Friday, March 31, 2017

Walker short-term hustle and spin means more budget pain

For three months, I’ve been waiting for the State of Wisconsin to release the 2016 update of the Comprehensive Annual Fiscal Report (CAFR), which usually comes out in December. The delay didn’t seem to be anything nefarious as much as it was involving first-year adjustments to the state’s new financial system, but it was frustrating to not get this more complete picture of where the state’s finances stood.

Well, the CAFR finally came out yesterday, and the reason I figured that out was because our Fair Governor tweeted out this piece of cherry-picking yesterday.

We already knew that the Fiscal Year 2016 budget had a carryover balance of $331 million, but what we didn’t know was the condition of the GAAP budget, which is included in the CAFR and the other figure Walker alludes to in the tweet. And a quick check of Page 161(Page 167 in the PDF) shows the GAAP deficit to be smaller than last year's $1.741 billion. But what Walker wants you to forget what was done (and not done) to get us to these allegedly good numbers in 2016, and how it screws up both this budget and future ones.

Let’s start with a reminder that that Walker’s Administration skipped $101 million in debt payments that could have been paid in May 2016. As it turns out, paying this $101 million bill would have easily fit under the $331 million that was left over on June 30, 2016, which made it an idiotic move to choose to make Wisconsin taxpayer pay approximately $13 million a year for the next 8 years vs paying the bill on time.

But interestingly, take a look at what paying that bill on time would have done for the GAAP balance in FY 2016.
FY 2015 GAAP General Fund deficit $1.741 billion
FY 2016 GAAP General Fund deficit $1.723 billion
FY 2016 GAAP deficit if debt paid off $1.824 billion

I don’t think the Walker Administration were thinking about the GAAP deficit when they made this reckless move to skip debt payments (I think they misread the cash numbers, forgot that there was a weekend at the end of the month, and panicked), but not making the debt payment allowed Walker to claim the GAAP deficit “improved.” Otherwise, it would have been the highest GAAP deficit in 5 years. Then add in the fact that the GAAP deficit in the 2017-19 Walker budget is slated to blow past $2 billion due to more delayed payments and because it spends more than it takes in BEFORE any extra borrowing is accounted for (see Page 57 of this PDF for more information).

The reasons why the GAAP deficit didn’t shrink more than it did should also concern you. For example, the GAAP deficit grew by $126 million due to a delayed payment in 2015-16’s per-pupil aids that didn’t happen until late July. At the time, this was considered necessary to make the lousy budget numbers add up, but again it turns out it didn’t need to happen (FYI, this is corrected by paying per-pupil aid twice during Fiscal Year 2016-17, once for 2015-16 in July, and again for 2016-17 in June).

Other reasons the GAAP deficit didn’t decline much were

1. An increased payment in the School Levy property tax credit that was also delayed until July as part of a Walker budget trick

2.A $126 million increase in net “payables for individual income taxes” (which is carryover losses and future refunds? I’m not a CPA, so someone let me know)

3.A $40 million “payable to the federal government for unallowable Title IV-E Foster Care and Adoption Assistance credits.” I have seen no stories on what this is or why we might owe the Feds $40 million, but it kind of seems important.

Another item that the CAFR goes into detail on is debt and debt payments. And it reiterates what we first saw around New Year’s in the state’s Continuing Disclosure report, which showed that the state’s debt is at an all-time high. As the CAFR notes
The State's total long-term debt obligations (bonds and notes payable) increased by $152.7 million during the [2016] fiscal year which represents the net difference between new issuances, payments and refundings of outstanding debt. Increases in debt resulted from new borrowings in excess of repayments of existing debt. During the year issuances of new general obligations exceeded repayments and refundings of debt by $211.3 million. Revenue bonds outstanding increased by$21.1 million. Offsetting those increases, annual appropriation bonds totaling $79.7 million were repaid.
There’s another segment in the CAFR that discusses debt in the state’s Transportation Fund, and how much of the state’s vehicle registration fees is used to pay off that debt each year. Basically, this sets aside a portion of the $75 a year that you pay the state for your plates, and instead of fixing roads or other needs, it goes to pay off past debt.

As you can see, debt is keeping an increasing amount of those registration fees from going back into the roads.

WisDOT vehicle registration fee 2014-2016
2014 net fee revenue $661.53 million
2014 debt service paid by fees $179.78 million
2014 left for other DOT needs $481.75 million

2015 net fee revenue $667.01 million
2015 debt service paid by fees $225.74 million
2015 left for other DOT needs $441.27 million
Change available vs 2014 -$40.48 million

2016 net fee revenue $688.07 million
2016 debt service paid by fees $231.77 million
2016 left for other DOT needs $456.30 million
Change available vs 2014 -$25.45 million

So that’s over $65 million lost from being available for other DOT projects over the last 2 years, and that number is likely to go up in the near future with the $850 million in borrowing that was included in the 2015-17 state budget- with much of it in the Transportation Fund.

Also in the CAFR is a rundown of all of the bonds that the state has to pay back, and when they have to pay them back. Because the CAFR only takes into account what things looked like on June 30, it doesn’t include the huge debt swap that happened last August, where a $363 million balloon payment that was due in 2018 got kicked into future years. That move and other refinancings mean that General Fund taxes needed to pay for these and other bonds will jump by $150 million for the budget after this one, helping to drive the structural deficit up to $1 billion for 2019-21.

And a check of the debt maturity figures in the CAFR shows that the amount that we already have to pay due to Walker’s can-kicking of debt stays at those high levels for much of the 2020s. So when you look at the record of the increasing GAAP deficit and overall debt combined with the budget tricks that we will be paying a price for in the coming years, and it makes all of WisGOP’s whining about federal debt in their Article V ALEC bill ring hollow, doesn’t it?

Maybe Wisconsin Republicans should get their house in order first. Or better yet, have them kicked out of the Capitol for their foolish, regressive actions, and replace them with politicians who don’t live in Supply-side Fantasyland.

Thursday, March 30, 2017

Hey WisDems, stop obsessing about money!

I saw that Tim Cullen dropped out of being a candidate for Governor in 2018. It's too bad, because I like Tim and thought Ringside Seat was a very good read.

But Cullen's argument that he couldn't raise enough money, and that's why he's dropping out? That's a pathetic excuse, and whatever consultant hotshot told him that should be fired from all Dem campaigns.

Any Dem lucky enough to win the Dem primary in 2018 will have plenty of money to run against Scott Walker, because there are thousands of Wisconsinites waiting to rally around a candidate and donate. Sure, Walker will have a ton of money (unless he becomes toxic), but any Dem will have enough to compete.

So memo to DPW hacks and prospective candidates- STOP CHASING MONEY! It'll be there, so worry about making Walker be disqualified for a third term.

Tuesday, March 28, 2017

Oops, big Walker talk on education won't come true

A couple of stories in the news today illustrate that some of the big education-based initiatives for Governor Scott Walker in the 2017-19 work a lot better as public poses than real-life policy. Especially given that it is unlikely that there won’t be the funds available to back up these proposals.

One of the ideas mentioned is the UW System’s new Flexible Option program. The idea is that these programs would increase the state’s talent base by allowing busy Wisconsinites to take higher education programs at home and at their own pace, and remove barriers for some prospective students. But there’s a problem- while Governor Walker wants to have Flex Option offerings be increased by 50 percent in the next 3 years, programs such as teacher certification haven’t been set up yet. And Walker’s budget doesn’t provide any extra money to set those programs up.
“I did not see funds earmarked for developing new programs,” said Laura Pedrick, executive director of online programs at UW-Milwaukee. “There would definitely need to be development funds.”…

Flexible Option programs are developed through a kind of “backwards design, she said. That involves looking at the student learning outcomes of traditional programs and identifying competency sets. Students then can, if able, demonstrate mastery of those competencies, Pedrick said. This is typically done through projects, she said. For the bachelor’s degree in nursing, for example, students might be asked to write a quality improvement plan for some aspect of patient care, she said.

[UW Colleges and Extension Chancellor Cathy] Sandeen and Pedrick both raised questions about a program to credential certified nursing assistants as registered nurses, because of hands-on patient care aspects of RN training….

Even if developing Flexible Option programs for registered nurses and K-12 teachers were feasible, concern about cost and timeframe for those or other programs remain.

