Many more battles yet to fight in Wisconsin

Quality cartoon today from the State Journal's Phil Hands (even if his "aging Madison liberal hippie" is still lame).



I also suspect the timing of the work-for-less bill was not coincidental, given that there were plenty of other stories that came out this week that would put the Walker and WisGOP economic record in a bad light.

Such as the Joint Finance Committee's budget hearings, which took place for all departments this week. Among the items revealed in those hearings was the fact that Scott Walker's corporate tax cuts are blowing a bigger hole in the state budget than originally predicted. As Mike Ivey's article notes, the projections are now out there that indicate a tax cut for manufacturers and agri-businesses will now cost state revenues around $275 million above what they predicted it would when the Koo-Koo tax cuts of 2014 sped up these corporate write-offs- or just about as much as Walker is trying to cut the UW System's budget by. Funny how that works.

The UW Board of Regents also said their piece about the cuts and changes in Walker's budget this week (not coincidentally, the Assembly was having the work-for-less debate at the same time that the Regents were meeting). In addition to asking for reductions in the huge budget cuts that Walker is asking for, some Regents also asked for other methods to give the System more independence, outside of the separate authority mechanism.

The regents unanimously passed a resolution asking the Legislature to "substantially reduce" the governor's proposed budget cut, and to grant flexibilities for the UW System to do business more efficiently and effectively "either through an agreed-upon public authority" or by amending state statute.

The resolution also asked for "a dedicated funding stream" for UW System operations, which a public authority would include.

Several regents pointed out that predictable, stable funding for the UW System could never be counted on because one legislature can't set policy for future legislatures.

"This is fairy dust. This is not something I think we can rely on," [UW Regent and UW Hospital Authority Board Chair David] Walsh said. "At the end of the day, this is about Draconian cuts" and efforts to persuade lawmakers to reduce those cuts. "Damn it. It's time we step forward and send a message to the State of Wisconsin that this is wrong and it's not who we are."

And it's not like the tax giveaways that have led to the UW System budget cuts have created huge amounts of jobs. As noted earlier this week, the Wisconsin Department of Workforce Development revealed that the state had 30,000 fewer jobs than previously reported, due to annual benchmark reporting. This story was largely buried in the state press because it came out the same day as the Board of Regents meeting and the work-for-less debate, but it needs to be brought back up again when the state-by-state reports come out later this month, because it seems possible that these revisions would cement Wisconsin's "worst in the Midwest" standing for job growth in Scott Walker's first term. And let's see if that reality squeaks over into Iowa and other places where Walker is trying to run from his failed record on the campaign trail.

So while I'm disgusted by the passage of work-for-less and find it to be another step on the state's decline in the Age of Fitzwalkerstan, there are many other fights and issues to go after. And since it's all part of the same "Robin Hood in reverse" Koch/ALEC agenda, I'd recommend the protestors in Phil Hands' picture turn around and go after the many other areas of Wisconsin that are being injured due to the demolition crew that's in power at the Capitol.

Good US jobs sends market down, deficit up?

Today featured another very good jobs report, with 295,000 jobs added in February (288,000 in the private sector), and unemployment dropping to 5.5%. It shows the Obama Jobs recovery continues to pick up, with nearly 3.3 million jobs added over the last year. It's also the lowest unemployment rate since May 2008 and a drop of 2.5% since the start of Obama's second term in January 2013.

So what happened on Wall Street in light of the good news? The Dow dropped 279 points. Why? Because the economy is going too well!

"Good news is bad news again," said Gina Martin Adams at Wells Fargo. Adams said there was a quick jump in the Fed Funds futures this morning. "The percentage chance for a June hike went from 18 percent to 25 percent," she said.

Oh dear! You mean the Wall Street cocaine party cheap money binge might have to be backed off some now that we're getting back to something resembling a normal economy? And people might get to actually receive some interest on their savings? GOD FORBID!

