Wednesday, January 29, 2020

Manufacturing dives in December, rounding out a lousy 2019

On Wednesday morning, we got another sign that the US manufacturing sector ended 2019 in a bad place. This time it was in the form of a sizable jump in the country’s trade deficit in goods.
Advance International Trade in Goods
The international trade deficit was $68.3 billion in December, up $5.3 billion from $63.0 billion in November. Exports of goods for December were $137.0 billion, $0.4 billion more than November exports. Imports of goods for December were $205.3 billion, $5.8 billion more than November imports.
That number is a bit fluky, as much of that jump in imports is due to a $3.9 billion increase in “Industrial Supplies”, which are a lot of energy products and raw materials. But it continued a mediocre years for exports, which were only up 0.7% in December 2019 vs December 2018, and that’s before inflation. So while our goods deficit did drop by more than $11 million from the December 2018 number, the “improvement” in our trade balance for goods really is a recessionary sign where fewer imports are coming in, and isn’t happening because of Americans exporting more products.

Worse, American manufacturers didn’t make up the difference by selling more products domestically (which should be the goal of trade barriers). In fact, another Commerce Department report from this week says that December marked a notable decline in most sectors of manufacturing orders and sales.
New Orders

New orders for manufactured durable goods in December increased $5.7 billion or 2.4 percent to $245.5 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent November decrease. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders decreased 2.5 percent. Transportation equipment, up following three consecutive monthly decreases, drove the increase, $5.9 billion or 7.6 percent to $82.9 billion.
In fact, take out an increase of more than $9 billion in defense capital goods, and new orders in all other sectors were down 1.5% for December. That follows the “non-defense capital” figures being down 0.9% in November, and 5.9% from December 2018.

Bad enough for future prospects, but there were also less products going out the door in December, continuing a decline that happened throughout the second half of 2019, and fewer prior orders left to finish.
Shipments of manufactured durable goods in December, down six consecutive months, decreased $0.5 billion or 0.2 percent to $250.4 billion. This followed a 0.1 percent November decrease. Transportation equipment, also down six consecutive months, led the decrease, $0.4 billion or 0.4 percent to $83.2 billion.

Unfilled Orders
Unfilled orders for manufactured durable goods in December, down three of the last four months, decreased $0.8 billion or 0.1 percent to $1,156.0 billion. This followed a 0.6 percent November decrease. Machinery, down fourteen consecutive months, led the decrease, $0.5 billion or 0.5 percent to $101.6 billion.
So what’s going to stop these negative figures in manufacturing? You got me, as US GDP growth is looking to be just under 2% for 4Q 2019 when it’s reported tomorrow, and growth isn’t predicted to get above that for us or most other advanced economies for 2020.

That reality makes it remarkable to me that even though the growth in manufacturing jobs leveled off in 2019, there still was growth (although the industrial Midwest wasn’t as lucky).

But you read these reports and wonder why it wasn’t even worse. Lower sales, lower orders, and lower prices (if you read the PPI reports) aren’t exactly good for business, and I can’t figure out an economic reason there wouldn’t be cutbacks at this point.

And yet we’re supposed to believe that President Trump signing NAFTA 2.0…ERRR…USMCA is going to reverse this decline in manufacturing, and magically make everything OK? Don’t be a sucker, folks. 2019 ended weak in that sector and there isn’t a lot of capacity left to make us stronger for 2020.

Fed keeps the money flowing, but real economy showing warning signs

To no surprise, the the Federal Reserve left interest rates unchanged today.
The Fed said it would keep lending to the short-term money market via short-term repo operations through April. Previously, it said the program would last through mid-February. The monthly purchases of T-bills will also last through April.

Some analysts have been calling the balance sheet policy “QE” or quantitative easing.

The rate-setting Federal Open Market Committee cut interest rates three times in 2019, in policy moves characterized as insurance cuts, to shield the U.S. economy from damages tied to the U.S. trade war with China. The economy has stabilized since the rate cuts, and has also been helped by a partial trade pact this month with China that eases some tensions between the global economic superpowers.

The central bank’s description of the economy was unchanged from six weeks ago: the labor market remained strong, growth was helped by consumer spending, and inflation remained below the 2% target.

As a result, the bank voted unanimously kept its benchmark fed-funds rate steady in a range between 1.5% and 1.75%.
Well, the labor markets and consumer spending are OK for now, but they’re also not growing at the levels we had this time last year, even with the drop in interest rates.

And the bond markets have been telling an interesting story in the last couple of weeks, as long-term rates have dropped while the shortest-term rates have remained the same.

While we’re not back to the 2-year/10-year inversion that freaked out Wall Street last Fall, but we’re a lot closer to it than we were a month ago, with the gap nearly being cut in half from the end of December.

Dec 31, 2019
2-year note 1.58
10-year note 1.92%
GAP 0.34%

Jan 29, 2020
2-year note 1.42% (-0.16%)
10-year note 1.60% (-0.32%)
GAP 0.18%

And there was another item that came out today that seems to give some warning signs of a slowing economy. It was the Philadelphia Fed's coincident index of the economies of all 50 states. The good news for us is that these reports show Wisconsin is out of its mid-2019 decline and has resumed growing (slowly), but other states aren't so lucky.

That's still a large majority of states growing over the last 3 months. But it also is an increasing number of states falling into the red and gray shades. So much so that a stat called the "diffusion index", which compares the number of states increasing vs declining, is now at the lowest levels in nearly 10 years.

As you can see 3 of the last 4 times that this index has gotten this low after the economy had been growing for a few years, recession followed within a year. The only "false positive" was in the middle of 1995, right around the time that the Internet was starting to become integrated into business operations.

Not saying recession is imminent, but there are definitely signals that our currently maxed-out economy isn't going to get better. And given that the manufacturing figures for December showed further weakening in that sector, let's keep an eye on this as 2020 moves along.

Tuesday, January 28, 2020

CBO budget outlook - we aren't going to grow our way out of debt

We found out today from the Congressional Budget Office that the US's deficit and debt will keep growing to record levels in the 2020s. Including this fiscal year, where the CBO now agrees with the White House and says the deficit will top $1 trillion.
CBO estimates that, in 2020, the federal deficit will reach $1,015 billion, which is $31 billion more than the shortfall recorded last year. Relative to the size of the economy, this year’s deficit would be about the same as last year’s shortfall—4.6 percent of GDP—which is the difference between revenues equal to 16.4 percent of GDP and outlays equal to 21.0 percent of GDP.

Over the next 10 years, deficits are projected to increase by more than 1 percentage point of GDP, rising from 4.3 percent in 2021 to 5.4 percent in 2030. Both revenues and outlays are projected to grow faster than GDP, though the increases in outlays would be larger. Federal revenues rise in CBO’s projections, from 16.6 percent of GDP in 2021 to 18.0 percent of GDP in 2030. The projected growth in revenues after 2025 is mostly attributable to the scheduled expiration of nearly all of the individual income tax provisions of P.L. 115-97, referred to here as the 2017 tax act. Federal outlays are projected to climb from 20.9 percent of GDP.
This chart shows that these updated deficit figures for next year are a bit above what the CBO projected this time last year, but it's also not as bad in the medium term as the CBO projected in August. However, the deficit projections for 2025 through 2027 are higher than they've ever been.