“There is an issue with that kind of growth rate,” said Aaron Brower, provost at UW-Extension. “It takes $1 million and a year to develop a new program. And without additional money attached, we could only mount one at a time.”
So in other words, Walker is talking big about what the Flex Option may be able to do, but as usual, isn’t putting money where his mouth is.

The same problem exists in regards to Walker’s plans to add $649 million in spending to public schools over the next 2 years. First of all, we already know that $30 million of that is based on using magic savings from having the state go to a self-insurance plan for health insurance for self-insurance (I call the savings “magic” because that $30 million never existed in the budget in the first place- it’s assumed to lapse). Not only is it very questionable that a self-insurance model will be approved by the Legislature’s Joint Finance Committee, but the savings are far from guaranteed.

The remaining $619 million is also greatly at risk, partly because some members of WisGOP legislative leadership want to assume that there will be no K-12 increase whatsoever when it comes to figuring out the budget.
The proposed $649 million increase in K-12 funding for public schools is “under threat,” public school advocates say, because of a plan some lawmakers on the budget-writing committee are considering to build the next state spending plan from current funding levels instead of using Walker’s proposals as a starting point.

“At stake are the substantial increases Gov. Walker has proposed for public schools, including increases in per pupil aid, aid targeted specifically to rural schools and funding from school-based mental health services, to name a few,” Wisconsin Association of School Boards (WASB) lobbyist Dan Rossmiller wrote in a blog post aimed at school board members. “Working from the base budget rather than Gov. Walker’s proposal would erase the proposed funding increases for public schools as a starting point for budget discussions. This would put public schools back to square one in the budget debate.”…

Assembly Speaker Robin Vos, R-Rochester, earlier this month expressed support for crafting a budget based on current funding levels, but Senate Education Committee chairman and Joint Finance Committee member Luther Olsen, R-Ripon, said Monday that Senate Republicans support working from the governor’s proposals.

“I honestly think it’s a slap in the face to say to the governor, ‘We’re not going to work from your budget,’ ” Olsen said.
However, given that many of the governor’s budget assumptions are sketchy and hopeful (at best), maybe it makes sense for us to figure out how much money we MAY have available, and then make our allocation decisions from there? For example, Vos has mentioned finding a more stable source for Transportation funding- would using some of that $619 million that's designated for per-pupil aid be a source for that, and split it 50-50 with highways, for example?

And let’s not forget a “pessimistic” scenario that the Legislative Fiscal Bureau floated in an otherwise rosy revenue picture that it produced in January, which enabled Walker to put in all of these campaign talking points budget giveaways in the first place.
Under the pessimistic scenario, the January, 2017, forecast assigns a 20% probability of a two-quarter economic contraction in the first half of 2018 due to strained trade relations with China and Mexico. U.S. exports decline more than imports, and economic conditions worsen across the world. The U.S. dollar increases in value, further undermining export competitiveness. U.S. businesses react by postponing capital investments. The stock market declines markedly, along with consumer confidence. Meanwhile, productivity continues to decline, and thus modest demand-side growth causes inflationary pressure. OPEC oil production cuts (which are not offset by increased domestic production) and inflation prompts the Federal Reserve to raise interest rates, further constricting growth. Under this scenario, disagreements between the new Trump administration and Congress, as well as a federal government hiring freeze, prevent stimulus spending. As a result, consumer and business confidence deteriorates, leading to declines in business investment, meager growth in consumer spending, and a fall in housing starts. Real GDP growth is estimated at 1.3% in 2017, -1.1% in 2018, and 1.9% in 2019. These growth rates are lower than the baseline forecast by 1.0% in 2017, 3.7% in 2018, and 0.4% in 2019.
Well, consumer confidence was stupidly high earlier this month (at 2000 levels, as we saw today), and oil prices have retreated a bit recently, so maybe that part of the equation hasn’t happened. But “disagreements between the new Trump Administration and Congress, as well as a federal hiring freeze,”? Yep, we’re already there. And do you think consumer confidence will stay high after last week’s failure in health care, and this Trump Bubble in the stock market inevitably pops?

If you start putting the pieces of this “house of cards” budget from Scott Walker together, you can see they don’t fit. And that’s why I wouldn’t count on little if any of those increases to either K-12 public schools or the UW to actually work out when the budget gets finalized…whenever that may be.

Monday, March 27, 2017

GOPs fiscal follies on full display- both in DC and Madison

Now that the Republicans have bombed in their attempt to remake health care in America, they’re turning their eyes toward screwing up something else- the country’s tax system. Max Ehrenfreund had a good article in today’s Washington Post Wonkblog going over how the GOP “Freedom Caucasians Caucus” and other Republicans would like to reform the country’s tax code.

To no one’s surprise, these plans include steep tax cuts, especially for the rich and corporate. But there are two intriguing developments in Ehrenfreund’s article that don’t make the “conservatives” seem that conservative. One involves them backtracking on a “flatter tax” plan that would have removed popular deductions for items such as mortgage interest and chartiable giving. Alleged Wisconsinite Paul Ryan kept those deductions in his asterisk-ridden budget plan, and while that may be the starting point for GOP discussions on taxes, it also means the budget deficit will go up.

Remarkably, after crying crocodile tears about the increasing national debt for 8 years under President Obama, these guys in GOP-land now aren’t as concerned with driving up the federal budget deficit now that they have a Republican in the White House who might sign off on those tax cuts.
Closing loopholes could, in theory, allow Republicans to deliver their promised rate cuts without decreasing the total revenue going to the government — a combination that would keep the new legislation from adding to the federal debt.

Under Ryan's plan, by contrast, reduced taxes would mean the federal government would give up at least $2.5 trillion in revenue over a decade, according to an analysis by the nonpartisan Tax Policy Center. The figure accounts for increased economic growth, so that is $2.5 trillion that the federal government would have to borrow — unless lawmakers found other ways of limiting deductions and loopholes or federal expenditures to save money.

So far, members of the Freedom Caucus have indicated they could accept a plan that implied more borrowing. They are less concerned about closing loopholes than they are about making sure rates go down and that, in general, Americans pay less in taxes.

"I think there's been a lot of flexibility in terms of some of my contacts and conservatives in terms of not making it totally offset," Rep. Mark Meadows (R-N.C.), the chairman of the Freedom Caucus, told ABC News on Sunday on "This Week," arguing that tax cuts would provide financial relief for ordinary American families.

"Does it have to be fully offset?" Meadows asked. "My personal response is no.”
Even the shiba inu that we are dogsitting can recognize that this means a return to the Bush-era GOP mentality of “deficits don’t matter.” Now contrast that statement to a bill sponsored by Wisconsin Republicans that is getting a hearing tomorrow in Assembly and Senate committees at the Wisconsin State Capitol (scheduled at the same time for both Committees, conveniently). Here’s what it says.
Whereas, 49 states, by constitution or statute, require a balanced budget; and

Whereas, the legislature of the State of Wisconsin supports the federal government operating under a balanced budget; now, therefore, be it

Resolved by the assembly, the senate concurring, That the legislature of the State of Wisconsin herewith respectfully applies to Congress, under the provisions of Article V of the Constitution of the United States, for the calling of a convention for proposing amendments, for the limited purpose of requiring the federal government to operate under a balanced budget; and, be it further

Resolved, That the secretary of state of the State of Wisconsin be, and is hereby, directed to forward a proper authenticated copy of this resolution to the President of the Senate of the United States, and to the Speaker of the House of Representatives of the United States; and, be it further

Resolved, That this resolution constitutes a continuing application for a convention for proposing amendments in accordance with Article V of the Constitution of the United States until such a convention is convened on the same subject or until the legislature of the State of Wisconsin rescinds this resolution.
Well, that seems like a helluva conflict with the direction things are going with Republicans in DC, where they’re planning to drive up deficits to even higher levels due to unfunded tax cuts. To then turn around and force the budget to be balanced would require massive cuts in services, increased taxes, and sizable cuts in aid to state governments, leading to more budgetary problems at that level.

I’ve also pointed out that this is hypocritical for WisGOPs to be part of this “balanced budget” sham, since they have approved budgets with borrowing in each of the last 6 years, including $850 million for roads for 2015-17, and sizable amounts for new buildings. In fact, Wisconsin was in record debt at the end of 2016, at over $8.07 billion. In DC, when we borrow money for items, that’s an increase in the deficit, and we sell Treasury bonds to get the cash up front to pay for it. AJR21,2,20So why are WisGOP legislators even discussing this Constitutional Convention pipe dream when we can’t even live up to this standard ourselves, and it forces unrealistic and economically damaging restrictions on our federal government?

