Sunday, April 30, 2017

McCabe for Wisconsin 2018?

Found this on the Citizen Action website from this weekend. Sure seems like Mike McCabe of Blue Jean Nation would be OK with being drafted into.the Governor's race for 2018.

Also interesting in that clip, McCabe openly says Bernie Sanders would be president had the Dems nominated him because of Bernie's ability to relate to Midwesterners and blue-collars in states like Wisconsin (I agree). In addition, McCabe notes that having gov't programs and job benefits NOT being available to all people plays directly into Scott Walker's "divide and conquer" game. So pushing benefits to all people and an economy that works for all people is the way to go.

There are DPW types who are skeptical of McCabe because apparently he was a GOP staffer a few decades ago and because they think his "independent guy/ both parties fail" act is cynical. Sorry, but I don't care. This is a guy who LISTENS AND OBSERVES what is out there, and is reacting to what he sees and is offerimg solutions.

Add in McCabe's upbringing as a Clark County dairy farmer, and this is the kind of voice people need to hear from Democrats, whether it's from McCabe, or someone with a similar honest, solution-based approach.

WIll it get worse for incompetent Trump? Probably

Really good article today from Stan Collender in Forbes- a guy who does great work if you want to see the nuts-and-bolts of the federal budget and the process that goes into passing fiscal bills in Congress. Collender notes today that the real benchmark for Donald Trump's administration may not be his (generally failed) first 100 days, but the next 150 days.

Collender says that the next months will make-or-break Trump's campaign promises of repealing/replacing the Affordable Care Act, and getting some kind of tax changes and infrastructure package through Congress. He also points out that the already-bad news on issues such as the increasing budget deficit and Russia investigations
This period will also be when the Trump administration supposedly will submit its first full budget -- complete with its first deficit and debt projections and economic forecasts – to Congress. That will set off the traditional political firestorm on Capital Hill when its released. (For the record, I still refuse to call what the administration released in March a “budget.")

In addition to the 12 fiscal 2018 appropriations that will be needed by October 1, one of the reliably most difficult bills to pass – an increase in the federal debt ceiling– will also have to be enacted in September.

May-September is also when the various congressional investigations on Russian involvement in the 2016 U.S. election are likely to result in potentially very damaging hearings for the White House.
And oh yeah, all this is assuming the government doesn't shut down at the end of this week after being given a one-week reprieve on Friday. That's no guarantee, given that there's still 5 months of spending appropriations that have to be figured out, and good luck having this crew of GOP clowns getting that sorted out, let alone have any Dems going along with any radical changes to the ACA or major shifts in spending priorities.

Collender says that a lot of the problems Trump has had in DC comes from his lack of governmental experience, and how he doesn't understand that running a country is much different than being a CEO in the corporate world. Mostly because in government, people can tell you NO, and still keep their jobs.
Since he took the oath of office, Trump has treated House and Senate Republicans as employees he can fire if they don’t do what he wants.Trump has been acting as if GOP representatives and senators shouldn’t just be obeying his directives but, rather, anticipating his every wish and thanking him for the privilege...

He didn’t [know that Congress could be independent of Trump], and congressional Republicans will make his political life miserable over the next few months because of it. The substantively and politically much tougher decisions immediately ahead will be considerably more difficult than they should have been at this point in his presidency.
Oh, but Trump and Chief of Staff Reince Priebus have solutions to this- just remove the checks and balances and opposition!

.@POTUS on getting things done in government: "It's a very rough system. It's an archaic system...It's really a bad thing for the country."

— Fox News (@FoxNews) April 28, 2017

The fiasco known as the Drumpf Administration is exhibit A why that whole "business people should be in charge" thing often doesn't work so well in a democracy. The only exception to this rule is if that business person understands that you have to listen to other people in the public sector, instead of just shouting orders, and that person needs to know something other than maximizing profit and buying influence. That is certainly NOT the person that lifetime con man Donald Trump is, and we are all suffering this joke as a result.

WisGOP hates wheel taxes? There's an easy solution for that

One of the byproducts of the state's crisis in Transportation funding is that many local communities have had to turn to come up with money to fix their local streets and highways. The problem is that there are few options given to local Wisconsin governments to raise money (due to property tax limits), so many communities have had to implement local vehicle registration fees in recent years (here's the current list from the Wisconsin DOT).

Also known as a "wheel tax", these fees are tacked onto your annual $75 vehicle registration that you send to the state, and then redistributed down to the city or county that levies it. This means the average Wisconsinite may think that state legislators raised their registration fees, and that pressure combined with some Wisconsin Republicans opposing any type of tax or revenue enhancer, has led some Baggers to try to take action to stop this "problem."

One of these "I hate taxes/revenues" dimwits is Oshkosh-area Rep. Michael Schraa (R-gerrymandering), and he is circulating a bill to give local voters a potential veto if their pass a new wheel tax.
The wheel tax can be hard on working families—especially those with teen drivers. Drivers are already paying $75 to register their cars. Imagine living in Milwaukee where they add $20 to the registration fee for the city wheel tax, and another $30 for the county wheel tax. Milwaukee residents are paying $125 per year for each vehicle. If there is a spouse who also needs to drive to work, the cost is doubled. Now add in a couple of teenage drivers. A family of four is paying $500 per year to register vehicles for two adults and two teen drivers.

Most wheel taxes are not as high as Milwaukee’s, but there are some additional concerns. The wheel tax is a regressive tax which has a greater impact on the poor than on the wealthy and middle classes. Unlike the property tax, the wheel tax can't even be deducted on income taxes. Government transparency requires a careful examination of all these issues, and the voters should at least have an opportunity to weigh in on this expense.

“Let’s keep the option for counties and local governments to raise transportation funds through a wheel tax, and let’s also give the people who pay that tax and drive on those roads a say in the decision.
Schraa claims that the wheel tax is also regressive because of its flat-fee design, but he doesn't seem to understand that people in real cities like Milwaukee and Madison have other transportation options, so they don't need to have a car (or as many cars) as people in the sticks. Regardless, the concern over having these fees go up is something that many have and will notice in the future, and that's where Schraa's desire for action comes from.

By the way, nice usage of the RW radio talking point of "Milwaukee is a high-tax hellhole," Rep. Schraa. I also see that State Treasurer Matt Adamczyk continued this meme, by pointing out that Milwaukee County voters overwhelmingly rejected an advisory amendment asking to increase the County's wheel tax to $60 to pay for spending in both road repair and transit.
For many years in Wisconsin, the only way a local government entity could raise money was via referendum. Unfortunately, many local elected officials are using the state law regarding wheel taxes to avoid the support of the people...

Even more ridiculous in Milwaukee County is that the $30 wheel tax being paid by car owners is mostly going to buses.

I am sure many hard-working citizens in Milwaukee are not happy that the money they are forced to pay in a wheel tax isn’t even going to fix the roads they drive on. I just wonder how many know this is what is actually happening with their money.”
Well, Rep Schraa and Treasurer Schraa, I got a simple answer to deal with this problem. Fund the cities and counties adequately from the state level. It is no coincidence that most of these wheel taxes have been passed in recent years, as WisGOP moves to cut taxes and cut shared revenues to local communities have squeezed local governments around the state. And no relief is coming in the 2017-19 budget, as that gimmicky, deficit-ridden document actually reduces shared revenues, and currently doesn't have any extra money for local roads aids, now that the Joint Finance Committee has ripped up Gov Walker's DOT budget and is starting from this year's base.

Schraa and Adamczyk bitching about Milwaukee is especially rich, because WisGOP legislators have consistently cut shared revenues to the state's largest city over the last 20 years, while not giving the city any extra assistance for the higher amount of police and fire protection responsibilities that it has to take on as a result of its large size and density. Let me remind you of this passage from a February article by Bruce Murphy is Urban Milwaukee.
Most cities in America have the ability to levy a sales or income or gas tax. Not cities in Wisconsin. That law goes back to 1911, when Wisconsin created the first state income tax in America. The legislature also wrote a law preventing cities from levying an income tax — to prevent some cities from gaining an advantage over others. Instead, the legislature committed to returning a significant portion of the state income tax revenue to cities through state shared aid.

But the legislature began retreating on that century-old grand bargain in the 1990s. Result: In 1995, 53 percent of Milwaukee’s general purpose budget was paid for by shared revenue, but that dropped to just 39 percent by 2012. Today, it’s down to 36 percent.

“State shared aid once paid for our entire police and fire department budget,” [Milwaukee Mayor Tom] Barrett notes. Now it doesn’t even pay for the entire police budget.

