Friday, July 31, 2015

Low salary, health-care increases mean workers deserve more

It's a relatively small report, but I think it told a relatively large story that won't get the notice that it may deserve. Today, the Bureau of Labor Statistics released the quarterly unit labor costs, and it set a new record for the 33 years that report has been in existence ....and not in a way that helps most people.
Labor costs in the United States recorded their smallest increase in 33 years during the second quarter as workers were paid less in commissions and bonuses. The tiny gain appeared to be a temporary wage growth setback against the backdrop of diminishing labor market slack.

The employment cost index, the broadest measure of labor costs, edged up 0.2 percent in the quarter, the Labor Department said on Friday. That was the smallest gain since the series began in the second quarter of 1982. The index rose 0.7 percent in the first quarter.
If you dig inside the numbers from the BLS, you'll see that both wages and benefit costs have been largely held in check.
Wages and salaries (which make up about 70 percent of compensation costs) was also little changed at 0.2 percent, and benefits (which make up the remaining 30 percent of compensation) was little changed at 0.1 percent....

Civilian Workers
Compensation costs for civilian workers increased 2.0 percent for the 12-month period ending June 2015, unchanged from the 12-month period ending June 2014. Wages and salaries increased 2.1 percent for the current 12-month period. In June 2014 the change was 1.8 percent. Benefit costs increased 1.8 percent for the 12-month period ending June 2015. In June 2014 the increase was 2.5 percent.
So despite the fact that the country's unemployment rate keeps falling, that does not seem to be reflected in upward pressure on wages, which should happen in a tightening labor market. But instead, business owners seem to be taking the extra output and putting it in their pockets or buying equipment instead of giving raises to the workers that helped to make it happen. More evidence that the "trickle-down" of growth simply does not happen in 2010s America, and instead has to be demanded.

Also, it sure seems like Obamacare isn't exactly being an expensive job-killer, as the BLS notes that the increase in employer cost for their employees';health care benefits is also small. Before Obamacare was passed in 2010, there had not been a year-long increase in health care costs-per-hour of less than 3% since 1998, and it was 5.0% in the 2nd and 4th Quarters of 2010. Take a look at what has happened in the last 4 years, as Obamacare has been fully implemented.

12-month change in cost of employer health benefits
Q2 2012 2.4%
Q2 2013 2.6%
Q2 2014 2.7%
Q2 2015 2.8%

You think any of the GOP candidates will bring up this fact as they have their absurdity of a debate next week? Yeah, I'll think they'll leave that inconvenient truth out. On the flip side, the fact that health care and other benefit costs are being managed should make you wonder why workers aren't getting a payoff with higher wages, since employers should have more funds freed up to pay them.

It tells me that the final piece on the Obama Recovery has yet to be realized, which is real 1990s-style wage growth that truly raises the middle and working classes. GOP governors like Scott Walker doing everything in their power to limit those wages even further shows that these guys don't know how to solve this problem...and they likely don't want to. This is because the ultimate end game for corporatist politicians and the oligarchs that donate to them is to make the other 99% that aren't in the "inner circle" to be serfs to the rich and connected, who squeeze all the profit out of workers, take their disproportionate cut, and then tell the worker that "you'll enjoy the pittance of any increase we decide to give you."

Shouldn't we demand more?

Thursday, July 30, 2015

Structural deficit improves, but still relies on accounting tricks

Now that Governor Walker has vetoed parts of the 2015-17 budget, signed the rest of it, and gotten out of town on the campaign trail, the Legislative Fiscal Bureau has re-crunched the numbers to take a look at how this budget and the next one shapes out. And on the topline, these numbers seem to be an improvement over the 2017-19 structural deficit that was reported in the budget that made it out of the Legislature earlier this month, and has some more breathing room in the current budget.

Net balance, 2015-17 budget, from Legislature
FY 2015-16 +$73 million
FY 2016-17 +$22 million

Net balance, 2015-17 budget, after guv vetoes
FY 2015-16 +$96 million
FY 2016-17 +$66 million

Structural deficit 2017-19 budget, from Legislature
FY 2017-18 -$92 million
FY 2018-19 -$204 million

Structural deficit 2017-19 budget, after guv vetoes
FY 2017-18 -$27 million
FY 2018-19 -$183 million

In addition, the structural deficit figure is lower than the $490 million reported earlier this month related to an accounting trick being done on per-pupil school aids (you may remember that Walker proposed cutting this by $150 a student in his original budget, a move that was reversed by the Joint Finance Committee after large amounts of complaints). As the LFB mentions:
Of this [per-pupil] amount, $127 million would be paid on a one-time delayed basis on the second Monday in July of 2016, but would be considered as moneys appropriated in 2015-16 [school year]. Aid for 2016-17, equal to $211 million, would constitute base year funding for the 2017-19 biennium. Thus, $127 million should have been removed from each of 2017-18 and 2018-19 in the July 7 exercise.
Of course, the structural deficit also assumes that those per-pupil aids will stay at that 2017 level for the following two years while most other costs go up, so…good luck with that.

What this "lower" structural deficit doesn’t take into account is Walker and WisGOP's biggest budget trick of them all. The Wisconsin Budget Project explains more in their excellent summary of the recent projections.
The latest calculations continue to understate the magnitude of future challenges because the budget bill assumes an unrealistically large amount of funding that agencies will lapse to the state treasury over the next four years – including $741 million in the 2016-17 fiscal year, and almost that much in each year of the 2017-19 biennium. As I explained in a July 8 blog post, the assumption that state agencies will lapse more than $2 billion over a 3-year period is a convenient way to make the structural deficit look relatively manageable, compared to many of the past structural deficits. However, it also means that the structural deficit figure by itself is no longer a very good indicator of the state’s future fiscal challenges, because that figure leaves out the immense challenge of lapsing so much funding year after year.
There’s also $349 million in lapses baked into the 2015-16 budget AFTER the large amounts of cuts that are already being felt across state agencies (like last week's layoff of 83 workers at UW Colleges). By comparison, while Wisconsin’s Annual Fiscal Report from last October says the Fiscal Year 2014 budget ended up lapsing $345 million, there were no major cuts in appropriations in that budget, so it had more ability to have lapses from job vacancies and other measures.

The FY 2013 budget did lapse nearly $750 million, but that was due to two reasons that do not apply today. The first was Act 10 “savings” and large amounts of retirements of higher-priced, veteran workers in light of that union-busting measure, and the second had to do with $263 million being ADDED to the budget after it was signed into law, which artificially increased the lapses. The 2012-13 budget actually overspent its planned amount by $54.4 million, but was bailed out by a one-time bump in revenues at the same time (a bump which was promptly blown on two rounds of Koo-Koo/Walker tax cuts that have put the state in the fiscal bind it has today).

So unless there’s another Act 10 or shocking economic boom coming, bet on this budget and the next one continuing to be wracked with deficits and likely service cuts…unless the leadership in Wisconsin can be changed.

Tuesday, July 28, 2015

"Low" Wisconsin unemployment ain't because of job growth

I was heading home from work today with my wife, who likes to listen to MSNBC on the satellite radio sometimes. By coincidence, she landed on the Ed Show just as he was wrapping up a segment comparing Wisconsin's economic outcomes with Dem-led Minnesota's (as I've mentioned many times here, Fitzwalkerstan has been getting its economic ass kicked by our neighbors to the West). On the show to stick up for Walker/GOP "governance" was a Koch whore Heritage Foundation hack named Genevieve Wood, and one of her claims was "Scott Walker can't be doing all bad, unemployment is 4.6% in Wisconsin!"

This is where I remind you that Wisconsin's low unemployment rate has little to do with Walker's economic policies succeeding....unless you count driving down the work force by 40,000 in the last 5 months as "success." This exodus from the work force is the difference between Wisconsin's unemployment rate being the reported 4.6% instead of 5.9%, which it would have been with the same amount of jobs today, and the same work force in January.

Making this adjustment drove me to expand on that thought when the state-by-state unemployment figures were released last week by the Bureau of Labor Statistics. I knew that Wisconsin's work force had risen in the later half of 2014, so I wanted to see if this recent dropoff of 40,000 workers was a sort of reversion to the mean. I also wanted to see if Wisconsin's changes were unusual compared to the rest of the Midwest, which has generally had lower population growth than the rest of the nation over the last couple of decades because of deindustrialization....and because it gets really cold here in the Winter. So I took the most recent labor force figures from the June 2015 report, and compared them with the numbers from June 2014 for the Midwest, and here's what I found.

Change in labor force, June 2015 vs. June 2014
Minn +1.91%
Ind. +0.52%
Ohio +0.33%
Iowa +0.05%
Mich -0.14%
Wis. -0.32%
Ill. -0.41%

So Wisconsin has indeed lost some of its work force in the last 12 months (9,800 in total), and that puts them at 6th out of 7 in the Midwest. And contrast that with Minnesota, which grew its work force by the most of any Midwestern state, likely getting some of that increased work force from Wisconsin.

Which then made me wonder what the unemployment rate would have done if the labor force numbers remained the same, so I decided to crunch those numbers. You crunch those numbers, and here's what comes up. Yes, I know that the number of jobs would change because of the changes in population and income, but just go with it for a moment.