State Rep. Chris Taylor knows exactly where this foolish, double-standard idea of a “balanced budget Constitutional convention” comes from- the American Legislative Exchange Council (ALEC). She’s gone behind the scenes at ALEC’s annual meeting the last 4 years, and describes how this bill was peddled to GOP puppet legislators, and what the ultimate goal really is (hint: it isn’t about balancing the budget).

At my first ALEC conference in 2013, Citizens for Self-Governance (CSG) rolled out the “Convention of States” campaign. Their scheme was to get 34 states to pass resolutions calling for an Article V Convention of States, provided for in the U.S. Constitution, in order to propose constitutional amendments that severely limit the government’s ability to regulate and spend. CSG’s Mark Meckler, founder of the Tea Party Patriots, and his colleague Michael Farris railed against the federal government, civil rights, and social safety nets. Meckler proselytized like a preacher at a church revival, exhorting us to use our power as state legislators to save the country and join their movement, for which we would be handsomely rewarded with bundled campaign contributions and grassroots support. We were given a model Article V constitutional convention resolution, urged to save the Republic, and sent on our way.

One of my Republican colleagues was sitting several rows in front of me, and I knew then this effort would come to Wisconsin. His resolution, which would make Wisconsin the 30th state calling for a Constitutional Convention to propose a balanced budget amendment, will soon be considered by the Wisconsin legislature….

After CSG’s presentation, a representative from the right-wing Madison Coalition asked about my thoughts on such an effort. I told him I didn’t think people would go for it. He replied that because Republicans controlled so many state governments and the corporations pushing these changes had unlimited money to spend, they didn’t really need the people.

That sums up ALEC. ALEC’s drive to amend our constitution has nothing to do with actual people and everything to do with their big corporate backers. They want to stop the federal government from protecting our environment, giving workers a voice at the table, paying fair wages, and giving the economy a boost during recessions. To them, government is not about the people, but the most powerful doing what they want, when they want, and to whom they want.
100% correct, Rep. Taylor. This is about removing barriers to corporate power and reducing the average person to a feudal serf at the whims of the CEOs and other oligarchs.

Do GOPs in 2017 have a clue about how these things tie together between the state and federal governments? Do they just throw this shit out there for talking points to stir up the rubes without ever planning to pass it into law (like many admitted they did for years with their “repeal Obamacare” bills under Obama)? Or do they truly have no idea about what they’re doing, and are just following the orders of their puppetmasters?

Whatever the reason, if any of your state legislators are in favor of this Article V garbage, they are fools and traitors, and need to be removed ASAP, before the country follows this state down the drain of unchecked, pro-corporate austerity.

Sunday, March 26, 2017

February jobs look good, but we also thought so last year, and it didn't turn out

Now that we've adjusted 2016 jobs data in Wisconsin to new annual benchmarks, we are seeing the state's jobs reports come in fast and furious. The latest one came out on Thursday reflecting the figures from February 2017, and it indicated a strong month when it came to job growth.
Place of work data: Based on preliminary data, the state added 28,200 total non-farm jobs and 21,500 private-sector jobs from February 2016 to February 2017, with a statistically significant gain of 11,100 total non-farm jobs as well as 7,600 private-sector jobs over the month. January 2017 total non-farm jobs were revised up 5.200 and private-sector jobs were revised up 4,600....

DWD Secretary Ray Allen issued the following statement: "Revised numbers show Wisconsin gained 10,400 private-sector jobs in January and preliminary numbers show we added 7,600 private-sector jobs in February, pointing to an excellent start to 2017. Building on this economic progress, Governor Walker's recent budget proposal reinforces Wisconsin's economic and workforce development strategy, which has supported the state's economic growth."
Sounds great, but looking inside the numbers, it seems like two low-wage service areas were the biggest beneficiaries of those two months of growth- one involving retail trade and other stores, and another that's mostly lodging and food services.

Change in jobs, Dec 2016-Feb 2017
Trade +7,800
Leisure and Hospitality +3,900
Rest of private sector +6,300

I also found it odd that the construction industry lost 800 jobs in February on a seasonally adjusted basis in Wisconsin, in the same month that we were seeing record-warmth in the state, meaning you'd expect a "gain" that would result from lower-than-normal seasonal layoffs. Manufacturing did have 600 jobs "gained" for this reason in February, but let's see what the next two months look like in both of those industries. I want to see if hiring was spurred in late February and early March due to all the warmth (which would show in a higher March number), or if the cooler, wetter weather of this month means that seasonally-adjusted hiring goes down for March and April.

And in general, these "good news" jobs reports should be taken with a serious grain of salt. Why do I say that? Take a look at what Walker's DWD was saying last April.
The state added a statistically significant 13,100 private sector jobs from February 2016 to March 2016 on a preliminary basis, including a significant gain of 4,200 jobs in manufacturing. Wisconsin also added a significant 47,500 private-sector and 51,200 total non-farm jobs over the year ending in March 2016, the best year-over-year growth since August 2004 in both categories. Additionally, revised February private-sector job counts swung from a gain of 8,000 to a gain of 10,500 private sector jobs, a difference of 2,500....

"Today's report shows that Wisconsin's employment was higher than ever in March, our unemployment rate dropped over the month while the national rate increased, and the state experienced the best 12 months of job growth since 2004," Secretary Allen said. "All indicators show that under Governor Walker's leadership, Wisconsin's economy is expanding and adding jobs in 2016."
And then the "gold standard" Quarterly Census of Employment and Wages came out several months later for the January-March 2016 time period, showed that year-over-year job growth for March 2015-March 2016 was 10,000 jobs less than than what DWD said it was, and certainly NOT the best since 2004 (it wasn't even as good as March 2014-March 2015). This led to the figures to be largely revised down when the numbers were benchmarked earlier this month.

Jan 2016- Feb 2016 private sector jobs
Jan 2016
Originally reported +5,800
Later revised +9,400

Feb 2016
Originally reported +10,500
Later revised +4,300

March 2016
Originally reported +13,100
Later revised +600

Originally reported +29,400
Later revised +14,300

So yeah, DWD, let's not get too far ahead of ourselves, shall we? Well, if you have any semblance of your office's mission beyond being a Walker campaign piece, that is.

Even more remarkable is that these surprisingly high job totals for January and February still have Wisconsin trailing most of our neighbors when you look at the last 12 months (the tables are located in this report), as well as the nation as a whole.

Private sector job growth, Feb 2016-Feb 2017
Mich +1.86%
U.S. 1.50%
Minn +1.36%
Ind. +1.25%
Ohio +1.06%
Wis. +0.87%
Iowa +0.77%
Ill. +0.71%

Combine these lagging figures with the claims of a 3.7% unemployment rate (that's caused by Wisconsin's low population growth more than adding jobs), and a consistent WisGOP olicy of wage suppression, and you tell me where the spark comes that will allow things look much better in the state over the next 10 months? And along with that, how will we get the revenue growth necessary to pay for our services? I'm not seeing it.

How gas tank cleanups may go away to fix potholes

For the first time in this session, the new 16-member Joint Finance Committee will meet tomorrow. The agenda is relatively minor, a few of the special session bills on opiod abuse, a child labor bill (in JFC due to licensing cost changes), and a 13.10 meeting to deal with a handful of in-year fiscal adjustments. That was where my attention was drawn, because of an item dealing with Petroleum Environmental Cleanup Fund Awards (PECFA).

First of all, let’s allow the Legislative Fiscal Bureau to explain how PECFA works.
The petroleum environmental cleanup fund award (PECFA) program reimburses owners for a portion of the cleanup costs of discharges from petroleum product storage tank systems and home heating oil systems. The amount of reimbursement varies from 75% to over 99% of eligible cleanup costs. Owners of certain underground and aboveground tanks may receive up to $1,000,000 for the costs of investigation, cleanup and monitoring of environmental contamination. PECFA awards are funded from the segregated petroleum inspection fund, which receives revenue from a 2¢ per gallon petroleum inspection fee assessed on all petroleum products brought into the state, including gasoline, diesel, and heating oil. The fund also receives revenues from inspection and plan review fees for bulk petroleum tanks, and interest income on the fund balance….

