Monday, July 31, 2023

GDP bumping along, boosted by Biden/Dem incentives for construction

Also wanted to discuss the other big new report from late last week, which also showed how the US economy continued to grow through the Spring and early Summer.

And a big reason behind the surprising growth was a jump in "non-residential fixed investment", which includes new business buildings and transportation equipment such as vehicles and airplanes. That made up for a moderating in consumer spending, and reflects the big increase in the construction of manufacturing facilities in recent months.

UW-Madison's Menzie Chinn is among several economists noting that Biden/Dem policies passed in 2022 coincide with this increase in 2023, but it doesn't seem like coincidence.

These numbers show the inflation-adjusted change in billions of dollars, and note the green bar's jump in the last quarter. That goes along with numbers we saw earlier this month, which said that the value of manufacturing construction had gone up by 77% between May 2022 and May 2023. Which helped to keep the sector afloat as the larger sector of private residential construction dropped by 11.6% in the same time period.

So we have solid but not booming economic growth, and economic policies that encourage investment in America. Basically everything that a sensible country should look like, with inflation moderating in the first half of the year as well. Seems like we'd want to continue in this direction, wouldn't we?

Saturday, July 29, 2023

Incomes up, spending up, and inflation flattening. Keep this ROLLIN'!

Lots of good economic news all around this week, punctuated by what was in the income and spending report that was released on Friday.

The income and spending numbers are good on their own, but the financial media centered on the inflation figures in that report, because they wanted hints on what might happen with future monetary policy. And they found nothing but good signs on that front.
Annual U.S. inflation rose at its slowest pace in more than two years in June, with underlying price pressures receding, a trend that, if sustained, could push the Federal Reserve closer to ending its fastest interest rate hiking cycle since the 1980s.

The improving inflation environment was reinforced by other data on Friday showing labor costs posted their smallest increase in two years in the second quarter as wage growth cooled. It mirrored reports this month showing the economy shifting into disinflation mode, with consumer prices moderating sharply in June and producer inflation muted.....

The personal consumption expenditures (PCE) price index increased 0.2% last month after edging up 0.1% in May, the Commerce Department said. Food prices dipped 0.1% while the cost of energy products increased 0.6%. In the 12 months through June, the PCE price index advanced 3.0%. That was the smallest annual gain since March 2021 and followed a 3.8% rise in May.

Excluding the volatile food and energy components, the PCE price index gained 0.2% after rising 0.3% in the prior month. That lowered the year-on-year increase in the so-called core PCE price index to 4.1%, the smallest advance since September 2021. The annual core PCE price index climbed 4.6% in May.

Economists polled by Reuters had forecast the core PCE price index would gain 0.2% and rise 4.2% on a year-on-year basis. They calculated that the "super core" increased 4.1% on a year-on-year basis after rising 4.7% in May. This measure of services less housing is being closely monitored by policymakers to gauge progress in the inflation fight.
Seems like a good situation to me. And while growth in the employment cost index declined in Q2 2023, wages and salaries were still up 1.0% for those 3 months, and increased 1.7% more than inflation over the last 12 months, clawing back half the losses suffered as inflation peaked in mid-2022.

Also note that this is just wages, salaries. It leaves out the stimulus checks and all the other COVID-related aids in 2020 and 2021 that added to Americans' checkbooks and allowed them to pay off some of their debts.

So with inflation down to a 3-4% annual rate, wage growth exceeding it, consumer spending staying strong but not frenzied, and unemployment staying low, what's the problem? Seems like Bidenomics is working on almost all fronts, but the Fed for some reason wants to blunt this by keeping interest rates at levels that predate 9/11.

Hopefully the Fed makes a long-overdue realization, and at the very least stops hiking for the rest of this year (in reality, they should be moving rates at least back toward the 4% PCE inflation level). US consumers and real job creators (aka NOT corporations) have foiled the Fed's plan for a recession so far in 2023, and it'll likely take some kind of outside shock to cause any sort of significant decline for the rest of the year.

Works for me.

Sunday, July 23, 2023

Wis Policy Forum reminds us that there are big tax cuts in Wis budget, and more funds to play with

Republicans have spent the last 3 weeks complaining about vetoes by Governor Evers that they claimed would ultimately raise taxes. Which is why this headline from last week give me a grin.

Wisconsin taxpayers are set to receive over $1 billion in state and local tax relief over the next two years from the latest state budget, according to a new report from the Wisconsin Policy Forum. The report, released early Thursday morning, found the $99 billion two-year state budget signed into law by Gov. Tony Evers earlier this month delivered historic aid increases to local governments and raised state spending by the highest rate this century while simultaneously cutting state and local taxes and preserving much of the state's rainy day reserves. "State officials used an unprecedented nearly $7 billion surplus to do in the 2023-25 budget what once would have seemed impossible: combine the largest increase in funding for public services in three decades with a relatively substantial package of tax cuts," researchers wrote in the report.
Oh! You mean WisGOPs aren't really telling the full story here? OK, Wisconsin Policy Forum. Tell me more, starting with the biggest source of tax relief in the budget.
Under the budget, funding for the school levy credit would rise by $255 million, or 27.1%, in year one and an additional $80 million, or 6.7%, in year two for a total increase in funding of $590 million over the two years. The year one percentage increase is the largest rise in the credit in a single year since 1997. Despite the credit’s name, it is used to lower property tax levies and does not provide additional funding for schools….

In his budget bill, Evers proposed increasing the amount that schools can raise from general state aid and the property tax by $350 per pupil in 2024, and then again by $650 in 2025, tying increases to inflation in the years following. Both would have been the largest increases seen since per-pupil revenue limits were instituted. However, the Joint Finance Committee lowered those amounts to $325 increases in both years – less than Evers sought but still the largest since the limits were put in place. As of this past school year, the state counted about 800,000 pupils for the purpose of revenue limits; an additional $325 would therefore equate to about $260 million each year between the two largest sources of school funding.