What I'm doing is comparing the reported June 2015 unemployment rate, and then using the total "employment" numbers for June 2015 (based on the household survey) and then using the June 2014 labor force figures to impute a second unemployment rate. We also can separate these two factors into why the reported unemployment rate has changed in the last year

Reported unemployment rate, June 2015
Iowa 3.7% (-0.7% vs June 2014)
Minn 3.9% (0.0% vs June 2014)
Wis. 4.6% (-0.8% vs June 2014)
Ind. 4.9% (-1.0% vs June 2014)
Ohio 5.2% (-0.4% vs June 2014)
Mich 5.5% (-1.6% vs June 2014)
Ill. 5.9% (-1.0% vs June 2014)

Imputed unemployment, June 2015 using June 2014 labor force
Minn 2.7% (-1.2% employment change, +1.2% labor force change)
Iowa 3.7% (-0.7% employment, 0.0% labor force)
Ind. 4.4% (-1.5% employment, +0.5% labor force)
Ohio 4.85% (-0.75% employment, +0.35% labor force)
Wis. 4.92% (-0.48% employment, -0.32% labor force)
Mich 5.6% (-1.5% employment, -0.1% labor force)
Ill. 6.3% (-0.6% employment, -0.4% labor force)

Changes the perspective of that "low' Wisconsin unemployment rate that Ms. Wood tried to pass over on the "Ed Show", doesn't it? Wisconsin goes from 3rd to 5th if you keep the labor force the same (and even has a higher unemployment rate than CALIFORNIA by the same metric), and is DEAD LAST in the Midwest for lowering unemployment through actual job growth. And look at how Minnesota's rate plummets to one of the lowest in the nation for the same reason.

This shows how population and work force changes play a major role in a state's economy, because that state's ability to grow gets constricted if it can't attract talent to come to its state and work. And that's what we've gotten from 4 1/2 years of financial mismanagement and mistreatment of workers in the Age of Fitzwalkerstan. And with the UW System and public education being defunded further with this new budget that started July 1, you tell me what's going to happen to reverse this trend of a stagnant Wisconsin work force under Scott Walker, and increase our state's chances of success?

Monday, July 27, 2015

Was $3 worth destroying the state over?

You know that property tax cut Scott Walker and the Wisconsin GOP promised would be part of the state budget? The Legislative Fiscal Bureau gave a look into projections for the average Wisconsinite's tax bill, and let's just say I wouldn't plan on getting a nice Christmas bonus off your December tax bill. Not surprisingly, a main culprit is the funneling of tens of millions of dollars from public school districts to vouchers.
The Legislature made several changes to SB 21 [the state budget bill] that affected the estimated property tax levels for school districts. Under Act 55, districts will be able to count incoming pupils who begin participating in the Racine or statewide private school choice programs in the 2015-16 school year or thereafter for revenue limit and general aid purposes. Act 55 also provides a revenue limit adjustment for consolidated school districts. Modifications were also made to per pupil payments and estimated participation in the independent charter school program and private school choice programs, which would affect the backfill levy associated with those programs. Compared to the Governor, these modifications are estimated to increase property tax levels by $21.0 million in 2015(16) and $23.5 million in 2016(17) for school districts and by $0.7 million in 2015(16) and $0.9 million in 2016(17) for tax incremental districts.

As a result of the preceding changes, gross property tax levies are estimated to increase on a statewide basis by 1.9% in 2015(16) and 0.8% in 2016(17), and net tax levies would increase by an estimated 1.1% in 2015(16) and 0.9% in 2016(17). These tax changes would translate into tax bills for a median-valued home estimated at $2,830 in 2015(16) and $2,828 in 2016(17). These represent decreases of $1 (-0.04%) in 2015(16) and $2 (-0.07%) in 2016(17).
THREE WHOLE DOLLARS OVER TWO YEARS???! That won't even buy a gallon of milk.

Hope THAT was worth fucking over public education, local government services, and having our roads become more likely to be filled with potholes. Oh, and because of (right-to) work-for-less, the repeal of some prevailing wage provisions, and higher co-pays for insurance (if you're a public employee), you'll be likely taking home a lot less than the $3 in property tax you MAY save. I'd much rather have my taxes go up and live in a state and community that's growing and caring about its citizens than getting this insulting pittance of a tax break. And if you don't feel the same, you are one pathetic dead-ender.

Had enough, yet?

More Bucks arena sliminess should make Assembly Dems play hardball

Tomorrow's the big day to see if the Bucks arena bill will pass the State Assembly, and on the day before the big vote, Steve Horn and Michael Arria wrote an in-depth piece in the online site Truthdig going over some the behind-the-scenes dealings with this bill. It's an excellent read.

The article first explores the close connections Bucks co-owner Marc Lasry has to the Obama White House and Hillary Clinton's current campaign, along with former Bucks owner Herb Kohl's involvement in the team and the project. But the more damning stuff on the Dem-related seems to come from another recent Bucks co-owner, Wes Edens, who not only is a billionaire that's looking for a public handout, but is accused of making some of it at the expense of some of Milwaukee's poorest people.
Activists from the group Common Ground in Milwaukee have decried Edens as a slumlord for profiting from over a dozen foreclosed homes in Milwaukee via a company that Fortress Investment Group owns a majority stake in, Nationstar Mortgage. Edens serves as Nationstar’s chairman. Common Ground has launched a campaign called “Fair Play” and written a report titled “Envisioning Fair Play,” calling for public subsidies to go toward sports playing fields that are in terrible condition in Milwaukee County’s poorest communities.
However, Edens comes off as a choirboy in the article compared to the slimeballs at the Metropolitan Milwaukee Association of Commerce. Not only has the pro-Walker MMAC been a major promoter of this project (because there's nothing those oligarchs love more than to take profits at taxpayer expense), but it's created an Astroturf front group called "Play it Forward" to try to trick the average person into thinking this arena has strong community support. Truthdig points out that Play It Forward has deep connections with current and former Walker Administration officials, lobbyists, and other upper-crusters, and the MMAC's buddies include a few familiar names to those of you who follow this blog.
A June 9 press release disseminated by Play It Forward announcing a rally lists Buddy Julius as the contact person; Julius runs the public relations and lobbying group Tthe Firm Consulting. He previously worked as a lobbyist for the Metro Milwaukee Association of Realtors, another founding member of Play It Forward along with the MMAC. The Firm’s website lists the MMAC as one of its clients.

Julius’ co-partner at The Firm is Ryan Murray (!), former deputy secretary and chief executive of the scandal-ridden Wisconsin Economic Development Corp. (WEDC) for the Walker administration, former deputy chief of staff for Gov. Walker and policy director for Walker’s 2010 victorious run for governor over Barrett. Murray also previously worked as communications director for Republican Senate Leader Scott Fitzgerald, a key point man for the Bucks’ arena effort. Fitzgerald’s younger brother and former Wisconsin Legislature colleague, Jeff, (!)now lobbies for the Bucks.

Metadata reviewed by Truthdig for the June 9 Play It Forward press release shows it was actually written by Steve Baas, one of the two MMAC registered lobbyists for the arena subsidy. Andrew Davis, the other MMAC lobbyist registered to lobby on behalf of the Bucks, formerly worked as director of external relations for Walker before getting the MMAC lobbying gig.
But even with all of this GOP-related lobbying, apparently a number of Democratic votes will be required to push this through, despite Republicans having a 63-36 advantage in the lower house of the Legislature. Dem Assembly Leader Peter Barca says the Dems still have a few demands they'd like to see, and a Milwaukee Business Journal story mentions that Barca will put forth a few Dem amendments to the bill. The biggest change to the Senate bill would be the inclusion of a "meaningful jobs" requirement for jobs associated with the Bucks arena.
The possibility of the Bucks agreeing to pay "living wages" once the project is complete was discussed by state Senate Democrats, but never reached the bill that a bipartisan Senate approved.

Support from at least 15 Democrats will be necessary for the arena-funding bill to pass the state Assembly, where Republicans hold a 2-to-1 advantage. Many out-state Republicans are expected to oppose the state contributing up to $4 million per year to paying arena construction debt (now reduced to $3.5 million with the $2 ticket tax offsetting an estimated $500,000 of the state's contribution) ....

It was not clear whether Barca’s reference to “meaningful jobs” was the same as wage and local-hiring requirements sought by a coalition of unions, community and faith-based organizations in Milwaukee called Alliance for Good Jobs.
Published reports indicate that around 15 of the Assembly's 36 Dems will be needed in order to have any Bucks bill pass, and Assembly Majority Leader Jim Steineke indicates that this will happen tomorrow.
Steineke says he 'fully expects' to have enough votes to pass the measure when the Assembly convenes at 11 a.m. Tuesday.

"This is something I grudgingly came around on, because I do think it overall is a good deal for the state," he said. "When you look at just the economics of if, the amount of money that we put into it is far less than the money that we get back. If we do nothing, the state loses revenue. And that's just something that we can't afford right now, so I do support the overall deal, but I do also get the concerns of the people of Brown County."

But some lawmakers, like State Rep. Eric Genrich, D-Green Bay, say their constituents don't support it.

"Especially in the context of this $250 million cut to the UW public colleges and universities," said Genrich. "To give $250 million of taxpayer money to billionaire owners of the Milwaukee Bucks is just tough for a lot of taxpayers and citizens to take in Green Bay and Northeast Wisconsin."
Interestingly, in the Fox 11 report out of Green Bay, Kaukauna's Steineke may be one the few people from northeastern Wisconsin that will vote for the bill. Fellow Republican John Macco of suburban GB expresses reservations in the story about forcing state taxpayers to fund the Bucks arena, in light of no state funding being put into the recent Lambeau Field renovations, leaving Brown County to have to put in a 0.5% sales tax by themselves to help fix up the home of the Packers.