And the CBO's last point about the expiration of the 2017 GOP Tax Scam is worth remembering. The deficit and debt will be notably higher if those tax cuts are allowed to continue. Later on in the document, the CBO says that if those tax cuts are allowed to expire in 6 years, it means an income tax hike of around 0.8% of GDP, or around $220 billion. Corporations will also have to pay more after 2025, around $25 billion from what I can tell, which doesn’t seem like much until you realize that corps only paid $230 billion for all of 2019.

But remarkably, as the chart above shows, the CBO says the increase in taxes after 2025 wouldn’t stop the growth of the deficit or debt. The deficit would rise to $1.3 trillion over the last 5 years the Tax Scam is in place, and then go higher from there once the Tax Scam is gone!

The reason why this happens? Higher spending, particularly in the areas of Social Security and Medicare.

In particular, notice how the “Major Medical Programs” more than double between 2019 and 2030? This is what makes complaints about Medicare for All’s cost absurd to me. Taxpayer costs for health care are already going to go up by a lot if we do nothing, so why not cover everybody and stop having people be tied down to their jobs because of health benefits? And this doesn’t even count the rising increase in out-of-pocket costs, which employers and private insurers will gladly push onto individuals in the coming years.

These rising deficits mean that our national debt will be considerably higher than the $22 trillion that we reached last year,
and the $23.8 trillion the CBO says it will be at by the end of the 2020 Fiscal Year, reaching $36 trillion by 2030.

But you'll notice that the CBO doesn't anticipate that all that extra debt will raise interest rates all that much, even though Uncle Sam has to encourage someone to buy all that debt. If those rates get higher, then our projected deficit will also get higher due to the increased interest that has to be paid to those who hold that debt. But since our exploding deficits haven't raised interest rates so far (in fact, it's going the other way), maybe that part of concerns over our deficit isn't that bad for now, and the future.

But the other long-term problem that the CBO reports hits on in this report is that the country’s aging demographics and slow population growth are going to limit the amount that the economy can grow by in coming years.
Adjusted for inflation, GDP is projected to grow by 2.2 percent in 2020. From 2021 to 2030, output is projected to grow at an average annual rate of 1.7 percent, roughly the same rate as the economy’s maximum sustainable output (or potential GDP), which is determined by factors such as the size of the labor force, the average number of hours worked, capital investment, and productivity growth.
So barring some kind of major jump in the country's birth rate or immigration (both unlikely in the short term), we're not going to be able to grow our way out of rising deficits and debts.

No one wants to deal with that reality now, especially the Republicans who turbo-charged the deficit numbers in the last 2 1/2 years by both their GOP Tax Scam, and by increasing government spending both on domestic programs and the military. But this reality is likely why President Trump is saying he will likely mess with Social Security and Medicare should this country be dumb enough to keep him in power, and why any Dem that replaces Trump will likely be met with a ton of bad faith from the same GOP that caused the fiscal problems in the first place.

Monday, January 27, 2020

Yes gerrymandering is failing Wisconsin, and GOPs' excuses are getting weaker

On Monday, Governor Evers put out an Executive Order to try to go around any gerrymandering after the 2020 elections. And it'll be done by organizing a group of people, mostly in local commmunities, to discuss the map-making process and coming up with their own proposal for legislative and Congressional districts.
The order, which Evers first announced in his State of the State address last week, creates the "People’s Maps Commission" to draw a new set of legislative maps for Wisconsin following the 2020 U.S. Census.

The order mandates no elected officials, public officials, lobbyists or political party officials can be members of the commission. Instead, it will be made up of experts in nonpartisan redistricting, members from "communities of interest" and residents of each of the state’s eight congressional districts.

"People should be able to choose their elected officials, not the other way around," Evers said at a Capitol press conference.

I have no illusions that the product of the "Peoples Maps Commission" will be accepted as-is by a gerrymandered GOP Legislature, if the GOPs stay in power after 2020. But that's part of the bigger picture, as Evers rightfully identified that the ability to entrench a majority in the Legislature has meant that Republicans can ignore policies that are favored by the overwheliming majority of Wisconsinites.
The governor said the Republican-controlled Legislature's choice to not move forward on issues like medical marijuana and expanding background checks on gun sales is proof lawmakers aren't accountable to voters. He pointed to strong public support for those measures, according to statewide polling from Marquette University Law School.

"When 80 percent of our state supports medical marijuana, and 80 percent of our state supports universal background checks, and also (extreme) risk protection orders, (and) 70 percent want Medicaid expansion, and elected officials can ignore those numbers and say, 'Go jump in a lake,' something’s wrong," Evers said.
That last part distills it well. In addition to having a Legislature which doesn’t reflect the wishes of the state as a whole, gerrymandering skews the incentives that legislators have, and the people who they have to care about. The politicians fear being tripped up in a low-turnout primary more than they fear their gerrymandered constituency as a whole, and so they listen to self-interested activists over the everyday person who won’t say or do anything because they’ve got other interests in life.

This incentive system also makes it easier for these “public servants” to be kept in line when Robbin’ Vos and other GOP puppetmasters threaten to send resources away from those legislators (and into possible primary challenges). Which is why so many GOPs blindly sign off on things that they have to know will hurt their communities, because it’s more important to serve the donors and bosses vs the people.

It's really not that hard to draw the maps and have them be sensibly connect with communities of interest. Here's what I did for the 33-member State Senate using 2016 census blocks, courtesy of the Dave's Redistricting app.

Here's what it looks like statewide

Milwaukee area


Dane County

You can also tell Evers has the upper hand here because the “logic” that Republicans give to try to justify the continuance of gerrymandering is increasingly silly. Check out this take from former Assembly GOP and Twitter tough guy Adam Jarchow.

The chart in Jarchow’s tweet illustrates the problem. Before the maps were drawn in 2011, there were fluctuations with each election, and never more than 60 Republicans in the 99-member Assembly. But since the 2011 gerrymander was installed, they’ve never had less than 60 seats, and haven’t been below 63 since 2014. That's despite years like 2012 when Dems Barack Obama and Tammy Baldwin won statewide by in the mid-to-high single digits, and in 2018, when all Dems won every statewide races with margins that ranged between 17,000 and 288,000 votes.

WHICH IS THE WHOLE POINT OF GERRYMANDERING - to make it not matter when the will of the voters changes 5-10%. But that stupid take probably helps explain why Jarchow got drilled 2 years ago in a district that favored Donald Trump by 17 points.

Frankly, if Republicans really believed that they were the choice of most places in Wisconsin, they’d welcome fair maps. Wouldn’t you want to be seen as legitimately earning your power instead of having an increasing number of people see you as illegitimate due to your self-interested gerrymandering? The fact that these big-talking GOPs aren’t saying “BRING IT ON” when it comes to ending gerrymandering is yet another example of a party that has no interest in winning public arguments or acting in the best interests of the state (or has given up trying). Instead, they rely on tactics, RW media propaganda, and lies without regard to consent of the governed.

