July jobs decent, but "gold standard" says things may not be so good

Now that I've had a bit of time, I wanted to follow-up on last week's Wisconsin jobs report, and put the figures into wider context.

1. The monthly job numbers are not bad at all for July (9,100 jobs added overall, and 5,000 in the private sector), but large downward revisions have happened in each of the previous two months (a combined downward revision of 10,600 total jobs and 11,600 private sector jobs). It means that job growth has been very small since March (2,500 private, 8,900 overall), despite all of the happy talk at the start of the year.

And given that U.S. job growth has sprung back in the last 2 months, this means the Walker jobs gap is growing again, now just under 91,000 private sector jobs, and 90,000 jobs overall.





2. And even those increases in the first three months of the year may not hold up. To be sure, the preliminary numbers of the "gold standard" Quarterly Census on Employment and Wages that were part of that July report showed improvement. Year-over-year private sector job growth in March up to 1.59% compared to September's 2-year low of 1.23%, and it was even more impressive in February, which had year-over-year growth at 42,648 - the highest in the Age of Fitzwalkerstan.



But March's 1.59% private sector job growth rate was also well below the 1.98% that the figures said in Spring, and as Chris Walker pointed out at Political Heat, the 12-month private sector job growth between March 2015 and March 2016 ended up being 10,000 jobs below what the "seasonally adjusted" monthly numbers indicated. That seems to indicate the monthly figures from the start of this year will be revised down when the next benchmarking happens next winter, and it also makes Wisconsin likely to remain in the bottom third for U.S. job growth when the nationwide QCEW is released in 2 weeks.

Bottom line- things aren't collapsing in Wisconsin, but we do continue to lag the rest of the country, and the last few months have seen another flatlining of job growth that makes me wonder how much more can be added (especially with regressive WisGOP policies driving talent into retirement and out of the state). Even worse, I fear that even with this past year's job growth, tax revenue growth will not follow (we'll find out in the coming days on that). If revenues do fall short, that means even more budget deficits to deal with in the near future, and that's before the effects of recent natural disasters and the mass closings of the Oscar Mayer and Manitowoc Crane plants ripple their way through the Wisconsin economy.

School year starts in Fitzwalkerstan under teacher shortages and major ethnic gaps

As the Summer winds down and another school year is on the horizon, we’re already starting to see hints that it could be a rough one in many of Wisconsin public districts. Despite the fact that college-prep scores remain strong, there are cracks showing in the foundation that used to be one of Wisconsin’s greatest economic and social strengths.

State Superintendent Tony Evers laid out the truth at a pro-public education event in Wauwatosa yesterday, saying the Walker/WisGOP policies of lower state aids and disrespect of public education and educators over the last 5 years is paying off in a very bad way. Most notably, the current school funding situation is leading to a shell game that results in higher property taxes through voter-approved referenda (often required just to keep the lights on and the classrooms upright), and greater disparities in performance among districts.

“And the reason we're passing referenda is because people like you all across the state, are saying, 'this is b.s,’ we have to support our schools, if the state is not,” he said.

But Evers said the downside is that school referendum efforts in some poorer communities like Milwaukee are less likely to succeed, making worse what he calls the gap between have and have-not school districts.

Evers said the Department of Public Instruction will ask Gov. Scott Walker in the next state budget to focus on having an equitable distribution of state aid for schools, noting he understands any additional dollars may be limited.

Evers said he's especially concerned about teacher shortages in some districts in Western and Northern Wisconsin. He said he's engaging stakeholders from around the state to identify and propose solutions that help school districts address critical staff shortages.

"I think it's about money. I think teachers are underpaid," Evers said. "And second of all, the kind of dysfunctional dialogue we have about public schools, where it always seems to turn to the teachers as the villains here. That's a national issue, but I think it's amplified here in Wisconsin.

That teacher shortage led to Evers outlining emergency steps being taken by DPI to get more teachers in the classroom when the new school year begins in just over a week.

Allowing educators near or in retirement to apply for a nonrenewable, five-year license without professional development requirements.