I also don't remember the Packers bill having the level of sketchiness that's been associated with this Bucks arena bill. I just scratched the surface of Horn and Arria's Truthdig article, and as mentioned before, read the whole thing if you got a chance. If people like those oligarch scum are spending so much time and effort trying to shove through this Bucks bill, you know it can't be a good thing. Barring major concessions on issues involving more funding for Milwaukee jobs and schools, I would strongly encourage Rep. Barca and other Dems in the Assembly to make the GOPs be the ones that vote for this corrupt deal as it stands now. And they can do so by at least demanding that some Dem amendments get through (making the Senate have to vote for the amended bill, and giving more time for stories like Horn's and Arria's to come out), or else say "NO SALE" to the whole thing.

A mistake Dems have frequently made in this state over the last 4 years is to give cover to GOPs on some really bad bills, thinking it makes them look like "nice guys" and "bipartisan problem solvers." How's that worked out for ya at election time? This was the baby of Scott Walker, his Milwaukee oligarch supporters, and the Bucks' billionaire owners. Make them be the ones that put up for it, and not the average Milwaukee taxpayer.

Sunday, July 26, 2015

Here's more ammo for Trump on Walker's failing record

Here's another one to add to the list of Scott Walker economic failures. The Philadelphia Federal Reserve updated its figures for the coincident indexes of all 50 states last week, then released the June coincident indexes on Friday. When put in perspective over the course of 4 1/2 years under Walker, it keeps Wisconsin in the cellar for growth in this index when compared to our Midwestern neighbors.

On Tuesday, the Philly Fed will update its leading indexes, indicating what it expects the economy to do in all 50 states over the next 6 months. We'll see if there is a change for Wisconsin from the outlook that was there in May, where we were a Midwestern standout for a bad reason.

So if Donald Trump wants more smack to lay down on Scott Walker's economic record in Wisconsin, here you go Don!

The ongoing foolishness of (mo)Ron Johnson

After a nice afternoon at AtwoodFest, I got home to unwind and watch the Brewers game, only to be interrupted by some right-wing PAC running an ad which has already been rated as a "pants on fire" lie by the right-wing leaning "Politifact" at the Journal-Sentinel. I don't know who these militarists are trying to reach with this bullshit, but it's not anyone who lives above ground.

That ad also led MSNBC's Chris Hayes to run this segment (h/t to Democurmudgeon for having this clip), which includes a guest appearance by Ruth Conniff of the Progressive, to go over the foolishness of the Senator this PAC is trying to prop up, Wisconsin's own (mo)Ron Johnson. They start by going into one of (mo)Ron's recent embarrasments, where he dictated a ridiculous theory to U.S. Secretary of Energy and nuclear physicist Ernest Moniz about a scenario that seems to have come out of a sci-fi magazine. And then Conniff reminds us of (mo)Ron's other greatest hits.

And let's not forget one of my favorites, in the middle of BENGHAZI hearings in January 2013, the (mo)Ron Senator admitted he hadn't done his homework as he tried to interrogate then-incoming Defense Secretary John Kerry
Johnson: Okay. Will you work with me then, on an ongoing basis, so we can get that behind us, so we can find out what actually happened, and then we can move beyond that? I mean, can you just make that commitment to me?

Kerry: Well I think, Senator, in all fairness, we do know what happened. I think it is very clear — were you at the briefing with the tapes?

Johnson: No.

Kerry: Well, there was a briefing with tapes, which we all saw — those of us who went to it — which made it crystal clear.
We sat for several hours with our intel folks, who described to us precisely what we were seeing. We saw all of the events unfold. We had a very complete and detailed description.
Oh, but Sen. Johnson KNOWS what happened.....because he was told the "truth" by the same neocons/Israelites at the Restoration PAC (who I'm sure have no financial or political interest AT ALL). I think one of the best responses to this week's absurdities of (mo)Ron Johnson was expressed by State Sen. Lena Taylor of Milwaukee, who responded to Johnson's statement on Icki McKenna's show that liberals think Milwaukee children are "idiot inner-city kids" who don't deserve better opportunities.
As a product of the Milwaukee Public School System, I find Senator Ron Johnson’s comments unfitting of the office of a United States Senator. I currently live in the same Milwaukee neighborhood in which I was raised and represent many of the great and hard-working families and children of MPS. These students need the same support, opportunities and respect afforded suburban districts by many of our elected officials. They need legislators that will fight to keep funding in their schools and quality teachers in their classrooms. Instead, these children are treated as political pawns. Senator Johnson needs to take ownership of his words. Hiding behind what he called sarcasm, Johnson pawned off his views on liberals and Democrats. In the more than a decade I’ve represented Milwaukee, I’ve never heard a fellow Democrat call inner-city school children idiots. However, I have heard the word used often to describe some politicians and their actions. - State Sen. Lena Taylor
Then again, (mo)Ron Johnson and the dwindling handful of losers who still support this guy are the living embodiment of the Dunning-Kruger effect.
The Dunning–Kruger effect is a cognitive bias in which an unskilled person makes poor decisions and arrives at erroneous conclusions, but their incompetence denies them the metacognitive ability to realize their mistakes. The unskilled therefore suffer from illusory superiority, rating their own ability as above average, much higher than it actually is, while the highly skilled underrate their abilities, suffering from illusory inferiority. This leads to the perverse situation in which less competent people rate their own ability higher than more competent people. It also explains why actual competence may weaken self-confidence: because competent individuals falsely assume that others have an equivalent understanding.
God, we need Russ back in the worst way.

Saturday, July 25, 2015

Rep. Weatherston, Bruce Murphy with updates on Bucks bill

I wanted to give you a couple of updated takes on the Bucks arena bill, which is still scheduled to be debated in the Assembly next Tuesday. The first comes from State Rep. Tom Weatherston, a Republican who represents suburban Racine. Weatherston has been at the forefront of trying to end the 0.1% Miller Park sales tax in the Milwaukee area, and wrote an intriguing press release explaining what he sees as the difference between the Miller Park bill from 20 years ago, and the current Bucks bill. The first contrast that Weatherston makes is that there is a sunset to how long most government payments will be made to the Bucks arena, as opposed to the open-ended Miller Park tax.
First, the Miller Park bill created a sales tax in Milwaukee, Racine, Waukesha, Ozaukee, and Washington Counties. And, like any tax, once it’s established it’s hard to make it go away. Just look at news accounts regarding the stadium tax over the years. On January 7, 2005, the Stadium Board reported, “the stadium tax remains on track to end in 2014.” Then on March 4, 2008, a stadium consultant reported that, “the sales tax might extend to 2017.” Two years later in 2010 financial projections suggested that the Miller Park stadium sales tax will be paid off “between 2016 and 2018.” Three years after that in March of 2013, a forecast said the Miller Park sales tax could end “as soon as 2016 or as late as 2020.” In March of this year the financial advisor to the Stadium District said in a letter that “we believe the District should be able to satisfy all of its outstanding obligations between 2017 and 2020.” The Bucks Arena bill does not create a new tax.
While some of that delay in ending the Miller Park tax is due to the two recessions that hit the area especially hard in the 2000s, Weatherston is mostly right o this point. The only direct tax money designated for the Bucks arena is through the Wisconsin Center District, and that is in the form of hotel and rental car taxes that are already in place.

Weatherston goes on to note that unlike Miller Park, the Bucks arena bill's taxpayer costs are merely for construction, are capped at a set figure, and will not include ongoing maintenance. All of those issues has resulted in a rising price tag that taxpayers have had to shell out for the Brewers stadium over the last 2 decades.
Next, the Miller Park legislation contained no taxpayer protections and set up a Stadium District with little oversight. The legislation that made Miller Park possible said that taxpayers were liable for $160 million of the estimated $250 million in construction costs with the Brewers making up the $90 million balance. But by the time the stadium construction was completed, taxpayer liability increased to $310 million when construction costs ballooned over the life of the project to nearly $400 million. Cost overruns were picked up courtesy of you, the taxpayer, because there were no protections in the bill. The Bucks Arena bill limits state taxpayer liability to $80 million, cost overruns are paid for out of the owner’s pockets.

Finally, the lease is where the insult was added to the injury to the taxpayers after the Miller Park bill was passed. Taxpayers are treated as an unwitting third party to the lease. The Stadium District as the landlord sticks taxpayers with the bill for a large portion of the costs of maintenance and upkeep. The lease requires the team to pay rent, yet the rent they pay doesn’t even cover the maintenance costs of Miller Park. What kind of landlord does that you ask? The same kind of landlord that plans to buy two more brand new scoreboards, the second one in the final year of the lease, at a cost of $6 million each. Further, did you know taxpayers paid a good chunk of the costs for the “mini-Miller Park” officially known as Helfaer Field (the Little League Park in the Miller Park parking lot) ?.... The cost of the field was $3.1 million with $2.1 million coming from the Helfaer Foundation. Taxpayers and the team were liable for a 70/30 split respectively for the remaining $1.1 million. Is this maintenance and upkeep? Under the Bucks arena legislation, after the arena is built, maintenance and upkeep and improvements are the Bucks’ responsibility, not the taxpayer’s.
I'll have a bit of a quibble with Weatherston's comment about the Bucks bill not paying for improvements, because the current Bucks bill still plans to spend $10 million to fix up the Bradley Center over the last two years that the Bucks would play in it (it's provision b on Page 3 of the 2.0 bill, and that hasn't been amended as of this time). But otherwise, I think these points are spot-on, and are improvements over the Miller Park bill that Weatherston calls "the model of what not to do" when it comes to funding sports arenas.