Let's also remember that Milwaukee County attracts the most tourism dollars out of any county in the state, and the solution to the concerns Schraa and Adamczyk have over higher wheel taxes becomes obvious. Let Milwaukee and other communities raise their own revenues for roads and transit with a local sales tax. This isn't a new idea. A bill to allow a referendum on whether a 0.5% sales tax would be designated for roads had bipartisan support in the last legislative session, but Assembly Speaker Robbin' Vos and Bradley Foundation-funded stink tanks had it killed ahead of the last election.

Let's also remember that the state used to have the ability to levy local sales taxes for transit and related needs, in the form of Regional Transit Authorities. RTAs not only were designed to better coordinate transit across county and city lines, but it also would have put these operations off of the property tax, making it easier to fund other needs throughout the community. Naturally, the anti-city Wisconsin GOP got rid of the RTAs as soon as they took power in 2011, and it's no coincidence that the funding problems for roads and transit have only gotten worse in the time since.

If state legislators and Gov Walker are still more concerned with the thoughts of "no-tax" DC Lobbyist Grover Norquist over the needs of Wisconsinites to have safe roads, and they don't want to see registration fees go up, then a local sales tax for roads and/or transit seems to be the obvious solution. This takes the debate out of the hands of state legislators, or at least limits it to what highway projects will be built or delayed due to this Bubble-World mentality.

In addition, having a sales tax be responsible for funding some of the local streets is more equitable than a registration fee, because some of those costs will be borne by tourists and other out-of-towners that use the roads, instead of allowing those people to free-ride whenever they go into big cities and enjoy the increased amenities and attractions that they offer.

But of course, allowing local communities to raise their own revenues is a real-life solution to the problem of deteriorating roads and transit services, and not a political one that distracts the rubes with resentment of "those people" in Milwaukee, or one that tries to pose for "low tax" holy pictures while allowing the GOP-voting burbs in the 262 to continue to gravy-train off of the Dem voters in the 414. We'll see which direction the Wisconsin GOP will take as the DOT funding debate heats up in the coming weeks, but I wouldn't be too confident that they'd choose the responsible, apolitical option.

Friday, April 28, 2017

GDP disappoints, but don't panic...yet

Not a good Gross Domestic Product report for the first 3 months of the Trump presidency. And more concerning to me is the reason why.
rowth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, braked to a 0.3 percent rate in the first quarter. That was the slowest pace since the fourth quarter of 2009 and followed the fourth quarter's robust 3.5 percent growth rate.

The near stall in consumer spending is blamed on a mild winter, which undermined demand for heating and utilities production. Higher inflation, with the reading on the personal consumption expenditures index averaging 2.4 percent - the highest since the second quarter of 2011 - also weighed on consumer spending.
That jibes with the soft retail sales figures I’d been noticing in the early part of this year, and a major part of that low consumer spending number comes from a decline in auto sales, which had been rising strongly at the end of 2016.

That drop in auto sales reduced GDP by nearly $20 billion, and 0.45% for the quarter. Oddly, on the same day that the decline in car sales was shown to hurt US GDP, General Motors came out and announced an increase in earnings nearing 35% compared to 1 year ago. Also noteworthy is that the decline in auto sales has yet to translate to auto layoffs, as auto vehicle and parts manufacturing employment went up by 3,000 in March, and rose by 2,000 for the first 3 months of 2017.

But the decline in consumer spending is concerning as GOPs at both the state and federal level continue to pass and propose wage-suppression measures that aren’t going to help people spend more of the money they have. Combine that with a real disposable income growth being cut it half (1% vs 2% in Q4 2016), the uncertainty in health care coming from Capitol Hill, and Drumpf’s general instability, and is it any wonder that people increased their savings rate from 5.5% to 5.7% in early 2017?

The positive part in the GDP report was on the “investment” side, where a massive increase in mining expenses and home construction kept allowed GDP growth to stay above zero.
Spending on mining exploration, wells and shafts surged at a record 449 percent rate after rising at a 23.7 percent pace in the fourth quarter, accounting for the rise in nonresidential structures investment.

Spending on nonresidential structures accelerated at a 22.1 percent pace in the first quarter after falling at a 1.9 percent rate in the prior period.

Investment in home building rose at a 13.7 percent rate. Exports rose at a 5.8 percent rate, outpacing the 4.1 percent rate of increase in imports. That left a smaller trade deficit, which had a neutral impact on GDP growth.
Of course, some of those stats also could scream “BUBBLE!”, particularly in housing with interest rates going up and wages not matching the sizable home price increases. And with oil prices having a sudden retreat of 8% over the last 2 weeks, you have to wonder if there’s any incentive for those companies to keep drilling and buying equipment in the near future.

These concerns aside, a few other underlying figures from the full report makes me think our economy hasn’t stalled out (yet). For example, inventories were reduced throughout Q1, taking away 0.93% from the GDP figures for that time period. Add that back, and quarterly GDP growth ends up at 1.63%, compared to a non-inventory growth level of less than 1.1% in Q4 2016.

Perhaps growth will pick up in the coming quarters, particularly if shelves need to be restocked, job losses in retail don’t spread into other parts of the economy, and gas prices stay low in the next few weeks. But as a guy who follows the Wisconsin budget closely, it’s noteworthy that in January the Legislative Fiscal Bureau was counting on 2.3% real GDP growth for 2017, and this 0.7% number for Q1 means we now need to grow at a 2.8% rate for the rest of this year to keep up. The US hasn’t averaged 2.8% growth over a year since 2005!

With an economy allegedly near full employment and consumers not willing to shell out for anything other than houses, I can’t see where that 2.8% growth might come from. Makes you wonder if those revenue estimates might not be rosy when they come out in the next week or so, especially once we get a look at the April revenues for the state. Stay tuned.

Wednesday, April 26, 2017

ESPN layoffs sad, structural change in the biz

Today was a sad day for those of us Gen X types that were huge sports fans in our younger days, and it’s a sign of how different things are today. Approximately 100 staffers at ESPN lost their jobs today, and most of them were on-air personnel and reporters. Richard Deitsch at Sports Illustrated has been updating the list of casualties throughout the day, and it is filled with familiar names.
Over the course of the day on Wednesday, a number of staffers announced via social media that they had been let go. Those included the noted NFL information broker Ed Werder; longtime columnist Johnette Howard; espnW staffer Jane McManus; college football and ESPN Radio analyst Danny Kannel; NHL reporters Scott Burnside, Pierre LeBrun and Joe McDonald and a mass of college sports reporters including C.L. Brown, Eamonn Brennan‏, Jeremy Crabtree, Brett McMurphy, Max Olson, Dana O’Neil, Jesse Temple, Derek Tyson, Austin Ward, Ted Miller, David Ching and Brian Bennett. MLB reporter Doug Padilla, ESPN Dallas Columnist Jean-Jacques Taylor, soccer reporter Mike Goodman, ESPNU anchor Brendan Fitzgerald, NFL analyst Trent Dilfer, SportsCenter anchor Jay Crawford, NBA writer Ethan Strauss, Justin Verrier​ and Calvin Watkins, NFL reporter Ashley Fox and longtime MLB reporter Jayson Stark also tweeted they were being let go.

ESPN issued two statements early on Wednesday, including one from President John Skipper and a second from his deputies.

“A necessary component of managing change involves constantly evaluating how we best utilize all of our resources, and that sometimes involves difficult decisions,” Skipper said, in a statement. “Our content strategy—primarily illustrated in recent months by melding distinct, personality-driven SportsCenter TV editions and digital-only efforts with our biggest sub-brand—still needs to go further, faster…and as always, must be efficient and nimble. Dynamic change demands an increased focus on versatility and value, and as a result, we have been engaged in the challenging process of determining the talent—anchors, analysts, reporters, writers and those who handle play-by-play—necessary to meet those demands. We will implement changes in our talent lineup this week. A limited number of other positions will also be affected and a handful of new jobs will be posted to fill various needs.”
As Skipper alludes to, a lot of the moves go along with an updated ESPN strategy to emphasize more of its digital platforms over having a large number of on-the-ground reporters that gather content for its website and shows like SportsCenter. In addition, online services like Hulu or Sling TV has allowed more people to “cut the cord” on cable while still getting ESPN content, and even if you have cable, you can DVR anything and watch a show at your leisure.

Unfortunately, these ESPN layoffs are a natural result to this structural change in the sports journalism industry, especially on television. It’s noteworthy that SportsCenter has basically turned away from being a highlight show in recent years, and instead has become a host-centered show with various long-form segments and not as much on the day’s games and player moves. Cork Gaines at Business Insider hearkened back to words from last year, when two former cornerstones at ESPN- writer/NBA guy Bill Simmons and former SportsCenter anchor Keith Olbermann – had a conversation on Simmons’ podcast about how the media world had changed.