•Increasing the number of days a short-term substitute can be in the same assignment from 20 to 45

•Expanding criteria for renewal of emergency licenses to include attempting required tests for licensure

•Adding new pathways for teachers to add additional licenses based on content tests

I could land a cheap shot here and point out that Wisconsin’s average ACT scores suffered a sizable drop last year (as the headline in this story indicates), but because I’m not a Republican, and therefore not a dishonest a-hole, I think that number can be excused. Those numbers dropped because 2015-16 was the first year all Wisconsin high school seniors took the test, increasing the pool of test-takers by 42 percent (with many of the new test-takers likely to be lower scorers, since they weren’t taking the college board beforehand), so I don't think the scores themselves are major cause for concern. In fact, Wisconsin was 4th out of 20 states that has virtually all of their graduating students take the ACT - pretty good, although behind our neighbors in Illinois and Minnesota.

But what is disturbing is the massive racial gaps that persist in the state listed as “worst in the country for African-Americans.” Not only did all Hispanics, Native Americans and African-Americans score between 3.6 and 5.6 points lower than their white counterparts in Wisconsin for 2015-16, those gaps persist even when limited to high school students who took “an ACT core curriculum” with 4 years of English, and 3 years each of math, science and social studies.

Average ACT scores of Wis students w-core curric.
White 23.2
Asian 21.9
Multi-racial 21.7
Hispanic 19.5
Native American 18.8
African-American 17.3

Then combine the fact that White students are more likely to take a core curriculum (59%) than Hispanics (47%), African-Americans (43%), and Native Americans (35%), and that non-core students of all races scored 2-4 points lower, and it’s an awful double-whammy that leaves minority groups at a significant disadvantage. Maybe that whole ALEC “de-invest and privatize public education and ghettoize poverty the cities” mentality of the last 25 years isn’t working so hot when it comes to bridging the racial divide in K-12, so perhaps we need to try another way.

Unfortunately, that other way won’t come from the current WisGOP wrecking crew that’s owned by the voucher lobby and other haters of public education. In fact, that 262-dominant group wants to keep all other schools in the state second-class, to allow their mediocre selves to stay on top and lessen competition in the workplace. These sliding results and large gaps are just what the ALEC crew want to claim schools are “failing.”, and continue the money funnel from convicted criminal Scott Jensen and other privateers.

Which means if we want to keep our talented teachers and improve our schools for ALL students, we need new blood inside the Capitol. That can only be done by removing as many of these enemies of public education this November. The recent words from Superintendent Evers and the reports from DPI prove that fact more than ever.

Walker plans another shell game- giveaway to biz while taking from us

In Steven Walters’ column for Urban Milwaukee yesterday, the longtime Capitol reporter discussed a trial balloon that has been sent up by Governor Scott Walker’s administration and the Wisconsin GOP about a two-step tax reform that would help pay for road repairs. But in true WisGOP fashion, they have to include a giveaway to business in the process.

Step 1: Eliminate the state personal property tax, which the Wisconsin Taxpayers Alliance (WTA) says totals about $287 million a year – taxes now collected by cities, towns and villages. Cities get about two-thirds of that. This is not the property tax you pay on your home, which generates far more — billions in tax revenue — for local governments across the state, but the little-known personal property tax mostly paid by businesses.

Step 2: Raise the gas tax or vehicle registration fee, or some combination of revenue increases, to pay for highway programs by about that same $287 million. It would be a step toward closing an estimated $1 billion shortfall in funding for road building and maintenance. Assembly Republican leaders, and some Democrats, are willing to raise revenues to avoid construction delays or more borrowing….

For context, Walters reminds us how much the gas tax and registration fees would have to go up as part of this scheme, with a 1-cent increase in the gas tax equalling $33.4 million in revenue, and a $10 increase in vehicle registration fees adding $47 million. So $287 million in revenues would mean a gas tax increase of 8.5 cents a gallon, or jacking up the registration fee from $75 to around $136. Or there could be a combination, like a 5-cent increase in gas tax and making the registration fee $100.

Raising the proper revenues to pay for highways is a nice first step, and that part I’m OK with. But what an awful trade-off to do it, as getting rid of the state personal property tax is nothing more than a giveaway to the corporate and well-off, and would cause a drastic shift that hurts homeowners and local governments.

It’s worth giving a look at the recent release of equalized values from the Wisconsin Department of Revenue to see the impact of removing the personal property tax from the overall tax base (you can click on your county and community here). If you go out from their and look at the state totals, you can see that cities have more of their tax base come from this personal property tax.

