June job growth booms...back to average

Friday's jobs report was viewed with more than the typical anticipation, because of May's severe drop-off in growth and the looming presidential election. But the fears were assuaged in the short-term, as the U.S. added 287,000 jobs for June, and while unemployment ticked up to 4.9%, it's still below what it was in April. The stock market blew up, with the Dow Jones rising 250 points, closing at its highest points of the year.

Unlike the stock market, I didn't see the jobs report as a sign that the economy was booming. Both the jobs and unemployment figures seem to be a reversion to the norm that we saw in the first part of 2016, and still going in the right direction. If you look at the Bureau of Labor Statistics' write-up on the revisions, you'll see how May and June's figures seem to balance each other out.

The change in total nonfarm payroll employment for April was revised from +123,000 to +144,000, and the change for May was revised from +38,000 to +11,000. With these revisions, employment gains in April and May combined were 6,000 less, on net, than previously reported. Over the past 3 months, job gains have averaged 147,000 per month.

What's interesting to note with those May revisions is that the private sector change was revised from +11,000 to DOWN 6,000. If that holds, then it would be the first month that private sector job growth declined in 6 1/2 years, the longest unbroken streak of job growth since they've been keeping the stats. But quite a bit of this "May down, June up" pattern seems to be seasonally-related where May hired less Summer workers than normal (or what the BLS thinks is normal), and June made up the difference. This seems particularly true if you look at the sectors that have a sizable amount of seasonal hires.

Non-seasonal vs seasonally-adjusted employment change
Leisure and Hospitality
Non-seasonal May +344,000, June +475,000
Seasonally adjusted May -3,000, June +59,000

Retail trade
Non-seasonal May +97,200, June +108,800
Seasonally-adjusted May +3,000, June +29,900

Manufacturing
Non-seasonal May +17,000, June +18,000
Seasonally adjusted May -16,000, June +14,000

A notable exception to the "May down, June up" trend was health care services, which doesn't have much of a seasonal adjustment, and still added 47,600 jobs in May and 58,200 in June. It's been the largest sector of growth the last year, with nearly 600,000 jobs added since June 2015.

On the unemployment rate side, we see a similar story in reverse. May had a drop in unemployment from 5.0% to 4.7%, largely due to seasonally-adjusted drops in the work force, and June went back up by 0.2% with more people entering the work force. The BLS basically admits as much.

The unemployment rate increased by 0.2 percentage point to 4.9 percent in June, and the number of unemployed persons increased by 347,000 to 7.8 million. These increases largely offset declines in May and brought both measures back in line with levels that had prevailed from August 2015 to April.

As you dig inside the numbers, the amount of people identifying as "employed" didn't change much between the two months.

Unemployment rate stats, April-June 2016
Employed- May +26,000, June +67,000
Labor force- May -458,000, June +414,000
Unemployment rate May -0.3%, June +0.2%

So while the June jobs report does calm any concern about major job slowdowns, I also don't see it as proof as the economy kicking into a higher gear. In addition, the Brexit did not happen until after the June jobs report survey had occurred, so any effect of that (and the result rise in the dollar and plummeting of interest rates) won't be shown until next month. Along with those effects, I'll need to see where these figures go in July and August to get a better idea on where job growth is headed, as the pattern of 150,000 per month growth seems to be where we're at in this near full-employment scenario.

Scott Walker's partisan crap, and other thoughts from a bad week in America

It's been an awful week in America, between the killings by police of innocent black men in Baton Rouge and the Twin Cities, followed by the ambush of five Dallas police officers at a "Black Lives Matter" rally by a disgruntled Army vet (extra chilling when you realize that Lee Harvey Oswald was also a disgruntled, radicalized Army vet in his mid-20s in 1963).

What feels especially awful about this is that it feels like there will be no resolution to these awful incidents beyond these deaths. That there is no solution that can be worked out because politicians and the media rely on this type of conflict to get contributions and ratings. It is telling that despite the recent massacres in Orlando and Dallas, Paul Ryan and the NRA-owned House Republicans refused to consider proposals this week on rapid-fire guns or in trying to keep those killing machines out of the hands of unstable people who were amassing a huge cache of weapons.