But that doesn't mean there still aren't a ton of goodies and other subsidies in this Bucks bill, as Bruce Murphy of Urban Milwaukee pointed out this Thursday. Here a tasting of the hundreds of millions in tax breaks and other extra perks that the Bucks and this arena will get, as opposed to the typical private business in Milwaukee.
A property tax exemption will extend to nine acres of development by the Milwaukee Bucks, which the bill says “may include offices of the professional basketball team…, parking spaces and garages, storage or loading facilities, access ways, sidewalks, skywalks, plazas, transportation facilities, and sports team stores.” We will never learn the total value of this complex because its exempt and will never be appraised by the city, but even assuming a value of just the $500 million estimate for the arena, that’s nearly $15 million in property taxes lost annually or $450 million over 30 years. (For a real business the assessed value might be lower than this but over time the tax rate would rise and I’m applying current rate for all 30 years.)...

-A sales tax exemption on building materials, equipment and supplies used solely in the construction of the arena. Assuming the cost of materials, etc. for the arena is, say, $300 million, that exemption would be worth about $17 million to the team.

-A sales tax exemption on luxury boxes which will be carried over from current law, which makes luxury boxes for an NBA arena sales tax exempt. In the NBA the average luxury box cost about $206,000 annually. Assuming 30 boxes, that’s six million in income annually, which would have generated $336,000 per year, or about $10 million over 30 years. (An regressive contrast to the $2 ticket tax that's part of the current arena bill, and the sales tax us regular folks already pay on tickets.)

-A sales tax exemptions on all retail within the arena, basically for concessions stands and other retail not normally open to the public. Any licensed bars or restaurants regularly open to the public will be subject to property and sales taxes.
And the Bucks would also be exempt from the state's corporate income tax, which is a nice bonus when you realize NBA teams will be making money hand-over-fist in the coming years with the league's new broadcasting deal. Murphy also mentions that the city of Milwaukee will have to borrow to build its portion of the infrastructure that it's contributing to the arena, and in addition to the Bucks picking up parking revenue from the garage being donated by the City, Milwaukee will lose parking revenue from the structure on 4th Street that it currently operates, but will demolish for the arena.

It is those local government costs, along with the contrast to the loss of education funding and other services in Milwaukee that make me oppose this arena (well, that and the corrupt ties between Gov Walker support of the arena and Walker 2016 finance chair Jon Hammes, whose company stands to make millions on this deal). As mentioned previously, I think a simple local Milwaukee County sales tax is the best way to go if you want to have public funding toward such an arena, and it can even be done in such a way to make Rep. Weatherston happy by killing the Miller Park tax at the same time. In addition, I think having the $4 million cut to Milwaukee County shared revenues to start in 2016, before there is a new arena, is a double-whammy, and the cut should be put off until 2017, when the County could realize the revenues from the new facility to offset some of that cut. Maybe some of the Assembly reps could throw that in as an amendment, which I'd think the Senate would have no problem concurring with.

Both Weatherston and Murphy's articles are good food for thought as this bill goes back for debate at the Capitol next week, and we'll see what the outcome is, and if any changes end up getting made to the arena bill.

Brilliant article on effects of suburb-based Wisconsin Transportation

If you have 15-30 minutes over the weekend, take a look at this outstanding article in Politico Magazine by Michael Grunwald on Wisconsin’s transportation policies. Entitled “Overpasses: A Love Story”, Grunwald talks about how the state, and especially the Milwaukee area, has been affected by its devotion to building more and more freeways in the last 50 years, to the delight of the Road Builders lobby and related campaign contributors. Grunwald hints that it’s not a change for the better, either fiscally or socially, and that the situation has worsened in the last 4 ½ years since Scott Walker and WisGOP took over state government.
I got a firsthand look at the consequences in Wisconsin, where snazzy megaprojects crowd out basic repairs, and politicians lavish attention on big highways at the expense of local roads and public transit. The anti-sprawl group Smart Growth American found that from 2009 to 2011, Wisconsin spent only 39 percent of its highway dollars on maintenance, versus 61 percent on new highway capacity that added to its maintenance backlog. As the state has shifted resources into freeway megaprojects, 71 percent of its roads are in mediocre or poor condition, according to federal data. Fourteen percent of its bridges are structurally deficient or functionally obsolete, which is actually better than the national average. Walker and his fellow Republicans have killed plans for light rail, commuter rail, high-speed rail, and dedicated bus lanes on major highways, so there is almost no public transportation connecting Milwaukee to its suburbs, intensifying divisions in one of the nation’s most racially, economically and politically segregated metropolitan areas. Yet Walker, who is running for president as a staunch fiscal conservative, has pushed a $250 million-per-mile plan to widen Interstate 94 between the Marquette and the Zoo despite fierce local opposition.

In some ways, Wisconsin represents an extreme example of the priorities that have traditionally dominated U.S. transportation policy, In some states, regional transit agencies are underfunded; in Wisconsin, thanks to Walker and the legislature, they’re illegal. Walker also killed a “Complete Streets” program that pushed road builders to accommodate bicyclists and pedestrians. The drive to promote driving has gotten so relentless that the courts have begun to apply the brakes. In a ruling with national implications, a federal judge recently blocked a $143 million expansion of a state highway between Fond du Lac and Sheboygan, citing absurdly inflated traffic estimates that Wisconsin transportation officials had used to justify it. Another potentially precedent-setting lawsuit alleged the Zoo project would serve suburban commuters at the expense of inner-city minorities; the Walker administration had to fund three new bus routes to settle it.
In addition to the cutting and limiting of non-driving transportation options, the 262 Republicans that support Walker and their 1980s mentality of "drive-drive-drive" and "sprawl-sprawl-sprawl" have let to policies that hamper the ability of local Wisconsin communities to fix their own streets. And as Grunwald notes, the Governor and his backers don’t seem to want people to find about its big-spending history on expressways and their high-dollar future plans when it comes to transportation.
State transportation officials, who initially agreed to show me around their [SE Wisconsin] megaprojects, later cancelled my tour and declined to comment; I was told by others that Walker’s aides had intervened. Goss and some of his colleagues with the road builders showed me around instead, and they noted that WISDOT actually backed off an earlier plan to double-deck that stretch of I-94, which would have been even more expensive and intrusive. The larger point for defenders of the megaprojects is that whether or not you like the carbon emissions, the land-use patterns, or the implications for the social contract, most Wisconsinites drive, and they do a lot of their driving on freeways. Only about 8 percent of the Milwaukee area’s commuters walk, bike, or take buses to work. The economy runs on concrete.

The critics argue that even for Wisconsinites who do drive, the state’s rush to supersize highways is draining upkeep for the local roads they use every day, like adding a new wing onto a house with a leaky roof and a busted furnace. In 2003, the ratio of state spending on highways to local roads was about 2:1. By 2013, the ratio had soared to more than 3:1—and state law prohibits municipalities from raising sales taxes to fix their own roads. [note: several legislators up North have sponsored a bill that would allow such a sales tax for local roads] Juan Carlos Ruiz, a Latino activist in Milwaukee, showed me around some of the city’s minority neighborhoods, where gutted streets contribute to a sense of malaise. Mandela Barnes, a young African-American state representative from the city’s north side, told me he recently had to replace the suspension on his Dodge Charger, a casualty of local potholes. Jeff Parisi, a contractor who has helped repair Main Streets in small towns like Waunakee, Platteville and Stoughton, said he’s scrambling to adjust to cuts in local road aid, and small towns with aging Main Streets are, too.
And here it is worth mentioning that while the Zoo Interchange did receive a haircut in the final state budget, as the North end of the project will be delayed by 2 years, it is nothing compared to the effects that will be seen by a $250 million total cut in other major state highways outside of Southeast Wisconsin, and a cut of over 6% in each year to state and local highway maintenance (and that's in dollar amounts. Given that highway inflation is high right now, the real cut will be much higher).

Interestingly, the Walker/WisGOP budget still counts on using the same amount of Federal Highway funds as the base 2014-15 year budget, with a disproportionate amount of federal funds going to pay for major highways and maintenance outside of the Milwaukee area megaprojects. This is noteworthy given that the federal highway trust fund runs out next week, and there is no bill that has been passed to replace it, and no agreement in place. Oddly, the Walker Administration and WisGOP doesn't seem to be worried about the possibility of these Federal Highway funds not being there next week or being drastically reduced, which in stark contrast to their excuse of not expanding Medicaid because there is no guarantee of Obamacare funding being 2020!

Walker also cut state shared revenues in his first budget, and has generally failed to fully restore them for the 4 years since. This newly-installed budget does not set aside any additional funds for local road aids, transit, or state shared revenues, which means the higher costs of road repair get put onto local property taxes, or services in those communities get cut. This will then mean those costs of deferred maintenance pile up, and more expenses have to be shelled out for in future budgets…which already have structural deficits built into them due to the refusal of Walker and WisGOP to raise taxes or fees to pay for their current road-building binges.

