Americans are driving fewer miles than they did ten years ago, reversing a decades-long trend. Given the magnitude of the change and the implications for the future of transportation, state legislators should think about moving away from policies that support expanding highways at the expense of support for communities, schools, and health care.

“The Driving Boom is over,” declares U.S. PIRG, in their new report A New Direction. Americans drove more miles nearly every year between the end of World War II and 2004, according to the report. But after 2004, something unusual happened: Americans began driving less, both on a per capita basis and overall. Young people, especially, are driving fewer miles than their predecessors.

The chart below, taken from the report, shows the recent decline in miles driven, which started before the recession.

This recent New York Times article also describes the decrease in miles driven. The article profiles one professional in Charlotte, North Carolina, who uses his car so infrequently that he occasionally misplaces it. Read more

In his proposed budget, Governor Walker recommends setting aside a portion of education funding to distribute to schools based on their performance. While this proposal might sound attractive on the surface, it will result in significant funding increases for schools with few low-income students, disabled students, or English language learners. Schools with larger percentages of those students would be allocated a much smaller share of funding.

The Governor is advocating allocating the following amounts for schools over the coming two-year budget period, based on a school report card accountability measure developed by the Wisconsin Department of Public Instruction:

• $24 million for schools that score in the highest category in DPI’s school report cards;
• $30 million for schools that improve their score on the school report cards by at least three points over the previous year; and
• $10 million for schools that score in the category of “fails to meet expectations,” if the school submits an improvement plan that is approved by DPI.

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Every $1 Invested Generates $6 in Additional Revenue

Governor Walker has made it clear that he is a fan of smaller state government. That’s why it’s notable that he has proposed adding 32 full time equivalent (FTE) positions at the Wisconsin Department of Revenue. The positions would focus on improving delinquent tax collections, reducing fraud, and following up on federal audits of state tax filers.

The legislature’s budget committee is scheduled to make a decision on Wednesday on whether to add the positions.

Here is the breakdown of how the new positions would be allocated by purpose:

• Delinquent tax enforcement, 15 FTE. Staff filling these positions would encourage or force individuals and businesses to pay delinquent taxes.
• Tax fraud enforcement, 13 FTE. Staff filling these positions would review income tax returns and tax claim forms for errors and fraud. Special scrutiny would be paid to returns claiming the Earned Income Tax Credit or the Homestead Credit, both of which benefit low-income Wisconsinites.

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The second Joint Finance Committee (JFC) meeting this week will be on Wednesday, May 15, starting at 10:00.  A full list of the items being considered can be found here, with links to each of the papers.   

One of the significant areas of discussion will be the Department of Revenue (DOR) budget, which includes a net increase of 32 positions to improve tax collections and fight fraud.   In another Budget Project Blog post today, Tamarine Cornelius explains that the new positions are expected to generate more than $6 in state tax revenue for each dollar invested.    

Other agencies on the agenda Wednesday include DOA, DNR, a few DHS issues (Care Facilities and Quality Assurance), and Ag (DATCP).  The outline below includes links to all six of the papers on DOR issues, as well as a very incomplete listing of other issues coming up Wednesday, with links to additional information and to some of the many Legislative Fiscal Bureau papers on those issues: 

Revenue — Tax Administration

• Audit Bureau and Compliance Bureau Revenue Collection Personnel (Paper #555)
• Increased Resources for Debt Collection (Paper #556)
• Federal Audit Reports Enforcement Activities (Paper #557)
• Increased Resources for Delinquent Tax Collection Activities (Paper #558)
• Tax Fraud Enforcement (Paper #559)
• Veteran Employment Tax Credit (Paper #560)

Administration — General Agency Provisions

• Capital Investment Program (Paper #100)
• Community Development Block Grant Administration (Paper #101)
• Regional Intergovernmental Affairs Positions (Paper #103)
• Low-Income Weatherization and Energy Assistance Program Allocation Changes (Paper #105)

Administration — Procurement

• Cost-Benefit Analysis Exceptions, Business Ownership Certifications, and Bidders List (Paper #126)

Health Services — Care Facilities and Quality Assurance

• Contracted Services for Mental Health Clients (Paper #362) 

Natural Resources — Stewardship

• Stewardship Debt Service (Paper #450)
• Stewardship Bonding Allocations (Paper #451)

Jon Peacock Read more

Monday’s Issue Areas Include Dept. of Corrections, Dept. of Administration, and HIRSP 

The Joint Finance Committee is expected to have three executive sessions in the coming week, and the dates, times and agendas have been set for the first two.   The committee will be voting on budget issues Monday, May 13, starting at 2:00 p.m., and again on Wednesday, May 15, starting at 10:00 a.m. 

A full list of the items being considered by the JFC on Thursday can be found here, with links to each of the papers.   Here’s a very incomplete list, with links to additional information and to a few of the many Legislative Fiscal Bureau papers on those issues: 

Workforce Development 

• Reestimate Unemployment Interest Payments and Transfers (Paper #737)
• Unemployment Insurance — Work Search Requirements (Paper #738)

Corrections

• Overtime and Permanent GPR Reductions (Paper #220) 
• Adult Populations, Population and Inflationary Cost Increases, and Prison Contract Bed Funding  (Paper #225) 
• Additional Funding and Positions for GPS and Electronic Monitoring of Offenders (Paper #230)
• Juvenile Population Estimates, Statutory Daily Rates, and Serious Juvenile Offenders (Paper #235)
• Deletion of Funding for Vacant Positions in Division of Juvenile Corrections (Paper #236)

Insurance 

• Health Insurance Risk-Sharing Plan (HIRSP) Board Proposal for Transition to Individual Market (Paper #381)

Jon Peacock  Read more

Will Lawmakers Use the Increased Revenue in Ways that Reduce the Structural Deficit or Exacerbate It?   