Which is why it’s a good move for Evers to have this group talk to the public and draw up their own maps in every corner of the state, because it shows the public that another way is possible, if we choose it. And it makes Republicans have to try to justify in public whatever absurd gerrymander they draw up after 2020 (assuming no 58-42 Dem landslide that would sweep them out of power).

The fact that these big-talking GOPs aren’t saying “BRING IT ON” when it comes to ending gerrymandering is yet another example of a party that has no interest in winning public arguments or acting in the best interests of the state (or has given up trying). Instead, they rely on tactics, RW media propaganda, and lies without regard to consent of the governed.

They won’t be able to BS their way out of this one, as this type of election rigging is one of the few issues that shake everyday people out of their typical “default” voting pattern and get revenge at the ballot box. Evers should push the advantage as the 2020 elections approach, and have these hearings as soon as Wisconsin gets the 2020 census figures determined, which I figure will be in late Summer, and keep the issue in people’s minds.

Foxconn still looks like little activity, with taxpayers still shelling out a lot

Right on cue, last week Foxconn's CEO tried again to convince people something will happen with his company in SE Wisconsin.
Foxconn Technology Group founder and chairman Terry Gou Tai-ming pledged to begin production at a long-delayed electronics plant in Wisconsin sometime this year, kick-starting a signature US project that is expected to play a pivotal role in expanding the billionaire’s manufacturing empire.

The factory will be up and running in 2020 and drive the vision of Taiwan-based Foxconn – known formally as Hon Hai Precision Industry – of manufacturing components for 5G mobile systems and artificial intelligence applications, according to Gou, without elaborating.

Gou, who failed in his bid to contest the Taiwanese presidential elections, added he will spend a lot of time in the US this year and intends to send more employees over.

“I hope many Hon Hai colleagues will go work in the US to help America boost manufacturing and build a supply chain,” Gou told employees at his company’s Lunar New Year’s party in Taipei.
Someone knew this was BS at the time.

Oh, so to get more tax write-offs from the State of Wisconsin, Terry Gou is now planning to make a show of importing workers to Wisconsin for a small bit of time before the 2020 election (if he does it at all). Is there anything from stopping these workers from being packed up and leaving again after the tax credits come in? OF COURSE NOT.

After Gou's announcement, Urban Milwaukee's Bruce Murphy looked at the empty promises (and building) in Racine County, and concluded that there won't be anything actually being made at the Foxconn campus.
Okay, so the building is, gosh, nearly enclosed and will have a very fine roof. But what exactly will be manufactured in it? The media continues to describe this as a Gen 6 LCD manufacturing plant, since Foxconn has generally called it this. So is that what will be building America’s supply chain in Mount Pleasant?

“I don’t think so,” says Harvard Professor Willy Shih, one of the few U.S. experts on LCD fabrication in answer to a query from Urban Milwaukee. “Not for making LCD panels. Assembling products that incorporate LCD panels, maybe.” ...

First, a Gen 6 plant needs “a massive steel infrastructure to support a vibration-free environment for equipment that has to do ultra precision (manufacturing),” as Shih noted. That steel support substructure is no small undertaking and could be up two floors deep in LCD plants — and nothing like that was done for this building.

Second, this plant is just one story tall, and as Shih wrote for Forbes: “LCD fabs (fabrication plants) are multi-story affairs. The main equipment floor is sandwiched between a ground floor that is filled with chemical pipelines, power distribution, and air handling equipment, and a third floor that also has a lot of air handling and other mechanical equipment…. When they bring the manufacturing equipment in, they load it onto a platform and hoist it with a crane on the outside of the building. That’s one way to recognize an LCD fab from the outside – loading docks on high floors that just open to the outdoors.”

Third, LCD plants are expensive, multi-billion structures. Shih estimated that a real Gen 6 plant, if it was built in Mount Pleasant, would have a price tag of around $5 billion. The spending on this is nowhere near this: the plant is expected to be valued at $400 million.
So in other words, it'll be an assembly plant or a distribution center. Not what Wisconsinites were told the Fox-con project was going to be, but that reality won't mean state taxpayers are off the hook. And not just because of the $252 million used to speed construction on I-94 near Foxconn or the $134 million to upgrade local roads near the project while all other roads in the state developed Scott-holes.

Let's go back to last week's revenue estimates from the Legislative Fiscal Bureau, which noted that while state taxpayers were likely to not give Foxconn as much as was budgeted, they still would be shelling out a sizable chunk of change in the next Fiscal Year.
The second item regards state expenditures related to the electronics and information technology manufacturing (EITM) zone refundable credits for the Hon Hai Precision Industry Co., Ltd (Foxconn) development. 2019 Act 9 estimated the refundable credits at $0 in 2019-20 and $212.0 million in 2020-21. Under the EITM zone tax credit program, the Wisconsin Economic Development Corporation (WEDC) certified three Wisconsin corporations that are affiliated with Foxconn as eligible to claim a payroll tax credit over 15 years for up to an aggregate amount of $1.50 billion and a capital expenditure credit over seven years for up to an aggregate amount of $1.35 billion. The Act 9 estimate assumed that Foxconn would have sufficient payroll and capital expenditures by the end of the 2019 calendar year to receive the $212 million of refundable credits that would be paid in the 2020-21 fiscal year. Based upon reports of the project's progress to date, and assumptions regarding payroll and capital expenditures, preliminary estimates suggest that it is likely that the credits paid to Foxconn in 2020-21 will be in the range of $50 million to $75 million, rather than the amounts contained in Act 9.
Those revenue and budget estimates did not include the expectation of lower payments to Foxconn, so that may be an extra $150 million or so to play with. But at $50-$75 mil, it is still a lot more than what we're giving to another company that is adding a lot more jobs than Foxconn.

To start, check out what we're giving for a 1,500-employee, 2.6 million square foot warehouse in Oak Creek.
Amazon stands to receive as much as $7.5 million from the state in return for building a massive warehouse in Milwaukee County.

The Wisconsin Economic Development Corp. announced on Monday that it had awarded the online retail giant Amazon up to $7.5 million worth of tax incentives if the company lives up to its pledge to spend $200 million on a 640,000-square-foot warehouse in Oak Creek and employ 1,500 people there. Amazon has announced plans to build a warehouse of that sort at the Ryan Business Park, near where Ryan Road meets Interstate 94.
I don't disagree that it's questionable whether a company like Amazon should get a dime, given how huge it is. But I can't help but notice how much less we are giving to them vs Foxconn.

The first big warehouse project for Foxconn involved them getting $7 million from WEDC and a $17 million TIF district from the City of Kenosha for a fulfillment center that is similar in size to what the Foxconn facility will be (if it ever opens). It looks like another $8 million was added at a later point, but that facility in Kenosha is estimated to be home to more than 3,000 jobs – a much better bang for the buck than the Foxconn project 10 miles away.

