Wednesday, August 30, 2023

In addition to a questionable plan, WisGOP tax cut could make Wis have to pay back millions to DC

After Governor Evers asked for the GOP-run State Legislature for a second chance to fund priorities like child care and education, the GOP has responded with (what else?) another tax cut package taht includes stuff that's already been vetoed.

The new proposal again seeks to reduce the second-highest rate from 5.3% to 4.4%, lowering taxes for individuals earning [taable incomes] between $27,630 and $304,170 and for married couples earning between $36,840 and $405,550 per year.

It would also remove taxes on retirement income of up to $100,000 per year for individuals and $150,000 per year for joint filers.

“We know there is no way that we can compete with the winter weather in the southern states where a lot of people choose to go for a few months in the wintertime," Vos said. "But I would say our goal is to keep people in Wisconsin six months and a day, or hopefully longer, so that we have them contributing to our economy, making sure they stay near their kids, and most importantly, have them as part of our society, as part of our state," Vos said
Yeah, I don't think that "tax-free income" is really a reason the overwhelming majority of older Wisconsinites might not want to stay here. Especially when Social Security and $5,000 in additional IRA/401k-type income is already exempted from state income taxes. But it would be a heck of a write-off for rich Boomers like Diane Hendricks and the Uihleins!

The Evers Administration says that there could be an additional snag with that tax cut plan. If it is too big, the state could risk being slapped with a big bill from Uncle Sam, as part of the deal with the state getting billions in assistance from the Feds in 2020 and 2021.
[Monday], state Budget Director Brian Pahnke wrote a new memo for the guv and DOA Secretary Kathy Blumenfeld projecting the state could reduce taxes in 2023-24 by $113 million and by $319 million in 2024-25 before having to possibly pay back federal COVID-19 dollars.

Under the American Rescue Plan Act, states may not use the funds to directly or indirectly offset a reduction in net tax revenue. States that violate the requirement must repay money that was earmarked for state and local governments in an amount equal to the reduction in net tax revenue.

Pahnke wrote in the memo the administration believes the U.S. Treasury’s rules don’t allow the state to include its current $4 billion surplus in calculating how much it can cut taxes before triggering the recoupment provisions.
What the Treasury does is compare a state’s tax revenue at the end of a state’s 2019 Fiscal Year, and then adjust that total for inflation between June 30, 2019 (in Wisconsin’s case) and the end of the fiscal year in question. Then, as the Legislative Fiscal Bureau described in June, Treasury looks at the actual tax revenues raised in that fiscal year, take into account changes in tax laws, and see if a state has less or more tax revenue as a result.
First, each reporting year, the state identifies all covered changes assessed to have had or predicted to have the effect of reducing tax revenue relative to current law and estimates their aggregate impact. Covered change means a change in law, regulation, or administrative interpretation. A change in law includes any final legislative or regulatory action, a new or changed administrative interpretation, and the phase-in or taking effect of any statute or rule if the phase-in or taking effect was not prescribed prior to the start of the covered period. States may not use dynamic scoring to incorporate the macroeconomic impact of the changes (e.g., a tax cut could result in additional economic activity which would increase revenue collections to partially offset the revenue loss)….

ARPA sets out that the amount subject to recoupment is the lesser of the amount of the applicable reduction to net tax revenues attributable to the violation and the amount of funds received under the SFRF (or transferred under the local fiscal recovery fund). The Treasury final rule further clarifies a revenue reduction cap such that, if found in violation of the offset provision, the amount used in violation is equal to the lesser of: (a) the difference between the baseline and actual revenue as of the end of the reporting year; and (b) the aggregate amount of reductions in tax revenues caused by covered changes, minus the sum of (i) reductions in spending compared to the inflation-adjusted 2018-19 baseline (net of SFRF funds); and (ii) increases in revenue from other covered changes in law. As a result, net revenue growth since 2018-19 effectively offsets the cost of the revenue reduction.
Between Fiscal Years 2019 and 2022, Wisconsin had a sizable increase in state tax revenues, which allowed state lawmakers to make cumulative tax cuts of well over $1 billion a year since then without having to pay back any of the COVID aids. But as was confirmed today, Wisconsin's revenue growth leveled off in 2023.
Preliminary information regarding general fund tax collections for the 2022-23 fiscal year is now available. According to the Department of Revenue (DOR), collections totaled $20,974.0 million in 2022-23, which was 2.1% higher than the previous year.

This office's final estimate of 2022-23 tax collections (projected on May 15) was $20,988.1 million. Actual collections were $14.1 million, or [less than] 0.1%, below the estimated amount.
The 2.1% growth in tax revenues is barely half of the 3.8% increase in the GDP price deflator from June 2022 to June 2023, and it was the second straight year that inflation outpaced the increase in Wisconsin revenues.

And the Evers Administration's concern is that inflation is catching up to the increases in revenue that we had between 2019 and 2023. Which adds up when you see how tax revenue has flattened out in the last year. The 2% gap is around $420 million

Which made it especially odd to me when I read reports earlier today that said Governor Evers indicated support for what seemed to me to be a still-regressive GOP tax cut package. But those comments were later clarified by WAOW in Wausau (possibly after the Evers folks got wind of how they reported it), and they added a clip where Evers explains the issue with the ARPA funds.

So we'll see if this goes anywhere. Maybe in reducing the upper income limits of that 4.4% tax bracket (maybe make it $150K/single and $200K/joint filers instead of $304K and $405K), and/or in putting off the tax cut until 2024, in order to lessen the price tag for this Fiscal Year and lower the risk of having to pay any of it back.

But the lower revenues from FY 2023 should give us a warning that permanent, long-term tax cuts can use up our $4 billion cushon a lot faster than investing some of those funds in services and programs that actually help people. There still is room for both, but I bet the WisGOPs won't care nearly as much about improving the quality of life and economic competitiveness of our state as they will in paying back their donors with regressive tax cuts.

Monday, August 28, 2023

WisGOP Sen Stroebel has a child care solution - mega-marts for kids!

As September looms, remember that Governor Evers has called a special session of the Legislature for next month on a number of priorities that did not get funded in the regular budget. Central to that is Evers’ request to pay for the Child Care Counts program, which was a federally-funded COVID relief program that was intended to keep child care centers open, and Evers wanted to continue that after the funds from DC ran out.

I don’t think our gerrymandered GOP Legislature will do much about it, but I think it’s worth reviewing the issue here, as Wisconsin child-care centers are already saying they will close due to the funds drying up in the coming months. So let’s go back to the Legislative Fiscal Bureau’s “comparative summary” on the budget, which goes over how the budget got changed from when Governor Evers introduced it, all the way to the final product.

