Policymakers Should Make Investments that Help Put People on the Path to Economic Security
Today’s U.S. Census Bureau report shows that our state’s gradual economic recovery still hasn’t substantially expanded economic opportunity for working people and families in Wisconsin. Median incomes are still well below their pre-recession level (adjusted for inflation), and our state’s elevated poverty levels have yet to begin declining.
According to the new Census Bureau data, Wisconsin’s overall poverty rate edged up slightly last year to 13.5%, which is roughly one in seven state residents. Although the small increase from 13.2% in 2012 is not statistically significant, the change over the last five years is very clear. There were about 755,000 Wisconsinites living in poverty last year, an increase of 186,000 since 2008, when the overall poverty rate was 10.4%.
“We simply can’t accept three quarters of a million Wisconsinites living in poverty as the ‘new normal,’ ” said Ken Taylor, executive director of the Wisconsin Council on Children and Families (WCCF). Read more
For Wisconsin to take full advantage of opportunities for economic growth, we need to make sure that all our students attend thriving schools, regardless of their economic status. Yet Wisconsin students who come from families with low incomes are far more likely to attend failing schools than other students, according to new school performance information released by the Department of Public Instruction.
Statewide, 1 in 11 students from families with low incomes attend schools that fail to meet expectations set by the Department of Public Instruction. That’s compared to the 1 in 77 students who are not from low income families who attend failing schools. Put another way, low-income students are 7 times more like to attend a failing school than are other students.
Low-income students are also less likely to attend schools that receive the highest rating. Just 1 out of 41 students from low-income families attends a highest-rated school, compared to 1 out of 11 students from families who do not have low incomes. Read more
Most state agencies have submitted their budget requests for Wisconsin’s upcoming 2015-17 budget. These requests are worth taking a look at because they can give some insight into Governor Walker’s priorities for the next budget. The requests can be found here, on the Department of Administration’s website.
Back in July, Governor Walker told state agencies that their 2015-17 budget requests should assume that there will be zero growth in General Purpose Revenue (GPR) appropriations. (He did carve out a few exceptions to that rule.) But nearly all the major agencies that have submitted budget proposals so far have requested at least modest increases in funding. The growing tab for these requests helps illustrate the significant challenge of balancing a budget at a time when the state is expected to need almost $1.8 billion of revenue growth just to provide flat funding.
One agency, the Department of Health Services, has indicated that it will require a big boost in General Fund spending to pay for health care for people with low incomes: $760 million over two years. Read more
Concerns about increases in income inequality were voiced from a surprising perspective today, when Standard and Poor’s (the bond rating agency) issued a lengthy report titled “Income Inequality Weighs On State Tax Revenues.” The report concludes that “disparity is contributing to weaker tax revenue growth by weakening the rate of overall economic expansion.”
The authors offer this explanation for the correlation between income disparities and economic growth:
“…rising income inequality is a macroeconomic factor that acts as a drag on growth. There is evidence, although not conclusive at this point, that the higher savings rates of those with high incomes causes aggregate consumer spending to suffer. And since one person’s spending is another person’s income, the result is slower overall personal income growth despite continued strong income gains at the top.”
An article in today’s Washington Post sums up the findings in clearer terms:
“Even as income has accelerated for the affluent, it has barely kept pace with inflation for most other people. Read more
Increasing Both the Earned Income Tax Credit and the Minimum Wage Would Strengthen Wisconsin’s Families
State lawmakers who want to help Wisconsin families recover from the recession should move to boost both the state’s earned income tax credit and its minimum wage. Each policy on its own helps make work pay for families struggling on low wages, but improving them at the same time goes further to putting working families on the path to economic security and opportunity, according to a new report from the Center on Budget and Policy Priorities.
Low wages make it hard for working families to afford basics like decent housing in a safe neighborhood, nutritious food, reliable transportation, quality child care, or educational opportunities that put families on a path to greater economic security.