% of tax base susceptible to personal property tax
STATEWIDE 2.49%
Cities 3.48%
Villages 2.42%
Towns 1.31%

What this means is that cities would have to make up a bigger loss to their tax base than more rural areas of the state. And in particular, the removal of the personal property tax seems to give a larger hit to smaller to mid-size communities that have a disproportionate amount of factories and warehouses along with property values that are not as high. And even though the state’s two largest cities won’t have it as tough as others, their personal property tax proportion is still above the state average of 2.49%.

% of tax base susceptible to personal property tax
Milwaukee 3.12%
Madison 2.90%

West Milwaukee 8.14%
Superior 7.37%
Prairie du Chien 6.25%
Beaver Dam 6.08%
Marshfield 5.94%
Rhinelander 5.43%
Beloit 5.20%
Green Bay 5.00%
Middleton 4.94%
Pleasant Prairie 4.94%
Fond du Lac 4.87%
Wausau 4.70%

This also means that residential homeowners in those communities will likely have to pay higher property taxes in order to make up the difference, since removing the personal property tax means more of the property tax base ends up being residential. Walters notes that this is leading a longtime Walker ally to tell the Governor not to go along with this plan.

The powerful Wisconsin Realtors Association (WRA), which has supported Walker in his three campaigns for governor, warned in a statement that abolishing the personal property tax “without identifying an alternative source of revenue” would increase the property tax bill on average Wisconsin home by $80 per year.

Chief WRA lobbyist Joe Murray also said that increase would ”violate Gov. Walker’s property tax pledge” to keep property taxes lower in 2018 than in 2014 and ”worsen Wisconsin’s ranking has one of the highest property taxed states in the country.”

Those higher property taxes may also be hard for local governments to accept, resulting in a cut of services. That’s independent of any other legislation that might be passed by this WisGOP crew to reduce shared revenues to local governments, if they stay in power (a strong possibility given how messed up the budget may be on both the Transportation and General Fund sides).

Plus, why the hell does the business community in Wisconsin need any more tax breaks? After 5 ½ years of giveaways in the Age of Fitzwalkerstan, we still have the worst job growth in the Midwest, and its lowest manufacturing wage, showing that these tax cuts haven’t trickled down to the average Wisconsinite. And now the average Joe/Jane is going to be shelling out higher property taxes to pay for this next sellout to campaign contributors business owners?

But Walters includes a final tidbit which should be the final straw as to why this trial balloon to dump the personal property tax is such crooked garbage.

It meets Republican Gov. Scott Walker’s read-my-lips promise to oppose any increase in Transportation Fund revenues, unless there is an offset in other tax collections. It’s another tax cut that helps businesses, who are expected to again support Walker if he runs for a third term two years from now. And, it repeals a tax that many regard as unfairly and unevenly administered.

Walters has this half-right, as part of this scheme is set up to stay in the good graces “no-tax” special interests. But it isn’t for Walker running for a third term in 2018 (which I doubt even happens), but instead because this delusional fool still thinks he can be a presidential candidate in 2020. Walker can’t kiss up to the Grover Norquists and the Kochs and other oligarchs if he is seen as raising taxes. It’s the exact same BS game that Louisiana Governor (and fellow 2016 GOP primary washout) Bobby Jindal tried to pull in Louisiana 1 ½ years ago.

He had to plug a $1.6 billion projected deficit for next year — 20 percent of Louisiana’s general fund — and he had to do it without violating an anti-tax pledge he made to Americans for Tax Reform (ATR), the influential conservative group headed by Grover Norquist. Jindal’s anti-tax credentials have been a prime selling point in his unannounced campaign for president.

Jindal’s solution: eliminating $526 million in tax rebates, most notably for the state’s business inventory tax. Norquist’s group blessed the decision, concluding that ending tax rebates would not amount to a tax increase.

But that distinction has prompted ridicule from state lawmakers and political commentators on both the right and the left, who accuse Jindal of selling out the state’s tax policy to Norquist.