When considering the combined impact of these increases in the per-pupil revenue limit and the additional general aid increase of $137.9 million in the first year of the budget and $362.8 million in the second, by themselves these two changes would likely mean some increase in authority to raise property taxes in year one of the budget and a potential decrease in year two. However, separate legislation (2023 Wisconsin Act 11) also raised the “low revenue limit ceiling” – the confusingly named minimum revenue amount for school districts – from $10,000 to $11,000. That would increase the revenue limit authority for districts collectively by roughly $350 million in each year. However, not all of this amount would be in addition to the $325 per-pupil revenue limit increases and so the total increase would be less than the two added together.
Combine that with the big increases in state funding being sent to local communities and other changes from the shared revenue bill [which became Wisconsin Act 12], and homeowners shouldn't see much of a difference in their property tax bill at all over the next 2 years.
The Legislature left in place the existing state caps on local property taxes, effectively limiting the increase in operating levies for municipalities, counties, and technical colleges to the growth in net new construction. As noted earlier, the legislation also increases shared revenue and local transportation aids and provides new sales tax authority to Milwaukee and Milwaukee County. All of these provisions could help to slow the growth of local property tax levies.

The budget and Act 12 also eliminated the personal property tax, estimated to lower total statewide levies on December 2024 bills by $173.8 million. The budget also provides GPR funding to increase the state lottery credit by $31.7 million over the two years, which is also used to lower the net statewide property tax levy.
And with Governor Evers' veto of income tax cuts, the Policy Forum reminds us that this leaves plenty of funds available for further tax cuts or initiatives. And those can be asked for some time during this current budget, or in the next one that Governor Evers will submit to a (ungerrymandered?) Legislature in 18 months.
...Under the final version of the budget with Evers’ vetoes, the general fund balance would drop from an estimated $6.88 billion on June 30 of 2023 to a projected $4.07 billion on that same date in 2025 (see Figure 2).

The state would still retain roughly $1.8 billion in its rainy day fund, leaving it with nearly $5.9 billion in total reserves. That would amount to 25.5% of spending (or net appropriations) for fiscal year 2025, which would be well above the levels typically seen in both Wisconsin and among state governments on average over the past two decades.

I'll also add that those bank accounts earn interest at the Fed's jacked-up rates until they get used or depleted in some other way. But I would recommend that Governor Evers demand for more in the coming months, such as renewing calls for working-class and middle-class income tax relief (which were in his original budget, and then removed by Republicans) and offering more financial support for child care and other needed community services, to make sure large amounts of Wisconsinites aren't left behind.

These are things that the people want and need, and we have the fiscal ability to do it. If Republicans don't want to get on board with this, and keep trying to give everything away to ultra-rich donors that take much more than they contribute, then let the WisGOPs explain it to the voters in 2024. New, fairer maps are coming in a state where Dems have been consistently winning statewide, and arguing in favor of the Walker-imposed status quo that has failed a lot of Sconnies doesn't seem like a WisGOP winner to me.

Saturday, July 22, 2023

How Dane County and other educated areas are the Death Star against Wisconsin going MAGA

I saw this article on social media, and it immediately piqued my attention.

Then I noticed the in-depth article begins DATELINE MADISON, WISCONSIN, and talks about how Dane County led the way in Janet Protasiewicz's landslide victory in April's Wisconsin Supreme Court race.

No place was more energized to vote than Dane County, the state’s second-most populous county after Milwaukee. It’s long been a progressive stronghold thanks to the double influence of Madison, the state capital, and the University of Wisconsin, but this was something else. Turnout in Dane was higher than anywhere else in the state. And the Democratic margin of victory that delivered control of the nonpartisan court to liberals was even more lopsided than usual — and bigger than in any of the state’s other 71 counties.

The margin was so big that it changed the state’s electoral formula. Under the state’s traditional political math, Milwaukee and Dane — Wisconsin’s two Democratic strongholds — are counterbalanced by the populous Republican suburbs surrounding Milwaukee. The rest of the state typically delivers the decisive margin in statewide races. The Supreme Court results blew up that model. Dane County alone is now so dominant that it overwhelms the Milwaukee suburbs (which have begun trending leftward anyway). In effect, Dane has become a Republican-killing Death Star.

“This is a really big deal,” said Mark Graul, a Republican strategist who ran George W. Bush’s 2004 reelection campaign in Wisconsin. “What Democrats are doing in Dane County is truly making it impossible for Republicans to win a statewide race.”
Protasiewicz won nearly 82% of the vote in Dane County in April, and Dane County accounted for more than 13% of the state's total votes in that Supreme Court election. As someone who worked an on-campus polling site that day, I couldn't help but notice that not only were a sizable number of students registering that day (meaning they likely had not registered and voted in November's midterms), but that around 3/4 were female. The chance to flip the court and reverse Wisconsin's 1849 abortion law had to be a main driver.

Coming up in 2024 is a presidential election, and in prez elections, Dane County has become a lot more Democratic since 2000, even though the margins statewide aren't much different. Democrats did 30 points better in Dane County than the rest of Wisconsin in all 3 elections between 2000 and 2008, but the difference compared to the rest of the state was a consistent one. That difference widened a bit in 2012, and broke apart after Donald Trump became a candidate to where the "Dane vs statewide" gap ended up closer to 50 points in 2020.

But it's not only Dem percentages that have been growing in Dane County - it's the total margins themselves. Because as the Politico article notes, these college communities are growing much faster than the rest of their swing states. They define these "college counties" as such:
The American Communities Project, which has developed a typology of counties, designates 171 independent cities and counties as “college towns.” In a combined social science/journalism effort based at the Michigan State University School of Journalism, the ACP uses three dozen different demographic and economic variables in its analysis such as population density, employment, bachelor’s degrees, household income, percent enrolled in college, rate of religious adherence and racial and ethnic composition.
Nationwide, Republicans have gone from slight victories (!) in these counties in the George W. Bush elections to losing them by more than one million votes in 2020. With total votes going up by nearly 50% in the last 20 years.

Turns out that people with options want to live in highly-educated places with high qualities of life, and businesses like to set up in communities that have those type of highly-educated workers (who knew?). And they care about issues and elections.

And while Madison and Dane County are the largest example of how this trend in college counties helps Dems in Wisconsin, it's not the only one. Eau Claire and La Crosse are Dem strongholds as well (Protasiewicz got 64% of the vote in both of those counties), Portage County (Stevens Point) gave soon-to-be Justice Janet 58% of the vote, and Protasiewicz won Republican-leaning Winnebago County by more than 8% after Evers lost it by less than 1% in November.