Governor Evers wanted to use $38 million from the FEDs and $303.1 million from the state.
Authorize DCF to establish a program to make monthly payments and monthly per-child payments to certified child care providers, licensed child care centers, and child care programs established or contracted for by a school board. Authorize DCF to promulgate rules to implement the program, including establishing eligibility requirements and payment amounts and setting requirements for how recipients may use the payments. Specify that DCF may promulgate the rules as emergency rules without providing a finding of an emergency.

Repeal an obsolete provision that prohibits DCF from increasing the maximum payment rates for child care providers before June 30, 2013.

The Child Care Counts stabilization payments program provides monthly payments to child care providers to support the costs of maintaining high quality care and to support workforce recruitment and retention. The payment period runs in two, nine-month blocks from August, 2022, through April, 2023, followed by a subsequent nine-month payment program from May, 2023, through January, 2024. Payments for provider costs are determined based on a per child amount by age (for example each full-time infant would increase the payment by $175) plus an additional amount for each child who: (a) receives Wisconsin Shares; (b) attends during non-standard hours; or (c) participates in a Birth-to-3 child care pilot program. Payments for staff recruitment and retention are determined based on an amount per employee ($150 for each full-time and $75 per part-time worker) plus a quality incentive amount for YoungStar participating providers (for example, $350 per full-time worker for 5-Star providers). The program is currently funded from one-time supplemental and emergency CCDBG funds the state received under the federal American Rescue Plan Act (ARPA).
In response to the criticism about the GOP’s refusal to go along with Evers’ plans for continuing Child Care Counts, State Sen. Duey Stroebel (R-Cedarburg) penned a letter to the editor to a WOW County group of newspapers, and claimed that WisGOPs are allowing more Wisconsinites to get assistance for child care services.

Republicans are not "defunding" Child Care Counts—– the program is simply expiring as the federal money is exhausted, as intended. At the state level, Wisconsin is investing more in child care than before COVID. In the new budget, Republicans increased the income eligibility for the Wisconsin Shares program to 200% of the federal poverty level and lengthened the phase-out of the benefit at a cost of $22 million.
This is pathetic spin. Let me show where it comes from, based on the LFB analysis of the state’s child care programs, and in particular, the Wisconsin Shares subisidy program.
Initial eligibility for Wisconsin Shares is limited to families with gross income of no more than 185% of the federal poverty level (FPL), which is $45,991 for a family of three in 2023. The copayments of participating families whose incomes increase above the 200% FPL threshold ($49,720 for a family of three) increase by $1.00 for every $3.00 by which the family's gross income exceeds 200% of the FPL. These families retain eligibility until either the copayment reduces the subsidy to $0 or their income increases to the exit threshold of 85% of state median income.
So Sen. Stroebel is talking about expanding the funding of Wisconsin Shares to a handful of families with incomes between that 185% and 200% threshold, and the “lengthening of the phase-out of the benefit” is changing that $1 in $3 co-pay to $1 in $5.

I won’t deny that these are good things, but it is a drop in the bucket compared to WisGOP’s refusal to fund Child Care Counts, and the drying up of the availability of child care services (and jobs) for a lot more Wisconsinites. Increased subsidies for a handful of families means nothing if they can’t be used anywhere because THE CHILD CARE CENTERS CLOSE. Or they jack up prices in order to stay in business.

From there, Stroebel starts to get ridiculous with his next paragraph.
By contrast, the requested state-funded backfill of Child Care Counts is a cash handout to businesses. It’s not targeted at those with low or moderate income and does not require increased wages for staff or increased available slots for families. Child Care Counts was not designed to be a perpetual stream of state funds but rather a one-time gift of federal funds to keep the industry afloat during the lockdown. Family situations vary, but is it right to ask everyone, including those who make financial trade-offs to be a one-income household, to subsidize the child care costs of middle- and upper-income families?
The “financial trade-offs to be a one-income household?” How many families with young kids even have the luxury to have that be an option in 2023? And nice attempt at playing the resentment game, as if middle and upper-income families don’t deserve affordable and accessible child care as well?

But hey, unlike most WisGOPs, at least Sen. Stroebel does have a larger-scale plan to solve the child care crisis.
As a state, we should look to reducing cost by tackling burdensome government overregulation. Wisconsin overly regulates the number of children allowed in a day care, square footage of the facility, licensing compliance and even limitations on disciplinary action. The unintended consequences of heavy government involvement are often higher costs, or even driving child care providers out of the market, without significantly improving quality. Parents want available slots more than they want attempted regulated perfection.
Yeah! Why don’t we shove these little kids into mega-mart centers, with huge classrooms, unqualified teachers and care givers? And have these unqualified staffers be able to strongly discipline those 3-year-olds if they get out of line! That won't go wrong at all!

(Side note – didn’t Stroebel complain earlier in the same piece about an alleged lack of wage requirements for Child Care Counts? But every other part should be DE-regulated? Also, this same guy has opposed every attempt to raise a minimum wage in this state for the last 12 years).

This is why he’s “No Cluey Duey”. According to his bio, Sen. Stroebel has 8 kids with his wife (an “involved parent” who serves on the Cedarburg School Board), and given how these two roll, I don’t think I’m going out on a limb to say that they didn't have to worry much about paying for child care. Or in having to run a business that relies on lower-income workers supplying services that working people need.

This is what happens when a small-town, small-time businessman gets lucky on some real estate holdings, and he thinks that makes him an expert in everything else in the world. We should be hammering these GOPs who have few solutions (or desire) to deal with real problems that Real Wisconsinites have. And the few absurd and outdated solutions they have illustrate further just how insulated from reality these GOPs are.

Saturday, August 26, 2023

Yet again, why does Jerome Powell continue to keep rates jacked up in a time of lower inflation?

So with inflation dropping back to an annual rate around 3% for most of 2023, many in the financial world were looking at Federal Reserve Chair Jerome Powell's Friday speech among other oligarchs at Jackson Hole, Wyoming to get an idea about what the Fed might do in the rest of 2023.

Powell noted that the economy has been growing faster than expected and that consumers have kept spending briskly — trends that could keep inflation pressures high. He reiterated the Fed’s determination to keep its benchmark rate elevated until inflation is reduced to its 2% target.

“We are attentive to signs that the economy may not be cooling as expected,” Powell said. “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”....

Powell acknowledged the decline in inflation, which he called “very good news.” Consumer prices, excluding the volatile food and energy categories, have begun to ease.

“But two months of good data,” he added, “are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal.”
And Powell went further in this speech, reiterating which side he was on. And it's not the one of everyday Americans.

For the 1000th time, I ask this question. What is so magical about 2% inflation? If we have wages growing by 5-6% (as they have been), and prices are only going up 3-4%, and we continue at full employment, why is this something that needs to be changed?

And easy for 70-year-old Jerome Powell to talk about imposing "below-trend economic growth and softening in labor market conditions." I don't think Jerry's going to have to worry about getting/keeping a job or in getting enough income to pay his bills. Prick.