I strongly encourage you to read the whole thing this weekend, as it touches on the racial, anti-city politics that are a main part of this regressive strategy on transportation. (For example, Assembly Speaker Robbin’ Vos is quoted in the story as saying public transit is a “social service than a traditional transportation program”, intended to give more state taxpayer dollars to poor people in cities.) We can only hope that more of this kind of in-depth reporting with context continues to come out on how Scott Walker REALLY has operated, so the rest of the nation could see how damaging the "divide and conquer" mentality would be if it came from the Oval Office, and how that mentality would make the U.S. fall behind the developed and developing world when it came to transportation.

Thursday, July 23, 2015

Is Hammes the real reason Walker backed the Bucks arena?

With the Bucks arena scheduled to have its final debate in the State Assembly next week before hitting Gov Scott Walker’s desk, let’s take a look at why a GOP presidential candidate would want to openly support a multi-million dollar handout to a sports team a few months before the first primaries. As we’ve found out over the last few days, it may well have to do with a connection Walker has with his campaign’s recently installed co-chair of finance, Jon Hammes.

I've previously mentioned this article by David Sirota and Andrew Perez in the International Business Times, which noted how Hammes stands to be a big winner if the Bucks arena becomes reality.
However, before Walker proposed the arena deal, Hammes had donated more than $15,000 to his gubernatorial campaigns, according to state campaign finance data. Federal records also show that over the last decade, Hammes has donated almost $280,000 to Republican candidates and third-party groups -- including more than $14,000 to the Wisconsin Republican Party. Hammes Company in 2010 donated $25,000 to the Republican Governors Association, which that year spent heavily in support of Walker's first run for governor. Jon Hammes also contributed $500 to Walker while he was a Milwaukee county executive.

Hammes became one of the part owners of the Bucks in 2014. A little more than three months later, Walker unveiled his proposal to spend a quarter of a billion dollars on a new arena for the team. The team currently plays at BMO Harris Bradley Center in Milwaukee….

…Hammes’ firm also was contracted by the local chamber of commerce to evaluate new stadium proposals. The company has expertise in that area, having been involved in the construction of the New York Giants’ stadium and the renovation of the Green Bay Packers’ home at Lambeau Field in Wisconsin.
That seems to answer the question why the allegedly “free-market conservative Governor (HEY! I hear your WEDC jokes!) sent a proposal to the State Legislature that would have shelled out $488 million to help build an arena for billionaire owners of Milwaukee’s NBA team. You really think these things are all coincidence? If so, then if the Bucks move to Vegas (as is rumored if the arena doesn’t go through), Hammes should go along with them, because he’d make a killing at the casinos and sports books with that kind of "luck."

I’ll also forward you to this article from Journal-Sentinel real estate reporter Tom Daykin from 3 weeks ago, which goes over Hammes’ recent land dealings in downtown Milwaukee.
An investment group led by developer Jon Hammes has purchased a large vacant downtown lot near a Park East site where Hammes proposed to build offices.

The 1.5-acre parcel, 210 E. Knapp St., was sold by BMO Harris Bank to HFJV LLC for $1 million, according to state real estate records posted Friday. The vacant lot is bordered by E. Knapp, N. Water and N. Market streets.

That property is just east of a 2.6-acre site between N. Water St. and the Milwaukee River, north of E. Knapp St., where Hammes has proposed developing three or four offices buildings--if the project can land tenants and financing.
And hey, whaddya know? All of those sites are just a few blocks across the Milwaukee River from where the new arena would be. And it’s within a block of a lot that Hammes’ group bought in November, after Walker’s re-election, but before Scotty’s original Bucks plan was released in January.

Remarkably, Daykin’s article brings up the new Bucks arena being nearby, but in the week since Sirota and Perez’s report in the International Business Times, neither the Journal-Sentinel nor the Wisconsin State Journal has said a word about the Walker-Hammes connection, and how Hammes stands to make a huge profit off of developments associated with the arena. Sure makes you wonder if these guys are avoiding the issue on purpose, as a way to curry favor with Jon Hammes, the other Bucks owners, and related big hitters in the state. There especially seems to be the case with the J-S, as their headquarters are located just blocks from the new arena and they would get a nice bump from increased property values around the new arena. In addition, radio station WTMJ 620 is the Bucks’ flagship, and they would likely get increased readership for their paper from having an NBA team.

Dave Zirin summed up this sketchy cronyism in an article he wrote yesterday morning for the Nation, and how it ties directly back to Scott Walker’s SOP, and the scumminess of his puppetmasters.
This absence of shame—coupled with an adolescent’s ardor for Ayn Rand—has long been Scott Walker’s defining characteristic and we are witnessing it again in his slavish pursuit of Bucks-bucks. Take a step back, and the man’s cheeky chutzpah provokes a near awe: Walker has—amidst a highly scrutinized presidential campaign—chosen to bankroll a billionaire backer with corporate welfare who in return will head his presidential financial operation. The optics of this are patently corrosive enough as is, but it’s even worse than that. Walker and the Wisconsin state legislature will pay for it by slashing roughly the same amount of the cost of the stadium from the state’s higher education budget. Over a quarter-billion for the arena and a quarter-billion siphoned from higher ed, and the giving of absolutely no fucks in how it all looks.

This isn’t politics. This isn’t differing economic philosophies. This isn’t even simple hypocrisy. This is trolling-as-governance, and Scott Walker is an expert in this art. This is what compels him to compare trade unionists to ISIS or stand up for the Confederate flag before the Charleston dead had even been put to rest (and then flip on the issue again), or rail against marriage equality while his own children cringe in shame, or stand up for the sanctity of Native American mascots. These qualities undoubtedly make him attractive to a section of the Republican base, the ones currently waving Confederate flags north of the Mason-Dixon Line and hosting Muhammad-drawing contests. He is attempting something audacious: trying to win the Republican nomination solely by relying on a coalition of the “jackass” wing of the party. One can already see his finance team approaching all egg avatars to join the Walker team.
Hey Dave, as an aside, if you’ve read comment sections in local papers or Facebook, and took a gander at some of the criminal complaints in the John Doe investigation, it’s pretty clear Scotty’s boys have been paying posters to front for him for years.

Zirin’s ending sentences are more accurate than he even knows, because it really does sum up the "262 wing" of the Wisconsin Republican Party these days ( Hi, Speaker Vos! Which public records are you wishing to hide today?).
At least we know why Hammes sees a kindred spirit in Scott Walker: They both share an absence of shame and an utter absence of fear that anyone will hold them to account.
Let’s see if they get held to that account in the next 5 days, before the Bucks bill is schedule to hit the Assembly floor on the 28th. I already oppose public funding of the arena because I think there are about 100 other needs in Milwaukee and Wisconsin over the Bucks. Now add in the recent dot-connecting by Sirota, Zirin, and other journalists on this Hammes-Walker connection, and it’s got the stench of Chicago-style corruption on top of the foolish use of tax dollars.

No Dem in the Assembly should go along with this crooked scheme, and that includes the reps from Milwaukee. Even if Bucks co-owner Marc Lasry promises to raise big money for them like he has for Barack Obama and Hillary Clinton, this thing is being done in the wrong way, and I would not associate myself with it.

Wednesday, July 22, 2015

Wisconsin the center of another housing bubble?

Here's an economic indicator in Wisconsin that is in stark contrast to the state’s awful jobs numbers and fiscal issues. It’s the state’s home sales stats, as the Wisconsin Realtors Association is unofficially reporting a jump in June home sales of 17.6% compared to June 2014. Nearly 9,300 homes were sold in Wisconsin last month, the most in the state's busiest home-sale month since the Bush-era housing boom.
“This is the best June sales volume we’ve seen in 11 years, well before the recession began,” said Dan Kruse, WRA board chairman. “Moreover, June has historically been a very busy month for housing sales,” Kruse added. “In a typical year, June accounts for about 11.5 percent of annual sales, which is the highest share of any month during the year,” said Kruse.

Compared to the first six months of 2014, sales were up by solid margins in all regions. The strongest sales were in the North and West regions, where existing home sales grew between 17.1 percent and 18.5 percent for the first half of the year. The growth from January through June in the remaining four regions was tightly clustered in the range of 9.9 percent to 12.2 percent, again relative to the first six months of 2014.

The statewide median price continued its strong growth trend as prices rose 6.3 percent to $169,000 in June compared to June 2014. “Prices are up $10,000 over the last 12 months, and they have been generally rising on an annual basis for more than three years,” said WRA President and CEO Michael Theo. After the recession began at the end of 2007, state housing prices didn’t bottom out until 2012; since March 2012, they have been generally rising when compared to the same month in the previous year. “It took several years to deal with the excess inventory created by foreclosures, but we are now at pre-recession levels on foreclosures in the state, and inventory levels are at healthy levels statewide,” said Theo. Foreclosures for the first half of the year are down 11.3 percent from the first half of last year, and they are nearly 61 percent lower than the peak foreclosure year of 2010. “We had just under nine months of inventory in June, but these markets are tightening,” Theo said. New listings were down 8.2 percent in June 2015 compared to June 2014, and the metropolitan counties had 6.7 months of available supply last month.
The rest of the country is also seeing growth in the housing sector, although sales haven't jumped double-digits like here in Wisconsin.
U.S. home resales rose in June to their highest level in nearly 8-1/2 years, a sign of pent-up demand that should buoy the housing market recovery and likely keep the Federal Reserve on track to raise interest rates later this year.