You also see a similar blue trend happening in Milwaukee suburbs that have a lot of college-educated individuals and future college students. Even though it was a July special election with smaller turnout, GOPs had to be alarmed with this result from Tuesday.

Census data tells us that nearly 46% of the 24th Assembly District's adult population has a bachelor's degree or higher, well above the Wisconsin rate of 31.5% with bachelor's degree or higher. The 24th also has more than 13,000 children under 18, whose parents are seeing the anti-education future that WisGOPs constantly spout, and increasing numbers aren't buying it.

You'd think Republicans would notice this and try to remove that motivator in time for the 2024 elections, but Legislative GOPs refuse to put forward any bill to restore Roe v. Wade rules in the state. Instead they are wasting time trying to push through anti-trans bills under the guise of "protecting girls' sports" - WHICH IS NOT A THING IN ALMOST ALL PARTS OF WISCONSIN.

And when the Assembly GOP Leader (who controls the campaign funds for other Assembly GOPs, and doesn't allow other legislation to get to the Assembly floor) isn't trying to revive unpopular tax cuts for the super-rich, Dweeby Napoleon continues to push this cultural BS.

The Politico article ends with this brutal bit of honesty from the recent Wisconsin GOP Convention, where a resolution to try to force college students to vote in their home districts got tabled. And it was because the dwindling number of Dane and Milwaukee County Republicans told other GOPs that they were getting their asses kicked.

“Why on Earth would we send a message to the students that we don’t want them to vote our way?” Milwaukee County GOP Chair Hilario Deleon told his fellow party activists. “Do not give the Democrats ammunition, give them competition.”
Shhhh, don't tell the MAGAts. Let them keep living in their Bubble of BS and anti-education resentment, and let them keep losing by bigger and bigger margins in Wisconsin.

Here's the link to that article again. Read it, it's a good one.

Friday, July 21, 2023

Wisconsin returns to record-high job levels in June

After a down report in May, Wisconsin’s job market bounced back in June, and hit a new record high.
The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) job totals for the month of June 2023, which showed Wisconsin's total nonfarm jobs reached a record high of 3,006,900. This is 52,900 more jobs than a year ago and an increase of 6,900 over the previous month.

Preliminary employment estimates for June 2023 showed Wisconsin's seasonally adjusted unemployment rate was 2.5%. The total labor force grew by 14,000 and employment increased by 10,700 over the month of June. Additionally, the state's total labor force participation rate increased to 65.3%.

Nationwide for the month of June, the U.S. unemployment rate was 3.6%, 1.1 percentage points above Wisconsin's rate, and the national labor force participation rate of 62.6% was 2.7 percentage points below the state rate.
Both of those items are pretty darned good, and it means that despite May's setback, Wisconsin has continued to be in the same moderate and relatively steady amount of job growth that we've had for most of the last 2 years. And that the state has gained over 260,000 jobs since Joe Biden took office 2 1/2 years ago.

(260,000 new jobs? Insert Scott Walker joke here).

There’s another part to the report that isn’t mentioned – May’s “largest in the nation” losses were revised down from 6,400 to 1,900. Some of that was fewer losses in manufacturing, and much of the rest was the erasure of losses in private education and health services. So even better than we thought.

Likewise, I want to give some warning to the 6,100 increase in leisure and hospitality jobs for June, because there are a lot of seasonal jobs that happen in that industry, and even with adjustments for that fact, that sector in particular may not be a sign of a longer-term trend when we look at June in isolation. And sure enough, leisure and hospitality lost 2,200 jobs on a seasonally-adjusted basis in May.

Given the sizable revisions to May and the reversals in June, I think the early reporting date for the May jobs report skews the numbers a bit, especially in areas like Wisconsin that have a lot of seasonal changes in employment between mid-May and mid-June.

With that in mind, let’s look at the net change from April to June, to take some of these calendar-related distortions out of the equation, and get a better idea of how things are really doing.

Seasonally-adjusted change in jobs, Apr – Jun 2023, Wisconsin
Accomodation + Food Service +600
Arts, Entertainment, and Rec +3,300
Prof./Bus Services +1,900
Construction -300
Health Care/Social Assist. -500
Manufacturing -2,900

While the manufacturing and construction losses are a concern, I’ll add that more people are working in those industries than they were in April – those industries just hadn’t added as many Summer jobs as normal.

Change in jobs, Apr-Jun 2023, Wisconsin Manufacturing
Seasonally-adjusted -2,900
Not seasonally-adjusted +2,900

Seasonally-adjusted -300
Not seasonally-adjusted +10,700

So let’s see if those “losses” in construction and manufacturing are merely a byproduct of a state that can’t find enough people to fill the needed positions as the weather warms, and that those sectors “gain” in August and September as there are fewer of those seasonal workers to lay off.

The increase in labor force and employment is a great sign, and the odd (seasonally-adjusted) decline in Wisconsin’s labor force from 2022 has now reversed. In fact, this month's Wisconsin labor force of 3,113,700 is a new post-pandemic high, and that's badly needed in a state’s that has a major economic concern over whether we can continue to get people to come here and stay here.

If more people wanting to work, finding jobs and the state getting record-high job levels translate into a 0.1% increase in unemployment each month this Summer, I think that’s an OK trade. And we need to continue and expand the high-employment situation we have in Wisconsin as long as we can.

Wednesday, July 19, 2023

One Milwaukee sales tax in the books, another on the way? Take it, then improve things

Less than a month after state lawmakers made it a possibility, the City of Milwaukee now has a new sales tax, after action by the City Council last week.
What began as a tense and unpredictable day at Milwaukee City Hall Tuesday ended with the Common Council's backing of a 2% local sales tax by a wider margin than required.

The critical vote offers the city a new revenue source to avert major service cuts in 2025 even as some council members said it would put additional financial pressure on residents living in poverty....

Even as the new law offers the city a financial lifeline — potentially $200 million-plus in new revenue annually, with the sales tax — it also comes with significantly increased costs for public safety and the city's annual pension payments.

Milwaukee's fiscal challenges have been caused by the state's decision to return a stagnant amount of shared revenue to the city for more than two decades and state-imposed limits on local governments' ability to raise revenue through other means such as sales taxes or by increasing property taxes. At the same time, the city's annual pension contribution is spiking while other costs are rising and reserves are dwindling, including the nearly $400 million Milwaukee received in pandemic aid.
A sales tax was something local Milwaukee officials had requested for years, and used charts such as this one to illstrate the squeeze they were under from both the revenue and spending sides.