And the latest large Amazon facility that recently started in Beloit has no state incentives at all, with the only gifts coming in the form of land grants and $13 million in city infrastructure. Now add in smaller properties that Amazon has bought from other closed businesses, such as a warehouse in Sussex that was recently expanded, and Monday’s news of Amazon buying a facility on Madison’s east side that used to house a Swiss Colony distribution center. That type of transaction often requires little to no government assistance, which is the best type of economic development you want.

You look at the growth of Amazon in this state in recent years, and it reiterates what an awful deal the Fox-con is for taxpayers, and how little return we’re getting for it. Worse, the bigger costs are yet to come, either if Terry Gou games the hiring figures to get his 17% kickbacks for a couple of years, or when Foxconn can’t put up the charade any more, packs up and leaves, and the Village of Mount Pleasant needs a state bailout for all the debt they’ve put upon themselves.

No matter how much Foxconn and GOP hacks try to spin, there is little doubt that this state has been put in a significant hole because of this boondoggle, and no one with an ounce of self-respect should believe announcements about what might happen at Foxconn, and instead trust what actually is happening. Wisconsin taxpayers are in a significant hole, and the last thing we should do is delude ourselves into thinking Foxconn will dig us out of it.

Saturday, January 25, 2020

Robbin' Vos and WisGOPs care about redirecting money. Not saving it.

Interesting article this week from the Capitol Times which showed that Robbin’ Vos’s highly paid, expanded staff main job doesn't seem to be checking up on potholes back in the 63rd Assembly district. Instead, they are using our money to harrass and try to embarrass Governor Evers.
The reporting began after Vos, in early 2019, added new staffers to his office, including three aides to former Republican Gov. Scott Walker. The move was criticized by a top Democratic leader as an attempt to launch a “shadow caucus” to take on the Evers administration.

“I don’t want to just assume whatever the executive branch tells us is automatically accurate," Vos told the Milwaukee Journal Sentinel last January. "I want to have someone double check it.”
By itself, asking for information is no biggie to me, as it’s worthwhile to be doing policy research and figuring out things for yourself no matter who is governor. And you’d want to know what the executive departments are doing with taxpayer dollars and current programs.

But it begs the question why Robbin’ decided he only needed these extra, taxpayer-funded staffers after Evers gave Scott Walker the boot in 2018. And the real answer to that question comes later in the article.
The Cap Times was first made aware of the activity after One Wisconsin Now shared a copy of a February research assistant training presentation assigned by Vos’ office. The 11-slide presentation walked Assembly staffers through the process of “monitoring state agencies” by keeping an eye on recruitment, contracts, grants, lawsuits filed against a department, stakeholder meetings, federal interactions, audits, social media accounts and more...

Two subsequent records requests filed with Vos’ office by the Cap Times uncovered a series of weekly department reports by Assembly staffers, with some dating back to February 2019, as well as emails about the activity between committee clerks and the speaker’s staff.

The length of the documents, which follow a two-and-a-half page template, tend to differ, week-to-week and between agencies. Some staffers regularly included charts or graphs showcasing vacancies, for example, while others listed and linked to every retweet their agency’s Twitter account sent out in a week. Others still submitted five- or six-page reports while different staffers filed two-page summaries, according to the records.

After compiling the reports, staffers emailed them to a corresponding point person or persons in Vos’ office, depending on their policy area or committee division, records show.
Sooooo punchable.

Your tax dollars at work, Wisconsin. And it illustrates yet again that for Robbin’ (Foxconn is in My District) Vos and other Republicans in 2020, “fiscal conservatism” really doesn't have a lot to do with saving money.

Another example of this will come next week, when VP Mike Pence will come to the Capitol for a photo op/BS event to promote Betsy DeVos’s “Jesus Rode a Dinosaur” schools.
Vice President Mike Pence will visit the Wisconsin State Capitol next week to promote private school vouchers and other alternatives to traditional public schools.

Pence will deliver a speech during a noon rally Jan. 28 in the Capitol rotunda recognizing National School Choice Week, an event organized by conservative groups and school choice advocates that is expected to draw as many as 800 people…..

The event was also organized by Hispanics for School Choice, School Choice Wisconsin, Wisconsin Federation for Children, Americans for Prosperity and No Better Friend Corp., which was created by former GOP U.S. Senate candidate Kevin Nicholson.
Oh, so it's nothing more than a taxpayer-funded rally backed by RW grifter organizations that uses kids as human shields. Cool, cool.

By the way, what has happened to taxpayer funding of vouchers in Wisconsin since the Age of Fitzwalkerstan began in 2011? It has nearly tripled, from less than $131 million in 2011, to $386 million next year. This includes increases of 12.5% this year and 13.5% next year. Our public schools sure aren’t getting double-digit percentage boosts in state aid in this budget, and in fact, they are having increasing amounts of money taken from them because of the voucher scam.

That money-funneling happens if the kids in voucher schools have never attended a public school in their home district, and property taxes have been raised to make up the difference for that reduced state aid. In fact, one item Governor Evers might want to look into with our extra tax revenues is reducing the $158.5 million being taken from public schools and use some of that money to reduce property taxes along with allowing those schools a bit more flexibility to use that money. Let's see the WisGOPs have to defend keeping the voucher theft to the Wisconsin voters, because they rarely get asked about it.

This cycle of money going out of publics and into unaccountable vouchers will continue each year that Robbin’ Vos, Mike Pence, and other GOPs use their Dirty DeVos Donations to stay in power. And Dems need to be calling this out as Pence, Vos and the rest of these puppets for RW oligarchs have their fake event at the Capitol on Tuesday.

Dems should also point out what has been obvious throughout the Age of Fitzwalkerstan. Whether it's Robbin' Vos adding political staff at taxpayer expense, adding tens of millions of dollars a year to a voucher program that has done nothing to improve K-12 education, or Fox-cons and other WEDC giveaways, WisGOPs don't really care about saving taxpayer dollars. They just want to use their power to send those dollars to their friends and donors and disadvantage everyone else in the process.

Wisconsin jobs up in December, but so is unemployment

Without much fanfare, we got the Wisconsin jobs report for December, which came out on Thursday. And it shows that we ended the year strong on the job-addition side, but not so good
– The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of December 2019. The data shows that Wisconsin added 9,800 total non-farm and 9,000 private-sector jobs in the month of December. Wisconsin's labor force participation rate in December was 67.0 percent, and the state's unemployment rate was 3.4 percent.
The seasonally-adjusted jump in jobs for December got Wisconsin above 0 for 2019 in these monthly reports, at 7,000 non-farm jobs overall, and 8,600 in the private sector. It was also nice to see jobs come back in manufacturing (+2,900) after the monthly reports had shown Wisconsin lost jobs in that sector for most of 2019 (although those losses come with caveats, which you will see below).