Under 2015 Wisconsin Act 55, PECFA eligibility is not available for any site if a person: (a) did not notify the Department of Natural Resources (DNR) of the petroleum discharge and the potential for submitting a claim before July 20, 2015; and (b) does not submit a claim for the reimbursement of eligible costs before July 1, 2020. In addition, Act 55 required that an owner or operator of an eligible site must submit a claim for reimbursement within 180 days after incurring the eligible costs, or February 1, 2016, whichever is later, or else the costs are no longer eligible for reimbursement.
This move in Walker’s last budget led to a rush to put in claims and clean up places that had petroleum contamination, so much so that the PECFA fund is out of money for the last few months of the 2017 Fiscal Year. So it has led to this 13.10 request for $2.1 million in more money to be set aside for claims over the next 3 months.
On February 16, 2017, DNR announced that the PECFA program had expended all of the 2015-17 available appropriation, and the program would pay claims when funds become available. PECFA claims approved for reimbursement as of March, 2017, are being placed on a waiting list for payment after additional funding is available in the PECFA claims appropriation. DNR indicates that PECFA claim demand increased in response to the Act 55 requirements. In addition, many site owners may be trying to speed progress on site cleanup work during the 2016 through 2019 construction seasons, so they may submit final claims before the June 30, 2020.
So this means that there's more money coming out from the PECFA fund to pay for these claims. Which makes for a complication in another part of Scott Walker's budget for the next 2 years, because Walker is planning to use for PECFA money for another purchase- to fill budget (pot)holes for the state's deficit-ridden Transportation Fund. As the Legislative Fiscal Bureau describes
Transfer $24,000,000 annually during the 2017-19 biennium from petroleum inspection fund (PIF) to the transportation fund. This transfer would be in addition to the existing ongoing transfer of $6,258,500 annually from PIF to the transportation fund. As a result, the total estimated PIF revenues provided to the transportation fund would be $30,258,500 annually compared to a total of $27,258,500 annually in the 2015-17 biennium in ongoing ($6,258,500) and one-time ($21,000,000) transfers.

Require the Secretary of the Department of Administration (DOA), beginning on June 30, 2020, and on June 30 of each subsequent fiscal year, to transfer the unencumbered balance of PIF to the transportation fund, except for an amount equal to not less than 5% of the gross revenues received by PIF during the fiscal year in which the transfer is made.
But is there going to be enough money to pull off this transfer of $30 mil a year out of the PECFA fund when we already don't have enough to pay for all the claims now? A quick look at the Petroleum Inspection Fund condition says they might be able to squeak by, because there is a few million less to be paid in debt over the next two years. But if there's a continued increase in claims for these items, and an increased need to pay for inspections and administration as a result, and those funds could be gone really fast.

And then what happens to Walker's plans to use the 2 cent-a-gallon PECFA fee as a backdoor gas tax increase to pay try to prop up the DOT Fund starting in 2020, a move that would probably net something like $70-$75 million a year? If that money isn't around, or if the needs to clean up these storage tanks continue past 2020, then where do we find the money to do that? Does remediation just get de-emphasized in the "open for business" DNR, and if people get their drinking water and soils contaminated by old gas tanks, so be it?

I'd be interested in seeing what those plans are for the PECFA duties over the next 3-4 years, as well as seeing how much money really is available. Maybe we won't get that information in tomorrow's 13.10 hearing before the Joint Finance Committee, but it definitely needs to come up as we go over budget talks in the coming months.

Saturday, March 25, 2017

$1 billion deficit in Wisconsin? Yep, it's coming

You may have heard by now that Wisconsin is back to facing a large structural budget deficit, as a result of gimmicks measures that are part of Scott Walker's proposed budget.
Gov. Scott Walker’s proposal for the state’s next budget creates a larger structural deficit than previously thought, nearly $1.1 billion, in the ensuing budget cycle beginning in 2019, the state’s nonpartisan fiscal office said Thursday.

The Legislative Fiscal Bureau released the findings in a memo made public late Thursday.

It shows Walker’s plan for the 2017-19 budget, which back-loads spending and tax cuts into its second fiscal year, leaves a structural deficit of $1.1 billion that lawmakers would have to erase in crafting the 2019-21 budget.
So why are we looking at a billion dollar deficit in the next 2 years? Well, let's look into the LFB memo and see what we find. Here are a few of the explanations.

1. In Walker's proposed 2017-19 budget, the state of Wisconsin is projected to spend more than it takes in for both years, but is able to slip by as a "balanced" budget because it is slated to carry $453 million over on June 30. In that budget, Fiscal Year 2019 has a deficit of $211 million baked into it, and given that the structural deficit figures on those expenses being the same as a base, that means we start $422 million in the hole.

2. Some of it is from Walker's "welfare reform" measures, including job training programs and the indexing of the Homestead Credit, which is $80 million of extra expenses which will hit in 2019-21. Another $105 million will be needed to maintain current expenses for various child welfare and family programs, since the state is using up left-over federal money under the Temporary Aid to Needy Families (TANF) program in the 2017-19 budget, and the structural deficit picture assumes the same amount of spending on programs for 2019-21, which mean state taxes have to make up the difference.

3. Another $94 million is the result of the full funding of a proposed 2% wage increase for state employees that hits in early 2019, with the last $47 million of that raise vs the 2018-19 hitting in Fiscal Year 2019-20, then staying at that higher level. But that wage increase may be threatened, as we found out earlier this week that the availability of that funding is based on projected savings from going to a self-employed health insurance model- a model which may not even be approved by the Joint Finance Committee, nor may it result in any of the $40 million a year in savings the Walker Administration claim it will.

4. $149 million in the additional deficit comes from additional debt costs, with much of it as the result of a debt swap that I described back in August. The debt swap was done to avoid a $383 million balloon payment that would have messed up this budget, but the next budget will be paying back some of those costs as a result, and from what I can tell that it will peak in the 2019-21 budget.

5. Lastly, $166 million in the additional deficit happens because of a federal law change that hits in 3 years, as the Wisconsin Department of Revenue notes.
1. What is the Internet Tax Freedom Act (ITFA)?
The ITFA is federal legislation banning states and local governments from imposing sales tax on Internet access. The ITFA was set to expire on October 1, 2016 but the ban was made permanent on February 24, 2016.

2.Is Internet access taxable in Wisconsin?
Yes, sales of Internet access services are subject to Wisconsin sales or use tax when the customer's place of primary use is in Wisconsin.* However, the permanent extension of ITFA includes a provision that bans grandfathered states, such as Wisconsin, from taxing Internet access services after June 30, 2020. Therefore, charges for Internet access services in Wisconsin will not be taxable as of July 1, 2020.
So that sales tax reduction hits in the 2020-21 budget, and blows another hole in the budget.

So how can we reduce this billion dollar budget deficit? How about getting rid of some of Walker's stupid poser tax cuts in this budget. Let's start with Walker's idiotic proposal to cut income tax rates by 0.1% for most Wisconsinites. This is a tax cut that the LFB says will give the average person less than $1 a week, but will cost the state over $200 million in the 2017-19 budget, and likely around $200 million more in the 2019-21 budget. That's $400 million right there.

Then add in another stupid pose, where Walker plans to get rid of the part of the property tax that goes to DNR Forestry items, and instead spend and additional $179 million in tax dollars to make up the difference. Not only would getting rid of this gimmick reduce expenses by an estimated total of $370 million over the course of the next 4 years, but it also would quiet criticism from people who own land in DNR woodlands and would likely be affected by future cuts in assistance in maintaining forest lands when the state is crunched for funding in future years.

These two moves would reduce the structural deficit by $770 million, wouldn't change spending in any other areas, and not make Wisconsinites pay anything more in taxes than they do today. Get rid of few other Walker budget gimmicks like a $22 million for 2 August sales tax holidays that could well be more trouble than it's worth to institute and a pointless $20 million deposit to the rainy day fund in 2018-19, and you've pretty much closed the structural deficit by that alone, and are still increasing funding to K-12 education in the process.

Oh, and given that it seems highly possible that Congress will shirk some of its funding duties in order to try to "pay for" some stupid GOP tax cuts and/or "de-federalize" certain governmental duties, we may well need to spend more money at the state level just to maintain services in the near future. In addition, given that we are likely to have some kind of recession in the next 4 years (we are going on 8 years of expansion, the record in US economic history is 10) , doesn't it seem like a good idea to have a sizable cushion built into our current and future budget to guard against the declining revenues that inevitably occur when the economy takes a downturn?

