Tuesday, November 22, 2022

What can Wisconsin do with these billions? I have some ideas

I mentioned yesterday that we got new estimates yesterday from the Evers Administration indicating that we may have as much as $6.6 billion in the state's bank account by the end of June, and nearly $10 billion by the end of the next state budget in June 2025.

With that in my, here is a quick wish list of the 3 big things that came to my mind (obviously, there is a lot more topics to cover, but we'll go over those things as they come up).

1. Get local governments and school funding off of the property tax. Cities and other municipalities have a limited method of raising funds for their services that basically restricts it to property taxes and a few fees, with counties unable to charge more than 0.5% in sales taxes, and most municipalities can’t put in any sales tax at all.

I alluded to this in my post over the weekend, but the state of Wisconsin has let down local communities by basically freezing shared revenues for the last dozen years. Then (Republicans) added to that problem with imposing revenue caps that limited how much property taxes were allowed to go up.

That needs to be changed. And not just by adding to shared revenues. We need more flexibility on the revenue limit side (you may have heard that costs have gone up in the last 24 months), and we need to allow communities to spread some of those taxes over to consumers via sales taxes instead of jamming so much onto homeowners.

As for K-12 schools, I’d use state funds to pay for more of special education costs (currently the state covers around 30% of special ed costs, vs the state covering about 2/3 of general costs) and add a sizable amount of General Aid. Half of that increase in General Aid could be used to increase school resources through higher revenue limits, and half of it would be used to reduce property taxes. This should also reduce the need of communities and schools to go to referendum just to maintain what they have, while shifting what pays for those services towards consumption and income and away from land taxes.

2. Help WisDOT fix the roads. Remember that there is a separate Transportation Fund where money is set aside to pay for highway projects and tries to take pressure off of the property tax for local needs like transit funding and street work. This is separate from the General Fund that has this multi-billion surplus.

There is already a boost happening in this next budget as a result of the federal Bipartisan Infrastructure Act. But we also need to stop relying so much on the gasoline tax and registration fees to pay for these services. Gasoline consumption continues to decline, and registration fees are generally regressive in this state (since we charge the same regardless of how much your vehicle is worth), so it’s not a long-term way to pay for increasingly expensive road repairs.

Why can’t we move some of those extra General Fund dollars to make for a more stable revenue situation in the Transportation Fund? And there is a local government reform that can be part of this as well, since one of the few non-property tax sources that communities can use are wheel taxes, which a lot of them have put in place since Scott Walker and WisGOP came to power in 2010.

Not only should we be sending more funds to local communities to help them fix their local roads and streets (those funds are not susceptible to state-imposed revenue limits), but why can’t we set up an incentive program that rewards local communities for getting rid of their local wheel tax, with 75% or more of the cost “paid for” with additional state funding.

And if you’re a community that’s been able to avoid putting in a wheel tax, you also get bonus funding equal to $10 or $20 a registration as long as you keep wheel taxes at $0. A lot of people don’t even make the connection to the local wheel tax being added onto their annual registration fee, so this might look good to a lot of legislators who can claim to constituents “You’re paying less to register your car!”

3. Income tax cuts? Yes, there likely should be some kind of income tax cut, but I’d have a lot of it go to expanding the Homestead, EITC and Child Care credits for low-income workers and homeowners vs cutting tax rates for the rich.

You'll likely hear a lot of talk in coming months about tax rates, especially with GOP leaders giving big talk about reducing the state's top tax rate, and likely trying to flatten out rates across income levels in general. So it's important to remember where we are starting from, to take it from there.

Not saying you can’t have lower taxes to the rich, but I'd prefer it be something like reducing the 7.65% top rate to 7.25%, while also reducing the 5.3% rate that most of us pay (or eliminating it entirely), and getting the lowest rate down near 3.2%

I am just spitballing numbers here, but you get the idea. I’d limit the price tag to around $1.25 billion a year so that we can still be at or near a structural surplus even after all of these moves. And if something has to be taken out, have it be the tax cut on the rich. Given how many millions the Hendrickses and Uihleins just dumped on our elections, I think they and other rich folks are surviving just fine, thank you.

Do I think any of these things will happen? They should, they seem like win-wins for both Democrats and Republicans. But I’m not going to count on it, given who’s running the show in the gerrymandered Legislature (these dipshits are already trying to use impeachment as a threat). However, the funds are out there to remake our outdated funding systems, if we so choose.

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