Olbermann noted that ESPN’s non-game programming strategy had become obsolete by the mid-2010s, because people get their sports news and highlights in a different way than when me and my college buddies were gathered around the Witte Hall dorm den to watch Keith every night in college.
"[Former ESPN Executive Editor] John Walsh said — I think this was 1993 — 'You know, we have done all sorts of marketing and research, and no matter what happens to ESPN, as long as we have 'SportsCenter' and it is a success, we will be dominant in this field no matter what competition arises. Our research indicates that our fans will stick with us if we lose the NFL contract, and they will stay with us if we lose this personality. As long as we have 'SportsCenter' and it is accurate and well done, we will be dominant in this field.' And it's not true anymore because it can't be the centerpiece of the operations for the reasons we already alluded to.

"But they clearly — and I think you would agree with me — they don't know that. And all attempts to change it are predicated on the idea that it can be what it was two years ago, five years ago, 20 years ago when Dan [Patrick] and I did it. And it can't."
That rings true. Name the last time you said “I gotta set aside time at 10pm to watch SportsCenter to find out what happened in this game!” You don’t need to. You can just click on your favorite website or go through your Twitter feed, and you will see the results and see the highlights that show how it happened. You don’t need SportsCenter for the postgame interviews, because that’s online as well, and you can read analysis from across the country on any number of websites and social media sites.

Of course, that doesn’t mean ESPN hasn’t made some self-inflicted damage along the way to cause some of the bloat they feel a need to get a rid of. This Tweet summed up my sideways glance at today’s news, especially as I realized several of the layoffs were veterans done for cost reasons.

Seems like something they really don’t need to spend the money on that, regardless of whether or not they’re doing more feature pieces vs game reporting as part of the change in ESPN's emphasis (and I like Marty Smith a lot, by the way- I think he’s hilarious and good at what he does). Somehow Steven A. Smith and Max Kellerman still have their jobs and shows through all of this, which also seems head-shakingly symptomatic of what Skipper and the suits think is what grabs ratings for "sports programming" in 2017.

The other thing that strikes me as odd with ESPN’s mass firings is the timing of it- the day before the NFL Draft. ESPN has had the Draft for almost all of the 38 years ESPN has been on TV, and it’s one of those events where it makes a lot of sense to have reporters at the various team offices to get inside info on possible trades, draft strategy, and interviews with the coaches/GM.

I don’t get why you get rid of a lot of college football and NFL people one day before you’re going to have a weekend full of draft coverage. Have mass firings on May 1, after the draft is over? I get that. But I guess that means I have yet another reason to watch NFL Network starting on Thursday (they’re better at the Draft anyway).

The suddenness of ESPN’s move tells me that there might be something else afoot. Wall Street media has been consistently discussing ESPN owner Disney, and the Worldwide Leader’s struggles and loss of subscribers, and Disney announces its next quarterly earnings in 2 weeks. You think maybe this is a pre-emptive move to deal with bad earnings news and keep investors happy?

Regardless of the reason, the bloodletting at ESPN is somewhat of a sign of the times, where we have more ability than ever to get information, but it hurts the ability of any one place to give you information (look at print media’s massive struggles over the last 25 years). And it’s sad to see a lot of familiar faces leave a network that I still watch, and it makes me wonder what platforms and networks I will see them pop up on in the coming months. Yes, ESPN's influence is much smaller than it was 20 years ago, but it's still generally the network I turn to for "general sports" programming, and like most TV shows, you grow a small level of attachment to those people. Interestingly, as I finish this Michael Smith and Jemele Hill have spent the first 15 minutes of their 5pm SportsCenter show to talk openly about the layoffs. In addition to telling viewers that it's difficult to deal with, because these are co-workers and colleagues (Smith just said "This has not made our team better").

I will disagree with one take Smith is having, because he's comparing the job reductions and public reaction to speculation/reaction to coaches getting fired. ESPN did not FIRE people today, which is something done for unacceptable performance or actions. ESPN did LAYOFFS today, which have to do with cold-hearted business decisions and often are affected by structural changes in consumer tastes.

Tuesday, April 25, 2017

And here we go with the Wisconsin budget!

If you're an avid budget watcher (and if you are.....what kind of twisted freak are you?), I got a link to get you geared up. The first round of budget papers from the Legislative Fiscal Bureau are now out ahead of next week's first votes.

There are a few things on Monday that are intriguing, although nothing too earth-shaking. You may be interested to read on the plans by Governor Walker to get rid of the Judicial Commission and move in under the State Supreme Court (one of many consolidations of power in the Governor's budget). There's also scheduled to be discussion about plans to end the state's Local Government Property Insurance Fund (I described the millions that may eventually be needed to bail this fund out back in December).

And if you ever wanted to read about how the state's Indian casinos interact with the state, and the revenue that the tribes send back to the state, I'll direct you to this paper. Because I have a thing for gambling laws and how casinos are doing, I noted that Wisconsin's Indian casinos in 2015 had its highest amount of net gaming revenue in 7 years at nearly $1.2 billion, and up 5.35% compared to 2014.

The LFB says that strong year means that the state should be getting $655,000 above what Governor Walker's bill had built into it, as part of $107 million that the state treasury and state agencies are slated get from the tribes over the 2017-19 biennium. However, there is one small hangup that might get rid of that mini-surplus.
On March 6, 2017, the Stockbridge Munsee tribe indicated "that it has notified the State of Wisconsin of its intent to withhold its revenue sharing payment of $923,000" for 2016-17 in a dispute over the expansion of the Ho-Chunk's Wittenburg facility (scheduled for completion in December, 2017). On April 19, 2017, the Stockbridge Munsee tribe filed suit against the state and the Ho-Chunk Nation alleging that: (a) the state is in violation of the Stockbridge Munsee compact revenue sharing provisions; (b) Ho-Chunk is in violation of its own compact for operating a gaming facility on lands not eligible for Indian gaming under federal law; and (c) the Wittenburg expansion does not meet the meaning of an "ancillary" facility. Given that DOA will not bill the tribe for payment until June, 2017, and that legal matters are pending, no assumption regarding a fiscal impact is made at this time. To the extent that a payment has not been received or is not made, revenue would be reduced pending the outcome of the lawsuit. Subsequent to settlement, payment may be received.
So far the Ho-Chunk haven't backed down, and are threatening a countersuit for damages if the Stockbridge-Munsee tribe doesn't back down. $923,000 isn't a big deal in a General Fund budget that is well over $15 billion a year, but it's an interesting story to follow if you like to play a few casino games around Highway 29.

But that tribal casino question is a mere trifle compared to the bigger issues that'll follow over the rest of May and June. Feel free to get your head ready for all of the fun and games, especially since we get new revenue numbers that could make or (more likely) break a lot of things when they come out some time over the next 2 weeks.

Monday, April 24, 2017

Walker claims there's money to fix the roads? Not today there isn't!

Lots of things in GOPland these days make me double-take and say “What the WHAT?” And so I guess I can add this one from our Fair Governor.
Reports last week indicated the governor might be willing to consider raising registration fees, but Walker told reporters at the Capitol he doesn't have "any interest" in doing that. He said he has explicitly stated his opposition to a gas tax hike because lawmakers have raised the possibility.

"I don’t know of anyone in the Legislature who’s talking about vehicle registration fees," Walker said. "For us, I think there is more than enough revenue out there. I’m willing to work with them."
First of all, if no legislators are “talking about vehicle registration fees”, then explain this comment from 3 days ago, Governor.
"Transportation’s going to be the biggest challenge. I think everything is on the table right now," Joint Finance Committee co-chair Sen. Alberta Darling, R-River Hills, told reporters Friday.
When “everything” is up for discussion, particularly involving DOT funding, that includes the registration fees that go into that funding, Governor.

Second of all “more than enough revenue out there”? For what? Not for any type of adequate funding of transportation projects, unless you want to include major cuts or delays. As mentioned previously, Walker’s DOT budget basically assumed that somehow an extra $107 million in highway spending would end any chance of delays on major projects in the Fox Cities and on the Verona Road/Beltline project in Madison (as was noted in the DOT’s budget request from September). The Walker Administration insists these projects will continue on schedule and on-budget despite the brutal audit that showed $3.1 billion in cost overruns from past highway projects, with much of that amount resulting from an inability to adjust projected costs to inflation. Call me skeptical on that assumption.

And despite what the Walker Administration propped up a couple of weeks ago, the $38 million in “added revenue” that the DOT is projecting into its Transportation Fund is merely a drop in the bucket when looking at the $6 billion DOT budget. Combine that with the fact that Walker’s budget would have spent $100 million more than it took in to the Transportation Fund, and there’s nowhere near enough revenue to cover the needs there.