But the 2% tax comes with plenty of strings attached, as all funds raised first go toward paying off the City's growing pension liabilities, and if that can be fully funded in a given year, the Legislative Fiscal Bureau points out that any extra funds go toward growing the number of police and fire fighters beyond the already-costly level that exists today.
Specify that the City of Milwaukee must attain a staffing level of no fewer than 1,725 law enforcement officers, including 175 detectives, and attain a daily staffing level of no fewer than 218 members of the paid fire department by December 31 of the 10th year beginning after the City first imposes the municipal sales and use tax.

Further, specify that the City of Milwaukee would have its supplemental county and municipal aid payment reduced by 15% if the City fails to meet the requirement that it increase its law enforcement and fire department staffing levels by December 31 of the 10th year beginning after the City first imposes the municipal sales and use tax.

Under the bill, the City of Milwaukee would have its current law county and municipal aid (shared revenue) payment and supplemental county and municipal aid payment each reduced by 15% if the City fails to meet either the City of Milwaukee-specific maintenance of effort requirement relating to law enforcement and fire protective and emergency medical service or the more general maintenance of effort requirements applicable to all municipalities with regard to law enforcement and fire protective and emergency medical service. Under the amendment, if the City failed to meet the specified staffing increase requirement and additionally failed to meet either the general maintenance of effort requirement applicable to all municipalities or the City of Milwaukee-specific maintenance of effort requirement, the City would have its current law county and municipal aid payment reduced by 15% and its supplemental county and municipal aid payment reduced by 30%.
As Jeramey Jannene notes in Urban Milwaukee, alders accepted the sales tax and the GOP's many conditions because not accepting them would have led to something worse.
We were presented with a bad deal,” said Alderman Russell W. Stamper, II. He said the deal negotiated by Mayor Cavalier Johnson let Republicans take advantage of the city. “This was already premeditated, they are taking advantage of the money they know we need.”

A city budget office report says that, without the new funding, the city would need to eliminate 700 of the approximately 1,600 police officers, 250 of the approximately 700 firefighters and 400 general city employees. A pandemic-era federal grant has delayed the fiscal cliff for a handful of years, but it will run out next year. [Mayor Cavalier] Johnson made getting a revenue solution for the city a cornerstone of his campaign for mayor and said he would get a “cot in the Capitol” if necessary....

Stamper said, despite his concerns, he “weighed the options of what could happen” and voted for the proposal. “I made the decision based on what I thought was the best for the city of Milwaukee,” he said in an interview.

Council members found public support from other political leaders [Monday]. Independently elected Comptroller Aycha Sawa, the city’s fiscal watchdog, endorsed the tax in a rare press release. Congresswoman Gwen Moore also endorsed the proposal.

The City's sales tax will start on January 1. Now we move to the County's sales tax, which was included as part of the same bill but is technically a different item, as the County Board and County Exec have to sign onto a countywide tax of 0.4%. In theory, the County doesn't have to follow the City's lead, although state lawmakers reduced the bump in shared revenue that Milwaukee County will get with the idea that the sales tax will make up for it.

And it looks like full County Board is slated to take that up next week, which would mean that sales tax would also be in place at the start of 2024.

Interesting choice of visual by the JS there.

Here's Urban Milwaukee's rundown of the committee debate, and some of the opposition that some members of the County Board have.
Sup. [and State Rep.] Ryan Clancy, who has opposed the sales tax since before enabling legislation was signed by the governor, once again shared his position. “What it comes down to is that sales taxes, despite the weak exemptions that Wisconsin have, fall disproportionately on the poor and working class,” Clancy said. “This sales tax is regressive.”

Clancy indicated that he thought the county should hold out for new Wisconsin Supreme Court Justice Janet Protasiewicz to be seated and for a potential future when the court invalidates the state’s legislative maps and they are redrawn fairer. The supervisor said he thought the county’s financial troubles aren’t as time-sensitive as the city’s. “The breathless list of concerns that we’ve heard are years away,” he said.

Sup. Willie Johnson, Jr. responded to Clancy saying, “There has been a delay since 2008.” The supervisor said the county should have had a sales tax increase long ago.
I know that 2008 reference, which was when Milwaukee County voters backed an additional 1% sales tax to fund transit, parks, EMS and property tax relief. The local County Executive opposed it, and after Dems and Governor Doyle dawdled in the State Legislature in 2009-10 and failed to take care of it, the sales tax topic was removed from consideration after 2010, when that same County Exec became Governor.

And while the economy may be much more stable since 2008, the funding streams for Milwaukee County certainly have not become more sustainable. The County’s transit system has had numerous cutbacks since 2008, and most recently has cut services for many special events such as lakefront festivals and Brewers games.MCTS says numerous routes will be eliminated in the next 2 years without fiscal changes, and with no more help from DC coming, there’s going to need to be a better option out there.

I also noted this part of the Urban Milwaukee rundown of Monday’s county committee meeting, which is in reply to Sup/Rep. Clancy’s argument that there is no need to rush.
Milwaukee County Corporation Counsel Margaret Daun was invited to offer her opinion on the potential for fair maps being a gateway to a better deal on shared revenue and funding with the state. Daun told supervisors that such a future relies on a number of assumptions about the court taking up the matter, the federal appeals process, the outcome of potential review by the U.S. Supreme Court, lawsuits and the actual process of redrawing the maps among other things. “My best professional estimate, assuming every case were to be won, in favor of more fair maps, as opposed to legislative autocracy, would be at least five years,” Daun said.
I don’t agree with Maggie Daun (she goes by Maggie on the radio) in the sense that it would take 5 years for the maps to be redrawn – I think the new majority on the Wisconsin Supreme Court would recognize the need to correct the wrongs of gerrymandering as soon as possible. But I think she’s right in that Milwaukee County is not in a position to roll the dice and hope for a better outcome 2-4 years down the road. Take the 0.4% sales tax to keep things afloat in the short term, and have the conditions and other GOP-imposed handcuffs removed after that through the courts and a fairer Legislature in the future.