Need I remind you what happened in Louisiana, where these “no taxes by any means” policies meant that new governor John Bel Edwards had to face $2.9 billion in deficits for the next 2 ½ years when he took office this January, and the state now needs to take out short-term loans just to meet up-front expenses of the National Guard and other emergency services as they grapple with the state’s historic flooding. A Louisiana-like fiscal disaster is what we will have in Wisconsin if Republicans stay in power in this state after the 2016 elections, which is something Scott Walker and his puppetmasters would be perfectly fine with (it makes for a good excuse to sell things off even more).

So let’s give thanks to Steven Walters for exposing this absurd Norquistian scheme of WisGOP’s to give yet another tax break to businesses while jacking up property taxes for homeowners and gas taxes and registration fees for everybody. Because maybe news of this getting out ahead of November will allow enough places in the state to see just how foolish and dumb these WisGOPs are, and they’ll boot enough of them to keep this “repeal the property tax for business” garbage from ever going through. 

Time to return east

As I sit in Seattle's airport and await my flight back to the Midwest, just a few reflections from my trip.

The Pacific Northwest is a unique part of the nation, with a high emphasis on quality of life, and the great scenery to match. I recommend anyone try to visit there if you can.

We went to a Brewers-Mariners game out there, and Safeco Park isnt bad- very similar to Miller Park right down to the color scheme of the seats (maybe a bit more compact in the concourses). Given the distance, the sizable number of Brewers fans was a bit surprising, although given the fact that the Northwest is a common landing spot for Wisconsinites to move to, I guess I shouldnt have been too shocked. Mariners fans were extremely friendly and I'm finding myself hoping they can slip into the playoffs for the first time in 15 years.

It was absurdly hot Friday and Saturday in Portland and Seattle (99 in Portland, 90 in Seattle), and there was a lot of evidence of drought and climate change. But there also was a notable lack of humidity vs what we'd see in the Midwest. And apparently some of the heat has broken back home, so thats a good sign that Fall may be coming.

I suppose I do need to get back to reality, but these last 4 days were a great break, and a great opportunity to discover. I definitely got another perspective on how things can be in this country (Vegas and the NW is notably more diverse), and it was quite the breath of fresh air.

Onto the plane, and back to business

Political Heat gives good context to Walker jobs FAIL

I talked earlier this week's about Scott Walker and WisGOP's shell game on taxes, but
Chris Walker at Political Heat has a good article on a similar shell game with jobs.

Hidden in yesterday's Wisconsin jobs report were the preliminary figures for the "gold standard" Quarterly Census on Employment and Wages (QCEW), which comes out in early September. And they showed that the March 2015-March 2016 increase in private sector jobs wasn't 47,500, as the Walker Admin said at the time, but instead was more like 37,500.

That's still not a bad increase (about 1.6%), but what Chris points out is that it is less than what we had in the 12 months before that. And even more interesting is that it still doesn't reach the 41,000 jobs that were added from March 2010-March 2011- aka the Wisconsin jobs environment Scott Walker inherited from Jim Doyle.

Know what else happened in March 2011? Act 10 was jammed thru the Legislature, and as Chris Walker notes, Wisconsin hasn't created jobs that fast since March 2011. Doesn't seem like coincidence to me.

Staking out West

I could talk a bit on Wisconsin's latest jobs report (July decent, June revised way down,net result not so good), but Im currently on the 22nd floor in Vegas right now, and will be hopping to the Pacific NW this weekend.

Sorry, but that's taking main priority right now. We will see if I have something more tomorrow as I embark for 95-degree(!) Portland and later onto Grunge City.

Make it happen wherever you are at.

Delayed UW construction, maintenance costing taxpayers more later on

On the eve of the UW System’s finalizing their “Ask” of the Governor’s Office for the next 2 years, State Rep. Gordon Hintz took a look at the documents, and sent out a press release noting his concerns. In typical Hintz style, the press release has a graphic with it, one of a collapsing house of cards, as Hintz said a past strategy of Governor Walker and WisGOP not paying for building projects and repairs will cost Wisconsinites more in the long run.

This week, University of Wisconsin System President Ray Cross released the UW System’s complete budget request for the upcoming 2017-19 budget. While there has been plenty of attention on Republicans’ decision to cut Wisconsin’s universities by $565 million since taking control of state government, another crisis is looming: the Governor’s decision to all but halt the UW’s maintenance and infrastructure program. A Legislative Fiscal Bureau memo released today by Rep. Gordon Hintz (D-Oshkosh) shows that 7 capital budget items ignored by the Governor in the 2015-17 budget have now increased in cost by nearly $30 million.