Oh wait, Scotty wasn’t talking about generating more money from the Transportation Fund. He instead wants to raid the General Fund to pay for the roads.
“I’ve said repeatedly in my meetings with the (Assembly) speaker and the Senate majority leader that I think we can free up some more money, looking at general purpose revenue in the state budget and some other areas we think we can save on,” Walker told reporters.
Sounds good in theory, except for one major problem. THERE IS NO MONEY IN THE GENERAL FUND TO RAID. We just saw on Friday that General Fund revenues were down nearly 5% for March, and are currently on pace to fall short of the projected totals for this year as well as the 2 years in the 2017-19 budget.

In addition, Walker’s budget spends $366 million more than it takes in, and only has $12 million in breathing room. That’s before we even get to the prospect of a revenue shortfall, or the fact that the budget bakes in $60 million in health care savings from a self-insurance scheme that may not pass and is far from guaranteeing when it comes to delivering those lower costs.

So given the tightness of the budget, there are only 2 ways that a huge transfer from the General Fund can happen

1. A bailout from DC in the form of huge increases in Federal spending, which can then be used to replace state money. Given that this GOP Congress and Drumpfian White House are going to have enough problems trying to keep the government from shutting down this week, I wouldn’t count on any help coming from those guys.

2. Getting rid of a number of Walker pre-election budget gimmicks. One possible move would be to reduce Scotty’s proposed $618 million increase in per-pupil aids for K-12 education, but WisGOP legislators don’t seem willing to risk the political damage that would result from that.

So the next option would be to take out some of Walker’s proposed tax cuts and shifts. The most likely one to go would seem to be an attempt to get rid of the state’s Forestry Mill tax, which is currently part of your property tax and goes to fund the DNR’s conservation fund. Instead, Walker wanted to spend over $180 million of General Fund money to make up the difference that resulted from dropping Forestry off the property tax. This plan got panned by many speakers during the Joint Finance Committee’s public hearings throughout the state, as many citizens rightfully were concerned that this would make the conservation fund an easy target for cuts in the future once the dedicated funding was taken away and General Fund money became scarce.

Another idea was to give a 0.1% income tax cut, which would give barely more than $1-a-week to the typical Wisconsin taxpayer, but would cost the state $203 million during the 2017-19 budget.

$22 million more could be restored from getting rid of Walker’s silly idea of a sales tax holiday in August for school supplies, which won’t do much to help overall sales and might prove more trouble than it’s worth for businesses to adjust staffing and registers for.

Now if Scotty’s signaling those 3 tax proposals can be taken out, then that’s over $400 million that could go to roads for this biennium without raising gas taxes or registration fees. But that would contain its own set of difficulties, because transferring that $400 million would increase the state’s $1 billion structural deficit in the next budget, since the structural budget doesn’t count on that money being taken out of the General Fund (although the effect is only $225 million, since the Forestry tax shift is assumed to happen).

So let’s see what Scotty is talking about when he claims “there will be enough revenue” for roads to be funded well in this budget. There sure isn’t enough revenue right now to make it happen, so that must mean there’s a deal in the works to make major changes to Walker’s budget, and we’ll see soon enough what it is.

Either that, or Walker is living firmly in Fantasyland. If so, those illusions will crash to Earth soon enough.

Dems don't need a Guv candidate yet. But stop the moping!

A lot of concern has been bandied about over what the Wisconsin Democrats will do to try to deny Scott Walker a third term in November 2018 (and make no mistake, Gov Dropout is running- what else is that political lifer going to do?). The lack of a declared “name” candidate for the Dems is something that is causing plenty of media discussion, including a segment on Mike Gousha’s show over the weekend.

Milwaukee’s Dom Noth jumped into this “Dem 2018” debate recently with another excellent column at his Dom’s Domain site. Noth mentions that Walker is particularly vulnerable given his failed record on job creation and policies and promises that don’t add up in the real world.
You can hardly quote [Walker] to create ridicule, as you can with Trump. Inelegant? Boastful? Sure, but hardly a memorable style. He’s much like Trump in promises exuded with confidence, but Walker already has a long track record of deception, of policies unfulfilled or exaggerated or misapplied. Current GOP legislators don’t admit this aloud, but he has put many in bind after bind.

This should be a campaign where the Democrats succeed by borrowing from Reagan – the “are you better off” question reaching back to 2010. Not just poor families but a typical middle class family of two parents and two kids, or single parents, or farmhands, or storekeepers or seniors – the bulk of the voters. It’s tax time. Have them write finances down and then look at the realities.

Despite Walker’s tax pledges, are you truly better off? Because of him? Can you claim real savings on property tax, faster transit to jobs, more assured life on the farm, better schooling at reasonable cost, health care improvements the state is responsible for, better treatment and balance in the environment – or is it mainly promises about not spending like the Democrats of GOP legend? And how has that welfare to educate the rich [in the form of tax breaks for private school tuition] worked out for you?
Noth goes on to mention that it’s not like the Dems lack for potential candidates, it’s just that none have formally entered the race. In addition, Noth says name recognition is something that can easily be built during the 15 months leading up to a contested Dem primary in August 2018, and the general election 3 months after that. He adds that “the interest should be [generated] from the angry bottom up.”

Among those Guv-interested candidates that Noth finds to be strongest are State Sen. Kathleen Vinehout and State Rep. Dana Wachs. Both come from outside of the Madison and Milwaukee areas, which Noth thinks is an advantage for Dems (he admits this anti-urban mentality among voters is ”not right. But it’s there.”)

Let me add a side note on Wachs and Vinehout- they should work out who wants the Guv job and who wants the Eau Claire-area Senate seat, and not run against each other. Maybe the ongoing redistricting litigation is part of this problem, since that wouldn’t be decided till Fall, but let’s not cannibalize our good candidates and blow a needed legislative seat in the process (personally, I want Vinehout for the Guv spot).

To conclude, Noth says the DPW needs to ignore the money factor when evaluating candidates and stick to issues and competence.
Basically I am annoyed if the Democratic search puts self-funding ahead of actual doing. The elements I have outlined -- what’s best for Wisconsin and who is proven -- count more than private income or potential celebrity. These are people we’re electing, not interchangeable brands….

But I know what I want after Walker: Restoration in the broadest sense of the Wisconsin Idea. Even if they are new ideas. Our state has lingered too long in the middle and near the bottom while once it flooded the nation with hopeful concepts and successful programs.
Dane County Exec Joe Parisi said a similar thing at the 2nd District Dem convention over the weekend, saying that if the Dems get the right candidate and the right message “the money will follow.”

I think both Noth and Parisi are correct in this- given the enormous amount of money candidates like Bernie Sanders and Jonathan Ossoff have been able to raise through the Internet and through progressive word-of-mouth, THE MONEY WILL BE THERE TO COMPETE AGAINST WALKER. But thinking this way makes the average consultant/party hack less meaningful, so naturally those insiders want to emphasize the “money-raising” part and ignore the “voter inspiration” one.

What’s depressing to see is so many potential Dem candidates pull the plug on a potential Guv candidacy so early. Ron Kind continues to be a comfortable coward and settles for his backbench House seat in DC (it’s especially disappointing because he allows Walker to clown him on the issue of Medicaid expansion instead of “coming down” to kick him out of the Governor’s chair). On the other side, I think Parisi was right not to run- he's a low-key Dane County liberal that is absolutely NOT the kind of candidate who will beat Scott Walker, no matter how successful things are here in the Madison area.

Senate Dem leader Jen Shilling bailed on a statewide run after she had to go to a surprising recount in her State Senate race, likely because she evaluated it as a reflection of her shortcomings as a candidate. But I think that decision was misguided because a lot of what hurt Wisconsin Dems in rural Wisconsin was having Hillary Clinton being at the top of the Dem ticket in 2016. The dimwits at Team Hillary/DNC were convinced that they “had the math” and failed to listen or seem to care about the needs and issues that rural voters cared about (it’s no coincidence that all people that I have seen running for DPW Chair and other party positions have openly criticized Team Hillary/DNC’s campaign, and its lack of resources/attention to rural Wisconsin. This includes the current DPW leadership).

What’s frustrating about all of these people refusing to run in the Governor’s race and the general confusion over what direction the Dems will take in 2018 is that it gives a false impression of Walker being stronger than he is. The state is floundering economically, the roads are falling apart, and Walker is a known crook who can’t be expected to keep his word on pretty much anything other than staying bought. Sure, he’ll have a lot of money from oligarchs backing him, but so what? In the late 2010s, having “big corporate” behind you may be a negative more than a positive, especially when it’s scum like the supporters of lead paint and lead in your drinking water.

