The Significant Risk of Never Breaking Even on Foxconn Subsidies

Wednesday, August 16, 2017 at 5:35 PM by

When the Legislative Fiscal Bureau wrote last week that it would take until at least 2043 for Wisconsin to break even on the Foxconn subsidies, they were summarizing a Department of Administration analysis that used the “best case” assumptions. Using the same methodology and most of the same assumptions, a new Wisconsin Budget Project analysis calculates that other scenarios within the range described by Foxconn could mean that the cost of the state subsidies would not be recovered until 2050 or 2058.

Of course, the DOA analysis and our alternative scenarios all raise the question of whether we can ever expect to break even on the state’s investment and local costs. As many people have pointed out, tech companies aren’t the most stable employers, and Foxconn’s own record illustrates that point. With that in mind, our new analysis calculates how much Wisconsin would be in the hole if Foxconn pulled out of Wisconsin 25 years from now or, alternatively, if they pull out of Wisconsin in 2034 when the annual subsidy payments would end. Read more

Lawmakers Seek to Eliminate or Limit Tool that Lets School Districts Save Money

Tuesday, August 15, 2017 at 3:44 PM by

A provision included in the proposed state budget would restrict school districts from exceeding their state-imposed budget caps in order to fund money-saving energy efficiency improvements.

Currently, the state sets a limit on how much money each school district can spend through the combination of state aid and property taxes, although voters in a district can override the spending limit by approving a referendum. The hurdle is lower when the district wants to temporarily lift the district’s budget cap to allow for spending on energy efficiency projects that save the school district money: only the approval of the school board is needed. The school board must specify the payback period after which the district is expected to recoup its investment in the upgraded facilities.

Exceeding the budget caps set by the state to fund energy efficiency projects has two advantages for school districts: It enables them to raise the resources needed to make improvements to school buildings, and it saves school districts money in the long run. Read more

Under Deal, State Could Reward Foxconn for Creating Jobs that Pay Near-Poverty Wages

Thursday, August 10, 2017 at 2:09 PM by

With the state offering enormous subsidies to lure Foxconn to Wisconsin, lawmakers should at the very minimum build in requirements that the new jobs pay family-supporting wages. But the $3 billion proposed deal could result in the state cutting checks to Foxconn to pay for the creation of new jobs that pay as little as little as $23,000 per year, an income level that would put a family of four below the poverty line.

The deal would give Foxconn up to $1.5 billion of state tax money over 15 years in tax credits to subsidize the creation of new jobs at the facility and up to $1.35 billion in subsidies for the facility itself. The state would pay 17% of the salary of jobs that meet certain standards.

The problem is that the salary standards for the new jobs are exceedingly low. The proposal puts forth two possibilities:

  • The state would subsidize Foxconn jobs that pay at least $10.88 an hour, or an annual equivalent of about $23,000; or
  • The state would subsidize jobs that pay at least $30,000 per year.
Read more

Foxconn Deal Keeps Looking Worse

Wednesday, August 9, 2017 at 4:56 PM by

The massive subsides for Foxconn proposed by the Governor keep looking worse as we learn more. The most recent sobering information came this week when the Legislative Fiscal Bureau (LFB) issued a new analysis of the proposed subsidies. The figures in that August 8th analysis reinforce why a number of commentators and editors for business publications, including the editors of Bloomberg, have been extremely critical of the proposal.

Here are some of the key points in the new LFB review of the Foxconn bill: Read more

Growing Gap between Rich and Everyone Else Thwarts Economic Opportunity

Tuesday, August 8, 2017 at 4:13 PM by

It turns out that a rising tide doesn’t lift all boats.

As the economy has expanded over the past decades, prosperity has not been broadly shared. Income gains have been directed into the pockets of those who already have very high incomes, while incomes of the rest have stagnated. The result is that workers in Wisconsin and across the country are missing out on reaping the rewards of their increased productivity, while the incomes of the top 1% soar.

The incomes of the very richest have increased dramatically, while the incomes of everyone else have stagnated. Since the late 1970s, the income of the top 1% in Wisconsin has increased by more than 130%, while the income of the remaining 99% has increased just 9%. The share of all income that is captured by the top 1% has more than doubled since the 1970s, to the point where $1 out of every $6 in Wisconsin now goes to the top 1% of earners. Read more

Reviewing the Foxconn Costs and Risks (without the Rose-colored Glasses)

Wednesday, August 2, 2017 at 5:31 PM by

Different Assumptions about Foxconn Job Creation Yield Much Higher Estimates of the Cost of Jobs

The cost of the proposed new tax credits for the tentative deal with Foxconn could be far larger per job created than some people have suggested. Those costs will vary greatly depending on the ratio of spending for payroll versus the capital expenditures.

