Business Climate Rankings Consistently Fail to Reflect States’ Economic Vitality
A new business climate ranking released last week has gotten little or no press attention in Wisconsin. Perhaps that’s because the conservatives in our state who often publicize these rankings are hesitant now to draw attention to the finding that Wisconsin continues to rank 43rd in this particular analysis. But I hope the actual reason is that reporters have gradually learned that these rankings have no correlation with how states are doing economically or will be doing in the coming years.
The latest version of the Tax Foundation’s annual State Business Tax Climate Index (SBTCI), which was released on Nov. 17, says Wisconsin is ranked 43rd for the fifth year in a row (2012 through 2016). That’s down from 41st in 2011. However, you shouldn’t be alarmed because these rankings reflect little more than the Tax Foundation’s skewed wish list for corporations. Read more
State spending on corrections has climbed in recent years in Wisconsin, as spending on schools and the University of Wisconsin System has plummeted, according to a new report by the Wisconsin Budget Project. The result is that the state has fewer resources to invest in our schools, communities, and health care.
State spending on corrections has increased 7% since the 2003-05 budget period, after amounts are adjusted for inflation. That stands in stark contrast to state spending on K-12 schools, which dropped by 14% over that time. State spending on the University of Wisconsin dropped by 21% over that period.
Wisconsin now spends more tax dollars on locking people up and other corrections activities than it does educating our next generation of workers at the University of Wisconsin. Back in the 2003-05 budget, Wisconsin spent about 15% less on corrections than it did on the UW System. In the current budget that has flipped, with the state spending about 15% more on corrections than on the University of Wisconsin. Read more
SJR 55 Would Enable Private Group to Set Wisconsin’s Budget Parameters
A proposed constitutional amendment that is coming up for a public hearing this week is likely to have harmful unintended consequences. Although the proposed amendment – Senate Joint Resolution (SJR) 55 and its Assembly companion, AJR 66 – has the laudable goal of making state budgeting more transparent and more fiscally responsible, it would tie the hands of future lawmakers and delegate some of the authority to set budget parameters to an unelected private organization. One potential consequence is that Wisconsin could be prevented from withdrawing money from the Rainy Day Fund when that funding is needed most.
The proposed constitutional change would prevent lawmakers from passing a budget that causes or increases a deficit, based on Generally Accepted Accounting Principles (GAAP). GAAP is a set of accounting standards developed and periodically updated by a private national organization. The constitutional amendment would also require that every year until the state has eliminated the GAAP deficit in the General Fund (and in any other fund), lawmakers would have to use at least 10 percent of that year’s growth in the revenue deposited in that fund to reduce the GAAP deficit. Read more
The New Speaker Should Help Open up Paid Family Leave to Far More Workers
Paul Ryan attracted a lot of attention for setting some conditions before he would take the position of Speaker of the House. Especially noteworthy among those conditions was that Representative Ryan insisted on protecting his family time. Other parents can certainly appreciate that sentiment, but few workers have the rights enjoyed by members of Congress and other federal employees that help them to spend time with or care for family members.
Rep. Ryan is a member of the Twelve Percent Club – i.e. the 12% of U.S workers who have access to paid family leave. In other words, only one in eight American workers has access to the perk that Rep. Ryan enjoys, despite the fact that paid family leave is common in the rest of the industrial world. In addition, only 61% of U.S. workers are able to take paid sick leave, and only 38% are eligible for paid personal leave. Read more
The list of states that are taking federal funding to expand Medicaid got a little longer last week when Montana received approval from CMS for its Medicaid expansion waiver. That makes Wisconsin one of only 20 states that aren’t yet taking advantage of the federal Medicaid expansion funds that Wisconsinites have been helping contribute to the federal treasury.
The approval of the Montana plan reinforces a couple of key points about Medicaid expansions:
- First, even conservative states like Montana, Arizona and Alaska understand the merits of expanding Medicaid for more parents and childless adults. (Ten of the 30 expansion states have GOP governors.)
- Second, it’s possible for states to get federal waivers for compromise expansion plans.
Pro-work tax credits give a boost to thousands of veteran and military households in Wisconsin, but nearly half of those families will lose part or all of their tax credits unless Congress takes action.
Key provisions of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), both of which help families with low incomes make ends meet, are set to expire at the end of 2017. These federal credits encourage work, help children do better in school, improve the health of children and families, and strengthen the future workforce.
In Wisconsin, hundreds of thousands of households – including 36,000 veteran and military households – benefit from the EITC or the part of the CTC that benefits families with low incomes. However, 17,000 of the veteran and military families that benefit will lose part or all of their tax credits if Congress doesn’t act to protect improvements to those credits. Read more
A new proposal that would limit opportunities for voters to approve new resources for schools would in practice require districts to wait as long as three years after an unsuccessful referendum before trying again, significantly longer than the minimum two-year wait specified in the bill.
The state limits the average amount each school district may spend to educate students, but voters in a district can override the spending limit by approving a referendum lifting the spending caps.
Currently, school districts have significant flexibility in when they ask voters to approve new resources. Some lawmakers are seeking to reduce that flexibility, by requiring districts to wait at least 730 days – two years – after an unsuccessful referendum to put another referendum before voters. Under the proposal, Assembly Bill 481, districts would also be limited to scheduling elections at the same time as the annual April elections or the November elections in even-numbered years. Read more
State lawmakers have approved borrowing an additional $350 million over the next two years for highway construction and repair. That approval will drive debt repayment costs higher, take money from a pot intended to support education and health care, and once again put off a permanent solution to paying for Wisconsin’s highways.
When the budget was passed in July, lawmakers included a provision that allowed Governor Walker to seek up to $200 million this year and $150 million next year in additional borrowing authority for highways. On November 4th, the legislature’s budget committee voted to approve the entire two-year total of $350 million in borrowing authority in one shot. The vote was unusual in that it did not fall along party lines: All four Democrats on the committee joined with six Republicans to pass the measure, with another six Republicans voting no.
Wisconsin has allocated a growing share of transportation resources towards repaying money the state has borrowed to build and repair highways, and the approval of new borrowing will drive borrowing costs up even further. Read more
Wisconsin is near average in many measures of government revenue and spending, according to new figures for 2013 that were released by the U.S. Census Bureau this week. That’s nothing new, as Wisconsin has been near the middle of the pack for about a decade now.
- Wisconsin state and local governments ranked 21st among the states in the amount of taxes, fees, and other charges that they collect from state residents on a per-person basis, and 19th when that amount is measured as a share of personal income.
- Wisconsin ranks 25th in total government spending per person and also 25th when the amount is measured as a share of income.
There are many different ways to measure public revenue and spending, and Wisconsin ranked near the middle in nearly all of them, with two exceptions:
- Wisconsin ranked 11th in state and local taxes as a share of income.