So maybe the State Legislature should take the LFB's warning to heart, and get rid of all the Walker pre-election poser garbage, and make this budget more stable over the next few months. Because it seems more likely that not only is there bad risk of deficits for 2019-21, it's also very possible that it'll creep up for 2017-19 as well.

Listen "Liberals"- Step up and tell the truth to rural America

One of the most influential political books to me was Thomas Frank’s What’s the Matter with Kansas? I think I first heard about it while flipping around the radio in the aftermath of Dubya’s re-election in 2004 when a whole lot of us were like “What the fuck is wrong with people that they can’t see through this guy and the destructive garbage he is peddling?”, and Frank’s explanation of why these rural whites continue to screw themselves by voting for these pro-rich, anti-worker Republicans rang very true.

I picked up the book soon after, and constantly found myself nodding my head saying “Yep, know that guy. Yep, I’ve seen that mentality.” Living in a small, post-industrial town in the mid-2000s definitely tuned me into the type of filter these people were seeing things through, and how mushy, half-assed messages from Democrats did not register with them, even if Dem policies were the ones that better fit what they wanted.

Frank is back with another book, and it seems as relevant as ever now that these same rurals voted big-time for a billionaire from Manhattan who has gold-plated toilets.

He is heading to Madison on Wednesday to have a reading and book signing, and the Capital Times’ Paul Fanlund interviewed the author ahead of the visit. Frank points to the tactics and “divide and conquer” mentality of Scott Walker as a perfect example of the tactics that Republicans will pull in order to grab and grow power, and how Democrats still don’t seem to know how to respond to it.
“Scott Walker is a textbook case of the kind of conservative that I wrote about in ‘What’s the Matter with Kansas?’ Now, ‘Listen Liberal’ is the other side of the coin. The question is why can’t the Democratic Party beat these guys? Why does the country keep moving farther and farther to the right?”

If Wisconsin reflects themes in those two books, it also shows up in another of his books, he said, the one titled “The Wrecking Crew: How Conservatives Destroyed Government, Enriched Themselves and Beggared the Nation.”

He pointed to Walker’s attack on unions: “That’s very typical of the right. They play the game much better than the Democrats do. One of the things that you find them doing again and again and again in different places is they figure out what props up the local Democratic Party and then they destroy it.

“They either destroy the institution or they destroy the method by which it funds the Democratic Party. There’s a slogan they used to have back in the ’70s — ‘Defund the Left.’ And that’s what Scott Walker is doing. They’re doing this nationally as well. They’ve been going after organized labor for years because unions donate to the Democratic Party.”

Frank added, “They figured out they could use the state to actually attack their opponents, invent various issues and reasons for doing it, but use the state to structurally injure their opponents. That’s Scott Walker.”
Far too many Democratic Party leaders think that 2010s politics is a debating society where being nice and “going high when they go low” will impress enough voters (often mouthed by comfortable elites lite Paul Fanlund) that we can slip by without saying much about economic issues. How’s that strategy working out for us?

Frank goes on to note that too many national and state Democrats have “lost their ability to speak to a huge part of the population in a state like yours,” and that they need to return to populist, bread-and-butter messages focused on the economy and the power of big money. Whether we like it or not, many people vote based on their gut, and they don’t want to hear a message of “you have to get better skills and hope they’ll pay you more.” They want to hear their lives will get better, and they want someone to blame for why their wages and lives have stagnant.

Which gets back to what Frank’s book is titled. “LISTEN, LIBERAL!” Listen to why these people are angry in all of these newspaper and magazine articles that we’ve seen in rural Wisconsin since the elections. They don’t see politicians trying to fix the real economic and social problems in their lives, so they default to politicians that are at least relaying their anger at “the system” and “those people”, and Republicans are craven enough to play to those lesser angels.

One of the people Thomas Frank says is showing the way on how Democrats should act if they want to win with blue-collar voters is someone who far too many DNC and DPW hacks knocked down for “not being a real Democrat”- Bernie Sanders. Here’s a great example from this week, where Bernie says “Hey working-class America- Donald Trump lied to you.” (Bernie comes on around 2:15)

I'll remind you that Bernie won 71 of 72 counties in Wisconsin just under a year ago, and it’s because he connected to everyday people and their problems, and offered solutions to them in a way that people can understand. With the implosion of Trump/Ryancare in DC, now would be a perfect time for Democrats to jump in and say how they will IMPROVE Obamacare, and stop greedy insurance and drug companies from abusing their power over vulnerable Americans.

Speaking of craven, in between hoops, I had on MSNBC Thursday night as they discussed the debacle going on with Republicans in DC regarding the health care bill, and none other than Wisconsin’s own Charlie(tan) Sykes was on (I can’t find the link). But what was striking was that Charlie(tan) admitted that most mouthbreathing right-wing radio listeners GOP voters don’t care about high-minded conservative theories like “returning power to the states over Medicaid.”

And Sykes is correct- the average angry blue-collar voter wants to have the stability of affordable health care, and to be able to make a decent wage at work, and to not have to change their lives in order to have a decent existence. They can’t understand why hard work and playing by the rules isn’t rewarded much these days, while others that don’t follow those rules seem to get away with more. Whether you like that mentality or not, it is there, and for Dems to win those voters (and win many states like Wisconsin in the process) it requires honest, straight talk that redirects rightful blue-collar anger to the people who caused it- greedy corporates and the politicians that have done their bidding.

I did see one release from Wisconsin Democrats that indicated they might be catching on. It related to the Legislative Fiscal Bureau’s release this week which showed that voucher schools get more state funding per student than K-12 public schools. When voucher lobbyists and their Republican puppets tried to claim that property taxes meant that public schools were more expensive (a questionable assertion in itself), Dem legislators shot back
“What’s the difference between $7700-$8400 handed to the voucher industry and an average of $6700 for public school students?,” Rep. Gordon Hintz (D-Oshkosh)asked. “The voucher industry has made their answer clear this week: property taxes.” …

“Wisconsin taxpayers have been on the hook since the GOP started hijacking state aid intended for public school students and handing it to the special interest voucher lobbyists,” saidSen. Jon Erpenbach (D-Middleton).“Republicans have decided to leave it up to responsible school boards across the state to fill the hole the GOP created by handing the voucher organizationsmore per student.”

One of the chairs of the Legislature’s budget-writing committee decried the revelation that the GOP was taking funding out of public schools and handing it to voucher schools by complaining that state funding detailswere “... completely neglecting the funding that comes from our state’s property taxes.”

“It IS time to stop neglecting property taxpayers and start living up to our responsibilities as state legislators,” said Rep. Sondy Pope (D-Mount Horeb).“The simple fact is that we have a constitutional responsibility in the statehouse for state funding of public education, and my GOP colleagues have chosen to hand voucher operators muchmore per student than public school students, and the voucher industry says it’s up to property taxpayers to fill the gap.
THAT is the type of straight-talk messaging that Dems in Wisconsin need to be giving if they ever want to be back in control of the state Legislature. Sure, gerrymandering is part of the problem, but gerrymandering doesn’t explain all of those Obama-Trump counties in rural Wisconsin. Maybe a few more Dems at the Capitol can make their way down to Room of One’s Own on Wednesday to hear from Thomas Frank and see how it’s done. 

Sometimes the Madness goes against you

Down 12 with less than 5 minutes to go, I had kind of resigned myself to a frustrating Badger loss where Florida shot well and refs gave the Gators a nice assist by allowing UF to play a lot of defense with their hands while calling everything on UW tight.

And then somehow, this team surprised me again, culminating with this.

We hit a miracle shot and then the guy who hits the shot turns to AARON FREAKING RODGERS IN THE CROWD and gives the "discount double-check"? There's no way we're losing after that.

And we're up 5 with less than a minute to go, but seem to run out of gas and blow the lead. But Nigel hits 2 FTs with 4 seconds left, UW is still up 2, and all we need is one more stop and it's a historic win and I might be heading downtown to celebrate.

And then...

Yes, I was able to get home after peeling myself off of the bar floor. But it's not going to be cool to be seeing and reliving that shot during "March Madness" promos for the next 20 years. Especially since the Badgers' side of the bracket was wide open, and I think UW would have played in the title game given who they'd have played (S. Carolina and then Gonzaga/Xavier).