It's also telling that the day after the awful killings of Philando Castile in the Twin Cities and Alton Sterling in Baton Rouge hit the nation's attention, our Fair Governor's tweets (on his "dark side" Scott Walker account) were a series of anti-Hillary Clinton posts like this

.@HillaryClinton You didn't know how to handle Top Secret info or didn't care. Either makes you unfit to be POTUS. pic.twitter.com/oRh7TmxbgI

— Scott Walker (@ScottWalker) July 7, 2016

But then when the police officers got killed in Dallas, he writes this.

I pray that this nation is united against this senseless violence.

— Scott Walker (@ScottWalker) July 8, 2016

One problem Scotty. We have this thing called the Google, and you sure weren't calling for national unity after the deaths of cops in the past. Instead, you used it to make partisan swipes at our President, and lie in the process.

We can mourn victims of #DallasPoliceShootings without distorting reality.#GOP is manipulating these men's deaths.pic.twitter.com/fLwPRHqUKH

— Victoria Brownworth (@VABVOX) July 9, 2016

It's so transparent, and shows that Walker and other Teabaggers that control power don't really care about this awful violence as long as it doesn't touch them or their allies. And they certainly won't do shit to try to keep it from happening again, either in their tone of argument or in working to get bills passed that might SOLVE THE PROBLEM. That's why I feel such gloom with this, because it feels like our country's political system has been rigged so terribly in favor of the forces of evil, big money and a desire to maintain power over improve society. And unless this country votes en masse to install politicians that will demand this change, I don't see how it changes. With so many Americans trapped in their own Bubbles of self-interest and delusion, and a media that either won't give them the facts necessary for them to wake up, or worse, partisan media which lies and buries those facts in the name of propaganda and ratings, how does enough of a groundswell happen so this country can finally break out of the inertia that's crippling it?

The great Charlie Pierce had an article on the 4th of July (a holiday that seems long ago today, but was just 5 days back), and he used the words from the civil rights struggles from 50 years ago as an example of how the promise of the Declaration of Independence isn't something that stopped in 1776 but must be something that continues and requires eternal vigilance.

In 1963, in his great speech on the Mall in Washington, in that part of the speech that many people find it convenient to forget, Martin Luther King, Jr. looked over at the great hall of the National Archives and saw an old bill, still unpaid.

In a sense we've come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the "unalienable Rights" of "Life, Liberty and the pursuit of Happiness." It is obvious today that America has defaulted on this promissory note, insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked "insufficient funds." But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so, we've come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.

A year later, on July 2, in the middle of the holiday weekend, President Lyndon Johnson signed the Civil Rights Act of 1964. In doing so, he said, he was seeking to fulfill the unpaid debt that Dr. King said had come due at last.

One hundred and eighty-eight years ago this week a small band of valiant men began a long struggle for freedom. They pledged their lives, their fortunes, and their sacred honor not only to found a nation, but to forge an ideal of freedom—not only for political independence, but for personal liberty—not only to eliminate foreign rule, but to establish the rule of justice in the affairs of men. That struggle was a turning point in our history. Today in far corners of distant continents, the ideals of those American patriots still shape the struggles of men who hunger for freedom. This is a proud triumph. Yet those who founded our country knew that freedom would be secure only if each generation fought to renew and enlarge its meaning.

So, here's to Marcy Otis Warren, and to Frederick Douglass, and to Susan B. and MLK and poor old LBJ, too, kickass women and kickass men who understood that we are children of Revolution, but that this Revolution was based on an enormous bluff that demands to be called by every American generation in its own way. And on this weekend, as we celebrate our independence with bright explosions across the night sky, take a moment and listen for the low rumbling of that land mine in history, detonating again and again, in a thousand places, like a heart that grows stronger with every beat.

We have innocent people of color being mowed down by bad cops, and good cops being mowed down by fuckheads with rapid-fire guns. These are real problems, and they require something beyond "thoughts and prayers" to figure out. The liberty of those individuals is gone, and much of the liberty and security that we as Americans have an inherent right to seems to be endanagered. And instead of expanding liberties such as the right to vote, or the right to be free from fear (one of our most dear freedoms as Franklin Roosevelt noted 75 years ago), we have politicians who rely on division, hate and repression.

They must go, or we go down the drain. It feels like there is no middle way.

NBA salary explosion plays into a second look at Bucks arena

Those of you who follow sports have likely seen a lot about the explosion of NBA salaries and player movement in the last week, headed up by former NBA MVP Kevin Durant going to the Golden State Warriors and former Marquette great Dwyane Wade leaving the Miami Heat to return home to Chicago and play for the Bulls. The numbers are dizzying, particularly among mid-level players, including former Badger and Buck Jon Leuer getting over $10 million a year for the next 4 years from the Detroit Pistons.