The “regressive” argument makes more sense to me on the 2% City tax than this 0.4% countywide tax. I don't see where spending another 0.4% on non-groceries would do much to burden people (unless you’re buying a car), but I certainly see where cutting transit routes and mental health services and other needs would hit poorer people the hardest. You know what else is regressive? Having a $30 Milwaukrr County wheel tax (and $30 more in the City) that had to be put in place to pay for roads, transit and other transportation because of a lack of other methods to pay for those needs - a wheel tax that is levied on ALL vehicles owned by residents, regardless of income levels. Maybe let's work on reversing that Fitzwalkerstan-era trend of more wheel taxes - both in Milwaukee and in the rest of the state.

And as mentioned before, with Milwaukee County being the largest attractor of tourism dollars in Wisconsin, shouldn’t they be allowed to keep more of those dollars up-front and provide the extra services and needs that result from having so many extra people coming into the community? Sure beats pawning it off on homeowners and fees-for-services, and it really beats the mess that results from not being able to raise property taxes OR sales taxes as costs and needs continue to rise.

I get that many Milwaukeeans are unhappy with being singled out for these handcuffs and the racially-tinged garbage that comes with a WisGOP Legislature, and we can debate how many conditions are worth the benefit of a long-overdue sales tax. But I’d say take what you can get, and then use the coming months and years to make it into a more typical sales tax, and to have a better chance of making Milwaukee into the community its people want, without the interference from state lawmakers that has long hampered the state’s largest city, tourist destination, and economic engine.

Getting rid of the conditions (either through the courts or through the results of elections from fairer maps) would make for the best of both worlds - new revenue streams that aren't state tax dollars or property taxes, and the City having more ability to use the funds as they see fit. And by the way, given how rapidly Dems are gaining in the Milwaukee suburbs, I don't think that Boomer-based "bash Milwaukee" strategy for WisGOP is the winner they think it still is.

Saturday, July 15, 2023

Evers road funding veto improves statewide equity. Rural WisGOPs don't want to give up the advantage

One of Governor Evers' vetoes in the recently approved state budget that hasn't been mentioned much was one that dealt with state aids for local roads. But a couple of rural WisGOP legislators are trying to change that, with State Sen. Cory Tomczyk giving an example of the type of complaint being leveled.
“It is appalling to me that the same Governor who campaigned on ‘fixing the damn roads’ and posed for photo-ops with a shovel in his hands would have the gall to veto critical funding our small town local roads....

(One paragraph of anti-Evers name-calling and whiny resentment not connected to reality. Will not share here).

You can talk to any town official in Wisconsin and they will tell you one of their biggest priorities this session was increasing the per-mileage funding for local roads. As Chair of the Senate Committee on Transportation and Local Government, increasing transportation funding was a priority for me this budget and is a cause I will continue to fight for, even while facing such ignorant opposition from the Governor’s office.”
This seems like a good place to tell you that despite Sen. Tomczyk beign elected to represent the Wausau area, his campaign page on Facebook resembles that of someone serving in Montana.

But let's go into the substance of Sen> Tomczyk's rant, and let's look at Gov Evers veto message, to see what it is and the reasoning behind it.
This section increases the mileage aid payments in the general transportation aids program to $2,789 in calendar year 2024 and $2,845 in calendar year 2025 – thereby providing 2 percent increases to the mileage reimbursement rate in both of these calendar years. This section also includes 2 percent increases in calendar year 2024 and calendar year 2025 for the general transportation aids program for both counties and municipalities.

I am partially vetoing the section to delete the mileage aid payment increases because I object to providing further increases to mileage aid when the disparate impact of 2011 Wisconsin Act 32 on the mileage aid versus share of cost aid components of the general transportation aids formula remains unaddressed. The nearly 6.0 percent reduction signed into law by 2011 Wisconsin Act 32 fell entirely on share of cost awardees in the formula. As a result of my veto, this disparate treatment based on the formula component that a locality relies upon is reduced. My veto also retains the 2 percent increases in funding for both calendar year 2024 and calendar year 2025 for the general transportation aids program as provided by this section.
So Evers isn't changing how much is available statewide at all, he's just making a difference in how much is being reimbursed to each community.

And as the Legislative Fiscal Bureau lays out, it costs much more to fix roads in cities and villages, because there are more streets to fix and (generally) more traffic to deal with. This means towns have had a much better deal, because they've gotten more payments based on land and mileage instead of how much the project actually costs.
Statewide estimated transportation aid payments for 2023 equal 20.1% of reported costs for 2021. From this perspective, towns do the best, with payments equaling 36.8% of reported costs. Incorporated areas benefit the least, with payments ranging from 14.7% of reported costs for those with populations under 10,000 to 17.5% of reported costs for those with populations over 200,000.

This situation is reversed when aid payments are examined in terms of mileage. On average statewide, local governments received $5,145 in 2023 payments for each mile of road under their jurisdiction. From this perspective, towns benefit the least, receiving $2,796 per mile. Incorporated areas benefit the most, ranging from $8,918 per mile for those with populations under 10,000 to $18,041 per mile for those with populations over 200,000.

Evers is merely trying to make for improved equity statewide. But apparently that's a no-go for Sen. Tomczyk and other rural WisGOPs, who never miss a moment to complain how put-upon the "forgotten folks in the sticks" are.

Also not mentioned by Tomczyk is that rural roads are already getting a major boost from this budget, in the form of a new $150 million program to help fix roads and related infrastructure in and around on agricultural lands. WisPolitics' JR Ross mentioned that new program while discussing this issue at the end of this week's "Rewind" show, and also pointed out that rural communities got a whole lot more money in the recently-signed shared revenued bill. Click ahead to 26:25, and Ross explains the situation quite well.

The bump that rurals got in the shared revenue bill shouldn't be forgotten. Many Wisconsin towns will be receiving as much as 5, 10 or even 15 times the shared revenue payment it got in 2023. And that reality was pointed out when Governor Evers signed the shared revenue bill in Sen. Tomczyk's district.

Especially given that rural communities often don't have a lot of services on their own to pay for beyond roads (countywide sheriff departments handle most law enforcement, and many towns don't have cops of their own), guess where those extra state funds are likely going toward.

I don't resent rural Wisconsin getting a disproportionate share of state in general - when there aren't many people in an area, you aren't going to have much of a tax base to do things on your own, and living in a small community shouldn't relegate you to a second-class existence when it comes to infrastructure. But I do resent when rural WisGOPs try to play this BS about how "ignored" they are when Governor Evers makes a small veto in road funding to make the playing field more level statewide.