I understand that the state political media would rather talk about horse races than issues, and so they’ll be consumed by “2018” talk. But Dems need to get rid of the defensive posture, and even if potential Guv candidates aren’t interested, they need to not say anything about it for now, to get the conversation back to where it should be- discussing the wreck that is happening in the State of Wisconsin due to the Republicans.

Stick with that, have a few candidates officially step forward in the next few months, and the interest in taking out Walker will go from there. And for God sakes, STOP OBSESSING ABOUT MONEY!

Saturday, April 22, 2017

Why are we still losing bigly to Minnesota?

On Friday, we got another chance to see how Wisconsin was shaping up against the rest of the country with the state-by-state job report from the Bureau of Labor Statistics. And it had the strange dichotomy of Wisconsin allegedly having the 2nd lowest unemployment rate in the Midwest at 3.4% (only Iowa was lower, at 3.1%), but also one of the lowest rates of job growth in the region (also oddly, Iowa was even worse than us).

Private sector job growth, March 2016-March 2017
Mich +1.86%
Minn +1.73%
U.S. +1.67%
Ind. +1.49%
Ohio +0.94%
Wis. +0.88%
Iowa +0.67%
Ill. +0.57%

Job growth that ranks 5th out of 7 states in your area and lagging well behind the national average isn’t the sign of a thriving state to me, no matter what the unemployment rate might say.

And we especially look bad compared to our neighbors on the other side of the St. Croix. Maybe it's because the 1-year anniversary of the death of one of the greatest Minnesotans is this week and I've been listening to Minnesota Public Radio a lot this weekend, but I do want to focus in on that....after you enjoy 9 minutes of genius from the Purple One.

Minnesota gained another 5,300 jobs last month in the private sector as well as overall while Wisconsin only gained 500 in the private sector and lost 2,700 overall, and UW’s Menzie Chinn notes that after a slight lull in 2015, Minnesota has resumed the ass-kicking they have given us throughout the Walker era.

Minnesota has added 20,000 more private sector jobs than Wisconsin in the last 12 months, and nearly 40,000 more since March 2011, when Act 10 was jammed through the Wisconsin Legislature.

But how has Wisconsin’s unemployment nose-dived in the last few months to become even lower than Minnesota’s for the first time in several years (3.4% in Wisconsin, 3.8% in Minnesota)? The answer points to 2 reasons.

1. The household “employed/unemployed” survey looks at where people live , while the “jobs number” looks at where people work. St. Croix County (located right across the river from the Twin Cities) was estimated to have nearly 19,000 residents who worked in Minnesota when the number was last measured in the 2009-2013 time period, and St. Croix has continued to grow in the meantime, adding another 3,684 people since 2010. And it’s not just St. Croix, as Pierce County had nearly 9,600 people commuting to Minnesota, and Polk County had over 4,300 that survey.

Wisconsin also exports workers in the Superior-Duluth area, with over 7,300 residents of Douglas County working on the Duluth side, vs less than 3,500 coming across from Minnesota into Wisconsin. The only place that came close to reversing those large Wis-to-Minn numbers were the 4,500 people from Minnesota who come into La Crosse vs. 1,000 heading the other way.

Likewise, over 21,000 Kenosha County residents commuted to Illinois for work, and another 4,500 people from Rock County also headed across the border (more than the people from the Rockford area that worked in Wisconsin). There’s no reason to think that trend has changed any, even with the many WEDC handouts that seem to go around the state line to encourage Illinois people to locate in lower-wage Wisconsin. This means Wisconsin has more people “employed”, but the “job” is in a different state.

2. People may be moving out of Wisconsin (or not moving in), and it’s not being reflected in the totals. Take a look at the difference in the two states when it comes to population growth and especially net migration.

Population growth, 2014-2016
Minn +29,326
Wis. +9,414

Minn +37,517
Wis. +10,817

Net migration per 1,000 residents
Minn +0.3
Wis. -1.3

Minn +2.2
Wis. -0.8

This would ordinarily reflect in the growth of the labor force being smaller in Wisconsin, which lowers the unemployment rate even when the job growth figures are low. And comparing the states over the last 6 years, this largely holds up.

Change in labor force Mar 2011- Mar 2017
Minn +76,600
Wis +62,100

Granted, both Wisconsin and Minnesota have gained sizable amount of people to their work force over the first 3 months of 2017 (Wis +22,200, Minn +15,000), but that also underscores just how much further behind Wisconsin was until that time. That huge change in Wisconsin's labor force after 6 years of stagnation makes the figures in that survey all the more suspicious (particularly since it hasn't translated into higher income tax revenues), and I want to see how that Wisconsin labor force and "employed" number adjusts in later years.

And outside of that outlying unemployment figure, Wisconsin still badly trails Minnesota when it comes to both jobs and wages, which leads me to this observation. If the Packers were 5-11 and the Vikings were 10-6, we wouldn't be saying "Well, the Bears were 3-13, so the Packers are doing OK." We'd be saying "FIRE THE COACH" because being way behind Minnesota would be unacceptable. So why do we accept this type of underperformance from our state and our governor?

March revenue drop means Wis budget in serious danger

I was counting on the Wisconsin Department of Revenue to release its March revenue figures yesterday. They usually release them around the 3rd Friday of the month, and as the day went on, and as the Walker Administration kept tweeting out propaganda about low unemployment (while hiding the bad record of job creation), I had a feeling the numbers might not be good.

Sure enough, the revenue numbers were dumped in the late afternoon, and they were not good.

March 2017 Wis revenues vs March 2016
Income taxes DOWN 8.8%
Sales taxes UP 3.3%
Corporate taxes DOWN 10.4%
Excise taxes DOWN 10.6%
Other DOWN 4.2%

That’s not good, given that March is the height of tax season, which gives an indication about the refunds and payments that set the tone for the rest of the year. Now, relatively decent numbers in February kept state finances from being a full-fledged crisis at this point, but the drop for March is still a bad sign.

This is particularly true given that there were extra days to file taxes (and get refunds) at this point in 2016, meaning that it is likely that more refunds are to be given out in April this year vs last, and limit any growth that we might see.

Even if we assume that income taxes hold up at its FY 2017 rate of growth for the last 3 months of the year (which would get us to slightly beat January’s estimates from the Legislative Fiscal Bureau), we’d still fall short, mostly due to the continued shortfall in corporate taxes.

2017 Wisconsin revenues vs estimates (current FY17 growth rates)
Income tax +$31.75 million
Sales tax -$2.4 million
Corporate tax -$64.0 million
Excise taxes +$3.0 million
Other taxes -$18.4 million
TOTAL SHORTFALL $50.05 million

$50 million in a General Fund that is projected to have $15.5 billion in taxes seems small, but the problem is that Scott Walker’s 2017-19 budget spends $366 million more than it takes in, and only allows $12 million in breathing room. So even a small miss like $50 million means that not everything Scotty wants can be funded, let alone the extra burdens from having a lower base to start from, which would drop available revenue in the budget by another $100 million or so, even if you stick with the LFB's assumptions that the "Trump Boom" somehow materializes in the next 2 years (it sure hasn't yet).

And that’s before we do anything about any of the Walker budget's gimmicks, like extra money needed to make up for his phantom savings on his health insurance scheme or the desire of legislators to find some extra money to fix our pothole-marked roads. Speaking of the DOT, did you notice Walker shift from his "no-tax, no-fee" stance this week, and now is saying that he might be OK with higher fees? It's like Gov Dropout finally figured out that there really wasn't any money in the General Fund that he could move over to fill in the holes (a move that would have driven our $1 billion structural deficit even higher, by the way).

The LFB will re-figure its revenue estimates in a couple of weeks, after it gets an indication of the April revenue numbers. If those April numbers come in light, the 2017-19 budget debate will change drastically, because the house of cards that Walker's pre-election boost to programs is based on will rapidly collapse.

Thursday, April 20, 2017

Wisconsin's jobs riddle- low unemployment and low job growth

Today had another Wisconsin job report, and ahead of it, Governor Walker gave away a key finding of it this morning.

And indeed, the March report from the Wisconsin Department of Workforce Development trumpted the state’s lowest unemployment rate since the height of the Dot-Com Boom.
Place of residence data:A preliminary seasonally adjusted unemployment rate of 3.4 percent in March 2017, down a significant 0.3 percent from February and at its lowest rate since April 2000. The rate remains lower than the national unemployment rate, which was 4.5 percent in March 2017. Wisconsin's labor force participation rate increased to 68.4 percent and continues to outpace the U.S. rate of 63.0 percent in March. Both total labor force and employment in Wisconsin remained at an all-time high in March, while the number of unemployed individuals was its lowest since June 2000.
What DWD didn’t talk as much about was the fact that the 12-month “jobs added” figure from the place of work/payrolls survey is very small, and it didn’t even bring up that 2,700 total jobs were reported to be lost in March.
·Place of work data: Based on preliminary data, the state added 25,100 total non-farm jobs and 22,100 private-sector jobs from March 2016 to March 2017. Other significant year-over-year gains include 6,100 jobs in Health Care and Social Assistance.
Much like we saw with the US job figures for March, the household survey said things were great, while the business payroll survey said things slowed sharply from February.