It's worth mentioning that December jobs numbers are often skewed out by the Holiday season, and only last for about six weeks before it and every other month in 2019 gets benchmarked to better match figures from the “gold standard” Quarterly Census on Employment and Wages (QCEW). I point this out because in March 2019, we found out that job growth in Scott Walker’s last year was overstated by more than 17,000, so take these December figures with some salt.

However, these are the figures we have for now, and they are part of the state-by-state jobs report that the Bureau of Labor Statistics put out on Friday. The Associated Press used that report to note Wisconsin’s rise in unemployment along with some other states, many of whom also were in our part of the country.
Though unemployment rates dropped throughout much of the country in 2019, more than a dozen states saw unemployment increases – and many were politically significant states in the Midwest as November's 2020 presidential election approaches.

Minnesota, Wisconsin, Iowa, Nebraska, South Dakota and Missouri are among the 13 states in which unemployment rates rose last year, according to new state employment metrics published Friday by the Bureau of Labor Statistics.

Mississippi saw the biggest annual increase, as the state's unemployment rate rose from 4.7% to 5.7% – well above the national average of 3.5%. But the next-largest increases, relative to each state's unemployment rate at the end of 2018, were in Minnesota, Wisconsin, Iowa, Nebraska and South Dakota.
To be sure, in the 5 states outside of Mississippi that had the largest rises in their unemployment rate, those figures are still under the national rate, ranging from 2.7% (Iowa) to Wisconsin’s 3.4%. But those figures also indicate that perhaps many of those places have already maxed out on available workers and growth, and it’s equally noteworthy that only Nebraska had more than 10,000 jobs added in the payroll surveys for 2019.

It also continued a trend in the household survey where Wisconsin continues to have declining number of people that consider themselves employed, and in the labor force overall.

UW’s Menzie Chinn adds that one reason for the stagnation and higher unemployment in the Midwest is due to the job losses in manufacturing that I referenced earlier, which hit the three closest Obama-to-Trump Midwestern states hard in 2019.

Now to be fair, the manufacturing numbers in these states and other places may look a bit better with the March benchmarking, based on the most recent QCEW. But any manufacturing gains are likely to be offset by losses in retail jobs that have been noted by the QCEW, and have yet to show up as much in the monthly reports.

So while it's a nice payroll figure for Wisconsin for December, the continuing upward creep in unemployment is worth keeping an eye on for 2020. And I'm not sure what changes for these trends this year if there aren't more people coming to Wisconsin, and the GOP Legislature is hell-bent on preventing any significant changes to state policy.

Thursday, January 23, 2020

So what should Wisconsin do with this extra money?

So now what should we do with the $818 million in extra revenues and $620 million in extra funds that we are projected to have for the rest of the 2020-21 biennium? Let's go over some of the ideas from the top people in state government, and then I'll enter a few of my own.

In his State of the State address, Gov Evers called for a special session starting next week that'll try to deal with the conditions that led to more than 800 dairy farms closing last year. And it seems logical that a part of that extra money would go to pay for thes initiatives.
One bill creates a Wisconsin Initiative for Dairy Exports to help boost U.S. dairy exports to 20% of the nation's milk supply by 2024, up from about 16% now.

Evers in his Wednesday address said the bill would increase Wisconsin's dairy exports to 20% of the U.S. milk supply, which would require billions more pounds of milk to accomplish. A spokeswoman clarified Thursday the governor meant the goal was to boost U.S. dairy exports to 20%, not Wisconsin's.

Another bill would provide grants to producers who want to add a new product to their operation. And, under another measure, the state's agriculture department would add five staff positions to provide mental health services for farmers.

Altogether, the bills would spend $8.5 million over two years, Evers told reporters.
Even though I'm generally skeptical of industrial policies that try to pump up exports without dealing with demand for the products or the base problem of overproduction by mega-farms, it seems worthy to at least try something that'll increase farmers' chances of survival.

Of course, Republicans are going to want to use the projected extra money on tax cuts, including the GOP's leader in the Senate, who wants to improve his image ahead of a run for Congress this Fall.
Republican Senate Majority Leader Scott Fitzgerald of Juneau has focused on that idea in recent months. He hasn't released a specific plan but could develop one now that legislators know how much cash is available.

"Once again, Wisconsin’s budget has run a massive surplus," Fitzgerald said in a statement. "After money has been set aside in the rainy-day fund, the Legislature should prioritize giving that money back to Wisconsin families in the form of a property tax cut."
Fitzgerald and other Republicans have extra concern after a Wisconsin Policy Forum report last month which showed property taxes for K-12 schools rose by the largest amount since 2010. Although it's worth noting that statistic is a bit skewed because it does not account for the larger School Levy credits, which offset some of those school property taxes, and gives a bigger benefit among individuals with higher property values and taxes.

Assembly Speaker Robbin' Vos gave a typically obnoxious response, saying he also might lower taxes, and also mentioned the opportunity to cut into the state's debts.
“In this growing economy, we’re not going to grow the size of government. While Democrats will likely try to spend every cent, Republicans will make sound fiscal decisions and return surplus dollars to the people who earn them. I look forward to working with my colleagues on a plan to pay down debt or reduce taxes.”
Do we want to tell Robbin' that most of the extra money has little to do with a "growing economy" but instead is because of corporations shifting around money to get a bigger windfall from the GOP Tax Scam in DC? Nah, let's allow him to cling to his delusions.

Joint Finance Committee co-Chair John Nygren said he wanted some of the extra money to go toward water quality measures.

I'm sure that has nothing to do with Nygren's hometown of Marinette having much of its drinking water affected by PFAS contamination due to activities at a Johnson Controls facility. But hey, if that's what brings them to the table to do the right thing...

Assembly Dem Leader Gordon Hintz thought the extra money would give a good chance to catch up on state needs that were neglected by Robbin' and the rest of the ALEC Crew in the 2010s.
“These new state revenues should be used for areas of urgent need. There has been bipartisan agreement about the issue of school-based mental health care. Governor Evers called for the legislature to act on additional funding in December after incidents at high schools in Oshkosh and Waukesha. There must be urgency to get this done. With this new revenue, it is my hope that Republicans will come back to the table to look at funding critical school-based mental health care programs they cut from Governor Evers’ budget.

“With this news comes opportunity. Shortsighted decisions by Republicans during the state budget debate resulted in cuts that are worth reconsidering at this time. For instance, despite a decade of national revenue growth, the UW system has been decimated by funding cuts since 2011. Legislative Republicans rejected the funding Governor Evers proposed in his budget that would have begun restoring higher education in Wisconsin, like the majority of other states have done during these strong economic times.”
And along those same lines, it would look pretty bad for people to talk up the extra money in the state budget, and then do nothing after seeing this headline on the same day.

My thoughts? Given that we are still projected to spend $442 million more than we take in for 2020-21, I wouldn't do too many permanent things. Here are 3 items I came up with.

1. Actual funding of the UW tuition freeze for one year (estimated at $16.8 million) and some more funding to the individual campuses to give it a cushion against enrollment drops such as the one that victimized UW-Whitewater.

