Why haven’t the property tax cuts included in Governor Walker’s budget proposal gotten much attention from the media or community advocates? One reason might be because of the way he has structured the tax cuts, which are mingled with state support for public schools. A new budget summary from the Wisconsin Budget Project includes information about the tax cuts and other parts of the Governor’s budget that affect taxes and state revenue.
Unlike income taxes or sales taxes, property taxes are levied by local governments, including counties, cities, school districts, and technical college districts. So when state lawmakers want to cut property taxes, they can’t do it directly. Instead, they increase the amount of aid to local governments while simultaneously prohibiting those governments from increasing their budgets. The result is that local governments must then cut property taxes.
In the state budget, this method of cutting property taxes shows up as an increase in state spending in aid for local governments. Read more
Governor Walker has proposed a budget that nearly freezes an important funding source for counties and municipalities, which would make it harder for local governments to provide the services that make Wisconsin communities attractive places to do business and raise families. A new budget summary released today by the Wisconsin Budget Project describes this and other changes that would affect Wisconsin communities and local governments.
The new summary describes:
- How a near-freeze on support for communities would leave them unable to keep up with population growth, and diminish their capacity to provide police and fire services, maintain sidewalks and parks, and repair roads.
- How a proposed change in the way technical colleges are funded by the state could result in fewer resources for colleges located in poorer parts of the state; and
- How the budget would limit the amount of property taxes communities and schools are able to raise.
Though researchers disagree on the effects of “right to work” legislation on the number of jobs, what is quite clear is that such laws suppress wages. Now that legislative leaders have suddenly put a so-called “right to work” (RTW) bill on a very fast track, I hope legislators will take a careful look at a couple of recent studies that examine the economic effects and warn against following the path of the states that have approved RTW laws.
A recent report by Dr. Abdur Chowdhury, who teaches economics at Marquette, reached the following conclusion about the effects on Wisconsin income and state taxes:
“The potential net loss in direct income to Wisconsin workers and their families due to a RTW legislation is between $3.89 and $4.82 billion annually. Using a conservative estimate of an impact multiplier of 1.5, the total direct and induced loss of a RTW legislation is estimated between $5.84 and $7.23 billion annually. Read more
A new website demonstrates the magnitude of proposed cuts to education for individual school districts, and can serve as a resource for parents and other advocates for public education who want to show how the cuts will affect schools in their communities.
The website is run by School Funding Reform for Wisconsin, a group that believes that public schools are critical to the health and vitality of Wisconsin communities. The website includes estimates of dollar amounts in per-pupil aid that would be lost to individual school districts next year if the Governor’s budget is approved without changes. The website also has pie charts, like the one below, available for individuals to download and use in their own advocacy. Read more
Resources for Corrections Would Outstrip State Support for University System, under Governor’s Proposal
Wisconsin would spend significantly more on prisons and corrections than on helping students pursue their educations at the University of Wisconsin System, if Governor Walker’s budget is passed without changes.
Governor Walker has called on lawmakers to dramatically reduce the amount of support the state provides for the University System. About 180,000 students attend the University of Wisconsin System, at 13 four-year universities and an equal number of two-year institutions. Each year, the UW system awards about 36,000 degrees. Those degrees help graduating students become part of the well-educated workforce Wisconsin needs to compete in the global economy. Read more
We finally learned this week one of the major tactics being used to fill the large hole in this year’s state budget. The Governor plans to push part of the problem further into the future by delaying a $108 million debt payment that is coming due in May.
A Legislative Fiscal Bureau (LFB) memo released yesterday by Reps. Hintz and Taylor explains that there are two kinds of debt restructuring – one that has the effect of reducing the total amount of interest paid on an outstanding debt, and another type that extends the life of an existing debt and increases the total cost to state taxpayers. The planned delay in the $108 million payment is the second type. Although the LFB memo doesn’t show the full impact of the revised payment schedule, it indicates that the delay will increase debt service costs by $544,900 in 2015-16 and more than $18.7 million in 2016-17. Read more
Iowa-based Plan Offers Option to Mitigate Deep Budget Cuts
A bill unveiled today offers a compromise on how to expand BadgerCare, while helping to avoid or scale back some of the deep cuts in the budget bill. The proposed legislation could save an estimated $241 million in Wisconsin’s 2015-17 budget, while expanding BadgerCare to an estimated 81,000 adults between 100% and 138% of the federal poverty level.
The compromise legislation, which is now being circulated for cosponsors by Representative Daniel Riemer (D – Milwaukee) and Senator Jon Erpenbach (D – Middleton), is similar to the Medicaid expansion plan being implemented in Iowa because the new BadgerCare coverage for adults over the poverty level would be private insurance plans purchased through the health insurance exchange or “Marketplace,” rather than the current public plan for BadgerCare recipients. This compromise would essentially continue the sort of coverage that adults over the poverty level can now get through the Marketplace, but the subsidies would be delivered through BadgerCare, rather than through the federal premium tax credits. Read more
Governor Walker has proposed an education budget that cuts resources for children attending public schools, devotes additional public money to private schools, and cuts property taxes. A new budget summary released today by the Wisconsin Budget Project describes these and other aspects of the Governor’s education plan.
The new summary describes:
- How the proposed cuts to education would come on top of dramatic reductions in resources for public schools that have already occurred;
- How the Governor proposes to deliver a property tax cut by requiring most school districts to reduce the amount of money they taken in from property taxes; and
- How an expansion of the school voucher program would increase the state budget line for tuition at private schools by $17 million, in addition to shifting funds from public schools to voucher schools.
A national group recently issued the 2015 Assets & Opportunity Scorecard, which provides a trove of comparative data on household financial security and policy solutions. It’s a very important resource – coming at a time when new data show that income disparities in Wisconsin have reached record levels, and as a broader range of politicians have begun to offer plans for fighting poverty (see for example the plan recently offered by Senator Darling and Rep. Kooyenga).
The scorecard was prepared by the Corporation for Enterprise Development (CFED), a nonprofit organization based in Washington DC that works to expand economic opportunities for low-income families and communities. They have scored and ranked states on the basis of a wide range of outcome measures, and a second ranking compares states on the basis of how well they are doing in adopting an array of policy solutions that have been shown to increase opportunity for low-income households. Read more
Now that the Governor’s budget bill has been introduced, we can begin to see the painful consequences of policy choices that state lawmakers made last session, such as enacting large tax cuts on the basis of overly optimistic revenue projections. But the deep cuts in areas such as the UW System budget aren’t inevitable if the state reconsiders the rejection of federal Medicaid funds, stops digging the budget hole deeper by passing more tax cuts, and closes tax loopholes.
It will take quite a while to carefully dissect and analyze the Governor’s budget bill, but here are some initial comments relating to major items in his plan – to the best of my abilities in the very brief time I’ve had to study the Dept. of Administration (DOA) documents. [NOTE: After reviewing the bill more carefully, I’ve added an update in the portion about school funding, because the blow to public schools is much greater than I initially thought.] Read more