Related to the good news and speculation on a forthcoming interest rate rise, the yield on the 10-year Treasury note has gone up to its highest levels of the year, closing at 2.24%. Keep an eye on this, as the multi-year stock market boom has been a beneficiary of low rates and export industries have benefitted from a relatively weak dollar. Both trends have changed in recent months, and while that was nice for me and my wife when we went to Mexico last week when it was 15 pesos to the dollar, but it's not so nice if you're trying to sell products overseas.

If that trend of higher interest rates continues, it could also have a significant impact on Wisconsin's finances, because Scott Walker's budget is balanced in no small part due to tens of millions of dollars in savings due to lower interest rates on borrowing, and it would increase the debt service on the $1.3 billion in borrowing that is projected for the state's road-building binge. Re-estimating debt payments is usually a quiet line item that comes out as the budget is debated later in the Spring, but given that the 10-year has risen from 1.78% to 2.24% in the 4 weeks since the budget was presented, it may be a sizable hit in a budget that can't afford one.

So bad enough that we're lagging the Obama Jobs Recovery in Wisconsin, and that we're cutting wages with the passage of (right-to) work-for-less, but the good U.S. economy might also make the hole in our deficit-ridden budget even larger. So Scotty, tell me again how it's working in Wisconsin?

As predicted, Wisconsin job numbers revised way down

I figured the release of the monthly jobs report in Wisconsin would be a big deal today, given the benchmarking of 2014's numbers along with past years. And boy was I right. Take a look at Page 3 of the Wisconsin Department of Workforce Development's release from this afternoon, which was conveniently dumped out as the (right-to) work-for-less debate lifted off in the State Assembly.

Revisions to December 2014's total jobs numbers, Wis.
Private sector jobs -25,800
Total jobs -30,300

You're reading that correctly, the total amount of jobs in Wisconsin were knocked down by more than 30,000! I knew there were big differences, but this was quite a bit more than I was expecting. Needless to say, the Scott Walker's DWD chose not to emphasize this fact in their propaganda analysis.

The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics' (BLS) preliminary state employment and unemployment estimates for January 2015, showing Wisconsin's unemployment rate dropped to 5.0 percent, its lowest point since August 2008.

DWD today also released BLS' revised employment estimates for each month in 2014 and previous years showing Wisconsin added 139,000 private sector jobs since December 2010. BLS adjusted the monthly job estimates through an annual process called “benchmarking” to bring the sample-based series into closer alignment with actual job counts from the Quarterly Census of Employment and Wages.

The unemployment rate drop is nice, but likely reflects growth of Wisconsinites taking jobs outside of the state's borders, and working in places such as the Twin Cities and Chicago (which would be a reason why the household and workplace surveys have been out of whack for the last few years). And of course, that alleged private sector job growth of 139,000 is a whole lot less than the 250,000 Scott Walker promised in his first four years in office, and also is quite a bit less than the 160,000-170,000 that was being listed after the December 2014 report.

It also is well below the national rate of growth during the Obama jobs recovery. Remember that the US numbers were benchmarked last month, but they were revised higher, which means the Walker jobs gap is as high as ever. I've updated the chart using the DWD's info on December and January year-over-year job growth, but haven't updated every month, which will show you the effect of these downward revisions, especially in December 2014 (in red on the right side of these charts).





I'll update this a bit tomorrow, but at first glance, this makes the Walker jobs gap stand at 90,000 private sector jobs. U.S. job growth was at a rate approximately 60% higher than Wisconsin's over Scott Walker's 4 years. Combine that with the exploding budget deficit, and who is this guy to talk about his economic record? What a total failure!

Of course, part of the reason Walker was retained was his administration's abilities in hiding this bad record, and another part was the state's largest newspaper helping him along by not informing the public of the full story. And today was no exception. Check out these leading paragraphs from the Milwaukee Journal-Sentinel's John Schmid.