Speaking of the Bucks, I want to go back to the hearing that took place 1 year ago this week at the Legislature’s Joint Finance Committee where the fiscal impact of the Bucks was a main topic of the discussion of whether or not state and local taxpayers should chip in for the new Bucks arena project.

John Koskinen, chief economist for the state Department of Revenue, told the committee that the Bucks contribute about $130 million to Wisconsin's gross domestic product annually. He also said income taxes on Bucks personnel generate $6.5 million per year. By 2019 those taxes should grow to $10.4 million annually.

That high revenue from players and other Bucks personnel was among the main reasons given for the state to have an interest in contributing money toward the arena. In the final bill, the state ended up paying $4 million a year starting in 2016-17, and also will shell out $10 million for repairs around the Bradley Center for the last 2 years it's hosting events (odd, but they are hosting March Madness this coming year, along with the typical BC fare). I expressed more than a little skepticism at the claim that Bucks-related income taxes would all be lost if the team left (I felt that other areas of the economy could pick up as people chose other entertainment options if the Bucks left, and similar revenues would follow), but the “cheaper to keep em” argument has become more plausible given what’s happened in the last few weeks in the NBA.

A big reason for the free-agent splurge is a huge jump in the league’s salary cap, largely due to a new TV deal that was signed in 2014 and starts next season. That cap number was just finalized last week, and the amount that’s available to pay players has gone way up compared to last season.

The league announced Saturday that the 2016-17 salary cap will rise to $94.1 million. The luxury tax line will increase to $113.3 million and the salary cap floor will be set at $84.7 million. The new salary cap figure is $24.1 million more than the 2015-16 salary cap, representing a record for a single-season increase.

Remarkably, the NBA’s salary cap has never previously risen by more than $8 million in the modern era.

For comparison’s sake, the salary cap was set at $70 million last season, the luxury tax line was $84.74 million and the salary cap floor was at $63 million.

Given that an NBA roster is around 15 people, that’s a cap increase of $1.6 million per player.

The Bucks took part in the free-agent bonanza last weekend, signing former Cavs guard Matthew Dellavedova for $38 million over 4 years, and also getting Mirza Teletovic away from the Suns for 3 years and $30 million. So the state budget will appreciate what these guys chip in over the next few years, although what effect the new arena had on these signings vs the all teams having to pay more for players isn’t clear. I haven’t heard the arena come up as a reason either of these players signed, but they also couldn’t officially sign with the team before today, and they have yet to have their introductory press conferences.

And this off-season isn't just a one-time bump for NBA players, as the TV deal is set for 9 years, which will keep the cap at these high levels next year and for future years. In fact, it was noteworthy that it was considered a disappointment when projections came out today saying that the salary cap is only supposed to rise by another $8 million for 2017-18 instead of $13 million.

I’d still argue many other needs in this state should have been funded over a new sports arena (bumpy highways and defunding the UW while paying for this seems very "Idiocracy"-like), but I’ll admit the north end of downtown Milwaukee is sprouting new development by the day, and the plans for the multi-use plaza around the new arena seem very cool. So maybe the Walker folks and others from both parties who voted for the Bucks arena may have gotten the fiscal part of the Bucks deal correct, because there is a whole lot of added money floating around the NBA right now, and Bucks players will definitely get some of that. I’m more than willing to check out the new arena when it opens in 2018, and with the salary cap continuing to grow in the NBA, giving the team more flexibility to sign guys from other teams (or allowing them to pay enough to keep young guys like Giannis and Jabari) it’ll be interesting to see who might be part of that Bucks team when it opens up.

Did Walker Admin skip debt payment because they misread the calendar?

Was flipping by my usual group of websites, when I saw the return of an old friend. It’s the State of Wisconsin’s Monthly Statement of Receipts and Disbursements by Fund. Yes, I know you’re screaming “NERD!”, but I noticed because it had been gone from the state’s budget site for several months, and then the report recently reappeared with all of the prior months included.

These figures do not match the General Fund’s budget balance (they largely measure cash on hand), but it does give an indication where things are going. And a gander into these figures gave me an indication why Gov Walker’s Administration may have pulled a “scoop and toss” maneuver in early May 2016 that moved $101 million in debt payments to future years. This April report included much of the tax season’s filings, and it hit around the same time that the “scoop and toss” decision was made. When I compared it to what was projected at the end of January 2016, you might see where the Walker boys’ concern came from.