I know President Biden isn't into rocking the boat or laying down any heavy influence on what is supposed to be an "outside agency". But it won't help Biden to stay in office if we fall into recession because Jerome Powell and other central bankers keep rates at this high level, and causes people not to buy houses or cars, or not be able to afford their higher costs of other debt.

Remember, Donald Trump threw a fit when the Fed Funds rate was at 2.25% in 2018 - below the rate of inflation at the time. So why shouldn't we ask why the Fed is choosing to have rates more than 2% above the increase in prices? These people think they are immune to the consequences of the extra costs they are putting onto many of us, and they need to be brought back to earth.

Friday, August 25, 2023

Updated benchmarks show slightly fewer jobs in US, more in Wis. And both growing strong.

On Wednesday, the Bureau of Labor Statistics released its "gold standard" jobs report - the Quarterly Census of Employment and Wages (QCEW). Which is always a good time to take a step back, see if anything has changed, and compare across states.

But the QCEW update that came this week also allowed for the BLS to review the monthly jobs reports up through March 2023. And that review indicates that job growth would be revised down early next year.
Each year, the Current Employment Statistics (CES) survey employment estimates are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from state unemployment insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus one-tenth of one percent of total nonfarm employment. The preliminary estimate of the benchmark revision indicates a downward adjustment to March 2023 total nonfarm employment of −306,000 (−0.2 percent).

Preliminary benchmark revisions are calculated only for the month of March 2023 for the major industry sectors in table 1. The existing employment series are not updated with the release of the preliminary benchmark estimate. The data for all CES series will be updated when the final benchmark revision is issued.
Even with the downward revision, the US still had strong job growth in that March 2022 to March 2023 period – just under 3.75 million jobs, or more than 310,000 a month. But I also would hope this helps the folks at the Fed recognize that US job growth has been moderating since early 2022, which is something they have claimed they wanted to see as they hiked interest rates over the last couple of years.

I also note that nearly half of the downward revision is due to the transportation and warehousing sector (-146,200), which includes transportation industries like trucking and air travel, which suffered at the start of the pandemic. But it also includes industries that hired up when more people were ordering remotely instead of heading to stores. And as people returned toward their pre-COVID buying habits, warehousing and couriers had already seen declines in the last year, even before these downward revisions get taken into account.

Locally, Wisconsin seems poised to add more jobs than what was previously reported, as the QCEW said we nearly hit 2% job growth for that 12-month period, while the monthly jobs reports had only put us at 1.5% growth. That would translate into an upward revision of around 12,000 to 14,000 when the state figures are benchmarked next March. Nice number to see, and while we are only in the upper 30s when compared to all other US states, we are outpacing most of the Midwest.

Job growth, QCEW, Midwest. March 2022-March 2023
Ill. +2.13%
Minn +2.01%
Wis. +1.959%
Mich +1.956%
Ind. +1.78%
Ohio +1.72%
Iowa +0.93%

Not bad overall, even with the lower revisions nationwide. And it's a trend that shouldn't be ended just so we can get inflation to 2% instead of 3-4%.

Wednesday, August 23, 2023

Republicans may be a MAGA party, but it's not a MAGA Nation

On a day where high temperature records were broken in many parts of the state, the heat is definitely getting turned up in Milwaukee.

Oh wait, you're asking aboout that other event in Milwaukee tonight? Yeah, I'm not watching that. I'm going to try to avoid any Twitter mentions of the GOP debate as well, because it will likely make me dumber.

Of course, a big part of the story is who is NOT at the debate, and how his cult won't get to hear "the truth" from their Dear Leader from the stage. Which was reflected in this widely-discussed poll finding.

Remember, this is 71% of the 25% or so of American voters who would vote for Trump in a GOP primary. Or about 18% overall – which seems about right. Around 1 in 5 Americans would believe the moon was made of cheese if the right person told them that, or if “the libs” told them it wasn’t.

This math also means that we have one of our two major political parties held hostage by the 18%ers who make up a large portion of their primary voters, and who are needed to turn out to help GOPs win in many places. Since Republicans can’t win on their ideas with most voters, they have to distract and stir up the rubes with non-troversies and other loudmouth crazy BS.

The problem for Republicans is that in states that are anywhere near close, MAGAts drive another group of moderate and/or low-info/interest voters toward Democrats. Which is why Dems overperformed and won in almost every contested statewide race in swing states across America in 2022, including Wisconsin.

But that still doesn’t make it pleasant when we see GOP idiocy continue because they care more about GOP voters than the mainstream of America. It causes much of the inertia and dysfunction that lingers over this state and country, and “inspires” morons and lowlifes into thinking they can bully and annoy everyone else.

Which is why I say “screw em”. They don’t decide November elections, and they aren’t worth wasting your time to talk to or listen to. Which helps explain why they’re Trump Trash, doesn’t it? Because they are SOFT and don’t have the guts to deal with the world as it exists, and certainly won’t listen to anyone outside “the circle” who would tell them about the outside world.

So all we can do is mock them and show bystanders that MAGAts are clowns that should be ignored and avoided by all measures. And crush them in elections to the point that Republicans don’t dare play footsie with these lowlifes ever again, because it hurts them more than it helps.

Monday, August 21, 2023

Home-building showing good signs in July. But we are not getting more sales

An interesting and positive sign in the economy came from a report last week that said even with mortgage rates being at their highest levels since the late 2000s, home-building activity picked up in July.
Housing Starts
Privately‐owned housing starts in July were at a seasonally adjusted annual rate of 1,452,000. This is 3.9 percent (±16.0 percent)* above the revised June estimate of 1,398,000 and is 5.9 percent (±16.1 percent)* above the July 2022 rate of 1,371,000. Single‐family housing starts in July were at a rate of 983,000; this is 6.7 percent (±13.0 percent)* above the revised June figure of 921,000. The July rate for units in buildings with five units or more was 460,000.

Housing Completions
Privately‐owned housing completions in July were at a seasonally adjusted annual rate of 1,321,000. This is 11.8 percent (±7.8 percent) below the revised June estimate of 1,498,000 and is 5.4 percent (±11.1 percent)* below the July 2022 rate of 1,396,000. Single‐family housing completions in July were at a rate of 1,018,000; this is 1.3 percent (±11.6 percent)* above the revised June rate of 1,005,000. The July rate for units in buildings with five units or more was 297,000.
That’s the second-highest amount of housing starts in the last 10 months. I also note the increase in single-family starts and completions, which would be a nice reversal from what we’d seen for the last couple of years, where single-family homes have been hard to find (driving up the prices of the few that become available), and high-density housing has been the more common form of homes being built.

Last month also had the 3rd-highest rate of permits since last October, indicating that the declines from the post-COVID boom from mid-2020 to early 2022 are bottoming out. The shift to single-family homes and away from multi-family is also apparent on the permit side of the housing market.