Look, it's the greatest annual sporting event in America for a reason- games like that one. It's just blows that my alma mater's on the bad end of one of those great games. Take a look at this win probability chart, and especially focus in on the roller coaster for the last 5 minutes of regulation and OT.... and the final crash.

Even though it ended in heartbreaking fashion, and that I'm still numb over it, I need to step back and realize this group of seniors just completed probably the best 4-year run of basketball of any class at UW. And represented my alma mater in great ways both on and off the court, showing there's more to being a UW basketball player than putting a ball through a hoop.

Thursday, March 23, 2017

The Kenosha County paradox- more jobs, but not more people

Looks like we have a new way to jump-start our state's economy. YUMMY GUMMIES!

A German candy maker plans to build its first North American factory, a $242 million facility with 400 jobs, in Pleasant Prairie, Gov. Scott Walker announced Thursday.

Walker hailed the move by Haribo coupled with the recent opening of a cardboard box factory employing 120 workers in Beloit, a Mills Fleet Farm distribution center employing 325 workers in Chippewa Falls and Thursday's news that the state's unemployment rate dropped to 3.7 percent in February as signs the state's economy is getting sweeter….

Haribo plans to open the 500,000 square-foot facility by 2020, the company's 100th anniversary, in a new office park the village of Pleasant Prairie is developing, Wisconsin Economic Development Corp. CEO Mark Hogan said. The village purchased the 400-acre site for $37.5 million.

Hogan said the state economic development agency has put together an incentive package to help bring the company to the state, but the details won't be released until after the WEDC board approves the deal.
On the face, it appears to be another coup for the apparently booming Kenosha County, which had the highest rate of job growth in the state in the latest “Gold Standard” Quarterly Census of Employment and Wages, and the second-highest addition of jobs overall (behind Dane County), with more than 3,200 new jobs over the 12 months measured.

But another item that came out today that didn’t get as much play from the media was the Census Bureau’s new 2016 population estimates for every county in America (feel free to click here to play around with the numbers). And what’s odd about all of these Kenosha-area job announcements and new factories is that they haven’t translated to population growth.

In fact, Kenosha has consistently been losing people at one of the highest rates in Wisconsin in the last 6 years. Milwaukee is far and away the biggest loser of people to other parts of the state and country (I’ll get into that in the near future), but since the 2010 Census, Kenosha County has lost nearly 2,700 people to domestic migration, the 3rd most of the state’s 72 counties.

By the way, much of Paul Ryan’s district is shown in this graph. How’s that experience been working out for ya?

The same concept holds for last year. In those new numbers from the Census Bureau, Kenosha County lost 659 people last year to domestic migration, even more than Racine this time.

I’m struggling to put these two concepts together, where Kenosha County is allegedly adding all these jobs, but is losing hundreds of people a year. It isn’t all immigration, because that’s only +757 since 2010. Is it people from Illinois who are taking the jobs near the state line (and paying taxes to Illinois as a result)? Are these new warehouse jobs not making up for better jobs that have been lost in this time period, and/or the new factories don’t require as many workers due to automation?

It’s nice that we’ll be making gummy bears in Pleasant Prairie, but notice that this factory won’t even start production until 2020, and these “projected” jobs always seem to come up short if/when the new facility actually does open (naturally, Walker plans to be re-elected and/or promoted to DC at that point, so he won’t be held accountable for this). So I’ll wait and see how much we’re going to shell out of our already deficit-ridden budget before I break out the gummy bears in celebration of HARIBO coming to our state.

And the sizable amount of people moving out the state over the last 6 years makes Gov Walker’s and WMC’s proclamations of “3.7% unemployment, things are great!” ring very hollow. It is quite obvious that, much like our fellow Koch lab rats in Kansas, Wisconsin’s low unemployment rate is more because of a lack of people wanting to stay here than it is a huge boom in jobs. If things were truly going great here, we would see manufacturing wages be higher, instead of being the lowest in Midwest.

Much like with the “dark stores” question, I wonder how the remaining Kenosha area residents are handling the many tax incentives that keep getting handed out like gummy bears to companies to pretend that we are “open for business.” Those people are paying the property taxes that the distribution centers aren’t, and will pay for the Village of Pleasant Prairie’s investments of land and infrastructure that will go into the new HARIBO factory. Maybe that high price of “job incentives” helps to explain the paradox in Wisconsin’s most southeastern county- where lots of new jobs and development isn’t translating into people coming to live in Kenosha County.

Dark stores could mean huge property tax bills for Wisconsin homeowners

A consistent story that we have heard over the first 3 months of the year regards the troubles that brick-and-mortar retailers are having. Much of this is due to a structural shift where people are choosing to buy items online instead of going to a store to get their items, which likely saves consumers time and money, but also is leading to sizable job losses and store closings in traditional retail.

Among those recent announcements include JC Penney saying last week that it would shut the doors on 138 stores this year, and Sears/KMart announcing that 150 more of its stores were going away, and that it has had 6 straight years of losses. And just today, Payless Shoe Source indicated it may seek bankruptcy protection and close up to 500 stores.

It means that this scene will likely be a common one in many communities in 2017.

These retail closings include several locations around Wisconsin, and not only are those communities looking at damage from having a retail outlet and employer go away, but they may end up getting hurt even if they still have stores in their town. This is because of a strategy that large retailers have increasingly used known as the “dark store” loophole. The League of Wisconsin Municipalities explains how this works.
In essence, the Dark Store strategy is a tax loophole being used by Big Box retailers and other national chains to lower the amount they pay in property taxes. Retailers such as Lowe’s, Target, Meijer, Home Depot, and Menards are arguing that the market value of their thriving store should be based on the sales of similar size “comparable” properties that are vacant and abandoned.

What? You mean a fully operational store, like a new Target, gets to pay the same property taxes as a closed, empty and “dark” K-Mart down the street? Yes, that’s exactly what the retailers are fighting for and it’s what is starting to happen more and more frequently.

Courts in other states like Michigan have upheld this “Dark Store theory” and cut property tax assessments in some cases by as much as 50 percent – resulting in a tax shift to homeowners or a cut in local services. If this strategy becomes successful in Wisconsin it could result in a shift of millions of dollars in tax burden across Wisconsin unless the loop hole is closed by the Legislature.
Many Wisconsin communities have recently passed resolutions urging state action to fight the “dark store” strategy, including Manitowoc County and Fond du Lac County both passing resolutions yesterday, and the City of Milwaukee approving one last month.

These dark store loopholes have an interesting ramification for our state’s politics. One item that Governor Walker always tries to promote is the lowering of property taxes on the average state homeowner. And while the Legislative Fiscal Bureau says that the average homeowner is slated to pay $21 less in property taxes in 2018 than they did last winter (due to unfunded state giveaways at the state level which would lead to future budget deficits), those savings could well be offset by the effect of these store closings and the related “dark store”loophole.

Note this part of the LFB’s analysis on property tax bills.
Modest [property value] increases are also projected for existing commercial and manufacturing properties in 2017 and 2018, and the level of new construction is estimated to also increase each year. In combination, these factors are expected to result in increases in statewide equalized values estimated at 3.5% in 2017 and 3.3% in 2018.

Since total values are expected to increase faster than the median home value, the estimated tax change on a median-valued home is less than the estimated rate of change in statewide tax levies. Under the preceding assumptions, statewide net levies are estimated to increase by 0.2% in 2017(18) and by 1.3% in 2018(19). In comparison, the estimated tax bill on a median-valued home is estimated to decrease by 0.7% in 2017(18) and by less than 0.1% in 2018(19). Tax bills are estimated at $2,832(-$20) for 2017(18), and $2,831(-$1) for 2018(19) under the provisions proposed by the Governor in the biennial budget bills.
The flip side of that analysis is that if enough stores close and the dark store loophole is OK’d, then total commercial property values go down, then residential homes pay more. Which means they’d be likely to face property tax increases in the coming years.

This helps explain why legislators such as Sen. Duey Stroebel are taking the LWM’s advice and want to pass a bill to get rid of this “dark store” exemption, and use the property’s lease value should be the standard for assessment and taxation. I usually think Stroebel is a WOW County dingbat, but he’s got a point here, and it’s an idea that politicians of both parties should get behind, before more of these remaining retail stores get a friendly court to allow them skip out on taxes and make us pay the difference.