Cash balance, actual vs projected, Jan-April 2016
Jan 31 projected balance $2,184.0 million
Jan 31 actual balance $2,162.0 million (-$22.0 million)

Feb 29 projected balance $2,177.8 million
Feb 29 actual balance $2,031.0 million (-$146.8 million)

March 31 projected balance $1,320.8 million
March 31 actual balance $1,175.2 million (-$145.6 million)

April 30 projected balance $1,540.8 million
April 30 actual balance $1,088.6 million (-$452.2 million)

My guess is that the Walker people looked at that $452 million disparity, and thought that meant a sizable budget hole was opening up, even with the $284 million cushion baked into the 2015-16 state budget. At this point they panicked, skipped the $101 million bill of debt they had due, and shoved it into future years.

And what’s sadly funny is that it appears likely that they didn’t have to do it. After May’s revenue figures came in, the adjusted figures indicated there was a minor shortfall, but one that could have been easily covered with that $284 million balance. In addition, there were an oddly-small amount of cash disbursements in May, falling almost $500 million short of what was projected, meaning that the cash shortfall is just under $140 million- no different than it was in February or March. I gotta ask- did Walker and his budget office not correctly account for the fact that April 30 and May 1 fell on a weekend, and messed up their projections accordingly?

Whether the lower May disbursements is because of transfers or a payment timing thing or something else, I don’t know. But it’s worth noting that the Wisconsin DHS said last week that Medicaid spending is now projected to go $175 million UNDER budget for 2015-16 (if you want follow-up on the Medicaid numbers, the Wisconsin Budget Project has some good info on it), so maybe we’ll get some breathing room on the expense side.

However, just because the 2015-16 budget may end up OK, this doesn’t let the Walker Administration off the hook for their “scoop and toss” decision. Now Wisconsin taxpayers will pay over $13 million this year and $104 million over the next 8 years when that number would have been $0 had we merely made the scheduled debt payment.

So what’s really going on, Scotty? Is the budget really in big trouble and the May figures are hiding worse news in the next few months? Or did you stupidly waste money in future years because you either didn’t understand the numbers you saw. Or your staff did understand the differences, but you wanted to pose and make the budget look good now to outsiders at the expense of later years?

No matter what the answer is, it shows that we don't exactly have calm, long-view leadership down there in WalkerWorld. And we deserve better.

Take-home pay cuts, and other state employee benefits news

After cleaning up from last night’s storms (hopefully you’re OK wherever you are), I got into work today, and got to find out I’m looking at another (minor) cut in my take-home pay for next year.

Contributions paid by Wisconsin Retirement System employees and employers into the system will increase slightly next year. The rate changes, effective January 1, 2017, were recommended by the WRS consulting actuary and approved by the Employee Trust Funds Board last week. Total WRS contribution rates, along with employee and employer shares, are indicated in the table below.

The 2017 rate increases are primarily due to higher life expectancies and lower-than-expected trust fund investment performance. This is a part of the unique “shared risk” design of the WRS, which includes 1) employee contributions, 2) employer contributions and 3) investment earnings. Together these funds must be sufficient to meet the present and long-term retirement benefit commitments of the system. Investment income contributes approximately 75% of WRS funding requirements.

This means that an everyday state worker like me is going to pay 6.8% next year into my pension vs the 6.6% I’m paying now. In the big picture, not a big move, and 6.8% is the same as what I paid in 2015. But what’s a bit worrisome is that this increased contribution is mostly based on the stock market flatlining in 2015 after a significant runup in the past few years. Since the market hasn’t gained much in 2016 either (the S&P is up barely more than 2.5% for the year, below the 7% it needs to grow to stay on track), it seems possible that more money might be going out of the pocket of myself and many other state employees in 2018 if this keeps. And that’s before any tricks come around from our Fair Governor to handle his budget deficits (assuming he’s still around next year).

The ETF’s notice also made me want to go down the rabbit hole of looking into where the funds come from, and where we stand on that 5 years after Act 10. The first source I looked at was the Legislative Fiscal Bureau’s paper on the Wisconsin Retirement System. You can see how 2011’s Act 10 funneled some of the contributions that went into these accounts from the general taxpayer, and took it from the workers themselves. The LFB’s paper goes up to 2013, which works because most areas were under Act 10 provisions by then.