If the good numbers for home-building holds in the next 2 months, we may well see the "residential fixed investment" increase the country's GDP in the 3rd quarter. That's something that hasn't happened since the first quarter of 2021, and would be a notable turnaround from the last half of 2022, when the decline in home-building (shown in light blue in the chart) was taking off more than 1% of our quarterly GDP totals.

But while home-building seems to have bottomed out and started to cover, home sales keep falling. The most recent update from the National Association of Realtors said June 2023 had double-digit drops in total home sales from June 2022. And June 2022 was down double digits from June 2021.

Wisconsin also reflects this decline, as the Wisconsin Realtors Association recently updated its sales data for July, and you can see that 2023's sales activity is significantly below each of the 5 previous years.

This is likely where you're seeing the effect of higher interest rates, more than on the home-building side. Because higher interest rates make it a lot harder to want to buy and move into a new home...or in wanting to leave a home when someone is locked into a 2.5% or 3% home loan. And that seems to be a situation that won't change very much in the near future, given how the Fed seems locked into "higher for longer" as its interest rate strategy.

In Wisconsin, we haven't seen the lack of sales stop prices from rising, as the WRA says the median sales price of a home was up 7.5% year-over-year in July. But we have seen declines in several other parts of the country, and after big-time increases in prices for the last few years, it is clear that the home-buying market has cooled. The question is whether it becomes a moderation that might allow more people to have a chance to buy a house, or if it speeds into a crash that causes other economic disruptions.

Saturday, August 19, 2023

Wisconsin gains jobs, and a bit of unemployment in July. Still in a great place

We found out this week that July was another month with job growth in Wisconsin.
Place of Residence Data: Wisconsin's unemployment rate edged up to 2.6% in July after hitting a record low of 2.4% in April and May. The number of unemployed people increased 4,300 over the month and decreased 12,500 over the year to 81,000. The labor force gained 11,200 workers over the month for a total labor force of 3,124,700. The number of Wisconsinites employed increased 6,800 in July for a total of 3,043,600 employed.

• Place of Work Data: Total nonfarm jobs increased 4,700 in July to a new high of 3,007,200, an annual increase of 39,500. Private sector jobs increased by 6,400 over the month and 34,700 over the year. Healthcare and social assistance jobs grew 7,500 over the month and 12,500 over the year.
Even the increase in unemployment to 2.6% was for the "good reason" - more Wisconsinites entering the work force, and 6,800 of them finding jobs. It continues a positive trend we've seen in both stats for all of 2023.

Although I view this as a good jobs report, there are a couple of cautionary items in there. June's job growth was revised down from over 6,000 to 2,500, so it mutes the growth totals for July. Still an all-time high that we should appreciate, but a definite slowdown in growth in the last 12 months compared to what we got from July 2021 to July 2022.

We also saw a seasonally-adjusted loss of 800 jobs in manufacturing. While that reflects lower-than-normal hiring in July, it's still part of a concerning trend where there are fewer Wisconsin manufacturing jobs now than there was a year ago, reversing a big runup in jobs in 2021 and the first half of 2022.

The question is whether this reflects more layoffs in manufacturing businesses, or if workers are leaving and aren't able to be replaced. Looking at the state-level JOLTS data for Wisconsin, it says that at least as of June, layoffs and job openings were both lower, and Wisconsin WARN notices indicate a few more mass layoffs than 2022, but still a lower level than we saw in the 2010s.

So i think Governor Evers is on the right track when he talked about expanding the entrants into Wisconsin's workforce pool for manufacturing and related blue-collar industries.

With interest rates staying high and our work force still near its limits, it's going to be a challenge to keep our unemployment rate under 3% and to keep adding jobs for the rest of 2023 and 2024. But job growth and 2.6% unemployment is a great spot to be in if you're looking at the Wisconsin jobs market, and we need to try to keep it up.

Thursday, August 17, 2023

Fed still chasing long-gone inflation. STOP IT! Let the good times roll!

Last week, we saw that inflation continued at the moderate pace that has been the case for pretty much all of 2023. And this week, even with inflation slowing and wage growth being good-but-not-insane, we've seen that the real economy keeps rolling along. In fact, recent reports indicate things took a step up in July.
GDP gains have averaged above 2% in the first half of 2023, with the economy on pace to rise another 5.8% in the third quarter, according to updated projections from the Atlanta Fed.

At the same time, employment growth has slowed some but still remains robust. The unemployment rate was at 3.5% in July, hovering around its lowest level since the late 1960s. Job openings have come in some from record levels but still far outnumber the pool of available workers.
That Atlanta Fed estimate is their GDP Now tracker, and has been based on the economic data from July. That projected growth rate was at 4% for Q3 until this week, and then took a significant jump up with the reports of this week.

Obviously there is a lot of data that needs to come in for the next 2 months and things are extremely likely not to stay at this torrid pace. But let's talk about the retail sales number, as that had a sizable jump in July.

Retail sales, which are adjusted for seasonality but not inflation, rose 0.7% in July from the prior month, the Commerce Department reported Tuesday. That was a faster pace than the previous month’s upwardly revised 0.3% gain and above economists’ expectations of a 0.4% rise, according to Refinitiv.

Spending rose on nondurable items, such as clothing and sporting goods. Sales at restaurants and bars rose a robust 1.4% in July from June.

Meanwhile, sales of durable goods — defined as products meant to last at least three years — slipped. Sales at furniture stores fell 1.8% in July from June and declined 1.3% at electronics and appliance stores during the same period.

Gas prices recently climbed to their highest level in nearly 10 months, which can influence the Commerce Department’s retail-sales figures. Excluding spending at gasoline stations, retail sales rose 0.8% in July from the prior month.
It’s the “excluding gasoline stations” stat that gives a best indication of what things look like for the consumer, given that gas prices had dropped significantly between July 2022 and July 2023. 0.8% is well above the core increase in inflation of 0.2% for July, and non-gas sales are up a solid 5% over the last 12 months measured. Well above the rate of inflation if you remove the changes in the costs of shelter and gasoline.

And the jump in spending at bars and restaurants continues, up 12.5% in 12 months, and nearly 33% higher than the pre-COVID peak, which is well past the 18% increase in CPI in the same time period.

So people are spending, still getting jobs, but inflation is consistently staying below a 4% annual rate. Seems like a good spot to be in to me, but the Fed still is chasing the inflation ghost, and is concerned by all this good news.
“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” the meeting summary stated.

That latest increase brought the Fed’s key borrowing level, known as the federal funds rate, to a range targeted between 5.25%-5%, the highest level in more than 22 years.

The quarter percentage point move takes the federal funds rate to a target range of 5.25%-5.5%.

While some members have said since the meeting that they think the further rate hikes could be unnecessary, the minutes suggested caution. Officials noted pressure from a number of variables and stressed that future decisions will be based on incoming data.