The National Association of Realtors said on Wednesday existing home sales increased 3.2 percent to an annual rate of 5.49 million units, the highest level since February 2007....

Economists had forecast sales rising to an annual rate of 5.40 million units last month. Sales were up 9.6 percent from a year ago.
Some of this is certainly due to the low interest rates that have persisted as the country has dragged itself out of the Great Recession, an economic event spurred on by the popping of the last housing bubble between 2006 and 2008. And Wisconsinites are hardly alone when it comes to people wanting to buy a home, as a gauge of homebuilder sentiment is at its highest level in 10 years. Those record-low interest rates may finally be coming to an end, and it’s being reflected in rising mortgage rates, which could slow down an overheating home market by increasing the total amount paid on a mortgage.
The 30-year fixed-rate mortgage averaged 4.09% for the week ending July 16, 2015, up from last week when it averaged 4.04%. A year ago at this time, the 30-year FRM averaged 4.13%.

The 15-year FRM also increased and grew to 3.25%, up from last week when it averaged 3.20%. In 2014, the 15-year FRM averaged 3.23%.
The chart on the 10-year U.S. Treasury note reflects this as well, with the yields going from 1.67% on February 2 to more than 2.40% by the end of June, and the current rate currently sitting at 2.32% That’s before any raises of interest rates by the Federal Reserve, which many analysts predict will start to occur in the next few months. If that’s the case, when do these rising sentiments and home sales and prices start to level off?

We’ve seen this routine before. Maybe the lending practices aren’t as sketchy or risk-laden as before, but these stats on rising home sales and prices seem to be out of whack with an economy that still has stagnant wage growth for far too many, reflected in retail sales growth that is still somewhat mediocre. Consistent U.S. job growth above 200,000 a month is helping, but wages continue to lag, with real hourly wages down 0.4% last month, and only up 2.0% before inflation over the last year.

Unless some other economic development comes along to continue to carry this upswing in housing, doesn’t it seem that things are getting ahead of where they should be, and this new housing bubble is going to deflate if not outright pop in the near future? And doesn't that seem especially true in Wisconsin, where the sales are up by more than we're seeing nationwide at the same time that we've had the worst job growth in the Midwest, and put into law wage-suppressing measures like (right-to) work-for-less and the removal of prevailing wage for many types of projects?

My 20 years of adulthood have earned me the right to be skeptical of the staying power of these housing numbers, and to be very worried about the fallout when the bubble does burst.

Post-veto budget may look better, but still brutal for Wisconsin

The Legislative Fiscal Bureau came out this week with the “plain language” explanation of Scott Walker’s 104 vetoes to the State Budget, and their effects on the state’s bottom line. It’s a very good read that cuts through a lot of the BS spin, and I wanted to touch on a few of the items the LFB analyses regarding the vetoes.

On the good side, there were some special-interest tax breaks that the Governor dumped out of the budget. These provisions were part of the notorious “999” motion thrown in at the end of the Joint Finance Committee’s budget deliberations earlier this month (I outlined some of these when they happened). They include the following:
As passed by the Legislature, Senate Bill 21 would have required that, with regard to taxable sales on access to or the use of an amusement device, the state sales and use tax only be imposed on the sales of playing time on the device. Further, to the extent that playing time on an amusement device derives from playing specified digital goods ("specified digital goods" means digital audio works, digital audiovisual works, and digital books under current law) or additional digital goods ("additional digital goods" includes video or electronic games under current law) on the device, the state sales and use tax would not apply. The bill would have defined "amusement device" as a pool table, video game machine, video gambling machine, dart board, pinball machine, foosball table, air hockey table, shuffleboard table, or jukebox....

As passed by the Legislature, Senate Bill 21 would have increased the cigarette tax stamp discount from 0.7% to 0.8% for cigarette manufactures, bonded direct marketers, and distributors. It was estimated that this provision would reduce state revenues by $500,000 in 2015-16 and $600,000 in 2016-17....

As passed by the Legislature, Senate Bill 21 would have created a sales and use tax exemption for goods sold to construction contractors who, in fulfillment of a real property construction activity, transfer the goods to Wisconsin elementary and secondary school districts, municipalities, or nonprofit entities if such goods become a component of a facility in this state that is owned by the entity. The bill specified that eligible nonprofit entities would include those that are organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations. The bill would have defined "facility" as any building, shelter, parking lot, parking garage, athletic field, athletic park, storm sewer, or water supply system, but not a highway, street, or road.
The Governor’s vetoes mean that previous law stands, and that these businesses will still have to pay the same amount of taxes. This increases state revenues by an estimated $12.4 million over the two-year budget over what the Legislature approved of.

There were also millions of dollars that Walker removed from the Wisconsin Economic Development Corporation’s budget, likely to avoid having the JFC having to discuss WEDC’s slushy mess at a time that it could further damage the Walker 2016 campaign.
As passed by the Legislature, Senate Bill 21 would have reduced GPR funding by $17,900,000 in 2015-16 and $12,400,000 in 2015-16 from the Wisconsin Economic Development Corporation's (WEDC) operations and programs appropriation and, instead, provided those amounts in the Joint Committee on Finance's (JFC) supplemental appropriation. The Governor's partial veto retains the reductions to WEDC's operations and programs appropriation, but deletes $16,300,000 in 2015-16 and $12,400,000 in 2016-17 that would have been placed in JFC's supplemental appropriation. [The $1,600,000 that would remain in JFC's supplemental appropriation in 2015-16 from the amounts subtracted from WEDC's operations and programs appropriation was also vetoed by the Governor and is described under "Investing in Infrastructure -- Item D-70."]
As is becoming habit, the best ways in Walker World to deal with a problem is to avoid dealing with it, or to abolish the agency that is looking into the issue.

If you turn to page 8 of the PDF, the LFB lists the numbers of the budget as it stands under Walker’s vetoes. This will likely be the source of a Walker talking point on the campaign trail that will claim something like “Our budget has a $131.4 million surplus.”

First of all, it’s a silly comment because all Wisconsin budgets by law have to be at +$65 million or above, because of a requirement for reserves. Second, this ignores the $500 million (and possibly $850 million) in borrowing that will need to be done to balance the Transportation Fund’s budget. This “separate budget” trick does not work for the “unified” Federal Budget, but Walker won’t tell the rubes in Iowa, New Hampshire and South Carolina that.

And Page 8 also shows this: The “$131.4 million surplus” figure is only reached by assuming nearly $1.1 BILLION in lapses (i.e., unspecified cuts), including $740.8 million in Year 2 of the budget. That’s like a debtor saying “my checkbook will balance, if I assume I won’t pay anything for gas or parking for my job next year.” It would be nice if we didn’t have to do that, but it’s not very connected to reality.

So while the governor’s vetoes did improve the bottom line for now (assuming they’re upheld), it’s still a brutal budget with very little margin for error, and a document that will likely result in further cuts in the very near future.

Tuesday, July 21, 2015

Updated info shows Wisconsin still in the cellar for jobs

Today had the Bureau of Labor Statistics release of the June jobs numbers for all 50 states, and not surprisingly, Wisconsin continued to lag its neighbors in the first half of 2015 after its brutal performance. Here's how the numbers break down for the year-to-date.

Private sector job growth, Dec 2014- June 2015
Mich 1.82% (+66,000)
Minn +0.99% (+23,900)
Ind. +0.94%(+24,400)
Iowa +0.88% (+11,500)
Ohio +0.66% (+30,400)
Wis. +0.39% (+9,500)
Ill. +0.38% (+19,100)

No state added fewer private sector jobs than Wisconsin, and only the dysfunctional train wreck in Illinois kept Wisconsin from being dead last in rate of growth (and even then, just barely). And because the FIBs had outgrown us in the previous 4 years (as measured by the Quarterly Census of Employment and Wages), this means Wisconsin stays dead last in the Midwest in the Age of Fitzwalkerstan.

Somehow, I'm thinking that chart won't be shown in Scott Walker's campaign speeches. But it might be a part of John Kasich's....

Back in the 608

Just got back after a needed 3 days of great Northwoods scenery. Working to catch up on my real life, with more to write about later on. Here's a preview- the first 6 months for Wisconsin's lagging job growth seem likely to land it in the same place it was in the first 4 years of Scott Walker's tenure. At dead last in the Midwest.

Stay tuned....

Saturday, July 18, 2015

Getting away from the heat

I'll be up in the Great Northwoods, where it's "only" 85 today, so don't expect much in the next few days. I'm sure you can.keep yourself amused

Friday, July 17, 2015

It pays to have connections - be you a developer or a politician

A couple of items going on in Wisconsin's two largest cities illustrate why one should be skeptical of promises and political influence that comes with developers. These stories show how many of these bigtime players are not to be completely trusted, and often rely on their political influence to increase profits at taxpayers' expense.

The first is an item that came out earlier this week regarding the a couple of developments in downtown Madison. Bob Dunn is the president of Hammes Corp., and is a major developer in town. He has recently reached an agreement with the City of Madison to get $42 million in City subsidies to help build a $188 million project downtown that will feature the new headquarters for Exact Sciences Corp. However, Dunn was in the news this week for another reason, as the Isthmus newspaper in Madison reported that Dunn hasn't paid taxes and bills related to his last major city-funded project.
[Dunn's] LLC currently owes the city more than $312,000 in back taxes, including more than $25,000 in interest and fees, on his last controversial development, the Edgewater Hotel. His LLC also owes a smaller amount, $2,548, on a separate piece of the property, which is likely a common area of the condo section of the building.