Retirement contributions for state employees
2009 $1.25 million employee, $415.57 million employer
2010 $3.60 million employee, $444.36 million employer
2011 $81.96 million employee, $386.07 million employer
2012 $213.45 million employee, $263.73 million employer
2013 $249.68 million employee, $305.66 million employer

CHANGE 2010 VS 2013
Employee +$246.08 million
Employer -$138.70 million

Retirement contributions for local employees
2009 $6.71 million employee, $1,003.56 million employer
2010 $8.10 million employee, $1,063.11 million employer
2011 $135.26 million employee, $961.14 million employer
2012 $398.21 million employee, $697.44 million employer
2013 $511.33 million employee, $704.48 million employer

CHANGE 2010 vs 2013
Employee +$504.62 million
Employer -$358.63 million

For the record, I’m not complaining as much that me as a public employee has had to pay more. Don’t forget, AFSCME's last-ditch offer in 2011 was to take the hit and agree the same amount of payments as in Act 10, as long as collective bargaining rights were maintained (even the pro-Walker Wisconsin Politi-"fact" admits this). I have a bigger problem with the amounts of contributions being mandated with no ability for negotiations to change it. And my biggest issue is the fact that Walker and WisGOP didn’t use the savings from Act 10 to continue investments or improve services, but instead cut aids to school districts and local governments, and used the proceeds to give tax cuts to the rich and the corporate. Which helps explain why we continue to have budget difficulties 5 ½ years later despite this decrease in retirement contributions from the state.

Also notice that the employer contribution figure was starting to go back up again in 2013, after the Act 10 bomb had been dropped, as the required contributions grew from 5.9% to 6.65% for both employee and employer. And the problem with any increased retirement contributions in 2017 is that there is only an additional $18.6 million in General Fund money and $37.2 million overall that’s set aside for all benefit and salary increases in the 2016-17 budget, and this boost in costs would be a part of that (and/or taken out of the budgets for all state agencies). Also, the Legislative Fiscal Bureau says the 2015-17 budget made some assumptions with “magic savings” that may not happen.

The final GPR and all funds compensation reserve amounts under AB 21/SB 21 identified above are net of the following recommendations of the Governor: (a) -$4,183,600 GPR in 2015-16 (-$9,194,700 all funds), and -$8,367,000 GPR in 2016-17 (-$18,389,000 all funds) associated with a proposal to permit state employees to opt-out of state health insurance coverage for a $2,000 annual payment; and (b) -$8,200,000 GPR in 2015-16 (-$18,200,000 all funds), and -$16,400,000 GPR in 2016-17 (-$36,400,000 all funds) associated with unspecified changes to the state group health insurance program.

Note the $12.5 million in extra savings projected due to that new “opt-out program”? According to the February 2016 Group Insurance Board meeting, it didn’t get too many takers.

Employees eligible for a state contribution for health insurance could be eligible to receive a $2,000 annual stipend if they were insured in 2015 and actively opted out of state group health insurance coverage for 2016. Analysis of ETF data indicates that 423 applications were submitted by state employees who had coverage through 2015 to cancel coverage in 2016 for reasons other than death, retirement, or termination of employment. This includes 21 graduate assistants. Final determination of eligibility for the opt-out benefit for these employees would be determined by the employer.

Those 423 members opting out would be just over 1% of all potential employees who had health insurance in 2015, and would be an additional group eligible for the $2,000 bonus. If you go to the budget paper on the Opt-Out proposal, here is why that 1% is an important number to know.

A key assumption underlying Deloitte's report regarding the possible costs or savings associated with annual opt-out payments was the percentage of additional state employees who might elect to opt-out. In regards to this key assumption, Deloitte indicated that, "There is little reliable data to validate the 1-5% opt out assumption and it is possible that there would be more opt outs." Deloitte indicated that if only an additional 1% of state employees opt-out of receiving state health insurance, the proposal would increase state costs between $1.6 million and $3.3 million annually. If, however, an additional 5% of state employees would opt-out of receiving state health insurance annually, the proposal could save the state from $9.7 million to $18.4 million annually. The administration has assumed in the budget that this proposal will save the state $18.4 million annually

Then a further study showed that the $18.4 million the Walker folks counted on was too high, hence the number being reduced to $12.5 million. However, the small enrollment in the opt-out means that costs associated with the opt-out would be around $14-16 million higher than what was budgeted, with costs actually going up compared to what would happen if there was no opt-out at all. That's a little different than the $18 mil in savings that the Walker folks anticipated from this move in early 2015. Ruh roh.