“Budgeting is all about investing in priorities. Unfortunately, Republicans have refused to make the hard decisions when it comes to investing in our infrastructure,” said Rep. Hintz. “In order to put our roads on the credit card, Gov. Walker and Republicans put a halt on our whole capital budget. However, as this memo shows those needs don’t go away. Higher education in Wisconsin is already suffering historic cuts in Wisconsin, and delaying projects only compounds the cost.”

In addition to additional costs of construction, the Governor has also failed to fund key maintenance projects to existing buildings on UW campuses, known as “all agency” funding. For the first time, our universities had to specifically request this money in their budget just to make repairs. A separate memo prepared by LFB shows the cost of deferring these needs is expected to cost an additional $13.5 million in future budgets. These projects include repairs such as: ‘elevator replacements and fire alarm system upgrades; modifications for handicapped accessibility; replacement of emergency generators and worn-out heating; ventilating and cooling systems; major repairs to roofs, utility structures, walls and loading docks’.

To go further into this, let’s back up and understand the 2 parts to the UW’s budget request.

1. Operating budget- these are everyday expenses which are paid off as they happen. Keeping the lights on, paying faculty and staff, etc. It also pays for items such as debt that was taken on for projects that were paid for with General Tax dollars. This last item goes to what Rep. Hintz was complaining about, because an increasing part of the state funds that go into the UW’s budget is being used to pay off debt instead of actually go into the classroom and to pay the instructors and researchers in the classroom, as is pointed out in Page 3 of the UW’s 2016-17 Operating budget.

2016-17 GPR funding for the UW System, $1,048,705,300, is lower than it was in 2007-08 when the UW budgeted $1,128,380,267. When 2016-17 GPR debt service is removed, state funding of $832.9 million is lower than it was in 1998-99 ($842.1 million). Debt Service increased significantly since 2005-06, decreased in 2011-12 and then grew even more steeply afterwards, largely due to refinancing to support other state costs.

Tomorrow, the UW Board of Regents will consider passing ahead a request to the Governor’s Office to give it an additional $42.5 million for the 2017-19 biennium, much of which is earmarked toward specific programs, such as improving student advising and increasing the pool of healthcare professionals in rural and underserved areas of Wisconsin.

Now let’s go into the main part of Rep. Hintz’s critique- the Capital Budget.

2. Capital Budget- For both the UW and other forms of government, these are funds for specific projects, usually buildings and other forms of infrastructure (streets are a main part of a city’s Capital Budget, for example). Many of these items are designated into specific projects, and are often borrowed for, with the funds being paid back over time.

You can see where the two sides can work together. A new Capital item might change Operating Expenses, either through the debt required to pay back the Capital item (much like how your checking account pays back your home loan), or through lower expenses via the better usage of space and other efficiency gains. And one could argue that the large one-budget drop in Capital items at the state level can reduce debt service for future years at the UW, allowing for more funds to be freed up.

But the obvious trade-off is that the cost for needed repairs and buildings may be higher later on, leaving the double-whammy of worsening facilities now and needing to spend more money to take care of the same problem.

And that’s where Rep. Hintz’s request to the Legislative Fiscal Bureau comes in. Here's an example of the LFB's analysis regarding the major projects that were put off from 2 years ago.

The table below shows the seven capital projects that were included in both the UW System's capital budget request for 2015-17 and its proposed capital budget for 2017-19. As shown in the table, the Regents requested a total of $227.6 million in funding for the seven projects in their 2015-17 capital request. As proposed, the UW System's 201-19 capital budget request would include $257.3 million for these projects, or $29.7 million more than was requested for the UW System's 2015-17 budget request.

Granted, many of these projects seem to be items like athletics facilities and dorms, so those facilities may be likely to be paid off by higher student fees as opposed to taxpayers dollars, but there is also a second memo that mentions another $13.5 million in added cost for regular maintenance that was not budgeted for last time, half of which will come out of general tax dollars.

Just like with roads and other services, the Walker Administration's short-term budget stunts on refusing to pay for building upkeep and construction on the UW Campus is leading to bigger costs in the long run. And us in Wisconsin will be paying for the cost of those delays well after Walker and much of this WisGOP wrecking crew are out of office.