Will Taxes Be the Key Issue in the Governor’s Race?

In the wake of the tragedy in New York and Washington, the Democratic candidates for governor have slowed down their campaigning, but they have been strategizing as to what the major issues will be in next fall’s election. Some believe it will be taxes.

“Republicans have doubled state spending,” says Attorney General Jim Doyle, the first to announce as a Democrat running for governor. “State government has grown and grown and grown.”

“I think we’re weak on the income tax,” says state Sen. Gary George (D-Milwaukee), another gubernatorial candidate. “I think the tax rate is too high.”

Todd Berry, executive director of the Wisconsin Taxpayers Alliance, says the rate of taxation is an inevitable issue. “In some way, it will be in the limelight.”

Berry, of course, makes his living decrying taxes. But he points to a recent statewide poll by the Wisconsin Policy Research Institute, which found taxes rated as a top issue.

But taxes have always loomed large in the WPRI polls, rating as the number one issue in ten of the last twelve years of polling. During that time, the percent of respondents choosing taxes as the top issue ranged between 33 percent and 17 percent. In the most recent poll it was chosen by 24 percent of respondents, an average result. “I don’t think it’s anything new,” says Jim Miller, head of the WPRI.

“If I looked at anything that might become major,” Miller adds, “it’s health care and prescriptions,” an issue that was raised by many respondents in a different part of his poll.

Tom Russell, campaign manager for Dane County Executive and gubernatorial candidate Kathleen Falk, says the terrorist attack on America could ultimately change the issues in the race. “We do have to get through where the nation is now. It does have a tendency to change how people are thinking.”

But it’s already clear the terrorist attack has had a negative impact on the American economy. Many states are already predicting shortfalls in their sales tax projections, as air traffic and tourism declines. One way or another, the economy and taxes are likely to loom large in the campaign. “Clearly the dominant issue is how Wisconsin grows in the next five or ten years,” Doyle says.

Doyle proposes to keep increases in state spending below the rate of inflation. That sounds easy, but would actually be a radical change. “During the 1990s,” Berry notes, “the average annual growth was just under seven percent per year, which would be double to triple the rate of inflation.”

The Tommy Thompson era saw gonzo government growth fueled by an income tax that was not indexed and thus grew faster than inflation. Wisconsin rose from the 11th highest state in taxation per person in 1987 to 8th highest last year, according to Census Bureau statistics.

In 1999, Thompson and the legislature finally indexed the income tax, but that hasn’t stopped the spending. Gov. Scott McCallum promised a new era of lower taxes, irritating Thompson with his statements, but didn’t exactly deliver on his promise.

The increase in the recent budget looks modest, but as the Taxpayers Alliance has noted, this was done with accounting tricks that are likely to leave Wisconsin $400 million in the red by 2003. These tricks included lowering the statutory reserve, floating new bonds to replace old ones and paying $115 million school aids a year late. Besides that, the biennial budget spends $158 million more than the revenue that is expected to come in during the next two years. And that was before the recent projections about declining sales taxes. (For the full explanation, click on related documents.)

In short, even with the income tax now indexed, the governor and legislature found other ways to keep spending. Will voters understand these fiscal tricks? Falk thinks so. “Boy, do they understand. They not only understand, but they’re angry.”

Of all the Democratic candidates for governor, Milwaukee Congressman Tom Barrett has said the least about taxes. “The biggest issue will be how we finance education,” Barrett told me.

Doyle’s supporters believe Barrett will be vulnerable to Republican ads about taxes and spending. The ads, for instance, might accuse him of voting for the largest tax increase in American history (early in Bill Clinton‘s term) and against the largest tax cut under George W. Bush. Barrett, however, looks like a moderate Democrat on spending according to ratings of the National Taxpayers Union.

Doyle notes he will leave a smaller budget for the attorney general’s office than the one he inherited 11 years ago. Of course, Thompson cut Doyle’s budget by moving the consumer fraud division to the Department of Agriculture, which may largely explain this apparent parsimony. Still, it seems safe to say Doyle will be less vulnerable on this issue than Barrett.

Doyle, in fact, intends to paint McCallum as the real spendthrift.” McCallum acts like ‘The Man Who Wasn’t There,’ but he shares the blame for the fiscal mess,” a recent Doyle press release argued. “McCallum says he inherited it, but he helped create it. He was Thompson’s accomplice in emptying the taxpayers’ pockets.”

Will voters buy the idea that a Democrat would spend less than a Republican? They did back in the late 1950s and early 1960s, when Doyle’s father was among a group of political strategists who engineered the rise of the Democrats in Wisconsin. But that was a long time ago.

Miller, however, is not so sure any issue will arise as the key factor in the election. “You don’t see a lot of intensity on any issue,” he says. “There’s a kind of complacency here. I think a lot of [the race] will be based on personality.”

Short Takes

The business group pushing to build a professional soccer stadium found at least one politician who spoke their language. PR man Jeff Remsik says when they met with County Executive F. Thomas Ament, they were amazed. “Ament is quite an expert on soccer,” Remsik says. “He knows the German teams, the structures and leagues in Europe.”

Sensenbites: Mike Gousha‘s Sunday night talk show featured Tom Barrett and his fellow Congressman Jim Sensenbrenner, a rare bit of local TV exposure for Sensenbrenner. “The fact is, anyone of us [in the Wisconsin delegation] could come up with a way to save Social Security and it wouldn’t get covered,” Sensenbrenner gripes. “But if we were involved in a scandal it would get covered. The electronic media has really fallen apart.”

Part of the problem, says Sensenbrenner, is the TV stations concentrate on city issues only. “The TV stations won’t go west of 35th Street,” he says. “The Milwaukee Journal is kind of the same way. They don’t do a heck of a lot of coverage of any of the members of the delegation, of what they do locally.”

This article was originally published by Milwaukee World.