Now look, there are plenty of other variables that come in on health insurance costs over the course of a 2-year budget, and there may well be items that offset these increased costs that make the health insurance payments OK. But it’s worth looking into this in advance of next week’s Group Insurance Board meeting, when more talk about the 2017 health plan schemes details will likely be released. And it makes me wonder if those costs might mean some bad surprises in store when the next budget requests come in, now that we know the current plans to save on employee benefit costs aren’t really panning out.

More proof that "manufacturers" tax credit doesn't create jobs

Gotta appreciate State Sen. Janet Bewley and the Legislative Dems staying on the issue of “The Big Giveaway” known as the Manufacturers and Agriculture Tax Credit, and shooting down absurd claims by right-wing hacks along the way.

Bewley responded today to an absurd bit of spin by Scott Manley, head lobbyist for the Mediocre Businessmen’s Association Wisconsin Manufacturers and Commerce, where he implied that Bush’s Great Recession had nothing to do with Wisconsin’s economic struggles in the late 2000s.

"The Manufacturing & Agriculture Credit is growing and sustaining middle class manufacturing jobs in Wisconsin. The Wisconsin Budget Project report against this credit is fundamentally flawed, and does not reflect the economic reality of its impact on our state. The reality is that since this tax credit was enacted in 2011, Wisconsin has grown the fifth-most manufacturing jobs in the country. Prior to the credit's enactment, Wisconsin was bleeding manufacturing jobs - we lost 81,800 manufacturing jobs between 2006 and 2010. By contrast, we have grown nearly 34,000 manufacturing jobs since the credit was enacted in 2011. The credit has helped to reverse a trend that had devastated family-supporting jobs for middle class families.

Interesting bit of date-choosing by Mr.(Thinks He’s) Manley, and not just because of the convenient placement of the years of the Great Recession and its “bleeding of manufacturing jobs.” The M&A tax credit didn’t become a tax write-off for these rich people and businesses until 2013, so it seems quite interesting that Manley would say that the M&A credit brought manufacturing jobs back in 2011 and 2012 when the write-off didn’t even exist at that time. It’s magic, I tell you!

Sen. Bewley called Manley’s bluff with a simple data request of the Legislative Fiscal Bureau, She asked what the “gold standard” Quarterly Census on Employment and Wages (QCEW) listed for Wisconsin Manufacturing jobs for the 3 years before the M&A tax credit took place, and what happened in the 3 years following it. Obviously, if Mr. Manley’s argument that the M&A credit sparked manufacturing job growth was true, you’d see an increase in it over the last 3 years.

The actual numbers say….the exact opposite.

QCEW manufacturing jobs, Wisconsin 2009, 2012, 2015
December 2009 422,714
December 2012 454,145 (annual growth, +2.4%)
December 2015 465,069 (annual growth, +1.6%)

Bewley noted the lack of boost after the expensive tax cut was put into place.

Last week we learned that after the first three years under the Manufacturers Tax Credit, a handful of Wisconsin’s millionaires will receive hundreds of millions in tax breaks. If you thought those tax breaks would lead to more job creation, you’d be wrong. The number of new jobs created in those three years fell by 65% compared to the three years before the tax cut took effect.

New data in a Legislative Fiscal Bureau memo, using the Governor’s gold standard measure of job creation, the BLS Quarterly Census of Employment and Wages, shows that Wisconsin added just 10,904 new manufacturing jobs in the three years that the Manufacturing & Agriculture Tax Credit began phasing in. In the three years before the soon-to-be $209 million giveaway took effect, Wisconsin added three times as many manufacturing jobs: 31,431.

Yes, I know manufacturing has slowed down in general over the last 3 years in the U.S., but that proves the bigger point that WMC oligarchs won’t tell you- tax breaks to corporations don’t create jobs, demand and revenue from selling products does. And a lack of demand is the reason Scott Walker’s buddies at HUSCO just laid off 100 people in Waukesha last week after getting WEDC tax credits for “expansion" 3 years ago, and likely why New Hampshire Industries in Horicon will close next year.