The economic recovery advanced into January as Wisconsin's unemployment rate declined to a preliminary 5%, down from 5.2% in December and 6% in January 2014.

Thursday's monthly estimates from the state Department of Workforce Development show the state's unemployment rate hovering at the best levels since August 2008, about a month before the financial market meltdown in that year triggered a brutal global downturn. In the worst months of the last recession, the state jobless rate peaked at 9.2% in 2009 and 2010.

The state appears to be tracking the national recovery, now in its fifth year. On Thursday, the state agency said Wisconsin gained 44,900 private-sector jobs from December 2013 to December 2014 — the highest 12-month December-to-December increase since 1999. That parallels the national trend in the same 12-month period, when U.S. employers capped the best year for job growth since the tech-boom year of 1999.

Nowhere in the article does Schmid mention the huge downward revisions, or the fact that Wisconsin's numbers still greatly lag the US's growth rate. That would seem to be the bigger story than repeating the Walker Administration's happy talk.

Here's my question- is Schmid stupid, gutless, or under orders not to the real story to J-S readers (most of whom don't have a clue about the DWD report or have any frame of reference for comparison)? Whatever the reason, articles like that from the J-S's staff Walker stenographers go a long way toward explaining why I don't give that newspaper a dime, and you shouldn't either.

Ashley Furniture's mess, updated

Hmmm, looks like Scott Walker's favorite furniture store isn't quite so "open for business."

Ashley Furniture Industries plans to return more than $250,000 in job-related tax credits to the state of Wisconsin and pull out of another program that would have given it $6 million in tax credits for an Arcadia flood-control project.

The Arcadia-based global manufacturing firm characterized the moves, announced Tuesday, as intended to "better align … aggressive growth strategies with the local job market and other economic conditions in Wisconsin."...

In 2012, Ashley received WEDC approval to earn credits on taxes paid based on its promise to expand the Whitehall employment base by 225 new positions by this year.

It has spent more than $200,000 to recruit workers but the number of new jobs stalled at 87 because of the limited number of potential employees in the area, the company said.

Huh, wonder why they didn't have the money to expand and couldn't find people to work there. It couldn't have anything to do with the story that came out last month that showed it was literally costing people an arm and a leg to work there, could it?

The U.S. Labor Department socked Ashley Furniture with one of the largest safety fines in history Monday after alleging repeated safety violations over 36 months that caused more than 1,000 worker injuries, including several ­amputated fingers.

The $1.77 million fine resulted from an Occupational Safety and Health Administration (OSHA) inspection last year of Ashley’s ­Arcadia, Wis., factory. Inspectors “identified 12 willful, 12 repeated and 14 serious safety violations.” Those are in addition to violations found during previous visits, U.S. Labor Department Assistant Secretary David Michaels told the Star Tribune on Monday.

“We rarely issue a fine that is more than $1 million,” Michaels said. “Having 1,000 work injuries in three years is proof positive that safety in this plant needs tremendous ­improvement.

May I remind you that this time last year, Ashley Furniture's founder (a significant Walker donor) held a thinly-veiled Walker campaign event to celebrate an expansion at his plant in Arcadia, with Ashley workers as a captive audience. And note what he also had as a handout.

Ashley and the DNR came under fire from environmental watchdogs for a 2005 addition there that required filling 13.5 acres of wetlands. Without that expansion, the company said later, most of the company’s 2,000 Arcadia-based jobs would have been moved out of state.

From a table of literature spread out for visitors, [Ashley Furniture founder and board chair] Ron Wanek grabbed a flyer decrying federal regulations, including environmental, workplace and health care rules, saying, “This is what’s going to kill industry in the United States.”

Actually, having an unsafe workplace and paying shit wages are what's going to kill industry in the United States, because no one will be able to buy anything, and no one will want to risk life and limb working for such crappy employers.