Much of rural Wisconsin got a whole lot more out of this budget than many of us city-slickers, and their towns, communities and schools will have an easier time making ends meet. Dems shouldn't let the WisGOPs that "represent" those areas get away with telling them otherwise.

Wednesday, July 12, 2023

INFLATION WATCH - CPI down, real wages up. Why does the Fed want to do more?

The June 2023 CPI report would mark one year since inflation peaked in June 2022, with year-over-year price increases exceeding 9%. And things are quite different now vs when gas was $5 a gallon a year ago.

That's pretty good news to me, and you can see how the year-over-year CPI totals have steadily declined over the last 12 months. In addition, 3 of the last 4 months have had CPI increases of 0.1% or 0.2%, and it translates to an annual rate of increase of around 2.5% since February.

Look, I get that the huge increase in prices between June 2021 and June 2022 was something that stressed a lot of people and annoyed a lot more. But some of the losses in real wages have been erased over the last year, as average hourly earnings have continued to climb at a consistent pace while CPI has faded downwards.

And the figure of “average” hourly wages for all workers obscures how lower-wage jobs have been seeing higher increases over the last year (transportation/warehousing up 6.0% and leisure/hospitality up 5.2% vs 4.7% for all jobs, as an example). Non-supervisory employees in total have had inflation-adjusted increases in hourly pay that virtually doubles the inflation-adjusted increase in average hourly wages for all private sector jobs in America.

And let’s not forget that in the 15 months before June 2021, there were sizable increases in income from stimulus checks, expanded unemployment benefits and other COVID-era aids, as well as a small bump in inflation- adjusted wages for those staying in jobs. While US inflation-adjusted disposable income may not be back at 2021 levels, it is still 4% above where it was at the end of 2019.

We're not all the way back from the inflation-adjusted losses on the wages side, but we have gotten back above pre-pandemic levels.

So if workers are now making up for the losses from the transitory inflation of 2021 and the first half of 2022, and inflation is now running at an annual rate of 3% or below, why are central bankers talking about raising interest rates again? How do we end up at a 5.5% Fed Funds rate when CPI is running at about half that level?

In June 2019 we had also had unemployment at 3.6%, were adding 150,000 new jobs a month, and the Fed Funds rate was half of where it is today. Then President-Trump threw a fit, claiming rates were too high (because he feared recession before the 2020 election). And the Fed backed down, cutting rates 3 times in 2019, before the pandemic even hit.

Inflation feels under control, jobs are still being gained but growth is now moderate, and where is there any “overheating” to fear about. Because workers are getting an adequate share of the economy’s gains for one of the few times in the last 20 years, and it’s preventing corporations from adding on to what was already record profits?

It’s well past time President Biden and Dems do the same, before Republican Jerome Powell and other Fed officials hurt their chances in 2024 by chasing an inflation that doesn’t exist in most of Real America, and triggering a job-losing recession that doesn’t need to happen.

Monday, July 10, 2023

State take billions out of the bank for 2023-25 budget, but still have $4 billion left.

We got an update today about how much more money will be in the state's bank account after Governor Evers' vetoes. And it's a bit more than I thought.
Wisconsin is projected to finish the 2023-25 biennium with a more than $4 billion surplus after Dem Gov. Tony Evers vetoed the bulk of a GOP income tax cut plan, according to new figures from the Legislative Fiscal Bureau.

That ending balance also will get a boost from the additional interest the state is in line to earn due to the money sitting in the general fund.

LFB projected that includes $51.3 million more in 2023-24 and another $98.5 million in 2024-25 compared to what the state would’ve seen under the budget Republicans sent to Evers last month.
The LFB projections show that nearly $5.5 billion of the projected available funds are used up in this budget, but there's a lot more cushion than there was under either Evers' original budget and under the budget that Republicans passed out of the Joint Finance Committee and later sent to the Governor's desk.

And you can see that almost all of the reduction in the bank balance comes in Fiscal Year 2024 (aka - the next 12 months), due to a lot of one-time General Fund cash payments for items such as more than $1 billion for capital projects and $555 million additional funds sent to the Transportation Fund. Since that isn't repeated in Fiscal Year 2025, we end up with a nearly balanced budget for Fiscal Year 2025.

With the $4 billion available, this allows for a second chance to improve this budget. That can be through adding funds for services like child care or mental health, or by putting in a more reasonable tax cut, whether it's Gov Evers original call for working and middle-class tax cuts, or by splitting the huge 5.3% tax bracket and limiting the tax cut to the first $125,000 in that part of the income distribution.

But maybe that waits until early 2024, when we get an update on the state's revenue picture, as well as see how the economy is holding up, and to see if other adjustments are required at that time. The good news is that we have plenty of cushion available to handle anything, and to make things even better for Wisconsinites.

Or Governor Evers can use that time to make another ask for popular items like Medicaid expansion (matching it with a tax cut?) or better financial aid for Wisconsin college students, or fixing the funding flaw in our voucher program so we pay the full costs of 2 separate school systems. And with new maps hopefully in place, maybe we can get a Legislature that will do things that match what everyday Wisconsinites want and need.

Sunday, July 9, 2023

Evers adds K-12 funding. WisGOPs claim it's a property tax increase. But it doesn't have to be

Wanted to give a few more thoughts on this action from last week from Governor Ope-lander.

Republicans are portraying Governor Evers’ creative veto as something that will trigger large and ongoing property tax increases. But all Evers did is guarantee more TOTAL revenue funding, and at a level that doesn’t even keep up with the current increase in costs.
Budget plans forwarded by Wisconsin's Republican legislators would have provided the state's public schools and additional $325 in revenue per pupil in this budget cycle. Using his broad veto powers as a scalpel, Evers sliced out bits of the budget document to extend that increase for four centuries.