UW professor Menzie Chinn has a similar analysis at Econbrowser. Prof. Chinn starts his comparison with January 2014, as the M&A credit was small in 2013 and began to accelerate that year. But the end result is largely the same- if anything, manufacturing employment slowed down, and actually fell below what would have been expected, given the nationwide trend in that time period.



At this point, does anyone who’s not being paid by the oligarchs at WMC or similar RW liars really believe giveaways like the M&A tax credit are about job creation? It’s all about greed, both in grabbing more money and profit, and by grabbing more power through kicking back some of that excess profit and rent-seeking in the form of dark money and campaign contributions.

Now do you think you’ll hear these figures in the Milwaukee Journal-Sentinel, or will they refuse to talk about it, as they refused to do with last week’s report of 11 mega-millionaires getting $21 million back from the M&A tax cut? And who ordered that storied to be buried anyway? Editor George Stanley, or his real bosses at the MMAC?

WisGOP budget stunt means UW buildings start to crumble

More evidence came in over the Holiday weekend about how the WisGOP wrecking crew continues to fail when it comes to the day-to-day work of running state government’s business. This time, it was in the form of a long, in-depth article on the lack of maintenance being done for the UW System’s buildings and electrical systems, and the Journal-Sentinel’s Karen Herzog pointed that this is a direct result of choices made by the Walker Administration in the 2015-17 state budget.

In prior years, the UW System received funding from the state for major maintenance, repairs and renovations to campus buildings, utilities and related infrastructure. That money — which the state borrows through bonding — was "zeroed out" by lawmakers in the 2015-'17 budget.

The money would have covered many of the expenses that come with running large campus operations: 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.

This is how Scott Walker can run around saying “we have the lowest amount of bonding in years,” despite borrowing $850 million for roads. If you look at the state’s Capital Budget for 2015-17, the tens of millions of new money usually set aside for UW maintenance was reduced to $0, and only about $27 million of left-over general funds for specific projects and $54 million of left-overs for general projects was left to pick up the slack in the 2015-17 budget. The Walker/WisGOP budget also continued a UW trend of shifting the burden for many projects from the general taxpayer, and putting it onto the students themselves in the form of higher fees and dorm costs. This is a big reason why the cost of attending UW for in-state students will go up by an average of more than $200 next year despite the alleged “tuition freeze” that GOPpers still try to prop up.

As a one-time solution, using existing borrowing authority may not be a bad trick to pull. But just like with using left-over reserve balances, that figure has now dwindled to where it can’t be grabbed from again, meaning additional funds must be set aside in budgets starting in 2017-19 to make up the difference. Combine that with a 2-year delay for many UW maintenance projects, and the Walker/WisGOP decision to strike poses over performing needed maintenance and paying our bills on time may well end up costing Wisconsinites more in the coming years.

But university officials say that small and major capital projects across the UW System — if funded — would correct code deficiencies, improve safety and reliability, and ultimately decrease operating costs. They also argue that by eliminating funding, the Legislature essentially kicks the problem down the road….

"Carry-over funds are not a good way to budget or do planned maintenance and repairs," William Elvey, associate vice chancellor for facilities planning and management at UW-Madison, said of the deferred maintenance backlog at the state's flagship campus.

"There's a lot of duct tape and silicone sealer," he said. "We do whatever it takes to keep it going. ...This will manifest itself in some place, some time, that eventually will affect student classrooms. We've got a long way to go to July 2017."

In addition, the “don’t borrow to fix the buildings” gambit doesn’t look so smart now, as interest rates have tanked in the last few months, and borrowing for a project wouldn’t come with much more in debt costs for the future.

By the way, failing to borrow for maintenance should not be confused with the “scoop and toss” maneuver that Walker’s Administration pulled in May. That case involved a $101 million BILL that could have been paid off by now, and instead was kicked into future budgets (with added interest) for no reason other than to avoid a possible budget repair bill. That’s very different than refusing to do projects that need to be done, and different than choosing to borrow money for road projects when a small tax or fee increase would pay for all the projects and prevent further backlogs from happening.

So just like with failing to pay for needed road projects and maintenance, we see how the Walker Administration has refused to shell out for needed fixes at the UW System. And just like with the mess of road funding, it looks like there are higher bills and additional budgets crunches that await us next year for the UW System’s facilities as a result of failing to set aside enough to “run the state like a business.” You know, the way we were told the “business-savvy” GOP operated, but then we grew up and found it isn’t the case at all.