Flash ahead one year, and look at this quote from Gov Walker, as he glad-handled other mediocre, arrogant businessmen at today's Wisconsin Manufacturers and Commerce "Business Day" in Madison.

Walker to state businesses: "Go out and sing" about positive changes in the business climate.

— Matthew DeFour (@WSJMattD4) March 4, 2015

Yep, just like how it's worked in the case of Ashley Furniture, who can't find skilled workers, is maiming the ones they have left, and fails to come through on their promises of prosperity and expansion. Combine that with badly-lagging job growth, and an exploding budget deficit leading to disinvestment in education, and what's not to like?

Wisconsin job growth was worse than we knew before election

In addition to the subpar revenue figures from January, (which I went over here), the Walker Administration tried to bury another report last week, as the (right-to) work-for-less debate was raging in the Legislature. That involved the submittal to the feds of Wisconsin's figures for the Quarterly Census on Employment and Wages.

That release indicated that Wisconsin added 27,489 private sector jobs from September 2014 through September 2015, and that figure is a major difference between what the state was reporting in the monthly report before the 2014 election, and what they eventually sent with the "gold standard" QCEW report 4 months later.

Private sector job growth Sep 2014-Sep 2015
Monthly jobs report: 37,900
QCEW report: 27,489

That's a difference of more than 10,400 jobs than the info that was out there before the November 2014 elections (things that make you go hmmmm), and if you plug in the figures and compare it to the state's history on the QCEW report, the 27,489 and 1.16% job growth is the lowest since April 2013.





So just like the looming budget deficit, here was another spot where the state of Wisconsin was going downhill before the election, but those facts were obscured by other information leaked out by the Walker Administration and the Wisconsin GOP, and the media wasn't willing to ask any tough questions about it. And when we see the rest of the country's job numbers in the QCEW, Wisconsin will be fortunate not to be in the bottom 10 for job growth in the nation, as the Obama Jobs Recovery was picking up steam over those 12 months while Wisconsin's rate of growth was slowing down.

Sure makes me wonder what the benchmark revisions to Wisconsin's 2014 jobs figures will be. And hey, whaddya know? That report will be released on Thursday along with the January 2015 state jobs report, and the benchmark revision will be partially based on the lower growth suggested by the QCEW. Maybe that's a big reason why they're trying to shove through work-for-less in the Assembly that day- to hide some bad jobs news?

Hidden in the union fight- Wisconsin budget slips further away

Now that I'm back in the state, I wanted to go into more detail on the newest Wisconsin revenue report, which was dumped as the State Senate Labor Committee debated the work-for-less bill last Tuesday. And there was a good reason they tried to hide it, as Wisconsin's revenues continue to badly lag, and the state's current and future deficits seem set to rise even further.

For January 2015, overall revenues were barely any larger than they were a year ago.

Year-over-year changes in revenue, Jan 2014 vs Jan 2015
Income taxes -1.1%
Sales taxes +6.6%
Corporate taxes -21.1%
Excise taxes -4.5%
TOTAL TAXES UP 0.7%

Yes, the income tax drop was largely a result of an estimated $55 million in lower withholdings (they'd be up 4.4% if you include that), but the state needs to have major increases in revenues just to match the projections in the Legislative Fiscal Bureau's revenue estimates from January. Let me remind you of this passage.

Over the remainder of 2014-15, it is anticipated that collections will increase by 15.1% due to several factors. First, refunds for tax year 2014 will be significantly reduced and final payments will be increased because of the decreased amount of withholding taxes paid since last April. Also, beginning in April, 2015, growth in withholding collections should improve significantly because the current-year receipts will no longer be compared to collections that were based on the previous, higher withholding tables. In addition, it is believed that federal tax increases enacted late in 2012 induced taxpayers to realize additional investment income in that year, which otherwise would have been realized in 2013. This is believed to have artificially suppressed collections last Spring, which should lead to a "bounce-back" this year. These positive impacts will be partially offset by the effects of state tax reductions, primarily the decrease in the bottom marginal tax rate enacted in 2013 Act 145 and the continued phase-in of the manufacturing and agriculture credit. As noted, for the entire year, income tax collections in 2014-15 are expected to be 4.1% higher than in 2013-14.