It also will be interesting to see where Governor Walker falls on these bills, because his puppetmasters at Wisconsin Manufacturers and Commerce want the dark store tax break (because those scumbags never pass up a tax break no matter how badly it screws the typical person). But allowing that loophole would likely raise property taxes on homeowners, and deprive Scotty of one of his favorite talking points heading into the 2018 election.

Keep an eye on this one, to see how it winds its way through the Legislature. With the news of more store closings seeming to come every day, and with property tax assessments and bills for 2017 coming sooner than we care to admit, this issue seems to be bubbling up very fast.

Tuesday, March 21, 2017

More evidence shows vouchers are still stealing from public schools in Fitzwalkerstan

State Sen. Janet Bewley drew some headlines this week when she asked the Legislative Fiscal Bureau to compare aids given to Wisconsin’s public schools with how much will be given out in vouchers for each student by the end of Governor Walker’s 2017-19 budget.

Here’s a look at what the LFB replied with regarding the voucher payments that are slated for the next 2 years. I know this will shock you, but more money is projected to go into them for this budget, just like it has for all other budgets under Scott Walker.
You asked for the choice payment amount for the 2010-11 school year and the payment amounts for the 2016-17 school year. In 2010-11, the per pupil payment was equal to $6,442 for pupils in all grades. In 2016-17, the per pupil payment is equal to $7,323 for pupils in grades K-8 and $7,969 for pupils in grades 9-12. The weighted average per pupil payment in 2016-17 is approximately $7,461, based on the percentage of full-time equivalent (FTE) pupils in the Milwaukee, Racine and statewide choice programs who are enrolled in grades K-8 and the percentage enrolled in grades 9-12.

Under Assembly Bill 64/Senate Bill 30 (the Governor's budget proposal), it is estimated that the payments will increase by $217 in each year of the 2017-19 biennium. Estimated payments for a K-8 pupil would equal $7,540 in 2017-18 and $7,757 in 2018-19. For a 9-12 pupil, estimated payments would equal $8,186 in 2017-18 and $8,403 in 2018-19.
In addition, some funding is taken away from public schools when a student living in the district uses a voucher for a private or independent charter school, so the LFB also noted that effect (estimated to be over $168 million in 2018-19).

Compare those figures of $7,757 per student for K-8 voucher students and $8,403 for high schoolers with what is sent out in General Aids for K-12 public schools. As you can see, public schools in Wisconsin would get less money per student in 2018-19 than they would 8 years before (aka, the year that Scott Walker and the Wisconsin GOP took power).

General state aid per pupil, K-12
2010-11 $5,318
2018-19 $5,273

And that’s before inflation is taken into account.

But K-12 school funding is more than General Aids, and the LFB paper mentions the fact that categorical aids have grown in the Age of Fitzwalkerstan. These are programs that are outside of the general funding formula, and the biggest item in it are per-pupil aids, which goes to schools based on their populations, and also includes targeted funds for certain schools with extra challenges, like sparsity aids for small rural districts with not much tax base, and aids for districts with high numbers of students living in poverty.

K-12 categorical aids are projected to grow from $653.9 million in 2010-11 to $1.22 billion in 2018-19 under the Governor’s Budget, including sizable per-pupil increases in both 2017-18 and 2018-19 (although as we found out yesterday, it’s not as big as the Walker Adminstration said, because some is based on whether the state decides to self-insure for employees health insurance, and whether there actually are savings). But even with the growth in aid that Walker’s pre-election budget has, the total state aid increase per pupil still lags below the rate of inflation during his time in office.

Total public school aids per pupil, K-12
2010-11 $6,080
2018-19 $6,703 (+10.2%)
Proj. change in CPI 2011-2019 (+13.8%)

And that $6,703 that state taxpayers would give in 2018-19 per K-12 student is a whole lot less than the $7,757 that comes with a K-8 voucher pupil or $8,403 for a high school student in that same year. The slimebuckets in the voucher lobby responded by saying “But what about property taxes?,” to which I have the following responses to that response:

1. The voucher people aren’t mentioning that there is a bonus payment that comes to voucher schools under the “special needs scholarship” program (page 17 of this PDF on the DPI budget). This gives funds to private schools who take in students with special needs, and Walker wants to increase this payment from $12,000 this year to $12,434 per student by 2018-19, and increase the number of students in the program from 350 next year to 500 in 2018-19 (with aid to the local public school district reduced by the same amount, by the way).

This $12,434 is well above the $8,403 that would be given for a voucher student without special needs, and while the extra cost of special education is figured in the public schools’ Categorical Aid number, it isn’t figured into the voucher school’s figures, which means the additional state cost per voucher school student is significantly higher a than the $1,000+ we’ve seen in the press.

2. The voucher lobby is conveniently not counting the fact that any private school tuition payment beyond the cost of the voucher also can be written off on a parent’s taxes. That’s another $12 million that should be added to the cost of vouchers, and that’s not even mentioning that the overwhelming number of parents getting the tax break make 6 figures.

3. Parents who use vouchers and/or private schools still get to write off the public school part of their property taxes at both the state and federal level. You wanna even it up, voucher slime? Then you don’t get to double-dip with a private school tuition tax break AND a write-off for public school property taxes.

So even while Governor Walker makes taxpayer-funded campaign appearances touting his plans to put more per-pupil aids into public schools, he's still giving preferential treatment to vouchers. Which still gives the average Wisconsin taxpayer the shaft for WisGOP's crooked, DeVosian strategy of funneling money into these private schools, with the plans that lobbyists like convicted criminal Scott Jensen kick back some of those voucher proceeds back to their campaigns.

Which is why it is all the more critical that we re-elect Tony Evers as superintendent on April 4, to make sure someone will advocate for the public schools that are the bedrocks of our community and society, even if they don't get the funding or lobbying that they deserve. And maybe we can start to even out this disparity in state funding where vouchers get thousands more in state funding per student than the public schools do.

Monday, March 20, 2017

John Oliver shows how Trump budget hurts his rural voters

Between March Madness and state issues tying me up, I haven't had too much time to go into the idiotic Trump budget that was rolled out last week. Fortunately, John Oliver was able to mention this in his HBO show on Sunday.

A few of my favorite lines from Oliver's segment.

“It is sort of fitting that the list of budget cuts scroll by, like the end credits for America.”

“Basically Mulvaney treated Trump’s past statements the way Trump treats women, randomly singling out a few of them, and then reducing them down to numbers.”

“You don’t cut those (small) agencies as a cost-saving measure, you do it as a ‘fuck you.’”

I also like that Oliver goes into detail on the fact that the Appalachian Regional Commission is eliminated in the Trump budget, and he jumps off from there to point out that many of these cuts are in white rural areas that gave Trump his biggest support. Including a proposal that literally turns these places into “flyover country” because it ends subsidies for small-town airports.

Much like we saw in an article this weekend where the GOP’s Obamacare repeal bill would screw rural Wisconsinites the worst, the constituents and states that put these guys into power would be the ones who are going to be hurt the most by Trump’s budget.

But hey, you showed us “over-ejukated lib’ruls last November, didn’t you? SUCKERS!

Walker self-insurance scam shows a $112 million budget hole

No doubt, the big news in the country is that, the Director of the FBI admitted that the new president*’s election campaign was being investigated for back-channel collusion with Russia. But there was another bit of news closer to home that will likely blow apart the plans of another Republican – Scott Walker.

You may recall that Walker proposed that the State of Wisconsin go away from its current competitive marketplace of health plans for its employees, and start self-insuring state workers in 2018. Bids were received by the Group Insurance Board earlier this year, but the deal still has to be signed off on by the Legislature’s Joint Finance Committee before it takes effect.

Today, the Legislative Fiscal Bureau released its analysis of the budget-related provisions on this self-insurance plan, and revealed it to be a scam which unravels a lot of Walker’s 2017-19 budget.

First of all, the Walker Administration claims that $60 million will be saved by switching state employees to a self-insured plan- $20 million for the last half of Fiscal Year 2018, and $40 million for FY 2019. That’s questionable enough, but let’s just assume it happens. The first $30 million of these savings are taken out of the Compensation Reserves part of the budget, which deals with fringe benefits like health care costs. Risky if the savings don’t happen, but no other problem there.