The $325 amount is still about $75 per student less than what schools would need to keep up with the inflation rate, which is at 4.05 percent, compared to 4.93 percent last month and 8.58 percent last year, according to the consumer price index.
Dan Rossmiller, the executive director of the Wisconsin Association of School Boards, points out in that WPR article that setting a baseline increase of $325 a year makes it much easier for public school districts to plan out their staffing and classroom needs. And he reminds us that $325 is a drop in the bucket compared to what voucher schools are set to get.
"Right now this seems like this is a substantial amount, but when you look at what was given to private schools in the voucher program, $325 is kind of dwarfed," Rossmiller said.…

Funding for kindergarten through eighth grade private choice schools will increase from about $8,400 per student to $9,500 per student. Funding for private choice high schools will go from $9,045 to $12,000 per student.
That means that even under Evers’ locked-in $325 increases in revenue limits, it would take several years for K-12 public schools to have the same amount of per-student increases in funding that voucher schools will get. And that’s not even accounting for the revenue increases that voucher schools will get from using these higher subsidies to raise their tuition (you know, like how righties have told us student loans allow colleges to jack up tuition).

And if property taxes do go up, a lot of that increase will never be paid for by Wisconsin property owners, because Evers accepted a GOP increase of $335 million a year for the School Levy Tax Credit. That’s about a 35% increase from what it is now, which would translate to another $245 in property tax relief for us next year. Granted, we live in higher-levy, high property-value Madison, and your reduction will likely be less, but a lot of any property tax increase that WisGOPs are yapping about will be blunted due to that increase in the School Levy Credit.

On a side note, when WisGOPs whine about the vetoes of income tax cuts that Governor Evers made, they don't bring up this increase in the School Levy Credit that overwhelmingly benefits richer Wisconsinites, and districts with higher property values.

Of course, if the WisGOPs are really concerned about property taxes being increased due to Governor Evers allowing K-12 districts to use more funds, they can simply vote to add $325 per student in state aid to every school district. That would be around $262.5 million a year (based on the 807,657 public school students in Wisconsin school districts for 2022-23), which isn’t much different than the $225 million increase in General School Aids that is set for 2024-25 under the WisGOP-approved budget that Evers signed into law.

Another option that WisGOP will never bring up to limit school-related property taxes is fixing the funding flaw in the state’s voucher program that takes away state aid from public school districts if a kid living in the district takes a voucher – even if the kid never attended one day of public school. Public school districts are then allowed to levy property taxes to make up for the loss in state aid from each voucher student (because losing one kid or even 10 kids isn’t going to lead to the closing of a school or classroom).

Maybe we shouldn’t do either of these things. Don’t take away that $200 million+ in aid to community schools for the voucher students that live there, and then you don’t need to have those districts levy property taxes to make up the difference. Extra bonus – we have to pay the full state taxpayer cost of having these 2 separate school systems, and maybe we get more honest about how this should work.

What WisGOPs are really angry at is that they now have to justify to voters why public K-12 schools shouldn’t continue to get the assistance that Evers locked in. After a dozen years of neglecting public schools and imposing absurdly low revenue limits that led to ongoing referendums and more cutbacks, good luck on saying “let’s go back to that [failing] system us WisGOPs put in place!”

The teeth-gnashing by Robbin’ Vos and other WisGOPs is delicious to see, because these dweebs have nothing beyond “Tax cuts”, distractions and game-playing. It’s well past time these guys find out what it’s like to be on the other side of some shenanigans, because the Real Wisconsin has been screwed over by WisGOP’s deceptions and rigging of our political system for most of the last dozen years. And Evers’ move to increase resources to school classrooms have the extra advantage of being something that the people actually want.

If WisGOPs don’t like what Governor Ope-Lander did, then they should go ahead and try to get the voters on their side. But given their continued failures in statewide elections over the last 7 years, that doesn't seem likely to work out for them.

Saturday, July 8, 2023

Steady as it goes for US jobs and wages in June. Still not seeing the downside

It was another jobs Friday in America yesterday, and the numbers were OK but not amazing.

Not sure I'd call a 110,000 downward revision "modest", but it also brought those large gains back toward the moderate growth we've been seeing for most of the first half of 2023. Since peaking in the second half of 2021, after vaccinations for COVID were in place and Biden/Dem stimulus were put into law, we've seen a steady decline in the rate of job growth, and now are at a little over 200,000 private sector jobs a month.

And you'd expect less job growth when you have an unemployment below 4% and slow population growth. It's been remarkable that we've still been able to grow both our jobs numbers and workforce even as unemployment has stayed at multi-decade lows for more than a year, and in fact, we have a higher percentage of working-age Americans in jobs than we have in 22 years (a time when Boomers dominated this age range).

For the Fed-watchers, we saw growth in average hourly earnings stay solid, beating the "expert expectations" with +0.36% for June and +4.35% over the last 12 months.

If you look at that chart, I think we can safely say this isn't a temporary thing anymore, and workers have a better hand than they had in the 2000s and 2010s. It also shows that there was never a wage-price spiral when inflation jumped in late 2021 and the first half of 2022, because CPI has receded into a 3-4% range while wage growth has stayed at 4-5%.

And again, I ask - what is wrong with a full-employment economy with decent job growth, 4-5% wage growth, and 3-4% inflation? You know, other than not allowing corporations to max out profits by squeezing everyday workers like they've been able to do for most of the 2000s?

But the Fed seems like they are hell-bent on fixing this "problem", and seem likely to raise rates to their highest levels since 2000. You'd think they'd recognize that hiring has slowed, and that we are in a mostly-balanced economy in mid-2023. But maybe that's not what they want, is it?

By comparison, you want to know what I think of this jobs market?

Friday, July 7, 2023

On tax cut vetoes, we should care about real Wisconsinites, not the "average" ones

I saw this headline in the news (and the Wisconsin GOP's framing of it), and immediately shook my head. The framing of “average” tax cut is wildly misleading. Let’s use notes from that same analysis from the Legislative Fiscal Bureau to get a better idea of how these dueling tax plans would have worked for everyday Wisconsinites, and to see just how much (or how little) Evers' vetoes reduced that tax cut.

Let's start with another way LFB says the WisGOP tax plan broke down.
--Filers with Wisconsin AGI under $100,000 would represent 72.9% of all filers with a tax decrease, and would receive 19.7% of the estimated decrease. Their estimated average tax decrease would be $155 in tax year 2023.

--Filers with Wisconsin AGI of $100,000 or more would represent 27.1% of all filers with a tax decrease, and would receive 80.3% of the estimated decrease. Their estimated average tax decrease would be $1,698 in tax year 2023.