2. General School Aids are already projected to go up by $163.5 million and Special Education Aids are scheduled to rise by $65.8 million next year. Those two increases are far overdue, and indicate that property tax increases for schools might be limited some as a result. So a better option might involve targeting more aid to local governments, as shared revenues have dropped significantly over the last decade, resulting in many more wheel taxes and service cutbacks across the state.

Maybe for every $2 a community gets in extra shared revenue, their levy limit rises by $1, which could give stability of funding that those communities need, while also giving homeowners a bit of property tax relief.

3. The state's new $75 million program for local transportation projects generated nearly $1.47 BILLION in applications. If there are that many unmet needs, it sure seems like you could do another $100 million or $150 million to take care of more of those projects. Alternatively, those funds could go to add to maintenance programs or large highway projects to clear some of the backlog that grew during the Age of Fitzwalkerstan, and lower the deficit of needs that we have in future years.

Now that the extra money is around, there will be a lot of ideas flying fast and furious in the next couple of months (before GOPs adjourn to go on a 10-month paid vacation). Opportunities exist, but we better be smart about them.

More money for Wisconsin....but not because of a strong economy.

Over the weekend, I mentioned that the Legislative Fiscal Bureau was likely to have good revenue projections when those figures were released this week. But what they had to say today exceeded what I was expecting.
Based upon our analysis, we project the closing, net general fund balance at the end of this biennium (June 30, 2021) to be $620.2 million. This is $451.9 million above the balance that was projected at the time of enactment of the 2019-21 biennial budget, as modified to incorporate the 2018-19 ending balance (2019-20 opening balance) as shown in the Annual Fiscal Report for 2018-19.

The $451.9 million is the net result of: (1) an increase of $818.2 million in estimated tax collections; (2) an increase of $20.0 million in departmental revenues (non-tax receipts deposited into the general fund); (3) a decrease of $22.8 million in net appropriations; and (4) a transfer of $409.1 million to the budget stabilization fund.
Wow, that’s pretty good budget news for sure.

So how did we get here with all this extra revenue? As I’ve mentioned before, it’s largely due to a jump in corporate taxes paid to the state, which started in FY 2019, and is projected to continue over the next 2 fiscal years.

Jan 2020 rev projections vs 2019-21 budget

Income taxes +$26.9 million
Sales taxes +$52.7 million
Corp taxes +$329.5 million
Public Utility taxes -$8.0 million
Excise taxes -$3.6 million
Others -$2.0 million

Income taxes +$93.0 million
Sales taxes +$49.5 million
Corp taxes +$299.6 million
Public Utility taxes -$2.0 million
Excise taxes -$12.6 million
Others -$4.7 million

And as I have mentioned before, you shouldn’t feel too bad for Wisconsin corporations, because the LFB notes that the increase in corporate taxes is largely due to the corps and their CEOs reorganizing their companies and moving around tax payments to get a major windfall under the GOP Tax Scam in DC.
Several factors contributed to unprecedented growth in corporate income/franchise tax collections in 2018-2019 and the first half of 2019-20, which are anticipated to moderate in 2020. First, the pass-through election to file under the entity-level tax caused an estimated $193.8 million increase in collections in 2018-19, accounting for 21.7 percentage points of growth in collections compared to 2017-18. As discussed above, pursuant to 2017 Act 368, S corporations, partnerships, and limited liability companies may elect to be taxed at the entity level beginning in tax year 2019, (except that S corporations can make the election beginning in tax year 2018). DOR records these payments under the corporate tax, rather than the individual income tax. As such, these payments reduce individual income tax collections and contribute to substantially higher growth in corporate income/franchise tax collections because the payments would otherwise be made by individual shareholders, partners, and members for tax owed on the income passed through by the entity on their individual returns. If such an election is made, it is likely that the election to pay at the entity level will actually increase the amount of state taxes owed by the taxpayer because: (a) the corporate income/franchise tax rate of 7.9% is higher than the graduated rates for individual income tax brackets in 2019 of 3.86%, 5.04%, 6.27%, or 7.65%; (b) tax credits cannot be claimed by the entity (except for the credit for taxes paid to another state); and (c) the entity cannot claim a net operating loss from another year. Nevertheless, it may be advantageous to make the election because income taxed at the entity level for state tax purposes may be a deductible business expense for federal tax purposes (where under TCJA, beginning in tax year 2018, the federal income tax itemized deduction for state and local taxes is limited to no more than $10,000 per year for individuals).

Overall, the May forecast expected payments from pass-through entities under the corporate tax to decrease in 2019-20. Because Act 368 was enacted in December, 2018, S corporations remitted entity level tax payments for tax year 2018 in March, 2019 (the last month to do so without incurring interest charges). Thus, in addition to receiving estimated payments from pass-through entities for the first half of 2019, collections for 2018-19 were enhanced by a one-time payment of $124.4 million owed by S corporations for tax year 2018. Due to the short amount of time to file and the safe harbor from interest charges, it was expected that pass-through entities would overpay the 2018 entity-level tax owed and later normalize their payments by either seeking refunds or remitting lower estimated payments throughout 2019-20. However, based on collections data, it now appears that in 2019-20 refunds are lower than previously estimated and that entity-level estimated tax payments are higher than previously estimated.
Guess it’s a good thing the state is getting more of those corporate taxes in these years, because there’s a good chance that the large deficits resulting from the GOP Tax Scam will likely mean there will be less money coming from the Feds in the near future, so the states better have money to make up the difference.

The LFB also pointed out that amount of available funds could be even higher than $620 million. And that’s because of the lack of activity at Foxconn.
… 2019 Act 9 [the 2019-21 state budget] estimated the refundable credits at $0 in 2019-20 and $212.0 million in 2020-21. Under the EITM zone tax credit program, the Wisconsin Economic Development Corporation (WEDC) certified three Wisconsin corporations that are affiliated with Foxconn as eligible to claim a payroll tax credit over 15 years for up to an aggregate amount of $1.50 billion and a capital expenditure credit over seven years for up to an aggregate amount of $1.35 billion. The Act 9 estimate assumed that Foxconn would have sufficient payroll and capital expenditures by the end of the 2019 calendar year to receive the $212 million of refundable credits that would be paid in the 2020-21 fiscal year. Based upon reports of the project's progress to date, and assumptions regarding payroll and capital expenditures, preliminary estimates suggest that it is likely that the credits paid to Foxconn in 2020-21 will be in the range of $50 million to $75 million, rather than the amounts contained in Act 9.

Before claiming EITM zone tax credits from the Department of Revenue, the Foxconn entities must receive a verification letter from WEDC. Before issuing such a letter, WEDC must first review Foxconn's annual report and a verification report from a nationally recognized certified public accountant. Pursuant to the contract, the Foxconn entities' next scheduled report is due on April 1, 2020, after which the accountant would have up to 45 days to complete its review before WEDC begins the verification process to calculate the amount of credits the Foxconn entities are eligible to claim. Further, upon receiving a verification letter from WEDC, the Foxconn entities would have up to 14 days to object to the calculation of tax credits. Given these steps, the amount of the credit to be paid in 2020-21 will likely not be known until after the end of this fiscal year.
That’s a nice bit of change that we will likely gain, since the Fox-con project won’t be nearly what was projected at this time (although it’s infuriating to be giving away $50-$75 million for the type of economic development that usually costs taxpayers a fraction of what we have given and will give to Foxconn).