In order for the state to match the LFB's income tax numbers, it needs to exceed 2014's figures from February-June by $521.6 million (21.3%). A rough estimate indicates that the state would make back $385 million due to lower tax refunds for 2015 (if you haven't done your taxes yet, you've been warned), but there still needs to be a nearly 6.0% increase in underlying income taxes to reach the LFB's numbers. If underlying income tax growth stays at January's 4.4% rate for the last five months, then income tax revenues would fall short by around $29 million, even with the bump resulting from the lower income tax refunds.

And the corporate tax gap is even larger. As you can see above, corporate tax collections were down more than 21% in January, and are down 8.7% for the first 7 months of Fiscal Year 2015. Somehow, the state has to increase its corporate tax haul by 2.4% in the last 5 months of FY 2015 to reach the LFB projections, and that's despite the loss of revenue due to added tax write-offs for corporations that were part of the second round of the Koo-Koo tax cuts. If the 8.7% loss of total corporate tax revenues were to hold, then collections would come up $52 million short of the declines that the LFB projected.

I'll remain positive and assume sales taxes stay in line for the rest of the fiscal year (they're up 5.0% for the Fiscal Year, and needs to be up 5.9% for the last five months to reach the LFB goals). Given the 6.6% increase in January, I'll say that's possible. Excise taxes could also come in line, despite being a bit short for the time being (they need to limit their decrease to 1.7% between now and June), and other taxes are relatively small and I'll assume they'll work out.

But that still means there is $81 million to make up somewhere, on top of the $283 million in deficits that the LFB said would have to be made up in January. Even with the $50 million in payments from the Potawatomi, Wisconsin still needs to find a way to make up $314 million in less than 4 months. We found out where the Walker Administration came up with $108 million of that amount last month, by skipping a debt payment and shoving those expenses into future years. But the Walker folks continue to come up short on the revenue side, and even though they are trying every trick in the book to avoid a budget repair bill, it is likely that one bad revenue report in the tax season months of February or March will guarantee that the current and future budgets must be formally fixed with leigslation.

If these guys were operating on any sort of semblance of fiscal responsibility, they'd bite the bullet and use this extraordinary session for fixing the budget while there's still some time to adjust, instead of gutting workers' wages and expanding inequality with work-for-less. But as Scott Walker himself admitted over the weekend in a major Freudian slip, he doesn't think of himself as the current governor of Wisconsin, and instead is using us Cheeseheads to show off to GOP oligarchs and grab their donations. However, I can't see how the imploding state budget in Wisconsin is something that'll make Scotty look good to any serious fiscal hawk, and unlike the takers on Wall Street, you'd think a lot of everyday GOP voters still do care about that reality.

Walker budget removes "Wisconsin" from the UW

With the release of the plain-English version of the Wisconsin state budget by the Legislative Fiscal Bureau, we've been getting new information on the depths of this new Walker budget. And if you dig inside to the University of Wisconsin System's part of the budget, in addition to the $300 million in cuts to System funding and the spinning off of the System into an independent authority, there is an obvious theme, which is this- the UW System's mission of outreach to the rest of the state is being taken out.

What grabbed a lot of the media's attention over the last two days is the passage in the LFB's analysis that mention the removal of a requirement to report sexual assault statistics on campus to the Wisconsin Department of Justice (page 50 on the PDF). Now, the Walker Administration and some newspapers have tried to walk back the story, as a UW System spokesman claims the System was the organization that asked for the provision, claiming it to be redundant since the feds already require such reporting.

