three Milwaukee schools could be put into the program in 2015-16 and 2016-17 with up to five eligible in 2017-18 and each year after.

The motion would also create a parallel provision under which a similar program could be created districts that meet certain requirements, including a membership of more than 15,000 students. That would impact Madison and Racine, though they have not met other requirements to be put under the recovery program. Some of the other benchmarks include receiving the lowest rating on the most recent accountability report in any two consecutive years.
WHAT.THE.FUCK. How much money is Scott Jensen, the Waltons and the De Voses promising these scumbags? has the whole motion (and there's 30 pages of it). Legislating by surprise in the middle of the night, with no public hearing on this bill, and on policies the GOP never ran on this November.

If it wasn't such a dirty word, I'd say recalls have to be in order. That's the only recourse we seem to have left (well, that's legal anyway).

NEVER VOTE REPUBLICAN AGAIN. And never allow any non-racist person under 50 with an IQ over 80 to sit out another election.

The WEDC follies roll on, and get worse

Here's a great summary on the unfolding scandal involving WEDC's politically-connected $500,000 loan to Building Committee, Inc. The article is courtesy of occasional Funhouse commenter "lufthase," and it shows how this guy tried for years to do a pay-for-play operation with Dems in the late 2000s, but the Dems wouldn't bite on it and give assistance to such sketchy characters with shaky plans. But once Scott Walker and the GOP made the state "Open for Business" in 2011, they were more than willing to play ball and kick back taxpayer funds to these guys.

Also props to Dee Hall and Matt DuFour on their two excellent articles exposing the BCI scam and just how the WEDC slush fund operated. Those scoops shamed the Journal-Sentinel into a rare act of journalism that blew this story wider yesterday. Patrick Marley and Jason Stein took a break from the paper's usual stenography and Walker puff pieces to call bullshit on Scott Walker's attempted evasions and "I know nothing" responses to this WEDC kickback.
The Sept. 9, 2011, letter from Paul Jadin, WEDC's chief executive officer at the time, was sent to William Minahan, owner of Building Committee Inc., a company that is now being sued by WEDC for defaulting on the unsecured loan without delivering the promised project and the jobs it was supposed to create.

Jadin said in his letter of intent that he was writing "on behalf of Governor Scott Walker" and noted "cc: Scott Walker, Governor" at the bottom.

Walker's top cabinet appointee, then Administration Secretary Mike Huebsch, urged WEDC officials to provide the loan, and Walker's then-chief of staff Keith Gilkes attended an initial meeting on it, according to records provided to the Milwaukee Journal Sentinel by the Walker administration.

"In closing Governor Walker and I are firmly committed to doing everything possible to expedite the processing and awarding of this incentive award," Jadin wrote in the letter.
So what's Mr. Unintimidated's response to this revelation? To whine about "partisan witch hunts" and have his lackeys give an excuse equivalent to "the dog ate my homework." This clown wants to be president? If it wasn't so serious that this crooked buffoon could be close to the button, it'd be hilarious.

And speaking of homework, it's pretty obvious that Walker and the WEDC staff wasn't too keen on doing theirs when it came to evaluating Building Committee, Inc.'s financial stability, as the J-S (sensing blood in the water?) is reporting tonight.
Building Committee Inc. and its owner William Minahan, a donor to Walker's campaign, indicated in their September 2011 application for the state loan that the company, its owners and officials had not been involved in any lawsuits or civil cases in the previous five years.

But online public records show that Minahan faced legal action by the state Department of Revenue in November 2010 for tax delinquency in the amount of $15,700 and that Building Committee was also sued for thousands of dollars in a money judgment case just over a year before Minahan signed the application. They were the first of many court actions that have been filed against Building Committee.

Assembly Minority Leader Peter Barca (D-Kenosha), a member of the Wisconsin Economic Development Corp. board, said that the loan should have never been made by the agency, given that a cursory search of online court records could have picked up the company's financial problems.

"A simple (Internet) search would have found it was there," Barca said.
Nice operation you got there, Scotty. Not incompetent or crooked in the least.

This story has serious legs, and I have a hard time believing that BCI are the only people who the Walker boys were being sketchy with. The US DOJ needs to take up Barca's request, and get the Feds on this case NOW.

Monday, May 18, 2015

GOPs try to magically avoid cutting K-12 tomorrow

Likely the big item in tomorrow's Joint Finance Committee meeting will involve state aids for K-12 schools. I'll leave out the possibility of suburban GOPs messing up Milwaukee Public Schools in this post (if you want to read the latest with that, take a look at what Andy at Wisconsin Soapbox said last night. There's definitely something afoot), and concentrate on a few of the school finance issues here.