The more that Foxconn invests in its facilities and state-of-the-art automation, rather than payroll, the more the proposed deal will cost state taxpayers per job created. A new Wisconsin Budget Project report examines the potential tax credit costs based on four scenarios that make different assumptions about the number of new jobs, the duration of the project, and the amount of Foxconn spending for capital improvements. Read more

Without Action from Policymakers, Many Will Continue to be Cut Off from Economic Opportunity

Thursday, July 27, 2017 at 1:52 PM by

An improving economy should offer more people a chance to climb the economic ladder to the middle class. But too many people in Wisconsin and nationwide are still being left behind, with their path to prosperity blocked by low-paying jobs, high housing costs, and lack of access to higher education, according to a new scorecard from Prosperity Now. Families of color are among those facing the most difficulty getting by, as they continue to feel the effect of generations of wealth-stripping policies targeting households and communities of color.

There are some signs of improvement in the national economy, most notably in the unemployment rate and poverty rate.  The national unemployment rate dropped to 4.9% in 2016, according to the scorecard, nearly matching the pre-recession low reached in 2006-7. And the number of households living in poverty fell to 13.8% in 2016, the first measurable decline since 2011.

A more in-depth examination of the economic trends, however, shows that the gains have not been shared widely, particularly with regards to race. Read more

ACA Repeal “Fixes” Continue to Shortchange Wisconsin

Monday, July 24, 2017 at 5:08 PM by

The legislation to repeal and replace the Affordable Care Act (ACA) can’t be fixed, but Senator McConnell and President Trump are still trying to revive it. McConnell plans to have a vote on July 25 on a procedural measure to initiate floor debate on the bill.

The conclusion that the bill isn’t fixable is reinforced by the badly flawed amendments that have been suggested as ways of getting a few more Senate Republicans to vote for the bill. One of the many problems with the following amendments is that each of them would adversely affect Wisconsin: Read more

Trump Tax Plan Primarily Benefits the Richest Americans

Thursday, July 20, 2017 at 12:57 PM by

Trump’s Tax Proposals Would Give Richest 1 Percent of Wisconsin Taxpayers an Average $117,000 Tax Cut, and More than Half of the Total Cuts

The federal tax reform plan outlined by President Trump in April would fail to deliver on its promise of largely helping middle-class taxpayers, according to a new analysis from the Institute on Taxation and Economic Policy (ITEP). Their July 20th report concludes that the President’s proposals would shower 61.4% of the total tax cut on the richest 1 percent of Americans.

ITEP’s analysis examines the overall effect of the Trump tax plan on federal revenue, as well as its impact on taxpayers in each of the 50 states. In sum, the plan would slash federal revenue by $4.8 trillion over the next decade.

The proposed tax cuts that primarily benefit the very wealthy would come with a heavy cost for vital program and services. Reducing investments in education, health care, food assistance, and other critical programs is too steep a price to pay for giving the very rich a tax cut that exceeds twice the income of the typical Wisconsin worker. Read more

Categories: Blog, FEDERAL BUDGET & TAXES, federal issues | Comments Off on Trump Tax Plan Primarily Benefits the Richest Americans

Repeal without Replacing: A Health Care Disaster

Tuesday, July 18, 2017 at 6:13 PM by

A month or two ago, President Trump described the House plan to repeal and replace the Affordable Care Act (ACA) as being “mean,” and he was right. Yet today he endorsed a far meaner approach – repealing the ACA without a replacement plan – even though he was the one who shot down that idea when Congress was considering it back in January, and despite the fact that a wealth of data demonstrate what a disaster that approach would be.

Senator McConnell is trying to breathe life into the strategy of repealing the ACA without first coming up with a replacement. That became his fallback plan today after it became apparent late yesterday that there aren’t enough votes to even begin the floor debate on the extremely unpopular “repeal and replace” plan, which a small group of Senators spent the last couple of months developing behind closed doors.

President Trump endorsed the new strategy, but some of the other Republican lawmakers who opposed the idea early this year – and whose positions are less fluid than Trump’s – have said they are still unwilling to wipe away the current law without having a replacement plan. Read more

Categories: Blog, federal issues, HEALTH & HUMAN SERVICES, health care reform | Comments Off on Repeal without Replacing: A Health Care Disaster