Change in Wisconsin jobs, March 2017
HH survey of Wisconsinites “employed” +16,400
Total private-sector payrolls +500
All Wisconsin jobs -2,700

The same pattern repeats when you look over the totals of the last year, where the household survey indicates strong job growth, while the payrolls survey says Wisconsin isn’t doing well at all.

Change in Wisconsin jobs, Mar 2016 - Mar 2017
HH survey of Wisconsinites “employed” +45,000
Total private-sector payrolls +22,100
All Wisconsin jobs +25,100

The 45,000 is in line with the annual increases of 35,000-50,000 we’ve mostly seen in the household report for Wisconsin over the last 4 years. On the flip side, the 12-month payroll increase in total jobs is only at 0.86%, well behind the US rate of 1.52% (Wisconsin is equally further behind in the private sector stat- 0.88% vs 1.67% nationwide). Combined with January and February, this is the first time Wisconsin has had 3 straight months of private sector job growth below 1% under Walker/WisGOP policies.

So one of these numbers has to be off, and/or the previous months on one of these surveys have to be off. Which leads one to ask “Which one is right?”

One thing that makes me skeptical of the low unemployment and high “employed” figures in the household survey is that we have not seen significantly higher income and sales tax revenues in that situation. The most recent figures released have been from February (March’s should be out in the coming week), but here’s what we had in February- a month where refunds were delayed compared to 2016. This meant that income tax figures should be, if anything, artificially inflated.

12-month change in tax revenues, Wisconsin
Income tax
FY 2016 +5.67%
Feb 2017 +5.33%

Sales tax
FY 2016 +3.41%
Feb 2017 +2.85%

If anything, that rate of revenue growth has fallen, and since there haven’t been many major initiatives that cut income or sales tax rates over those 8 months, that would seem to shoot down the Walker Administration’s impression that Wisconsin is seeing significant job growth.

I’m also inclined to buy that the lower payroll numbers are more likely to be accurate because the state has had a consistent decline in job growth that started around the time Walker’s “presidential” austerity budget was introduced in early 2015, with our job growth being half of what it was 2 years ago.

These job numbers were benchmarked to the “gold standard” Quarterly Census on Employment and Wages, which has consistently been below the Walker DWD’s original figures as well as the household figures over the last 2-3 years.

As I alluded to earlier, new revenue figures for March and new revenue estimates from the Legislative Fiscal Bureau in the next 3 weeks will likely give a clearer indication whether the “slow growth” or “Trump/Walker Boom” scenarios are closer to the truth. But for now, I’d say your evaluation of Wisconsin’s job situation is likely very related to what survey and outcome you want to believe, no matter what side of the political spectrum you fall on.

GOP prof uses sketchy study to claim M&A credit works

You may have seen this report by UW Professor Noah Williams, which has been tweeted out and referred to by WisGOPs in the last couple of days. The paper deals with the state's Manufacturing and Agriculture Tax Credit, and the media dutifully reported its findings, in no small part because Williams' findings went against pretty much any economic report we’ve seen over the last 4 years, which has Wisconsin consistently lagging its neighbors and having stagnant manufacturing growth.

So I dug into Williams’ paper, and started by looking at how he defines Wisconsin’s “border counties”, where much of the growth has taken place.
A map of the counties of Wisconsin and its neighboring states is shown in Figure 2.1. I now focus on differences across these borders. My sample includes 21 border counties in Wisconsin (Buffalo, Burnett, Crawford, Douglas, Florence, Forest, Grant Green, Iron,Kenosha, La Crosse, Lafayette, Marinette, Pepin, Pierce, Polk, Rock, St. Croix, Vernon, Vilas, and Walworth), each of which are matched with their paired county (or counties if the borders of multiple overlap) in Minnesota (Carlton, Chisago, Goodhue, Houston, Pine, St. Louis, Wabasha, Washington, and Winona), Iowa (Allamakee, Clayton, and Dubuque), Illinois (Boone, Jo Daviess, Lake, McHenry, Stephenson, and Winnebago), and Michigan (Dickinson, Gogebic, Iron, and Menominee). Thus the sample includes a total of 43 counties in 21 groups.
Right away, this should set off your radar as a problematic sample, and not only because Williams didn't include Trempealeau County as a "border county" (which might come as news to the Trempealeu Hotel on the Mississippi). The M&A credit is for the entire state, not just border counties, so wouldn't it be worthwhile to compare it state-to-state?

Williams' sample also includes the Wisconsin counties of Kenosha and Rock, which suffered the largest devastation in the state during the Bush Recessions of the 2000s. Rock County unemployment was over 13% in early 2010 and was consistently around 2% higher than 2002’s level in 2012, while Kenosha County unemployment peaked at 12.1% in 2010, and was also 2% higher in 2012 than 10 years prior.

Because Wisconsin border counties lost more jobs than other places before 2012, it made it easier for it to “snap back” and show improvement in the 4 years after that. And Williams uses that fact to “prove” Wisconsin grew faster, and advance his case. This is from Williams’ own paper.

Annual growth rate for manufacturing jobs in border counties
Wisconsin -2.39%
MN-IA-IL-MI -2.01%

Wisconsin 1.78%
MN-IA-IL-MI 0.90%

And then Williams makes up a “difference” stat that tries to make it look like the M&A credit is the reason for this stronger manufacturing recovery in Wisconsin, when it may be nothing more than snapback (notably, we do not see a comparison of the total job change between 2002-2016).

But in isolation, the job growth in those border counties has been impressive since 2012, and Williams says the bump in manufacturing lifts the numbers for the rest of the state, and assumes that the rest of the state also added manufacturing jobs due to the M&A credit.
The estimated 6.6% increase in manufacturing employment from the border counties implied a 4.3% increase in the interior, and thus a 4.6% increase statewide. This suggests that manufacturing employment would have fallen in the absence of the MAC, and I estimate that by September 2016 the MAC accounted for a cumulative increase of 20,819 manufacturing jobs statewide.
Basically, Williams assumes that instead of gaining 13,000+ manufacturing jobs over the last 4 years, we would have lost 7,000+ manufacturing jobs in that same time period. So apparently the manufacturing sector is booming in the state- which might come as news to all those Wisconsin blue-collars that voted for Trump to “turn the economy around.”

As for spillover effects, Williams says the manufacturing gains raised overall employment in the state as well.
Figure 4.3 plots the estimated cumulative statewide increase in manufacturing, non-manufacturing, and total employment due to the MAC. There we see that the employment gains in the manufacturing and non-manufacturing sectors were roughly equal. The estimated percentage gains in the non-manufacturing sector were substantially smaller, but non-manufacturing employment is roughly 4 times as large as manufacturing employment, resulting in a commensurate increase in total jobs. In total, I estimate that by September 2016 the MAC accounted for a gain of 42,161 jobs statewide, a 1.8% increase in private employment.
If that’s true, then Wisconsin’s underlying economy is even shittier than I thought it was. I say this because Wisconsin didn’t come close to outperforming its neighbors in job growth between 2012 and 2016, and was well behind the US rate of growth as the Obama Recovery hit full steam. In fact, the Walker jobs gap tripled in the first 4 years that the M&A credit started and expanded, from less than 38,500 at the end of 2012 to more than 115,500 by the end of 2016.

And of course, while Williams may say that jobs were created through this giveaway, he doesn’t mention the huge price tag that went with it. As the Wisconsin Budget Project noted earlier this year, the M&A tax handout is estimated to cost the state a total of $768 million through the end of this fiscal year, and will cost another $654 million in the next budget.

Even if you buy Williams’ argument that this credit has added 42,000 jobs in the last 4 years, is that worth over 3/4 of a billion dollars? I would think that investing that money in fixing roads (for example) and funding the schools would have gone much further, and reduced the future costs that are now resulting from that inaction. And it would have made Wisconsin a much more attractive place for talent to locate, instead of relying on this strategy of one-time giveaways to donors corporations that have failed to make our manufacturing wages competitive with Wisconsin’s neighboring states (note that Williams does not mention wages in his analysis).

Lastly, while this is a study from a UW professor, and the numbers seem to have some legitimacy at first glance, it is not UW-sanctioned research. If you look closely at Williams’ press release, it says the following.
The Center for Research on the Wisconsin Economy (CROWE) was created to support and disseminate economic policy research, with a particular focus on the Wisconsin economy and state-­‐level economic policy issues. (Final campus approval is pending.)