Here’s where things get really sketchy- the Walker Admin then DOUBLE-COUNTS these savings when it comes to increasing funds for public education. Instead of the reported figures of a $200 per-student increase for 2017-18 and $404 per-student in 2018-19, it turns out some of that increase assumes money saved from self-insurance then being funneled back into K-12 public education. Note the “ifs” in the LFB’s statement.
…if a contract to provide self-insured group health plans is executed and if there are lapses to the general fund associated with self-insurance, school districts would be eligible for an additional per pupil aid amount of $12 in 2017-18 and $24 in 2018-19. The additional $12 and $24 would not be ongoing and would only be provided if the school district met the same two conditions required for the increases of $188 and $380. The budget bill estimates that the $12 and $24 increases require $30.3 million GPR, which would be associated with the projected lapse indicated above.
In other words, somehow the Walker folks thought that they could add $30 million in health care savings to K-12....without ever counting that money in the first place. That’s not how "saving" money works, Scotty.

And it gets worse in this LFB memo, as the Walker Administration is also counting on the UW System to save money from self-insurance. UW System funding is done by a block grant that assumes all costs, including the fringe and benefit costs in the Comp Reserve. So the Walker budget simply reduced the money the UW System would get in their block grant, regardless of whether self-insurance ever saved any money.
The bill would provide funding directly to the UW System in order to support general wage adjustments of 2% on both September 30, 2018, and May 26, 2019,and estimated fringe benefit costs for employees. The bill assumes self-insured group health plan savings of $9,853,000 GPR in 2017-18 and $19,705,900 GPR in 2018-19 for the UW System. Funding for salary and fringe benefit adjustments provided to the UW in the bill are net of assumed savings, and total $126,500 GPR in 2017-18 and $11,517,900 GPR in 2018-19.The bill specifies that the Board of Regents could not request any funds from the state's compensation reserves during the 2017-19 biennium to fund salary and fringe benefit costs.
To turn that around, if self-insurance is not approved or if it results in not savings in the next two years vs the current health care system, then the UW either LOSES $17.9 million in funding and has to figure out how to handle that cut themselves, or $29.5 million will have to be added back to the UW budget to pay for those 2% pay raises for 2018 and 2019.

All of this is bad enough, and will lead to a significant hole in the budget if self-insurance is either not adopted, or doesn't lead to any of the promised savings. But there is another assumption that the Walker Administration threw into the budget involving the repeal of Obamacare. Of course that is also up in the air, and we certainly don't know what the law will look like this time next year. But that didn't stop the Walker Administration from banking on an Obamacare repeal to balance its budget.
Health Insurer Fee Savings. Under the bill, savings associated with the anticipated repeal of the federal Affordable Care Act's health insurer fee (otherwise known as a market share fee or premium tax) are accounted for separately from a decision to self-insure for group health plans. Compensation reserves for state employees other than UW System employees assume expenditure reductions of $4,082,700 GPR in 2017-18 and $8,165,300 GPR in 2018-19 associated with eliminating the fee. The amount appropriated to the UW System for compensation, described above, assumes expenditure reductions of $3,247,000 GPR in 2017-18 and $6,494,100 GPR in 2018-19 associated with eliminating the fee.
So if that health insurer fee doesn't get repealed for 2018, then that's another $22 million that we have to come up with (or cut) in order to make the numbers add up. Remember, Scott Walker's proposed budget has less than $7 million of breathing room even with all of these phantom savings baked in.

Let's add up the tab, and see what we need to put back in, shall we?

$30.44 million cut from Comp Reserves
$30.3 million to keep $200/$404 per-pupil addition to K-12
$29.55 million cut from UW funding
$12.25 million for removal of ACA health insurer fee
$9.74 million for removal of UW System health insurer fee

And we're not even discussing the economic disruptions that would be caused from layoffs of Wisconsin health insurers as the plans change to national companies, along with questions about who the providers would be. Oh, and if public employees have to pay more in premiums and/or have to add more in FSAs or HSAs, then that's going to lower tax revenues (since those costs can be written off). Oddly, those revenue effects aren't a part of this budget. Funny that.

So it looks like the roads aren't the only place where Scott Walker is relying on magical thinking to make the numbers add up in this budget.

I don't see the media jumping on this analysis too much so far (you might want to drop them a line), but I bet the members of the Joint Finance Committee will when budget hearings start in the near future.

Sunday, March 19, 2017

A weekend of Milwaukee Madness

I was in Milwaukee a couple of times during this frenetic weekend to catch some March Madness action. Me and several of my friends decided to return to the Bradley Center Thursday afternoon and Saturday night, and as usual, it was a great time (Saturday night's Iowa State-Purdue game was especially good and intense).

But those games and the festive scene from the out of town fans wasn't the biggest hoops thrill I got out of the weekend.

And Coach Gard's line about how his "water wasn't sweet. BUT THAT WIN SURE WAS!" is a reprise of this classic Gard-o "Dad joke" (around 0:45) from another shocking 2nd round upset that Bucky pulled last year.

Which explains why the dipshit on the right has a juice drink in his hand in this postgame picture from a Milwaukee bar on Saturday afternoon.

So all of a sudden, things aren't so disappointing with UW hoops are they? And now that these guys are playing with house money, why can't they do some damage in NYC next weekend?

U RAH RAH MUTHAFUCKAS! Now I need to come down from this always-crazy and always-awesome 1st weekend of Madness.

PS- As someone who did quite a bit of driving between Madison and Milwaukee this weekend, the roads are even worse than I recalled it being a couple of weeks back. I know the snow of last week probably is a big reason that things deteriorated further, but it's not a very good look for the many people who traveled into our state's biggest city last weekend. And it probably helps explain why the City and County have put in wheel taxes in recent years, since the state isn't holding up their end of the bargain in either highway maintenance or in giving aids to local communities.

Brilliant! Rural Wisconsin voted to lose their Obamacare

One common theme that comes up when discussing the GOP's "Trump-Ryancare" plan in Congress is that older rural white Americans who favored Donald Trump are the ones most likely to be hurt by the GOP's plan. whose subsidies for buying coverage on the ACA's exchanges are not likely to be enough to cover the higher premiums they will have to pay.

And Wisconsin is an excellent example, with Craig Gilbert's article in today's Milwaukee Journal-Sentinel including this illustration showing that Northern and Western Wisconsin will end up paying the most under the GOP's plan to replace Obamacare.

Sean Duffy "represents" the 7th district of Wisconsin in Congress, which has the most recipients of insurance through the Obamacare exchanges out of any district in the state. However, GOP drone Duffy thinks that that the Magic of Mr. Market will save the many lower-income residents of the 715.
Duffy said Saturday he has concerns about the ability of some older people to purchase a health care plan with the GOP tax credit as it is currently designed.

“The final page hasn’t been written” on the bill, he said. “Maybe we can improve the amount of money that an individual in their 60s gets in regard to their refundable tax credit.”

But Duffy said he did not favor the approach under Obamacare of offering bigger tax credits to people in higher-cost counties (though that has meant more generous subsidies in his rural district). And that view appears to be the prevailing one among House Republicans.
Oh yeah, Sean. There are insurance companies and health providers just lining up to give Boomer-aged guys in Tomahawk a low-price, high-coverage plan. Is this guy truly this out of touch with how the Real World economy works, or is just too Koched up to admit the truth?

Look, maybe you rurals thought that Hillary was an elitist bitch who didn't speak to what you felt, and you decided to show us smarty-pants urbanites by voting for Trump and (mo)Ron Johnson because they had "business sense." But you were voting to cut your own throat, and those "businessmen", the rest of the Republican Party, and their puppetmasters care even less about what happens to you, especially since rural people aren't a profitable market for most corporate businesses.

Meanwhile, "Smarty-Pants liberal" Jake in Madison thinks that you deserve the same options in health care that rich people in bigger cities have, and I think being born and raised in a small town shouldn't mean you have to settle for a second-class existence. But apparently you don't feel the same way, because you think you have to "make us listen to you" by voting for the less-intelligent, "non-politically correct" person because it's going to teach us.....what?

No offense rurals, but if you don't want to help yourself and this state by voting for politicians who actually care about the well-being of their constituents and the communities they leave behind, then why should I be nice to you? Grow up, vote smarter, get some self-respect, and stop electing jerk-off Republicans who do not give a crap about you and in providing the services that give you opportunities for a better life.

You do this to yourself....and that's what really hurts. It's just too bad that your pig-headed decisions also drive the rest of us down the drain as well. STOP IT.