“In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” the document said.
For what seems to be the 1000th time, I gotta ask “WHAT IS SO MAGIC ABOUT 2% INFLATION?” Is it just because our economy was so slanted in favor of cheap money and limited labor power for the last 20-30 years that these Central Bankers thought that was some kind of “desired new normal” instead of something that wasn’t good for the overwhelming majority of Americans with actual jobs?

This is dumb, and while gas prices have had a recent increase, oil prices recently went back below $80 a barrel for the first time in 2 weeks, and $80/barrel is no different than it was in April. So between that and Summer driving season ending, I would expect gas prices to recede closer to $3 than $4 soon, and there is little food inflation or other factors that would cause it to flare back up.

And the tough talk from some Fed Board members along with the strong economy is not what Wall Streeters want to hear, and so stocks have gone down this week even as things have brightened in the real world. I think it's well past time for the Fed to adjust to the reality that we're living in, and as long as inflation isn't running above 4%, why would we consider raising rates above 5.5%?

Tuesday, August 15, 2023

Inflation continues to be moderate, and real wages rise. And dont panic about gas prices.

On a day when the President visits our state to talk up the Inflation Reduction Act and efforts to be more environmentally sustainable, it seems to be a good time to check in on both those fronts, doesn't it?

We saw last week that inflation stayed on a lower track in July 2023, and is significantly below the peaks of June 2022.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported [Thursday]. Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment.
That makes for 4 out of the last 5 months where CPI has increased by 0.2% or less.

But somehow, far too many media members decided to use that 12-month figure to imply that inflation had gone up .

That’s because of the 0.0% figure in July 2022, which reflected gas prices falling back to earth after peaking the month before. So even if inflation speeds up to a 0.3% rate for each of the next 3 months, will the AP and others give us headlines that 12-month inflation is falling?

And as usual, the lagging indicator of shelter was the reason for most of the (small) increase in prices.
The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.2 percent in July after increasing 0.1 percent the previous month. The index for food at home increased 0.3 percent over the month while the index for food away from home rose 0.2 percent in July. The energy index rose 0.1 percent in July as the major energy component indexes were mixed.
The “Core rate” (something that inflation hawks have been trying to hang onto as a reason to keep raising rates) also continued to fall.

The index for all items less food and energy rose 0.2 percent in July, as it did in June. Indexes which increased in June include shelter, motor vehicle insurance, education, and recreation. The indexes for airline fares, used cars and trucks, medical care, and communication were among those that decreased over the month. Over the last 3 months, the “core” CPI has increased by a total of 0.8%, or an annual rate of around 3.3%-3.4%. And when we have wage growth that is consistently between 4% and 5%, what’s wrong with that?

The low CPI number also means that July was another month of real wage growth, which has consistently been happening since inflation peaked in June 2022. And another consistent trend is that non-supervisory line workers have been seeing faster growth that workers overall.

That’s a pretty good situation as well, and the last 12 months have retraced about half of the inflation-adjusted losses suffered in the year before. There’s still plenty of work left to be done to get back to where we were in 2021, but it’s also still above pre-COVID (and Trump-era) levels.

1982-84 dollars

I think the “base” inflation isn’t going to cause many problems in the near future, but I certainly noticed a runup in oil prices in July and early August….because inflation isn’t hampering the economy and the stock market has increased for most of 2023. And that’s starting to reflect in higher gas prices.

This adds up, as it looks like gasoline supplies were tight at the start of this Summer, with the lowest supply levels in 8 years. But there hasn’t been any depletion of supply in June or July, and now we’re in a more typical level of gasoline availability. Also note how supply jumped last year as people backed off driving in the face of $4 and $5 gas, (and how the pre-vaccine, low-travel Summer of 2020 had so much gas around that it barely even shows up on this chart).

And while gasoline consumption is up compared to last year, it is still behind most other non-COVID Summers in our recent history (note, we only have one week of gas consumption data for August 2023). .

In addition, the Energy Information Administration, the US has pumped out at least 12 million barrels in every week of 2023, and had a new post-COVID high of 12.6 million barrels in the first week of August. So we are keeping up on the supply side as well.

So I don’t see why gasoline prices would get higher than whatever moderate increase we may see over the next few weeks. And that should quickly subside as the Summer driving season ends and demand falls further. I don’t see it spiraling like gas prices did in early 2022 – there isn’t a new overseas conflict that might pop up or some other supply disruption like we saw at that time. And I also will note that while supplies are slightly tighter than they were last year, it’s not much different than what we’ve seen in times with lower gas prices and more supplies. Especially pre-COVID.

Just play smart and don’t panic because Wall Streeters are throwing money around and/or Saudis and Russians make an effort to manipulate prices and the US economy. Even if there is a slight uptick in inflation for August as a result of what's happened in the last month to gas prices, don’t be fooled into thinking that CPI levels are going back above 5% any time soon.

Bottom line - if I were a US economic policymaker, I’d care a lot more about keeping US unemployment at or below 4% than in getting inflation below 3%. And I am suspicious of Central Bankers who do not feel the same (do you hear me, Kashkari???).

Monday, August 14, 2023

Brewers stadium talk? Cmon! We got plenty of time. Let's worry more about the NL Central

After a rough two weeks, the Brewers righted the ship over the weekend, sweeping a dreadful White Sox team in Chicago, and extending their NL Central lead to 3 ½ games over the Reds and Cubs.

Yet right before that White Sox series, as we start to feel a little better about the Crew’s prospects in 2023, we get this eye-rolling story thrown into the mix.

The Milwaukee Brewers could start looking for a new home this fall if state and local officials fail to reach agreement by then on a taxpayer-funded package to fund improvements to American Family Field required in the team’s lease with the state, sources say — a process that might lead them to the boomtowns of Charlotte, North Carolina or Nashville, Tennessee.

Months after Wisconsin Gov. Tony Evers proposed spending $290 million in taxpayer dollars to help ensure the Brewers stay in Wisconsin, and after the Major League Baseball commissioner Rob Manfred urged lawmakers to act quickly, a deal has not yet materialized.

That has pushed Brewers officials to a point of contemplating whether communities with fast-growing populations, and no Major League Baseball teams, might be options if state and local officials don't produce enough funding for stadium renovations, sources with knowledge of the dynamic told the Milwaukee Journal Sentinel.
OH PLEASE! This again?

Look, the Brewers’ lease for Miller Park AmFam Field isn’t up for 7 more years, so why are team officials leaking this out now? Sure, Governor Evers’ idea of a $290 million state subsidy for fixups over the next 20 years was shot down by WisGOPs in budget talks before the first pitch of the Brewers’ season. But there’s a lot of time to work out a good deal that keep the Crew in town for another generation, maintains and improves the ballpark, and doesn’t rip off taxpayers.