But, state lawmakers have tools that can help address stagnant low wages. One, increase the state Earned Income Tax Credit. Two, raise the state minimum wage and make future increases automatic to keep up with inflation
These policies both are targeted to assist only those who are working, helping them to better afford basic necessities, including the things that allow them to keep working, like car repairs and child care. Read more
Structural Deficit Calculation Jumps to Nearly $1.8 Billion
It’s remarkable how quickly the state’s fiscal picture can turn around, even during a period when the national economy is on the mend. During the campaign season two years ago, GOP incumbents were making a big deal of the fact that they had eliminated the state’s structural deficit. Today we learned from the Legislative Fiscal Bureau (LFB) that the structural deficit has returned with a vengeance; the new figure of $1.766 billion is the third largest structural deficit estimated by the LFB since 1997 (for the 10 biennial budgets from 1997-99 through 2015-17).
Although that turnaround in the state fiscal picture is surprising to many people, it shouldn’t be. Wisconsin lawmakers have a long history of banking on surpluses that are estimated during the first half of a biennium (especially in election years) and promising tax cuts and/or spending levels that aren’t sustainable and that lead to big deficits. Read more
Budget Repair Bill May be Needed to Bring Budget Back into Balance
It’s been widely reported that state tax revenues fell well short of projections for the budget year that ended in June. But the nature of Wisconsin’s two-year budget means that the budget hole is likely to be bigger than many commentators realize, if current trends continue.
We already know that tax revenues fell $281 million short of projections for budget year 2013-14. That’s not good, but the end-of-year fund balance is enough to cover the shortfall, so it the shortfall doesn’t present any immediate problems.
The shortfall is likely to lead to bigger difficulties in 2014-15, the second year of the budget. Tax revenues for 2014-15 were projected to grow by 3.5% over 2013-14 amounts. But with 2013-14 revenues coming in so much lower than expected, 2014-15 revenues will be growing from a lower base. If 2014-15 revenues grow the originally projected 3.5% from the new, lower base, then at the end of the next budget year, Wisconsin would have a second shortfall of about $291 million. Read more
Last week we learned that state tax revenues fell far short of projections for the budget year that just ended. The shortfall means that next year the state is likely to face another round of budget cuts — cuts that slow economic growth and reduce investment in education, health care, and our state’s workforce.
The irony is that not too long ago, state lawmakers were trumpeting Wisconsin’s budget surplus, which neared $1 billion over two years. But instead of using those resources to build up a meaningful budget cushion, state lawmakers rushed to pass tax cuts. Legislators were in such a hurry to cut taxes that they passed a $100 million property tax cut last October in just four days, leaving little time for public debate. Lawmakers also passed two other major tax cut packages in 2013 and 2014.
The three big tax cut packages hurt the state’s bottom line, but they didn’t do much to lower taxes for Wisconsin’s lowest-wage workers. Read more
In the Wisconsin debate about whether to accept federal funding for expanding BadgerCare, there has been little attention paid to a significant inconsistency used in the arguments made by many opponents of using those funds.
New Report Takes Comprehensive Look at Weaknesses, Strengths of Wisconsin’s Labor Market
Wisconsin’s economy is adding jobs at a slow pace, wage growth has stalled, and many workers don’t have the security and opportunity they need to get ahead, according to a new Labor Day report released from the Center on Wisconsin Strategy (COWS).
The report, “The State of Working Wisconsin, 2014,” provides a thorough examination of Wisconsin job numbers, wages, poverty, and job quality.
The information on Wisconsin job growth that is included in this report is helpful in deciphering the claims of political candidates who have helped bring a great deal of attention to jobs figures. The report notes that in many ways the hardships for Wisconsin workers mirror the troubles in the national economy. But beginning in 2011, rates of job growth in Wisconsin have fallen behind the national average:
“From January 2011 to June 2014, Wisconsin gained 109,200 jobs, posting growth in the labor market of 4.0 percent.