That being said, it’s pretty obvious that the projected increase in tax revenues has little to do with an economic boom - income and sales taxes are each projected are up by less than 1% vs the last projections, and the LFB says the state is on track to collect fewer income taxes in this Fiscal Year than in 2019 due to tax cuts that were part of the state budget (you haven't noticed them yet? Wait till you file).

Instead, the extra money is mostly due to corporate tax tricks that are the result of the GOP Tax Scam that will prevent many Wisconsinites from writing off their own state and local income taxes (which will likely reduce your Federal tax refund). So taxes and refunds from one level of government are likely to go up, while taxes and refunds from another level of government is likely to go down

That being said, having more money in the state’s bank account and its rainy day fund (which is projected to grow by $410 million under this projection) beats being in the red, and it offers some opportunities to put that extra money to use. So what should be done? Let’s examine that in another post.

Wednesday, January 22, 2020

End of the UW tuition freeze? Looks like it's in the pipeline

The UW System has seen its in-state tuition levels frozen for the last 7 years. That might be nice for students and their parents, but the UW System also hasn't received more funding from state taxpayers to make up the difference, and the state's demographics has meant that total enrollment in the System has declined in recent years.

Therefore, the UW System has had to deal with less money from two sources as costs have increased over time, resulting in the System struggling to make ends meet.

And now, even the GOP-friendly outgoing President of the UW System is telling a State Senate committee that in-state tuition is going to have to increase at the campuses in order for it to survive in the 2020s.
The UW System Board of Regents is eyeing a tuition increase in the next budget biennium, University of Wisconsin System President Ray Cross told a legislative committee Wednesday....

The tuition freeze has been in place for in-state undergraduates at four-year campuses since 2013 and in 12 of the last 14 years at the two-year campuses. The state budget passed last summer requires tuition remain frozen through the 2020-21 school year.

"We’re exploring a process, and I probably won’t be here in August, but I believe this process will be embraced by the board where they will put forward a tuition increase a year ahead of the implementation," said Cross, who plans to retire when a new president is expected to begin sometime this summer. "In the coming biennial budget request, you will see the proposed tuition increase as a part of the revenue projections for the coming year."
As Kelley Meyerhoffer noted in the Wisconsin State Journal article about the committee meeting, allowing the Board of Regents to ask for the tuition hike might be a nice way for legislators to end the freeze and allow the UW a better chance to compete, while passing the buck on responsibility for that increase.
[T]he [tuition] freeze pinches campuses’ financial flexibility, particularly when coupled with cuts in state money in some previous budget cycles. The nonpartisan Legislative Fiscal Bureau has estimated the System has been cut by about $1.1 billion since 2011.

Regents have spoken at multiple meetings in recent years about the need to return tuition-setting authority to the board. The appointed body faces less political pressure than elected lawmakers when it comes to voting on tuition increases.
President Cross's comments came as part of a discussion of a different tuition-related bill. That bill will also allow for in-state tuition raises, but in a different way, as it would do what is known as "cohort" tuition. Under cohort tuition, it would be raised for a given year, but would stay at that same level for students over the next 4 years (for example, the students enrolling in Fall 2020 would pay the same tuition as they graduate in 2024).

The UW System said that cohort tuition would allow for more money to come into the schools, but because students would have different tuition bills based on when they entered the UW System, it also would add costs.
A cohort tuition model would significantly increase the complexity of the tuition setup in the campus' Student Information Systems. Costs are related to reconfigurations of the various implementations of the Student Information Systems at each campus to accommodate the cohort tuition model proposed by the bill. Estimated costs for all campuses, except for UW-Madison, is $2.5-3 million for one-time expenses. Estimated costs for UW-Madison are $522,720 for one-time expenses and $243,875 for ongoing operational costs.

There would be increased revenue due to a tuition increase, however the cohort model would impact those revenues compared to an increase in the full base. For example, increasing base tuition for state-supported resident undergraduate students, including differential, by 1 percent would generate an estimated $8.5 million in tuition revenues annually. In the cohort tuition model, any tuition increase would generate approximately 25 percent of the overall amount as tuition would only increase for new, incoming students and remain static for others. The impact of this would most likely be that UW System would continue to have tuition revenue shortfall when considering factors such as pay plan and fringe benefits, which are funded in part with tuition revenue.
Is there extra funding in this bill to help the UW schools pay for the time and adjustments to all of these different tuition bills that students have to pay? OF COURSE NOT. It's yet another unfunded mandate thrown on the UW System to have them carry out another stunt by the ALEC Crew in the Legislature, in order to give the appearance of "controlling costs" to the low-educated, resentful constituencies that many GOPs represent.

It's obvious at this point that even some Republicans see that the UW System and the state's workforce is suffering due to their starving of the System, and that they are not able to compete. And I don't think many voters are fooled these days into thinking that there hasn't been a cost the "tuition freeze without funding stunt", especially as UW-Madison has fallen to its lowest research ranking since 1972, and other campuses have had to lay off staff and reduce majors as resources dry up.

But I wouldn't count on GOPs to make too much of an effort to help the UW recover from the damage imposed on it in the Age of Fitzwalkerstan. After all, if more Wisconsinites can think critically and have experiences beyond their own backyard, it hurts the GOP's chances of staying in power.

EDIT- Sure enough, here's UW-Whitewater having to cut staff and classes next year due to a lack of resources. The starvation has to end.

Tuesday, January 21, 2020

Everyone can see growth slowing in 2020. But by how much?

While people are (understandably) watching the trial in DC today, this seems to be an interesting note from across the water.

Not recession, but basically the same as the last 3 quarters of 2019, which will end up around 2% after 2.5% growth in 2018. And it's a slight downtick from what the Congressional Budget Office projected for GDP growth in August (2.1% in 2020, 1.8% in 2021).

UW's Menzie Chinn also took a step back and looked at where the economy stands today. And Chinn adjusted the job growth to the lower levels signaled by the "gold standard" Quarterly Census of Employment and Wages, which will likely result in a sizable downward revision to job growth in a couple of weeks.

And while the decline in December Industrial Production was largely due to the record warmth around Christmas (which lowered the amount of heat required to be produced), it's still been relatively flat for more than a year. We'll see if it turns around with a colder January, but you're already seeing hints that whatever we signed with China isn't going to make any notable difference for trade...or worse.
[Chad] Bown, who served as a senior economist for international trade in the White House, under Obama’s leadership, said he is “very worried” about what’s in the agreement.

China agreed to buy an additional $200 billion in U.S. goods over the next two years, as part of the deal. President Donald Trump, who addressed the Davos forum earlier on Tuesday, said the number of purchases could end up closer to $300 billion.