That said, it does seem that Assembly Speaker Robbin’ Vos wants to get a Brewers stadium bill figured out sooner than later (well, if he doesn’t get sidetracked by threatening Supreme Court justices to try to keep his gerrymandered maps). On that front, WisPolitics had some good details on what might be in such a bill.
Vos charged state Rep. Rob Brooks with working on a framework. The Saukville Republican told WisPolitics last week the package has evolved into a $698 million proposal that would cover 27 years.

It includes $463 million from the state through taxes off Milwaukee Brewers players and personnel, as well as visiting players. It calls for an additional $100 million from the team through things like higher rent than what it’s currently playing. And local governments would be on the hook for $135 million, or about $5 million a year.
Ooh, I kind of like the idea of making the team chip in more in rent as a way of having them contribute toward repairs (after all, how many tenants get to take the operating profits of the property, like the Brewers do?).

But that “local governments” part is where things might get tricky, especially after all of the conditions that Vos and the GOP Legislature put on them with the shared revenue bill earlier this year. Beck’s Journal-Sentinel article mentions why, but also includes an interesting way forward for the locals.
Milwaukee city and county officials have opposed providing local funding for the ballpark. They say the main economic benefits generated by the Brewers are state tax revenues.

Milwaukee County Executive David Crowley in June signed a resolution, passed unanimously by the County Board, opposing any county funds used for American Family Field's renovations. But in recent days, Crowley has expressed a willingness to find a way to free up local revenue that could be used for stadium renovations, according to CBS58.
Remember that Milwaukee County just got a 0.4% sales tax passed into law last month, and might some portion of that be used for the Brewers ballpark work, with the argument being that the County will get back some of that money (and then some) from sales tax generated in and around the ballpark?

Seems like the County Exec might be OK with that.

Crowley's communications director, Brandon Weathersby, told CBS 58 Crowley was pursuing the changes at the request of Democratic leadership in the state Legislature.

"We proposed technical changes to the Act 12 language to allow us to use sales tax dollars to further reduce our structural deficit," Weathersby said. "And provide more financial flexibility for Milwaukee County to provide a local contribution [to stadium repairs.]"…

Weathersby said Crowley's office was working with the GOP-controlled Legislature to let the county spend those dollars on more than one type of pension-related debt payment. Weathersby said state law currently only lets that revenue cover pension obligation bonds.

He said Crowley wanted to use sales tax money to pay off additional types of pension-related debt. That flexibility would then allow other dollars to go toward ballpark renovations, although Weathersby followed up to say funding stadium repairs was not a top priority.
But then the County Board would also have to OK this move, and the County Board said in May that they didn’t want to pay ANYTHING toward the Brewers stadium.

Here's my advice to the County (and City for that matter) - if you’re not keen on kicking back some of your new sales tax funds toward the Brewers’ stadium (and I totally get why), why not go to what I suggested when MLB Commissioner Rob Manfred was in MKE in May to give some light extortion on the stadium. SET UP THE BEER DISTRICT.

Would a standalone Brewers bill allow for some of the lots and land around AmFam Field to be developed and add tax base to the City/County (along with a higher levy limit, maybe?), in exchange for the property tax exemption for that land being dropped? And how much would need to be sent to the Brewers to either buy that land and allow it to be sold/developed, or to reimburse the team for lost parking revenues?

Related, why can’t this Beer District and the nearby area (think Bluemound Road and the related ballpark bars) be part of a special taxing district whose funds go to the ballpark? This is what Minneapolis did to help pay for the new Vikings Stadium and other downtown attractions, which includes an extra sales tax for “live entertainment” in the area, and includes additional taxes on liquor and restaurants in designated neighborhoods and sports facilities.
The extra sales tax in the Beer District could be sent to the Ballpark District that is the actual owner of AmFam Field to the ballpark, you allow for more development on the east and southeast parts of the Brewers’ property, and put that property on the tax rolls.

And thinking it over more - do we even need to reimburse the Brewers for parking revenue that may be lost? Especially as a trade-off for where the rent isn't raised as much because the Beer District is paying for the team's upkeep and repairs to the ballyard?

On the local side, the City and County should get a higher tax base, and could even lower the property tax rate for homeowners in the process. Lastly, if you never go to a Brewers game or hang out in the Beer District, you’ll never pay a dime toward the stadium upkeep and repairs (much like how they don't pay much/anything toward FiServ Forum) so that should tamp down on voter resentment.

There are a lot of ways this can go, and we can take our time to get it right. So let’s shut down the “OMIGOD! The Brewers could leave in 7 years!” talk – from both the politicians and the team. It pisses off fans and others in the state, and it’s an especially stupid strategy because the threat isn’t immediate.

Instead, work behind the scenes over the coming months on a package, and let’s have the only headlines about the Brewers being stuff that relates to their quest to get this message back up on the AmFam Field scoreboard in late September of this year.

Saturday, August 12, 2023

Napoleon Vos making up impeachment to keep gerrymandered maps? I wouldn't try that, Robbin'.

I have had suspicions that the constant whining from conservatives on the Wisconsin Supreme Court about the changes that come with being in the minority for the first time in 15 years was being created by WisGOP and their media spokespeople to try to lead to something.

And sure enough, the power-drunk Assembly Speaker went on RW radio yesterday to hint at what they might try out of a desperate attempt to stay in power at the Capitol.

Assembly Speaker Robin Vos, a Republican from Rochester, said in an interview on WSAU he does not believe impeachment should be considered lightly by lawmakers. But he said the idea could move forward if Protasiewicz does not recuse herself on cases he said she "prejudged" during her campaign for a seat on the state's highest court.

"If there's any semblance of honor on the state Supreme Court left, you cannot have a person who runs for the court prejudging a case and being open about it, and then acting on the case as if you're an impartial observer," Vos told conservative WSAU host Meg Ellefson when asked whether the Legislature could successfully defend the current boundaries with a liberal-controlled state Supreme Court.

"You cannot have a judge who said, you know, the maps are rigged because she bought into the argument that that's why we're winning elections, not the quality of our candidates, and then she sits on that trial acting like she's gonna listen and hear both sides fairly − that just can't happen."
Uhh, Robbin'. Are the circumstances of your gerrymandering somehow different today than they were in April? No, they are not. And Justice Janet was elected by DOUBLE DIGITS after telling the truth about what she thought about those maps.

Based on this screen-grab from Wisconsin Eye, I don't think "telling the truth and following through on what you said you would do" satisfies the standard for impeachment.

May I also remind you that 12 years ago, Republicans were arguing against recalls on GOPs who voted for Act 10, even though the union-busting of Act 10 was never debated during the elections that put them into power, and it likely would have been defeated if it was put tpo a statewide referendum. But now some of the same clowns are thinking Protasiewicz should be impeached/removed for....following through on what she said she would do if elected?