As you may be aware, the Walker budget plans to cut $127 million in per-pupil aids in 2015-16, and then restores that and $15 million more for 2016-17. But the $127 million cut has angered many constituents and school districts, and the Legislative GOP (sensing that they'll be tossed out on their asses in 2016 if they let this stand) has been scrambling to try to find some way to put some of this money back.
While Republicans initially talked about simply restoring Walker's $127 million cut, which would still keep school funding flat, they are now advocating for putting more money in for the 2016-2017 school year.

"I'm pushing hard for that because a zero increase will be hell to pay when you go home," said Sen. Luther Olsen, a Republican on the budget committee from Ripon.

Rep. John Nygren, co-chair of the budget committee, said his goal is to increase funding by an additional $75 per student in the second year of the budget after holding it flat the first year. He called that a "reasonable" increase.
Of course, that would require a lot of money that a budget without extra revenues does not have. From looking at the Legislative Fiscal Bureau's paper on per-pupil aids and the various options that could be taken, it would take an extra $126.8 million just to keep funding flat in year 1 and up by $18 for year 2 (Option A2). If they want to quadruple that per-pupil increase in year 2 (like Nygren says), they'd need to add another $45 million to the budget bill on top of that $126.8 million in year 1. And that's money the budget doesn't have, for either year.

So maybe this is where some work gets done on the School Levy Tax Credit. I went over the issues with that last week, but the GOP Co-Chairs delayed action on those property tax credits so they could work simultaneously with the K-12 School Aids. I suppose trading the $211 million in School Levy Credits in 2016-17 could pay for a $75 increase per-pupil in year 2 (bye-bye $5 property tax cut), but I still don't see where the extra money is coming from for year 1. So let's see how they try to pull off this alleged increase in school aids, as it the money doesn't seem to be there, so it'll have to be done by seriously hurting some other part of a budget that has hurt a lot of areas already, and/or driving up the structural and GAAP deficits even higher.

And late on Friday, another monkey wrench was thrown in to school funding, as Robbin' Vos is still working to give a kickback to Scott Jensen and the other voucher lobbyists that helped elect Republicans to the Legislature last November. Vos's scam plan involves taking money out of the public schools, and throwing that money into the voucher schools- an estimated funneling of $48 million in taxpayer funds. Walker's budget would remove the 1,000-student cap on vouchers, and Vos not only would keep that, but would add a kicker to it that changes what happens to districts outside of Milwaukee and Racine that have students who take vouchers with them to attend a school. The LFB's paper on the "Choice Program" explains more.
28. The [Joint Finance] Committee could also consider an approach similar to the funding mechanism for the open enrollment program under current law. For incoming pupils in the Racine or statewide programs, the pupil's school district of residence would count the pupil in its membership for revenue limits and general aids, and therefore would receive revenue limit authority and general aid as though the pupil were enrolled in that district. The district's equalization aid or other state aid would be decreased by an amount equal to the per pupil amount paid by the state to choice schools attributable to pupils residing in the district. A district would not be able to increase its property tax levy to compensate for the aid loss, but would receive revenue limit authority based on the number of incoming choice pupils from that district. [Alternative D4]

29. If school districts count choice pupils in their membership for revenue limit purposes, property taxes could be affected in those districts if those pupils would have otherwise attended a private school. A three-year rolling average of a school district's public enrollment is used to calculate the district's revenue limit. Therefore, after three years, the school district of residence for a choice pupil who began participating in the program in 2015-16 or later would have full revenue limit authority for that pupil. The effect on property tax levies across the state would vary depending on the school districts of residence of incoming choice pupils and whether those pupils would have otherwise attended a public school. In 2014-15, the statewide average revenue limit per pupil equals $10,200.
The double-whammy about this is that the money taken away from the school because a kid attends a voucher is over $500-$1,000 HIGHER than the loss from open enrollment to a public school. And the $48 million lost by public schools in state aid from vouchers would likely offset a sizable portion of any increase in aid that Nygren and the rest of the GOPs on Joint Finance can come up with.

Even with the $48 million funneled to vouchers (a disgusting enough proposition), we still could get Rep. Nygren's desired increase in per-pupil aid if we merely kept tax rates for certain corporations at the same level they are today. But just like with the voucher lobby, the GOPs take care of their donors first and foremost, so the WMC crowd will get their unproductive tax cut, while the state's public schools starve and lessen the chances of providing the state with the human capital that is the real driver of a strong economy. As I've said before- with priorities like those, do you wonder why we continue to lag behind the rest of the country?

Keep your eyes peeled tomorrow as the JFC tries their shell games. There promises to be many of these in the next few weeks.