But our media shouldn't let the Walker folks off the hook on this issue, and not just because the UW spokesman claiming the removal was the System's idea was a guy appointed by Walker last month, and wasn't an active part of these budget discussions. Because there is an overriding theme of Scott Walker's budget when it comes to the UW System - that the college system isn't supposed to serve the common good, outside of the campus's boundaries. I'll give you three examples (and there are many more).

Delete current law establishing, requiring the Board to establish, or requiring the Board to maintain the following institutes and centers: (a) the institute for excellence in urban education at UW-Milwaukee, which engages in research, public service, and educational activities pertaining to issues in urban public education; (b) the solid and hazardous waste education center in the UW-Extension, which promotes pollution prevention through an education and technical assistance program; (c) the area health education center at UW-Madison to support community-based primary care training programs; (d) the center for environmental education within the College of Natural Resources at UW-Stevens Point, which assists in the development, dissemination, implementation, and evaluation of environmental education programs for elementary and secondary school teachers and pupils; and (e) the center for urban land economics research in the UW-Madison School of Business, which conducts research and undertakes educational, public outreach, and grant activities related to real estate and urban land economics. In addition, delete the requirement that the Department of Safety and Professional Services pay $10 of each real estate broker license renewal fee to the UW System to support the center for urban land economics and research....

Delete the requirement that the Board offer, establish, or maintain the following UW-Extension programs: (a) a local planning program to educate local policymakers; (b) a program of education and technical assistance related to recycling market development; (c) programs to educate consumers about biotechnology processes and products and risk assessment techniques; and (d) a higher education location program (UW HELP) to provide information on undergraduate admission requirements, degree programs, enrollment, student financial aid, student housing, and admission forms....

Delete current law requiring the Board to establish or maintain all of the following related to its research and public service missions: (a) agricultural demonstration stations; (b) a state soils and plant analysis laboratory in connection with the UW-Madison College of Agricultural and Life Sciences and UW-Extension; (c) a pharmaceutical experiment station in the UW-Madison School of Pharmacy; and (d) an herbarium at UW-Madison.
Delete provisions requiring the Board to authorize research, experiments, or studies related to the following: (a) experimental work in agriculture; (b) bovine brucellosis; (c) Dutch Elm disease; (d) the feasibility of reintroducing elk into the northern part of the state; and (e) the Fond du Lac Avenue corridor in Milwaukee.

James Rowen also has more on the removal of this outreach mission, including the removal of protections of the Donner Woods sanctuary in Milwaukee. And while I understand that the Board of Regents of the proposed System Authority could keep all or most of these outreach missions around, the removal of these required programs and reserach and the lack of legislative oversight sets a dangerous precedent. What's stopped a Walker-stacked Board of Regents from getting rid of some of these duties, and instead pawning it off to well-connected private interests?

And it goes to a deeper point that started when we found out that the Walker Administration removed the Wisconsin Idea from the UW's mission statement in the original state budget (a deletion that has not been formally amended as of this writing, by the way). Note what Walker said to reporters the day the story broke, before he and his team had to walk back such an absurd and petty action.

Walker adds to the opening line, on the mission of the UW System, “to meet the state’s workforce needs.”

“The focus would be honed in, in particular to look at making sure that we prepare individuals in this state . . . for the jobs and opportunities that are available in the state,” Walker said during a stop in DePere on Wednesday.

Now do you see how this ties together? They want the UW System to be a glorified technical school that produces workers for corporations, and not as a source of public good that provides research that improves people's lives. Because if the UW System were to serve the public and have certain lands set aside, it would get in the way of maximizing the profitability of such a service, and having them reach conclusions that warn against the damage that might result from maximizing profits or bespoiling the land. And that is a threat in Walker World, which wants to funnel as much money and power as possible to the rich and well-connected, at the expense of every other person and natural resource of the state.

It sure makes you wonder, if the System Authority is set up without all of these requirements of public service to the state, how long before we have the Koch School of Land Management Brawndo School of Medicine?