WisGOP legislators should take note of how their fellow Republicans in Ohio suffered a massive defeat this week. Esquire's Charlie Pierce describes it well in his "subscriber-only column for the week.
The stage was set perfectly. The legislature had a perfectly engineered Republican majority and Republicans held all the major constitutional offices. So, when the advocates of reproductive freedom proposed an amendment to the state constitution guaranteeing reproductive freedom for all Ohioans, all that was needed to pass the amendment was a majority vote this November. So the Republicans called for a special election on the proposition that the threshold for an amendment be raised to 60 percent. The current amendment process is a legacy from President Theodore Roosevelt in 1912. And the Republicans arranged for the special election to be held in August, when nobody would care. What clever dicks they were. This past week, it turned out that the ducks were not in a row, but all the chickens came home to roost. President Teddy kicked all kinds of ass from the Beyond. From the Ohio Capital Journal:

Twenty-two of Ohio’s 88 counties voted no against Issue 1. The bulk came from Cuyahoga and Franklin counties, with democratic voters focusing on how raising the threshold for a constitutional amendment to pass from a simple majority to 60% was meant to thwart the abortion rights proposal on the November ballot. But deep blue counties weren’t the only ones voting no. Twelve fall into the urban category, 6 in the partly rural and four totally rural. Fifteen of the 22 counties voted for Donald Trump in the 2020 presidential election.

The Republicans’ proposal was completely thrashed, losing 57 percent to 43, adding Ohio to the diverse roster of states in which reproductive freedom has shown overwhelming political power. It opens the door to other potential state constitutional amendments, including one that would forbid partisan gerrymandering. The odds on the pro-choice amendment in the November election have now flipped completely in its favor, and that may prove invaluable to incumbent Senator Sherrod Brown’s re-election effort. This is especially piquant because one possible Brown opponent is Ohio Secretary of State Frank LaRose, who bulldogged the proposed change in the amendment threshold and who was not thrilled by the fact that his tricksy maneuver was blown up at the polls. Again, from the Ohio Capital Journal:

By Tuesday morning, LaRose, who was the most visible face of Issue 1, might have been worried. Before noon, he ducked a meeting with reporters. That afternoon, he was attacked by an Arizona Republican who came to Ohio to campaign for Issue 1. That evening, after the blowout became apparent, he skipped a press conference and the official speaking in his place pointed blame at his fellow Republicans. At 11:23 p.m., LaRose broke his silence by issuing a statement. It was angry, misleading, and hardly a concession that voters disliked his proposal, which they defeated by a 14-point margin. Making the loss even more bitter, some counties that had voted for Donald Trump in 2020 joined the chorus in voting “no” on Issue 1.
Turns out voters don't like it when politicians do transparent power grabs instead of actual work.

Assembly Republicans should be asking themselves if they really want to have Napoleon Vos desperately running around thinking of tactics to trying to cling to power instead of doing anything that voters want. Because it should be assumed that ALL Republicans are OK with the effort to hamstring and/or remove a Justice that Wisconsinites overwhelmingly put into office, even if a few of them put up a symbolic "No" vote on impeachment to try to cover themselves.

If the WisGOP Legislature was smart instead of drunk on power, they'd shut up, let the maps go through, let the abortion ban get overturned, and take their chances in 2024. After all, even a fair map favors Republicans for control of the State Legislature - they just have to work a little harder to stay in control, and have to listen to what their constituents. Which in GOPWorld is considered a problem instead of an opportunity.

Look, I know that Republicans don't care about being hypocrites and they are incapable of shame. But fear of voter hatred (or even voter attention) and losing their jobs will at least shake some of them. So if I were the WisDems, I would be pounding the local airwaves in GOP-held districts that voted for Protasiewicz and demand that the local reps follow the wishes of their voters, and not scared, dweeby Robbin' Vos and his oligarch puppetmasters.

Besides, the power-hungry and out-of-touch GOP has lost almost every statewide race since 2016, and if they try any funny business with Justice Janet or the rest of the Wisconsin Supreme Court, and deny the people what they voted for, they're going to have an even bigger loss in 2024. Big enough that even your illegitimate gerrymander might not save you. You really want that?

Tuesday, August 8, 2023

Evers special session - a reminder of what he (and us) want and still need

When the state budget got signed last month, there was plenty of unfinished business for the rest of the 2023-25 session. And our Governor is asking that some of this business be taken care of next month.

The Special Session wouldn't start until September 20 (because God Forbid we do work at the Capitol in August), but let's break down the Governor's press release that goes over what he is asking for in the special session. The first item that Evers mentions deals with maintaining and improving access to child care.
· More than $340 million, including $38.9 million in Temporary Assistance for Need Families (TANF) funds, for the Child Care Counts Program that to date has helped more than 4,300 child care providers keep their doors open, ensuring the employment of 22,000 child care professionals and allowing providers to continue to provide high-quality care to more than 113,000 kids; and
· $22.3 million for the Partner Up! Program, which has helped support employers in purchasing child care spots for their employees at existing regulated child care providers across the state. A portion of this investment redirects the $15 million that the 2023-25 budget placed in the Joint Finance Committee supplemental appropriation for the purposes of grants to child care providers. As of March 2023, 220 businesses have enrolled in Partner Up!, securing slots for over 1,200 kids across Wisconsin.
Child Care Counts was part of Evers' 2023-25 budget plans, and would have continued a COVID-era program to help child care providers make ends meet. But it was removed by GOP legislators during budget deliberations, and while the GOPs on Joint Finance did allow the Evers Administration to use up $11 million in COVID-era funding to bolster Child Care Counts in the coming months, Child Care Counts is on track to run out of money next January.

Another Evers budget request would have set up a statewide paid family leave program in Wisconsin, similar to what was signed into law in Minnesota in May. But that was also taken out of Wisconsin's budget by Republicans, and Evers wants to bring FMLA back with this special session.
Under the paid FMLA Program, workers will be eligible for 12 weeks of leave beginning Jan. 1, 2025. This program will be self-sustaining by 2026, and benefits will be funded through payroll contributions shared equally by an employer and an employee, much like the current Unemployment Insurance system. In order to launch the program expeditiously, the governor’s plan infuses the new benefit and administration trust fund with a transfer of $243.4 million. Employers with fewer than 50 employees would be able to opt-in to the program.
It's the same proposal from Evers' budget as well, with the state paying $243.4 million in startup costs, and payroll taxes paying for the rest. Don't bet on this getting passed with the ALEC crew in charge, but Evers wants to keep the issue in public consciousness, which tells you that he thinks it's a winner.

Another central part of Evers' special session package involves adding funding to higher education, which seems especially relevant in light of this headline from last week.

As always, GOP cuts to the UW System hurt the other 4-year campuses in the rest of the state, not "those liberals in Madison."