CROWE’s goal is to better understand the economic outcomes and the impacts of policies at the state level, and make economic research accessible to policymakers, businesses, and community groups in Wisconsin and around the nation.
If you try to look up CROWE in the UW directory, it’s not even mentioned as a future initiative. I find that intriguing. Also intriguing is that Williams’ CV lists numerous pro-GOP, supply-side articles such as “Marco Rubio’s Tax Plan Provides Relief for all Families”, and a 2015 article he wrote for Forbes magazine called “Under Scott Walker, Wisconsin Has Prospered – Keep That in Mind for 2016.”

So that whole meme that WisGOPs will try to use in the coming weeks and months to claim “See, the research shows M&A credit added 42,000 jobs! It's working!” Be skeptical. Be VERY skeptical.

Tuesday, April 18, 2017

EITC expansion could be good, would reverse a bad Walker decision

Among the many budget provisions that will soon be debated is a plan by Governor Walker to expand the state's Earned Income Tax Credit, which is geared toward low-income families. It's an intriguing proposal and seems to be pointing in the right direction, but you have a right to be skeptical of why Walker is asking for this.

According to the Legislative Fiscal Bureau, this move will start with the 2018 tax year, and the main two changes will reduce taxes for eligible families by over $26 million a year when it is fully phased in.
Credit Percentage for Claimants with One Child. Modify the percentage used to calculate the EITC by increasing the percentage from 4% to 11% for claimants with one child, beginning in tax year 2018. This would increase the cost of the credit by an estimated $20,800,000 in 201819. The proposed credit percentage is the same percentage used for claimants with two children.

Credit Calculation for Claimants Who Become Married. Beginning in tax year 2018, authorize claimants who become married in a year to claim the greater of the credit calculated as a married claimant or the credit claimed in the prior year when the claimant was unmarried. In the succeeding two years, authorize the claimant to claim the greater of the credit calculated as a married claimant for that year or the credit claimed in the year prior to the year the claimant became married. The proposed change would increase the cost of the credit by an estimated $1,500,000 in 2018-19. Because the provision would first apply in tax year 2018 and extend for the initial three years of the claimant's marriage, the cost of the provision is estimated to increase to $3,500,000 in 2019-20 and $5,500,000 in 2020-21.
What' also interesting is that state taxpayers won't pay for about half of this increased EITC, but instead the state will use $13 million in additional TANF block grant money from the Federal Government, with state money filling in the rest.

The Wisconsin Budget Project points out that expanding the EITC can be a win-win, where not only do low-income families a few extra dollars, but it also goes to a group of people more likely to spend that money. A wider EITC can also remove some barriers to working more hours.
Expanding Wisconsin’s EITC would give a much-deserved break to working parents with low and moderate incomes. The EITC lets working families keep more of what they earn to help meet basic needs and pay for things that allow them to keep working, such as child care and transportation. This tax credit offers working parents a hand up by encouraging and supporting work. It’s a modest investment that can make a big difference in the lives of families.

The EITC also boosts local communities and economies across the state. It puts more money in the pockets of low-wage workers, who then spend it at local businesses to pay for things like groceries and child care. Businesses like this tax credit because workers who can pay for basic necessities are more dependable employees when they can afford child care and reliable transportation.
While Walker may be doing good policy ahead of next year's election, let's not give him too much credit for this proposal. Much like with his newfound desire to fund public schools, the Budget Project notes that Walker is offsetting a 2011 cut the EITC, and basically admits he made a mistake to do so.

We'll see if this plan to expand Wisconsin's EITC survives after new revenue numbers come out in a couple of weeks, or if it's even sped up to hit in the 2017 tax year instead of delaying it to 2018. I would think we could swap out Walker's stupid $1-a-week income tax cut (which costs $100 million a year) for helping low-income families this year.

Monday, April 17, 2017

WMC president says Wisconsin is better for we cut worker pay

The president of The Mediocre Businessman’s Association Wisconsin Manufacturers and Commerce has a bright idea for helping our state fill its needs for workers and help business expand more- poaching workers from our south.
In a column published by the quarterly magazine, Wisconsin Business Voice, Wisconsin Manufacturers & Commerce (WMC) President/CEO Kurt R. Bauer said the Badger State's workforce shortage could be partially solved by attracting Illinois residents over the border.

Listing the numerous problems faced by it's (sic!) neighbor to the south, Bauer claims there is an "opportunity for Wisconsin."

Last October, a scientific poll conducted by Southern Illinois University found that 47 percent of Illinoisans would leave the state. If they are already leaving Illinois, why not encourage them to come to Wisconsin, Bauer writes in his column.

He highlights the WMC-produced video "Wisconsin: A Great Place to Get Started" in the column, which promotes the state as an ideal location for startup businesses and millennial talent. However, he says a broader campaign is necessary and urges state lawmakers to fund the effort.
In addition to the questionable desire to use taxpayer dollars for this “attract the FIBs” program that Bauer wants, there’s a bigger problem with WMC’s theory. The most recent “gold standard” Quarterly Census of Employment and Wages makes it clear that it'll take even more cash for this plan to work.

Average weekly wage, private sector Sept 2016
Ill. $1,067
Wis. $883

Average weekly wage, manufacturing, Sept 2016
Ill. $1,279
Wis. $1,071

Average weekly wage, construction, Sept 2016
Ill. $1,332
Wis. $1,156

So why would someone living in Illinois take a pay cut of $180-$200 a week to move to Wisconsin? Even more amazing is that Bauer would make these statements on the same day Governor Walker has signed a bill banning Project Labor Agreements on construction projects by local governments, a move that is likely to drive the wage gap between the two states even further apart.

It amazes me how the WMC/ALEC crowd continues not to understand that offering a fair wage and high quality of life attracts the talent you want. Or maybe they do get this concept, but they’re such arrogant greedheads that they don’t care to ask our state government to do something about it.

And then these idiots wonder why people aren’t streaming across the border to take work in Wisconsin, and whine about the “skills gap” that their anti-worker policies helped lead to. So I ask again, why are we allowing such self-absorbed, regressive dimwits to ruin run our state’s economic policy?

Sunday, April 16, 2017

"Surrounded by reality"- Madison booms while rest of state stagnates

As a Madison homeowner, I find myself waiting on the April reassessments of city property to come out, to get an early indication of what our home is valued at, as well as what that might mean for our property taxes. And while my $15,000, 5% increase is notable, the city's overall report and the Wisconsin State Journal's follow-up article showed that, if anything, the rest of the city had its property values go up even more.
The new assessments show a 10.2 percent rise in real estate values, including the fourth straight increase in the value of the average single-family home, which jumped 5.8 percent to $269,377.

The rise in real estate values was driven by a 6.6 percent increase in total residential values and a whopping 16.6 leap in commercial values, the latter driven by construction of big apartment buildings and hotel revaluations, city assessor Mark Hanson said.

New construction topped $750 million, including $154 million for single-family homes and $560 million for commercial properties, which includes apartment buildings with more than four units, hotels, stores and offices.
And while these are the largest of the recent increases, it's only the next level of a trend of rising values in Madison over the last 4 years. The average residential home value in the city has risen by nearly 1/6 since 2013, and the rise in commercial property values has been higher than the increase in residential in that time period.

What that means is that the average homeowner in Madison will not see property taxes rise by the same percentage as his/her increase in home value. But the rise in property values and that $750 million in new construction does give the city more flexibility for its 2018 budget.
Under state law, new construction is vital because tight revenue limits restrict increases in tax collections to net growth, which is the value of new buildings, additions and remodeling minus the value of demolished properties.

The new construction figures will allow a roughly 3 percent increase, or about $4.3 million, in tax collections for the operating budget, Schmiedicke said.
But a 3% increase in taxes in a city where values are up over 10% would seem to indicate a notable DROP in property tax rates, and our home might not see much of an increase at all (and that's after a tiny 0.6% increase the year before).

Sure, we will pay a sizable amount in property taxes because our home will be assessed at over $310,000, but that's the trade-off for living in a great community that attracts talent. Maybe the rest of the state should learn something from the way we do things in the Mad City, because Dane County is kicking the rest of this state's ass when it comes to job and population growth as well.

Take a look at the most recent figures from the Bureau of Labor Statistics' local job report, as well as the Census Bureau's new estimates for County population. Let's use 2011 as a starting point for jobs, to reflect when Scott Walker and the WisGOPs came to power in the state, and you can see that the Madison metro area is adding jobs at twice the rate of the Milwaukee metro area. And the rest of the state also lags well behind what's happening in Dane County when it comes to attracting people over the last 6 years.