That’s not much for the 73% of Wisconsin tax filers that don’t make 6 figures. And certainly not worth imploding the state’s budget to the point that there would be a multi-billion dollar structural deficit in 2 years.

Under the tax cut that Evers allowed to become law, those sub-$100K filers still get some relief, but the richer Wisconsinites don’t get the windfall that they WisGOP would have given them.
--Filers with Wisconsin AGI under $100,000 represent 72.8% of all filers with a tax decrease, and receive 61.7% of the estimated decrease. Their estimated average tax decrease is $31 in tax year 2023.

--Filers with Wisconsin AGI of $100,000 or more represent 27.2% of all filers with a tax decrease, and receive 38.3% of the estimated decrease. Their estimated average tax decrease is $51 in tax year 2023.
And even that extra context doesn’t tell it all. More than 2/5 of tax filers in Wisconsin have incomes of $50,000 or below, and for them, Evers’ vetoes don’t change much at all. Most taxpayers making under $20,000 won’t see any decrease in their income taxes (because they have zero state tax liability), and only once the $40,000 to $50,000 level hits does the difference between the two tax cuts start to meaningfully grow.

I also want to clear up some confusing reporting that even I don’t always drill down and explain well enough. We need to separate what we usually associate as “income” (how much you make in wages, investments and other types of money-making) with taxable income. Because in Wisconsin, those can be quite different numbers for a lot of people.

So if you’re single and make $12,760 or married and make a combined $23,620, your taxable income is ZERO. If you’re above that level, also subtract $700 for each individual or dependent exemption, and another $250 if you’re over 65 years of age. Only if you have any income remaining after that do you even start paying Wisconsin income taxes.

This means that single Wisconsinites making $38,000 and married couples making $55,000 won’t be affected at all by Governor Evers’ vetoes of the highest tax brackets – they weren’t in those tax brackets. The handful of dollars back are better than nothing, but you know what is likely more important, especially at this lower income levels? Better wages, a higher quality of life, adequate social services, and more access to health care and child care.

I do think a bigger conversation is there to be had regarding Evers’ veto of the GOP’s elimination of the 3rd tax bracket, which would have reduced that tax rate from 5.3% to 4.4%. That’s quite a drop, and would have been something that could have saved hundreds to a few thousand dollars for a lot of Wisconsin families on top of the $55 or so they’re going to get with what Evers signed into law.

But also notice the wide range of taxable incomes that happen within the 5.3% tax bracket that WisGOP wanted to collapse.

And when we're talking about actual (not "taxable") income in the 4.65% (now 4.4%) tax bracket, it's really $38K for singles and $55K or so for married couples. That's a very different existence vs a single filer making $300K or a married couple that pulls down $400K. Maybe we should be have a tax structure that deals with that reality, and split up this tax bracket. The current federal tax brackets have a break point at $182,100 for single filers, and that seems like a logical place to me.

Using the same ratio that currently exists between single and married joint filers in Wisconsin, this would place the joint filer break point somewhere around $242,000 (some of this disparity is made up with the $480 married couple credit for two-earner couples). If you’re Governor Evers, why not offer a compromise where the 4.4% income tax rate now goes all the way to $182K/$242K? The LFB already estimated a slightly smaller expansion of the 4.65% bracket to have a price tag of just over $1.04 billion for this budget, so cutting the 5.3% bracket to 4.4% for incomes below $182K/$242K might total $1.4 billion, or about $700 million a year (that’s my very rough estimate, but hey, let’s try it and find out!).

And the richest Wisconsinites would also get in on that tax cut, just like they did when the 2nd-highest tax bracket was cut from 6.27% to 5.3% in the last state budget.

If WisGOPs turn that down, it pretty much wrecks their (already-weak) talking point about how “Evers/Dems didn’t want to cut taxes for middle-income everyday Wisconsinites.” Seems like a good way to go, if you ask me.

If Evers wants to hang onto the $3.5 billion that’s projected to be in the state’s bank account for this budget, and see what things look like in early 2024 with new revenue estimates, I think that can work as well. At that time, Evers could resurrect his early 2022 idea of giving a one-time $150 rebate for each individual/dependent exemption that a Wisconsinite claims. That was estimated to cost $816.2 million at the time, and would likely be a similar amount today.

And with new maps possibly in place in early 2024, maybe there would be enough WisGOPs willing to stop playing games, and take the smaller tax cut package that gives benefits to all Wisconsinites. In the process, they might look like someone other than clueless puppets of oligarchs, whose only answer on fiscal policy is to go back to the same failed trickle-down BS that hasn’t delivered for decades, and stop funding services and public goods that Wisconsinites want and depend upon.

Wednesday, July 5, 2023

Ope-lander strikes! Evers uses his pen to get more funds into the classroom

While Governor Evers' tax vetoes involve a lot of dollars in this budget, another veto was even more remarkable, and much more creative.

That's for the revenue limits for public K-12 schools (changes in state aid + property taxes per student), and the WisGOP Legislature had agreed to raise the revenue limits by those amounts for the two years in the budget. But it was only for those two years and did not have any promises of higher revenue limits for future years. So the former State School Superintendent decided to take care of that uncertainty.

Is it a BS maneuver? Yeah, probably. Is it hilarious and (currently) legal? ABSOLUTELY.

Naturally, WisGOP's Number 2 in the Assembly was not happy at being outfoxed.

1. The deal was for expanding voucher payments, slightly more state aid to public K-12s, and increased revenue limits of $325 in each year. That didn't change Tyler.

2. If you raise state aids $325 per student each year (an amount that will be less than 3% of the revenue limits for all schools in 2025, and a whole lot less than we're increasing voucher payments in this budget), property taxes wouldn't have to go up at all.

3. These limits can always be changed, Tyler. You know, like collective bargaining rights for public workers. Or voting laws. Or change the powers of the Governor. All of these were things Tyler August and the rest of the gerrymandered WisGOPs were glad to vote to change in the past.

Before the next election, if WisGOPs don't like what Evers did, they can try to override the added future funding for schools. Or try their chances with the soon-to-be liberal majority in the Supreme Court and claim that Evers went too far with his veto power. See how far that gets you guys.

Or WisGOPs can try to argue against the higher limits to win at the ballot box. But good luck trying to sell the majority of Wisconsinites on that one, or on pretty much anything else WisGOP is supporting these days. And new maps are coming.