With that in mind, Evers is asking the Legislature to give the System additional state funding of $66.4 million, which matches what he wanted to do in his budget. Evers also wants to increase aid to the Technical College System by $40 million, and Evers also wants to increase financial aid for low-income students by expanding Wisconsin Grants by more than $17 million. None of these initiative got assistance from the GOP Legislature in the current budget.

Another item Evers is asking the GOP Legislature to reconsider is having more than $197 million go to replace and update the outdated UW-Madison Engineering Building. That move was met with immediate approval from Bucky's Chancellor.

Lastly, Evers wants to invest in some intiaitves to increase the workforce and services in some high-need sectors.

We certainly have the money available to do all of these things over the next 2 years. After the GOP removed a number of Evers' spending requests, and Evers vetoed GOP tax cuts for the rich, the state is projected to have around $4 billion available throughout this 2-year budget.

You'd think that businesses would welcome state efforts to help remove barriers to joinging the work force and the funding of higher education in the state, as it'll improve the pool of workers available. But I bet the "business leaders" at WMC will tell Robbin' Vos and company to double down on regressive tax cuts instead.

And the thing is - I undertand that most of what Evers is doing is entirely pose, with little chance of succeeding. Along with some of these spending proposals, he could have also revived the lower-income tax cut package that he had in his original budget, and possibly expand the cut in tax rates to around $150,000 or $200,000 in income. That would remove the GOP argument of "this is just politics", and would have forced them to be seen as "gaveling out" for petty, personal reasons instead of having a serious counter-proposal.

Not that I count on WisGOPs to be serious with this spending-only package, but I do appreciate Evers being willing to keep pushing the issue, because he and the Dems have the advantage on the real issues. And with new maps looming, WisGOPs continuing to do nothing while billions sit in the bank should be something pounded on for the next 15 months.

Sunday, August 6, 2023

Rural Wisconsin is getting the bigger state aid boosts in this budget, no matter what GOPs tell you.

I wanted to revisit a post I made a couple of weeks back that discussed a veto Governor Evers made on road funding that made many rural Republicans cry crocodile tears. T The Legislative Fiscal Bureau recently released a rundown on that veto, and included important context to go along with it which shows that the rurals are getting a great deal as a result of the 2023-25 budget and legislative session.

First, let's talk about Evers' veto.
As passed by the Legislature, Senate Bill 70 [the 2023-25 State Budget] would have also increased the GTA program's mileage aid rate payment for municipalities by 2.0% annually, from its current level of $2,734 per mile, to $2,789 per mile for calendar year 2024, and to $2,845 per mile for 2025, and thereafter. The Governor's partial veto deletes these provisions. Consequently, the current law statutory mileage aid rate payment of $2,734 per mile for calendar year 2023, and thereafter, is retained. The veto primarily affects towns, as most cities and villages are on the share of cost component of the GTA formula and most towns are on the mileage aid component of the formula. As a result, most towns will not receive additional aid from the 2% annual increase in general transportation aid. Instead, as shown in the last row of the Attachment, because of the Governor's partial veto, an estimated $3.2 million in 2023-24 and $6.4 million in 2024-25, in additional funding would be available to be allocated to those municipalities on the share-of-cost side of the GTA formula.
So these towns don't get additional funding from the state via GTAs for the next 2 years. But those reallocations total less than 1% of all the money that will go out under GTAs for 2024, and just over 1.5% for 2025.

Governor Evers also reminded us that this change in the GTA formula isn’t nearly as one-sided as the cuts in GTAs that were signed into law in Scott Walker’s first budget. And that pro-rural change has stayed in place in the state's funding formula (and compounded) for the last 12 years.
As stated in the Governor's veto message, the 2011-13 budget reduced funding for general transportation aid by 10%, while the mileage aid rate was reduced by only 3%, which had the opposite effect of the Governor Evers current veto. That provision reduced overall funding for general transportation aid by 10% for nearly all (except very small) cities and villages while reducing funding for towns and small cities and villages on mileage aid by 3%, and continues to affect the distribution of GTA funding each year. The rationale for the 2011-13 provision was that smaller municipalities, by having a limited number, if any, full-time employees, with full employee benefits, could not partake in the employee cost reductions mandated under 2011 Act 10.
And by the way, the total of $9.6 million in reallocations in GTAs is a fraction of the added funds that are targeted to towns and other rural areas in this budget. Starting with another state aid program to help pay for road projects - the Local Roads Improvement Program (LRIP), and also including a huge boost to transportation access to farmland.
While the Governor's veto would mean that municipalities on mileage aid will continue to receive the same amount of general transportation aid over the next two years that they received in 2023, other budget provisions provided increased aid to local governments. For example, towns and counties will be the primary recipients of the newly-created agricultural roads improvement program, which is provided $150 million in one-time funding in the 2023-25 biennium under Act 19. The program will make grants of up to 90% of eligible costs to reimburse political subdivisions for agricultural road projects. Act 19 also provides one-time funding of $100,000,000 in 2023-24 for the local roads improvement program supplementary grants (LRIP-S) component, which funds county trunk highway improvements, town road improvements, and municipal street improvements. The LRIP-S program funding is distributed in the same percentages as the LRIP discretionary grants component (35.6% for counties, 39.0% for towns, and 25.4% for municipalities in the 2023-25 biennium). The LRIP program formula component and discretionary component also received a 4% annual increase in the biennium under Act 19. Table 1 indicates the total and percent increase in biennial LRIP funding in 2023-25 compared to base funding for each local government type. As shown in the table, towns will receive the largest percentage increase in total LRIP funding in biennium.

Outside of direct funding for roads, the LFB adds that towns are seeing their amounts of shared revenues go up more than 156% under the newly-signed law, allowing for more resources that can go to a variety of needs, including roads. Towns will get nearly 1/3 of the increase among Wisconsin’s cities, villages and town, despite the fact that less than 27% of Wisconsinites live in those communities.

In addition, Wisconsin counties are getting a 55% total increase in shared revenues, but Milwaukee County was given only a 16% increase as part of the shared revenue bill. This translates into many rural counties getting a lot more than a 55% increase (click here to see how your neighborhood fares under this).

Bottom line – rural Wisconsin is getting more than its share of state funds sent its way in the state budget, despite accounting for less of the state's economic activity. I don't even mind some of those funds being redirected - everyone deserves first-class infrastructure and services no matter where they live - but things are heavily slanted in favor of communities that have few taxpayers and jobs residing in them, and it lessens the need for them to have wheel taxes, sales taxes and other measures to make up the difference. I'd say that's a very good deal for those rural residents.

Governor Evers' veto’s attempt to rebalance a fraction of those extra millions is only fair (and nowhere near as much as what would be truly fair). And the best part is that the added aids of all sorts in this budget should limit the strains on property taxes and other services, allowing for all of communities to have a better chance to improve for the rest of the 2020s.