Wisconsin’s Self-Inflicted Budget Woes
Budget decisions by Walker and Republicans are coming back to haunt them.
Governor Scott Walker Signing Right to Work Legislation (Photo from Governor’s Office)
Just six months after Wisconsin’s two-year state budget was passed, state revenues are projected to come in below expectations due to slow economic growth. Less revenue makes it more difficult for the current Legislature to pass bills with any cost. Even worse, the slower economic growth projections forecast significant budget challenges for the future 2017-2019 budget.
But don’t take it from me. On February 2, Republican Senate Majority Leader Scott Fitzgerald said “I think this next state budget is going to be just as rough as this past one. The economy is not going to continue to soar, it’s going to lag”. As a reminder, that ‘past one’ Senator Fitzgerald is referring to is the budget that slashed $250 million from the UW System and failed to even attempt to address the $1.05 billion cut from public schools over the last five years. What is most frustrating is these cuts cannot simply be chalked up to a lack of money, since they were made during a budget that spent over a billion dollars more than the previous one.
Two budget decisions continue to stand out. The first is the ongoing decision to refuse the Medicaid expansion that would save Wisconsin taxpayers $320 million in our current budget alone, while providing health insurance for 83,000 more people. Wisconsin is the only upper Midwestern state to reject the federal money. Governor Walker and legislative Republicans have decided that denying health insurance to those earning less than $16,240 a year (to make a political point) is more important than funding K-12 public education and the UW System.
The second budget decision has been blindly supporting an expansive tax credit passed in Governor Walker’s first budget in 2011 that eliminates most state income taxes on owners of factories and agriculture producers. Originally estimated to cost $128 million a year by 2016-17, it is now estimated to cost more than twice the amount ($283.9 million). Simply delaying the final phase in of this credit by two years could have saved nearly $78 million in the current budget.
These tax cuts are among the more than $4.7 billion in state tax cuts passed over the last 5 years in an effort to drive economic growth. But the reality is that it hasn’t worked: Wisconsin’s economy has continued to lag behind the nation as well as neighboring states. Over the last four years, Wisconsin has been 32nd in private sector job growth, last in the Midwest, and over the last year Wisconsin has had a job growth rate that is nearly half of the national rate. Last week, the Philadelphia Federal Reserve Bank announced that Wisconsin is one of only seven states that likely has a shrinking economy in spite of the growing national economy. This news is made worse by the fact that Wisconsin is one of the only states in that group that cannot attribute its sluggish performance to historically low oil prices. This data mirrors the U.S. Bureau of Labor Statistics preliminary estimates that show Wisconsin lost 8,800 private sector jobs between October and December of 2015.
So, while Senator Fitzgerald and I don’t agree often, I must agree wholeheartedly with his assessment that our next state budget is likely to be ‘rough’. And I will go even further and make the not-so-bold prediction that rough budgets will continue as long the Governor and Republican majority continue to sacrifice valued Wisconsin institutions, like education, on the altar of badly-crafted tax cuts that mostly benefit the wealthy and aren’t designed to create jobs.
State Representative Gordon Hintz (D-Oshkosh) serves on the Legislature’s budget-writing Joint Finance Committee.
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Buying into more Medicaid is like guying a giant alligator that can eat us up and kill school money as it has been the last decades. Never look a gift horse in mouth unless it costs you more to keep it, then not get it. if my Dad gave me a Corvette when I had a $20 a week could I could not afford it. Be Careful of Trojan horses.
>> Buying into more Medicaid is like guying a giant alligator that can eat us up. . .
No, in contrast to your nonsensical analogy, allowing Medicaid expansion is reaping the benefits of taxes that we have already paid. The modern Republican toolkit has only one idea: government is bad. Its single tool is tax cuts. And in Wisconsin, we see the same outcome of this policy that other Republican-held states like Kansas, Mississippi, and Louisiana have experienced: lagging infrastructure, education, and economic growth.
This op-ed lost all credibility when they toted the same medicaid line that ignores federal tax benefits of the ACA and all the people who signed up on the exchanges and received tax credits, counting those people as needing medicaid.
OH, and then they cited the last Philadelphia Federal Reserve Bank report that shows Wi doing so poorly but doesn’t point out that it’s a snapshot in time and the release in the quarter before that had WI doing tremendously well. That report roller coasters all over the place.
Terrible terrible talking point repeating op-ed….
I would liken the refusal of Medicaid Expansion to being owed money from the Federal Government that I sent to them as taxes , a refund to be used for the state’s betterment.Refusing it would be like refusing your income tax return and telling the Feds to send it to another state’s taxpayer. The governors refusal is not fiscally conservative but is fiscally stupid.
The Status Quo Defender Strikes Again! Whenever a press release or op-ed from a Democrat or left-leaning group is published, he’s there to nitpick every little thing he sees wrong with it and go out of his way to defend the administration and the GOP legislature.
DEmocracy is a bitch, Vince. Podman, good idea, what if the Feds renig? Happens all the time. Feds do not have any money but we do have Badgercare and ACA.
Tell that to the GOP WCD. Elections have consequences right? We hear that all the time. But now we’re going to pout and throw tantrums because the president wants to do his job and nominate a successor to Scalia. OK off-topic rant over.
We are bound by the resolution passed by the Left, in 1960, in the senate, opposed to election year appointments. But keep whining, love it.
Now we can have a real debate about what the direction of theh country should be. Scare dof that?
That wasn’t the case in 1988 w/ Kennedy.
I can’t imagine why anyone on the planet would be scared of debating you. It’s just like debating your crazy uncle. It provides lots of laughs.
We have a crazy uncle, name is Bruce. Debate any time, but it is not fair you are such a genius so to even it up you and have all the Bruces on this site on your side. I would crush you.
It’s going to be real funny to see the next President nominate a much more liberal nominee than Obama does and have them confirmed by a Dem Senate. I hope Bob Dohnal waits to drop dead until then.
WCD, what about the other points made in the essay? We seem to be following a similar playbook to Kansas with similar effects. Surely we can’t just claim bad demographics when comparing ourselves to our Midwestern peers.
Minnesota is crushing us in terms of performance, and coincidently, the Twin Cities have a combined taxing authority to help the entire region prosper. Would love to see something like that in the Milwaukee Metro..
“…badly-crafted tax cuts that mostly benefit the wealthy…”
I’m far from wealthy but my property taxes have fallen hundreds of dollars per year since Act 10 was passed. I’ve certainly seen the real economic benefits. Year after year I’d see ol’ Grinnin’ Jim Doyle up there giving his State of The State, talking about ‘investments,’ meaning my taxes would go up year, after year, after year…
If Doyle would have stayed in office our property taxes would be 25 % higher or more plus income and sales taxes would have gone up, like Ill.
All they have is “what if” when they are proven failures. Or the same tired old line of “But if Doyle would have. . . .” Always respond with made up scenarios without citing sources. #StrawmanArgumentsWhenVoidOfFacts
Hundreds of dollars per year? That must only be true for conservatives in Washington County. It’s certainly not true for my wife and I.