Minnesota releases updated revenue and spending projections in early December of each year, and the new figures released today are very positive – a net gain in the Minnesota budget balance of about $1 billion. Let’s hope that Wisconsin can come close to matching that when our new tax and spending estimates are released in late January or February.
As we noted in a blog post about two weeks ago, many people across the country are watching Minnesota and Wisconsin carefully because of the very different directions that the two states have gone in fiscal and health care policy over the last couple of years. Because of the many demographic similarities between the two states, the divergent choices by policymakers set up an interesting experiment. In that context, today’s budget news from our neighbor to the west could be an early point in their favor, but we won’t have any basis of comparison in Wisconsin for another month or two. Read more
Today is Cyber Monday, the first day back in the office after Thanksgiving – and one of the biggest days of the year for online shopping. One thing that will be different this shopping season is that for the first time, Amazon will be collecting sales tax on purchases made by Wisconsin residents. Amazon’s move is expected to increase state revenue by $30 million in the first year.
Wisconsin residents always owed sales tax on purchases made online, but until recently, the state could not compel Amazon and other online-only retailers to actually collect the tax. Instead, Wisconsin residents were supposed to report their purchases and pay the sales tax on their income tax forms, something few people did. The fact that online-only retailers did not charge consumers sales tax – even though sales tax is owed on the purchases – gave online-only retailers a competitive advantage over retailers with “bricks and mortar” presences in the states. Read more
Thousands of out-of-work Wisconsinites who have been searching for a job for a long time will lose their unemployment benefits at the end of the year, unless Congress acts to renew federal unemployment benefits. According to a new analysis from the Wisconsin Budget Project, 65,500 jobless workers in Wisconsin will lose access to federal benefits over the next six months, as shown in the chart below.
Most states pay unemployment insurance benefits to jobless workers for a maximum of 26 weeks. In times of higher unemployment, Congress authorizes federally-funded benefits that provide assistance to people who reach the limit on their state-financed unemployment insurance. If the program that provides federal unemployment benefits is allowed to end, the maximum duration of unemployment benefits for jobless workers in Wisconsin will drop by more than half, from 54 weeks to 26 weeks.
$900,000 per Month Increase in DOC Costs Is One of Several Unintended Effects
Rather than accepting enhanced federal Medicaid funds, the Governor proposes to pay for a 3-month delay in BadgerCare eligibility reductions by also delaying positive aspects of the budget bill, including the expansion of coverage for adults who don’t have dependent children. Obviously, the most disappointing aspect of financing the bill in that way is that the Governor is breaking his promise not to create a coverage gap for low-income childless adults. Another smaller and much less obvious problem is that the Special Session bill being considered by the Joint Finance Committee on December 2nd creates a $2.8 million GPR hole in the Department of Corrections budget.
The expansion of coverage to include adults without dependent children is projected to save the DOC about $900,000 per month by picking up a significant portion of the cost of hospitalizing inmates. Read more
November was Native American Heritage Month, but for most of the month all we have heard about was the mascot issue and casinos. The national stories about the “code-talkers” during World War II were a welcome exception to the dearth of positive stories about American Indians during the first half of the month, though those stories drew attention to just a very brief glimpse of Indian history and contributions.
In addition to wishing that the media would shed more light on Native Americans’ contributions to American history and culture, I would like to hear more about the economic challenges facing American Indians, particularly those living in “Indian country.” The following graphic, prepared by my colleague Tamarine Cornelius, shows that the unemployment rate for Native Americans in Wisconsin is almost twice the rate for non-Hispanic whites, and the poverty rate is more than two and a half times as high for Native Americans (25.3% vs. Read more
Yesterday’s competition between the Green Bay Packers and the Minnesota Vikings ended in a rare tie game. That game is finished, but there is another competition that is still going on between Wisconsin and Minnesota, one that involves job creation and economic growth, rather than touchdowns and field goals.
Wisconsin and Minnesota are similar states in many ways, but we are taking very different approaches to growing our state economies. Policymakers in Wisconsin have focused on cutting taxes, especially for corporations and the wealthiest, sharply reducing state spending on K-12 education and the university system, and limiting tax credits and other services that give a boost to struggling families. In contrast, policymakers in Minnesota have targeted the state’s highest earners for an increase in income taxes, kept education spending on an even keel during the recession, and expanded Medicaid.
The different approaches to economic development amount to a type of experiment, one that policymakers from other states will be watching with a close eye. Read more
Wisconsin has been reducing investments that give families access to high-quality child care, a move that will hurt children’s school-readiness and success in later life.
The state legislature’s freeze on child care payments – payments that help make it possible for parents who work at low-wage jobs to work – has taken a negative toll on parents, children, and child care providers, according to a new report from the Wisconsin Council on Children and Families. The legislature has frozen payment rates for the past seven years, with the effect that providers are dropping out of the program, and parents are having difficulty finding the child care they need in order to work.
The reduced investments in child care stand in stark contrast with Wisconsin’s past approach to helping low-wage parents get the child care they need. In 2006, before the rate freeze, the maximum payment rate covered 75% of child care slots statewide, according to the report. Read more
Next year is the 50th anniversary of the “war on poverty,” and we can expect a lot of debate and posturing then about that ambitious undertaking. Expect some legislators to use the opportunity to urge that policymakers renew their commitment to fight poverty and reinvigorate some of the elements of that agenda, while others will take that opportunity to declare the war on poverty a failure and a mistake.
Rep. Paul Ryan is preparing to play a role in next year’s debate by offering his own views about a very different type of war on poverty, which may also be a war on the current spectrum of anti-poverty programs. An article in the Washington Post this morning reports on his endeavor:
“Paul Ryan is ready to move beyond last year’s failed presidential campaign and the budget committee chairmanship that has defined him to embark on an ambitious new project: Steering Republicans away from the angry, nativist inclinations of the tea party movement and toward the more inclusive vision of his mentor, the late Jack Kemp. Read more
After the Illinois governor signs legislation next week approving same-sex marriage, Wisconsin will be nearly surrounded by states that allow same-sex marriage. An overlooked (and let’s face it, kind of unromantic) aspect of the growth in the number of states that allow same-sex marriage is that those states benefit from a small but important boost to their economies – a boost that Wisconsin won’t be sharing any time soon.
Next week, the Illinois governor is slated to sign a measure that makes same-sex marriage legal in that state. That move will bring the total number of states that allow same-sex marriage to 16, including our neighboring states of Minnesota and Iowa.
Wisconsin’s Constitution defines marriage as between one man and one woman, so Wisconsin won’t be joining the states that allow same-sex marriage in the near future. Too bad, because that means we will miss out on some of the economic benefits that go hand in hand with same-sex marriage – like the ones that Illinois will be experiencing. Read more
There are a lot of ways in which America’s free market health care system boosts cost to levels far in excess of the costs anywhere else in the world, even though Americans aren’t healthier, and don’t appear to be getting the best health care. Most of those ways are perfectly legal; others not so much.
Once in a while a health care corporation that is exploiting the opportunities to maximize profit in unethical or illegal ways is called on the carpet and forced to pay restitution for their shady exploits. There have been two examples of that in the last week or so, and both could help Wisconsin fill a hole in the state’s Medicaid budget.
Last week the U.S. Department of Justice announced that Johnson and Johnson will pay $2.2 billion to settle a lawsuit related to deceptive marketing and distribution of two antipsychotic drugs, Risperdal and Invega. The drug company misrepresented what the drugs should be allowed for, and allegedly paid kickbacks to doctors and agencies to make sure their drugs were prescribed for certain off-brand purposes. Read more