Total job growth, Feb 2011-Feb 2017
Milwaukee metro area +45,700 (+5.70%)
Madison metro area +44,300 (+12.50%)
Appleton metro area +11,100 (+9.81%)
Green Bay metro area +8,700 (+5.34%)
Rest of the State +98,400 (+7.50%)
US Rate of job growth +13.41%

Private sector job growth Feb 2011- Feb 2017
Milwaukee metro area +50,200 (+7.09%)
Madison metro area +43,200 (+16.22%)
Appleton metro area +11,000 (+10.95%)
Green Bay metro area +9,300 (+6.16%)
Rest of the State +96,400 (+8.54%)
US Rate of job growth +13.43%

Population change 2010-2016
Dane County +43,198
Brown County +12,394
Waukesha Co. +8,488
Outagamie Co. +7,831
Milwaukee Co. +3,712
Rest of the State +15,796

Makes you wonder how dead this state would be if it wasn't for us over-ejukated hippies in Dane County, huh? Maybe the mediocre business oligarchs at the Metro Milwaukee Association of Commerce and WMC should take a look at what's happening her, and instead of continuing to spend big money to back the stagnating policies of WisGOP, start learning and copying the strategy that works in Madison.

You know, concentrating on advantages like quality of life, good public education, and paying good wages.

Saturday, April 15, 2017

Retail recession not going away soon. When does it hit Wisconsin?

The stock market may have been closed on Friday, but there was still economic news that came out. And one of the biggest items of news dealt with an indicator of consumer spending, which seems to have stagnated in the first quarter of 2017. US Retail sales declined for the second straight month in March, with significant declines coming in auto sales and restaurants and bars. But it's a third area of the consumer economy that not only suffered in March, but has been hurting badly for the last several months, with declines in both sales and jobs.

Here's a good summary on the sector of the US economy that seems to be rapidly falling into crisis, in a story fittingly titled "Is American Retail at a Historic Tipping Point?"
More workers in general merchandise stores have been laid off since October, about 89,000 Americans. That is more than all of the people employed in the United States coal industry, which President Trump championed during the campaign as a prime example of the workers who have been left behind in the economic recovery.

The job losses in retail could have unexpected social and political consequences, as huge numbers of low-wage retail employees become economically unhinged, just as manufacturing workers did in recent decades. About one out of every 10 Americans works in retail.

“There is a sea change happening in the retail industry,” said Mark Cohen, a former executive at Sears, who now runs the retail studies program at Columbia Business School. “And that is bringing a sea change in employment.”

Store closures, meanwhile, are on pace this year to eclipse the number of stores that closed in the depths of the Great Recession of 2008. Back then Americans, mired in foreclosures and investment losses, retrenched away from buying stuff.

The current torrent of closures comes as consumer confidence is strong and unemployment is low, suggesting that a permanent restructuring is underway, rather than a dip in the normal business cycle. In short, traditional retail may never recover.
This reflects a trend away from traditional stores and into online retailers like is something I've touched on before, but it was reiterated in the most recently-released retail sales report.

Year-over-year change in sales, March 2016-March 2017
Clothing and clothing accessory stores +0.3%
Electronics and appliance stores -0.7%
Sporting goods, hobby + book/music stores -3.8%
Department stores -4.5%

Nonstore retailers +11.9%

Wisconsin has so far dodged major fallout from this nationwide trend of store closings and job loss, as employment is trade (the sector that includes retail employment) is up 5,400 since October, and 7,800 in the last 2 months measured. Maybe this reverts back to trend when stores fail to hire with the warming weather in Wisconsin, and we see those job losses be registered in upcoming job reports.

I certainly don't think Wisconsin will be immune to the country's decline retail, and the concern over huge retailers avoiding property taxes with "dark store" exemptions being symptomatic of this underlying reality. What seems interesting is that because the retail store closings won't come full force until later this year, that means the decline in retail store property values and malls won't be reflected much in the property value assessments that will be issued in the coming weeks.

That damage would show up in the 2018 assessments, and the property tax bills that come out that Fall and Winter. Which makes the spectre of dark stores and empty lots in Wisconsin one of the biggest wild cards out there as we debate the state budget, and the property tax policy that will be part of it.

WisGOPs ignore voters, continue to want to hurt rural schools

After last week saw another slate of school referenda be approved by voters across Wisconsin, where the voters agreed to raise their own property taxes in order to keep their schools operating and improve/maintain their facilities, some Wisconsin GOP state legislators said "This will not do." This group from the "party of local control", led by State Sen. Duey Stroebel (R-Glenn Grothmanland), introduced several bills this week intended to limit the ability of districts to hold school referenda.
Among the provisions included in these bills include limiting when those referenda votes could happen, micro-managing how districts could pay for building projects, and even penalizing a district for having a referendum approved.
•Eliminate so-called recurring referendums for operating expenses — those that raise taxes indefinitely — and cap non-recurring referendums at five years.

•Dock a district's state aid by an amount equal to 20% of whatever it generates in an operating referendum. So, if voters approve, say, $5 million, they lose $1 million in aid.

•And provide a 50% match for district funds placed in a long-term capital improvement trust fund, so-called Fund 46, to encourage cash financing of maintenance and construction projects.
Much of this is ridiculous when applied to the real world. A large reason all of these schools are going to referendum in the first place is because of the $1 billion in cuts that WisGOPs in Madison have imposed on state aid to public K-12 schools since 2011. So WisGOP's solution to this ""problem" is more cuts in state aid to districts whose voters want to invest in their schools...which repeats the problem that led to the need for referenda in the first place (My cynical side says this is a backdoor way to cut more funding from the state, since I bet that money won't be reallocated elsewhere).

The Wisconsin Association of School Boards and other people who actually deal with day-to-day operations in schools pointed out how these restrictions would increase uncertainty and other adverse side-effects.
Public school advocates take issue with the measures. Eliminating recurring operating referendums and capping operating increases to five years, they say, would force districts into endless cycles of referendums to avoid cutting programs. Cutting state aid punishes voters for investing in schools, and funding large construction projects with cash isn't practical, they say.
The "cash requirement" for building projects is equally absurd. How many of you paid for your house in 50% cash? And how much would districts have to cut back in staff and supplies in order to meet that requirement? Stroebel's a millionaire developer in Cedarburg, he should know this concept as well as anyone.

And the people that would see their schools strangled the most by these anti-referendum bills aren't ones in heavily populated cities and suburbs, but are smaller rural districts who have had stagnant or declining enrollments, and need state aid to be able to maintain a fair level of education funding. The Wisconsin Budget Project did a great job of explaining this in a recent posting of theirs, where they illustrated that rural schools get larger benefits from the multi-year recurring revenue amendments.

And as the Budget Project explains, this situation is a bad combination of changing demographics and being on the wrong side of economies of scale.
Rural school districts may be relying on permanent referendums in an effort to address financial hardships caused by declining enrollment. Many communities in Wisconsin have fewer children than they did five or ten years ago, with some of the biggest declines occurring in counties in northern Wisconsin. To a large extent, student enrollment determines the amount of state support a school district receives as well as the amount of money the school district is allowed to raise from property taxes. But many school district costs are fixed and don’t go down when student enrollment goes down. For example, school districts face the same heating bill regardless of how many students occupy a building. Likewise, a school district may have to run the same bus routes, have the same costs for insuring its buildings, and pay the same amount to have its parking lot plowed regardless of the number of students inside the building.

Rural school districts shouldn’t need to go to referendum to avoid making deep cuts to academic programs or to services that help keep students in school. Still, passing a referendum can be an important tool for rural taxpayers who want to ensure that their school district is able to make investments in students. Taking away an important tool for rural schools will make it harder for rural families and communities to thrive.
And this reality exposes the flaw in Governor Walker's plans to send more funding to K-12 public schools. It's based on per-pupil aids, and not the state's general aid distribution forumula. This means that schools who do not grow in population lose out compared to those who do, and with overall revenue limits not changing for public schools, this does little to take care of the problem that causes many of these referenda in public schools in the first place.

This is especially true in medium-sized, smaller-town districts that don't qualify for sparsity aid, and many of the districts that had revenue-limit referenda be defeated last week fell into this category. So instead of listening to dimwits from the 262 BubbleWorld like Duey Stroebel and putting even more constraints on the state's public schools, maybe we should be working to improve Governor Walker's aid increase gimmick by moving that per-pupil money into the general aid and special education categories, which would give more aid to the schools, communities and individuals that are more in need of it.

Then again, as columnist And Milwaukee Public Schools teacher Jay Bullock noted, the ALEC Crew in the Capitol doesn't really want to improve the quality and funding of Wisconsin's public education.