“These are unrealistic numbers, which puts the whole viability of the deal into question,” Bown said, adding that the only way to reach these figures is by diverting trade away from other countries, such as soy beans away from Brazil and fish away from Canada.

Among the additional purchases of U.S. goods, China has committed to buy at least $40 billion worth of American farming products. However, a leading commodities expert at Goldman Sachs casted doubts over whether China will manage to do that. Speaking to CNBC earlier this month Jeff Currie said “there is still a lot of uncertainty about how you would achieve $40 (billion) or potentially even $50 billion of agricultural purchases.”
Yeah, it's going to take something else for the US economy to not slow down further in 2020. Maybe the Bubbles in the stock market and the home market somehow pull demand ahead to have things keep growing. But what happens if those Bubbles burst, or even have a normal 10% correction in the coming months? 2.0% might be a generous estimate if that occurs.

EDIT- Here's Prof Chinn with another sign that things aren't so swell in the transport sector.

Monday, January 20, 2020

"Both sides suck" - the GOP's strategy in DC

This is all you need to know about the Senate trial.

That's it. GOPs can't deny the facts about this crooked, compromised president. Likely because it would implicate how crooked and compromised they are, and how Russians helped THEM get into power. So they're going to just make political speeches and lie and deceive, and not allow for witnesses to confirm or deny what the evidence is.

The idea is that the average dope won't know the difference, and will turn off saying "They both suck," and ignore what is happening. Don't let that disgust and cynicism take over.

It's so tiring, but saying "Screw it", and letting the lawbreaking evildoers win is worse. And Dems better start calling for Impeachment Round 2...and this time make GOP Senators and House members testify to what they know, and the efforts they have made to obstruct and distract from the facts.

GOPs don't play fair, so why should Dems play nice?

EDIT- Here's another way to describe the GOP's Impeachment Trial strategy....along with the words "cover up."

Tomorrow in the State Senate - how to bail out your small local Wis community

Saw a few items in tomorrow's agenda in the Wisconsin State Senate that had a common theme - special treatment and/or spending for specific areas of the state.

One of these items takes a traditional form - an earmark to try out new state-assisted projects to avoid some kind of social problem. In this case, the bill would try to prevent further damage from severe weather in northern Wisconsin.
(1) FLOOD RISK REDUCTION PILOT PROJECT. In the 2019-21 fiscal biennium, the department of natural resources shall allocate $150,000 to Ashland County todesign, implement, and evaluate not more than three demonstration projects that test natural flood risk reduction practices in that county. Project expenditures for the moneys allocated may be used include engineering and design, materials,construction, pre-construction and post-construction monitoring, and project management. The department shall require Ashland County to submit to the department a progress report summarizing the results to date of its demonstration projects no later than June 30, 2021. The department shall submit to the legislature, in the manner provided under section 13.172 (2), and to the division of emergency management in the department of military affairs a report summarizing the resultsof the demonstration projects and recommendations for how existing state policies or funding streams could be adapted to create incentives to protect and restore natural infrastructure and reduce floods.
But that's not what some other bills do. In fact, they seem to be done to bail out GOP-voting communities from having to suffer consequences due to decisions by state and local officials that haven't worked out.

One of these bills would extend the time limit for buildings to count as part of the Foxconn Tax Increment District from 7 years, and extend it to 15 years. This means anything built in that massive area between now and 2032 can be counted toward retiring the $915 million in debt that the Village of Mount Pleasant has taken on as part of that white elephant.

Sure sounds like they're not counting on Foxconn itself to do much in the near future, and instead they want other businesses to take advantage of TIF in that area if/when Foxconn pulls out.

The Senate is also scheduled to discuss a similar bill regarding a TID in the Village of Kronenwetter in Marathon County. It's a tract of land that was set aside in 2004, and originally was given 15 years to add infrastructure and 20 years to pay back the costs with added property values. There hasn't been enough development to have the TID pay off, so now the GOP legislators from the area want to give Kronenwetter another 5 years to build more infrastructure, and hopefully get enough development to pay off the debt.
The project costs of a TID, which are initially incurred by the creating city or village, include public works such as sewers, streets, and lighting systems; financing costs; site preparation costs; and professional service costs. DOR authorizes the allocation of the tax increments until the TID terminates or, generally, 20 years, 23 years, or 27 years after the TID is created, depending on the type of TID and the year in which it was created. Also under current law, a city or village may not generally make expenditures for project costs later than five years before the unextended termination date of the TID. Under certain circumstances, the life of the TID, the expenditure period, and the allocation period may be extended.

Under this bill, with regard to TID Number Two in the village of Kronenwetter, the expenditures for project costs may be made for up to 20 years after the TID was created, DOR may allocate tax increments for up to 25 years after the TID's creation,
and the maximum life of the TID is extended for 5 years.
Guess it's nice to have your party in charge to avoid having taxpayers pay the brunt of your community's failed decisions, isn't it?

But there's also a bill that's a bad example of different rules for certain communities - and it deals with school funding for one small district in Northeastern Wisconsin.

Let's back up by noting that in recent budgets, some K-12 districts have been allowed to raise their revenue limits in the last few years because earlier Walker/WisGOP cuts in state aid and prior levy limits were leaving these districts in bad shape, and they required more flexibility. But then WisGOPs started to be unhappy when school referenda kept drawing attention to bad GOP policies, and so they figured that communities that turned down referenda don't need to have that extra ability to raise taxes, and so their revenue limit was frozen at the lower amount.

That is, until some schools in the district of Assembly Majority Leader Jim Steineke were facing fewer resources due to that bill. Now, the GOPs want to make an exception.
During the 2018-19 school year, only the Freedom Area School District (FASD) met the criteria [to have lower revenue limits] under the bill (referendum held on April 2, 2019). As a result, the applicable low-revenue ceiling amount for the FASD will be $9,400 for the 2019-20 school year. All school districts will receive a per-member adjustment of $175. The FASD will have revenue raising authority for $9,575 per member for the 2019-20 school year, prior to any other adjustments (e.g., declining enrollment exception).....

One school district would be impacted by the bill; the impact would be to allow the district to increase its revenue raising authority by $125 per revenue limit member in 2019-20. That additional revenue authority would become part of the school district's ongoing base revenues. However, it is ultimately the local school board's decision whether or not to levy to the maximum revenue limit amount.

Tax limits are great...until they affect our voters.

I'd assume that higher revenue limit may not be applicable to the Freedom Area District next year (they've already sent out property taxes for this year), but it certainly would let them get another boost in future years. I saw that there is a separate amendment to this bill proposed by some Senate Dems that would get rid of the punishment for turning down a referendum, but I'd bet WisGOPs will be too petty to allow that because none are sponsoring that amendment, and it would be an admission that the original freeze was stupid to begin with.

Keep these bills in mind when GOPs whine about how the City of Milwaukee and other blue-voting areas of the state have to be put under strict rules and are castigated for how they spend their money. Because when you're not looking, GOPs are more than fine with allowing smaller, rural and more GOP-voting communities from getting state assistance to avoid the consequences and tough choices that bigger communities are forced to make all the time.