The Edgewater was the cause of a bruising development fight that dragged on for years and still resonates with many residents. It pitted historic preservationists and neighborhood groups against pro-development advocates. It likely played a role in the 2011 mayoral election, when Paul Soglin unseated Dave Cieslewicz, who championed the project.

The hotel renovation cost roughly $100 million. Last month, the Wisconsin State Journal reported that J.H. Findorff & Son and 15 other companies had filed liens against the hotel totaling $23.7 million.

Dunn hasn’t paid real estate taxes on the property since March 31. Dave Gawenda, the city’s treasurer, says that if the taxes aren’t paid by Sept. 1, the owner is issued a tax certificate, and the account is turned over to the county for enforcement.
Guy hasn't paid all of his own bills, but yet he gets the nod for a massive injection of revenue with the Judge Doyle Square project, with the city floating a sizable amount of the bill. Most of us would be told to hit the road and never do another job again if we were deadbeats, but we're not Bob Dunn and Hammes Corp., so they get the inside track at the next big project. Cool deal huh?

Speaking of connections, Dunn's partner in the development business has some pretty strong connections himself. In addition to the real estate company that carries his name, Jon Hammes has donated huge amounts of money to Republican candidates, especially in Wisconsin, and a quite a bit of that money has floated to Wisconsin Governor Scott Walker. In addition, Hammes is going to serve as the national finance co-chair of Walker's presidential campaign, and those connections may help explain why the allegedly "free-market" Walker wanted to originally throw so much state money for the Bucks new arena project. David Sirota and Andrew Perez at the Intetrnational Business Times connected the dots, and it should make you "Hmmmm."
....before Walker proposed the arena deal, Hammes had donated more than $15,000 to his gubernatorial campaigns, according to state campaign finance data. Federal records also show that over the last decade, Hammes has donated almost $280,000 to Republican candidates and third-party groups -- including more than $14,000 to the Wisconsin Republican Party. He also contributed $500 to Walker while he was a Milwaukee county executive.

Hammes became one of the part owners of the Bucks in 2014. A little more than three months later, Walker unveiled his proposal to spend a quarter of a billion dollars on a new arena for the team. The team currently plays at BMO Harris Bradley Center in Milwaukee.

A Hammes Company representative declined to say what percentage of the team he owns.

Hammes’ financial interest in Walker’s arena subsidy package may not be limited to just his stake in the team. According to local news reports, his real estate firm also also bought parcels of downtown land near the location of the proposed new arena. Hammes’ firm also was contracted by the local chamber of commerce to evaluate new stadium proposals. The company has expertise in that area, having been involved in the construction of the New York Giants’ stadium and the renovation of the Green Bay Packers’ home at Lambeau Field in Wisconsin.
On top of the increased revenue that will be flowing to all NBA teams as part of the new TV deal for the league, if Hammes can get himself a piece of the $500 million arena project or any of the related developments around the new arena, that's a nice little return on investment for having the arena project be supported by Walker and other state politicians,, isn't it? Maybe this is all happening independently of these donations and connections for Hammes (you know, like how Super PACs help certain candidates "independently"), but it sure makes you wonder. And now with this week's John Doe ruling trying to allow campaign coordination without the public being allowed to know the names of the donors to these "third parties" that are nothing more than outgrowths of a candidate's campaign apparatus, it'll make it a lot easier to have these cronies keep the cycle of "donation/reward/donation" going with less of a chance of it being detected.

On a related "Hmmmm" note, why didn't the Milwaukee media or other Wisconsin publications pick up on this obvious connection between the Bucks arena project, Hammes, and Walker. Makes you wonder if they're in on the take as well (we know JournalComm has a clear interest in getting the arena done, due to their owning of land near the arena and because of Bucks broadcasts on AM620).

There's another major elected official could be looking at a nice payoff in his recent real estate investment. That's Milwaukee County Executive Chris Abele, who bought a $2.1 million condo a few blocks from the arena site at the new Moderne complex downtown. Sure, maybe Abele bought that 4,300+ sq. foot condo just to be closer to the action downtown and to his workplace at the Milwaukee County Courthouse, but it sure is a nice coincidence that he bought the building just as the Bucks arena debate was heating up, and before the public knew about the added development in the blocks around the arena. Shiny new developments downtown would make that unit a lot more attractive to buy for a Bucks player or another high roller, and very likely to quickly go up in value. Now maybe that's all a coincidence or just good business savvy, but that sure makes Abele quite the lucky investor, doesn't it?

When you dig into what these members of Wisconsin's exclusive club get out of these development deals, it sure explains how they stay on top, doesn't it? So when do we crash the club and even the score?

Thursday, July 16, 2015

Jobs stay subpar in Wisconsin

It was well-hidden between the John Doe news and the Bucks arena, but there was yet another disappointing Wisconsin job report that leaked out late this afternoon. 300 more private sector jobs went away, which includes 2,300 seasonally-adjusted jobs lost in Construction, 2,000 lost in Leisure and Hospitality, and 300 in Manufacturing (all of which reflect lower-than-normal seasonal hiring). Higher-than-average seasonal hiring by local governments meant that total jobs were up by a seasonally-adjusted 1,900, and those mediocre results were somewhat alleviated by May's figures being revised up by 2,600 private sector jobs and 2,800 overall, but that still means that May had 5,800 total jobs lost, and the weak results in June means that the Walker jobs gap has grown yet again, now up past 96,600 private sector jobs, and over 90,000 overall.

The household survey also featured a ongoing trend of recent months- bad employment numbers masked by a lower work force. This time, it says that 12,600 fewer Wisconsinites were listed as "employed" in June, but the unemployment rate held at 4.6% because 11,000 people dropped out of the workforce! This now means that over 40,000 Wisconsinites have allegedly dropped out of the work force in just 5 months, the participation rate has dr4opped by 1% in those give months, and while some of this may be reversion to the statistical mean (it rose quite a bit in 2014), the state's workforce numbers are now no different than they were at the start of 2013.

Take a look at what the state's unemployment rate would have done since January if the state's work force numbers had remained the same, instead of having these 40,000 dropouts reported.

That's right, our unemployment rate would be 5.9% instead of 4.6% if our labor force had remained the same as we had in January. I really want to see why this is. People leaving? Retiring and not being replaced? Statistical blip and the labor force will go up in future months, along with the unemployment rate?

Either way, both the jobs and unemployment figures are not going in the right direction, and many of us should keep these figures at the ready if Scott Walker wants to talk up his "economic success" to the rubes out of state on the campaign trail. Because while Scotty may lie, the numbers do not.

John Doe decision means you don't have the right to know

Like anyone else that gives a shit about democracy and this state, I'm obviously outraged by the John Doe decision. Not as much for the expected "issue advocacy" garbage reasoning that the corrupt WMC-bought judges used to try to let Gov Walker and his oligarch buddies off the hook, but because of a provision that orders the destruction of evidence in the case. It screams cover-up, and goes to the heart of the message that right-wingers have on the subject of open government- you, the people do not have a right to know who's influencing us, and what we're really up to. Nixon lives, folks.

I'll let others that are better at law and the written word take it from there. For the technical side of the decision, I'll direct you to Rick Hasen's Election Law Blog, which explains why this is such a damaging decision if it is allowed to stand.
Gutting of campaign finance. The conservatives on the Court have held that Wisconsin’s existing campaign finance laws violate the First Amendment to the extent they limit coordination between a candidate and any group, even a 501c4 group not disclosing its donors, on campaigns to support that candidate. The only thing the nominally outside group has to do is to avoid words of express advocacy or their functional equivalent. Avoiding express advocacy while vigorously supporting a candidate, as we know from the federal period before McCain-Feingold, is child’s play. That is, a candidate can now direct unlimited contributions to a nominally outside group and tell that group what ads to run, when, and how. If you think it is a problem for someone to be able to give millions of dollars directly to a candidate to support that candidate’s campaign, then this should be very troubling to you. It was a theory of coordination strongly rejected by the 7th Circuit in the federal version of the John Doe case. And there’s no prospect that the Wisconsin legislature, dominated by Republicans and already weakening campaign finance law, will fix this. This applies only to Wisconsin elections (and not federal elections in Wisconsin) but is very, very bad news. (More analysis in my earlier Slate piece.)

Conservative harassment. For months, conservatives have been sending me stories for ELB purporting to show the horrors of the investigation (late night raids, etc.) However, these stories were never fully verified. As the Milwaukee-Journal Sentinel editorialized about the selling of this story: “A breathless article in the conservative National Review. An equally breathless report by Megyn Kelly on Fox News. Tart comments from Gov. Scott Walker on the campaign trail in Iowa…. Conservatives targeted by the John Doe investigation for more than a year have declined to discuss their concerns with the Journal Sentinel or other independent news outlets that will seek out all sides to a story. They have told their stories only to partisan outlets that share their political agenda, such as Fox News, the National Review and The Wall Street Journal’s editorial page (not its news staff).” Now the conservatives on the Supreme Court have validated this version of events, and without full transparency the stories cannot be fully investigated. One Justice even went so far as to reach the issue of the constitutionality of the nighttime raids even though the issue was not before the Court. (I would love that Justice to ride along with police in the poorer parts of Milwaukee at night and perhaps gain some appreciation of what others face from law enforcement every day.) In the meantime, they fit into a conservative meme of persecution for conservative ideas. Expect this to lead to calls for even more laws to be struck down out of fear of persecution, fears which generally do not stand up to scrutiny.

Recusal? We know that one of the prosecutors in the case asked at least one of the Justices who decided the case to recuse because the Justice may have been supported by some of the campaign spending in the case. As the dissenting Justice Abrahamson notes, the majority did not even respond to the issue. It seems to me that this at least deserves a response as to why recusal is not warranted.

U.S. Supreme Court review? The dissent [written by former Chief Justice Shirley Abrahamson] notes that under the U.S. Supreme Court’s Caperton decision, the failure to recuse in this case could be a due process violation. At least theoretically, that’s an issue which could go to the U.S. Supreme Court. The Court could also potentially consider the First Amendment holding about coordinated issue advocacy. My guess is that the Court will decline review in this case, and frankly, given this Supreme Court on campaign finance issues, I’d be very afraid of having this issue before this Supreme Court. I mean I think Justice Kennedy would consider coordinated issue advocacy to be regulable, but I don’t know that I’d be the entire country’s campaign finance system on it.
I couldn't disagree with this last statement more. This thing has to be appealed to SCOTUS, if for nothing else to ask the question "Is it legal to launder money and hide donors in the name of "free speech"?" Make the justices say it, and make the right-wingers publically support that, and see how well it flies with a very angry public.

As part of the right-wing victimization meme that Hasen mentions, there will likely be another WisGOP attempt to try to mess with the Government Accountability Board, as punishment for allowing this investigation to go on. But as GAB Chair Gerald Nichol mentioned today, the organization was merely following what the law was until 4 WMC judges decided to rewrite it this morning.
Today’s Wisconsin Supreme Court decision reverses a longstanding interpretation and application of campaign finance law that has been followed by the former State Elections Board and the Government Accountability Board since the U.S. Supreme Court’s Buckley v. Valeo decision in 1976. It also reverses a 1999 Wisconsin Court of Appeals decision that backed the state’s interpretation of the law, which the Board has relied on in its advisory and enforcement decisions.

In light of recent federal court decisions, in January of this year the G.A.B. unanimously passed a resolution requesting that the Legislature undertake a comprehensive review and revision of Wisconsin’s campaign finance law. The Board also suggested that the best approach to this endeavor would be through the establishment of a Legislative Council study committee. Today’s decision reinforces the need for that comprehensive review.
Somehow I'm guessing the GOPs in the Legislature aren't going to use the coming month in cleaning up disparities in election law and allow this to be a chance to improve confidence to the people that their politicians aren't being bought by dark money. Although if the Wisconsin Dems had a brain, you'd think it would be a good time to bring it up.

I'll end this post with the great Charlie Pierce, who distilled the decision and its obvious corruption in the clear way that far too many are able to do.
In February, the special prosecutor asked that one or more justices drop out of the case, presumably because they have benefitted from spending by the Wisconsin Club for Growth and Wisconsin Manufacturers & Commerce. The Wisconsin Club for Growth is estimated to have spent $400,000 for Ziegler in 2007; $507,000 for Gableman in 2008; $520,000 for Prosser in 2011; and $350,000 for Roggensack in 2013. WMC spent an estimated $2.2 million for Ziegler; $1.8 million for Gableman; $1.1 million for Prosser; and $500,000 for Roggensack. In addition, Citizens for a Strong America — a group funded entirely by the Wisconsin Club for Growth — spent an estimated $985,000 to help Prosser. The spending estimates come from the Wisconsin Democracy Campaign, which tracks political spending. The justices did not give a reason for why they don't view that spending as a conflict, but court rules say political spending on its own is not enough to force a justice off a case.

If you're keeping score at home, the same organizations that were the subject of the criminal probe gave hundreds of thousands of neatly laundered dollars to the judges who ruled that those same organizations did nothing wrong on behalf of Scott Walker because fk you, that's why. If this happened in Myanmar or Kazakhstan, we'd all be laughing at it. Instead, let's once again congratulate Justice Anthony Kennedy for his immortal observation that: "...independent expenditures do not lead to, or create the appearance of, quid pro quo corruption."

So Walker's winning streak goes on, even though it is identical in its authenticity to those winning streaks once put up by the Harlem Globetrotters over the Washington Generals, or Hulk Hogan over the rest of professional wrestling. His presidential campaign is going to have to crater on its own which, if Walker keeps stepping on his own dick, may well be inevitable.
Yeah, Scotty might try to play victim to get a few more votes from dimwitted GOP rubes in the coming days and weeks, and maybe some will fall for it. But I'm thinking his foolish statements, flip-flopping and failed policy will outweigh whatever small bump he might get inside the right-wing bubble from today's disgusting decision from the Wisconsin Supreme Court.

Wednesday, July 15, 2015

Bucks arena bill goes through, but looks very different

Well that was fast (and not the least bit sketchy). 21-10 vote in the Senate, no less. Here's the list of votes for you to file away, courtesy of Wisconsin Public Radio's Shawn Johnson, and you can reward/ punish as appropriate.

So now the Bucks bill bounces over into the Assembly. You'd figure it passes, given the amount of suburban GOPs that dominate that chamber, but we'll see for sure (and I'm not sure when they plan to take it up). But what was passed is a whole lot different than what we saw before. Let me direct you to the Legislative Fiscal Bureau's explanation of the changes in the Bucks arena, and how this thing shakes out. One of the biggest changes involves the addition of a $2 ticket tax.
Specify that the Wisconsin Center District (WCD) board require the sponsor of an event held at a sports and entertainment arena to impose a surcharge on each ticket that is sold to the event equal to $2 on each ticket sold. Specify that the event sponsor forward to the board of directors any surcharges collected under this section. Require the board to remit 25% of the surcharge revenues to the Department of Administration (DOA) for deposit of these funds to the general fund and the District would retain the remainder of the surcharge revenues. When the arena construction is complete and events begin to be held, it is estimated that GPR revenues would increase by approximately $500,000 annually to reflect deposit of these funds to the general fund and revenues to the District would increase by approximately $1,500,000 annually associated with the surcharge.....

Delete the provision requiring the Department of Revenue (DOR) to enter into an agreement with Milwaukee County for collection of County's debt, and the requirement that the County (or by written proclamation of the County Executive) enter into such an agreement with DOR.....

Specify that beginning with the distributions in 2016, and ending with distributions made in 2035, the annual county and municipal aid payment to a county in which a sports and entertainment arena is located would be the amount, as otherwise determined under current law for that county, minus $4,000,000. Reduce the sum sufficient county and municipal aid appropriation by $4,000,000 in 2016-17 to reflect this aid deduction.
So there's a ticket tax that in essence reduces the state's payments for the arena from $4 million to $3.5 million, and the state also saves by not having to take over Milwaukee County's debt collection, and they cut Milwaukee County's shared aids by $4 million! Sure, the County would receive a fiscal boost from added sales taxes if this arena really pays off (still an "if", by the way, given that other County businesses may see less spending at the same time), but losing $4 mil in state aid seems like quite the screw job, and on the surface, it looks like County Exec Chris Abele got taken to town by the hedge funders running the Bucks and arena backers in the Legislature.

The ticket tax also helps to pay for the $203 million in lifetime debt costs the Wisconsin Center District has to take on for the arena, but obviously not all of it. And there's an additional sweetener that was thrown in for suburban GOP Senators like Mary Lazich, Leah Vukmir and Alberta Darling (all of whom voted for this bill), because the current 0.5% food and beverage tax that the Wisconsin Center District levies would go away once their current (i.e. non-Bucks arena) debt is paid off. Yes, the Wisconsin Center District would have other sources to pay off their share of the Bucks arena costs, such as local taxes on rental cars and hotel rooms, and the theory is that the new arena and other development will encourage more of those items to be purchased, which would raise the revenue further. But it also puts the WCD at risk of struggling to come up with the funds if the economy turns sour (like what happened with Miller Park) and/or the arena doesn't spur much development.

There are a few other interesting items, such as defining (and narrowing, it seems) the amount of property that would be tax-exempt, and making the Bucks responsible for maintenance and repairs to the facility (unlike the Bradley Center, where the state is slated to shell out $10 million for maintenance, as part of another provision in this bill). And I certainly agree that the bill is a massive improvement from the pile of junk Gov Walker proposed 5 months ago, which had over $600 million in property tax breaks and $400 million+ of state spending thrown into this arena, compared to the $70 million total that it'll cost the state under this bill, and the smaller scope of property tax exemptions for the Bucks and the related development.

But I still wouldn't have voted for it myself. There are far too many other needs in Milwaukee that deserve investment over this project (especially involving K-12 and UW-Milwaukee) and with the NBA making money hand-over-fist in the coming years, the Bucks owners didn't need the help to build this, if they felt Milwaukee was a place worth keeping the team in. But as this arena debate has evolved, it's pretty obvious that the Bucks owners see it more as an opportunity to make big bucks through arena-related real estate, and they're probably right. But it sure got a lot easier with the state and local Milwaukee governments giving $250 million up front to the arena, and I just hope it doesn't result in an "Idiocracy"-style outcome where many parts of the City suffer and decline while building and maintaining a nice shiny sports palace downtown. It sounds a bit too much like Rahm Emanuel's Chicago to me, and that's not a good thing.