State legislators working on the 2013-15 budget got some very good news today.  A new paper from the Legislative Fiscal Bureau estimates that tax collections in the current fiscal year (which ends on June 30) will be $215 million more than previously anticipated.  That stronger base of revenue is pushing up the amount anticipated in each of the next two years by $180 million, for a total (three-year) increase by the end of the 2013-15 biennium of $575 million. 

Although today’s news could trigger fights about the best ways to use the increased revenue, the rosier revenue picture should nonetheless make it easier for the majority party to fashion a compromise that addresses the competing priorities of various Republicans, including adding to the meager K-12 education funding increase recommended by the Governor.  

The biggest question in my mind is whether lawmakers will use the added revenue in ways that reduce the $664 million budget hole (“structural imbalance”) that the Legislative Fiscal Bureau said the Governor’s budget would create for the 2015-17 biennium. Read more

The prospects for an increase in the funding budgeted for Wisconsin’s public schools look a bit stronger now, after 13 Assembly Republicans released a letter Tuesday expressing their support “for an increase in K-12 funding and an increase in revenue limits.” 

Although the Governor’s budget bill does contain an  increase in school aid, it’s a very small increase and the revenue cap is frozen – which means that any boost a school gets in general aid has to be offset by reduced property tax revenue.  (See our two-page issue brief on the K-12 education budget.) 

It’s hard to say how much difference it will make that 13 Republican Representatives are willing to publicly say they support increased school aid and higher revenue limits.  There already appeared to be enough support among Republicans in the Senate to achieve at least a small boost for schools.  The letter from their colleagues in the Assembly strengthens the bargaining position of the Senate supporters of increased school funding when a deal on K-12 issues is worked out between the two houses. Read more

Budget reserves have been in the news recently, with many legislators sharply rebuking the University of Wisconsin System for maintaining a sizable reserve.  Yet there’s been virtually no attention paid to the state’s general fund reserve, which suffers from the opposite problem – the current reserve requirement is less than 0.5%.   A new analysis from the Wisconsin Budget Project notes that the budget bill once again amends the statutes to postpone increasing the state’s miniscule reserve requirement.

In general, budget reserves are a good thing, as the new Wisconsin Budget Project analysis points out. If the state had a more substantial budget reserve, it could use the reserve to cover small or moderate-sized budget gaps that occur between budgets when an economic downturn causes revenues to be less than expected, or spending to be higher. Currently, the state usually addresses these gaps by requiring agencies to lapse funds — often with short notice — or by passing a budget repair bill that cuts spending or increases revenues. Read more

Third Executive Session, on May 9, Will Include Broad Range of Issues

The Joint Finance Committee (JFC) only met once last week and has scheduled just one executive session on the budget this week, on Thursday, May 9.  The committee will have to shift into a higher gear over the rest of the month; so don’t be surprised if they have three meetings a week over the next few weeks. 

The May 9 executive session on the budget will start at 10 a.m. in the JFC hearing room – 412 East.   Some of the budget issue areas on Thursday’s agenda include Shared Revenue, property tax levy limits, residency requirements, the Wisconsin Economic Development Commission, and the Technical College System.

Although property tax credits, such as the Homestead Credit, are one of the general subject areas on the agenda, there isn’t a Fiscal Bureau paper on the funding for that particular credit (although there will subsequently be one about the proposed penalties for fraudulent claims).  That makes it considerably less likely that the JFC will vote on one of our concerns – adjusting the Homestead Credit for inflation.  (See our blog posts on that topic.) 

A full list of the items being considered by the JFC on Thursday can be found here, with links to each of the papers.   Here’s a very incomplete list, with links to additional information and to a few of the many Legislative Fiscal Bureau papers on those issues: 

Employment Relations Commission 

• Restructuring the Employment Relations Commission (Paper #265)

Shared Revenue and Tax Relief – Direct Aid Payments  

Shared Revenue and Tax Relief  — Property Tax Credits 

Shared Revenue and Tax Relief – Property Taxation 

• County and Municipal Levy Limit Carry Forward Adjustment (Paper #605)

Residency Requirements 

• Local Government Employee Residency Requirements (Paper #554)

Wisconsin Economic Development Corporation 

• Increased Funding for Marketing (Paper #710)
• Increased Funding for Seed Capital (Paper #711)

Safety and Professional Services — Departmentwide and Professional Regulation 
Safety and Professional Services — Buildings and Environmental Regulation 

Veterans Affairs — Veterans Homes, Cemeteries, and Memorials 

Wisconsin Technical College System 

• Performance Based Funding and General Aid (Paper #725)
• Grants to District Boards (Paper #726)
• Technical College Levy Limits (Paper #727)

Read more

It’s clear that the Wisconsin Economic Development Corporation faces challenges in properly administering the state’s economic development programs. What’s less clear is what, if anything, state policymakers are going to do about that.

Numerous problems at WEDC came to light this week, with the publication of a scathing new audit of WEDC. The WEDC is a public-private corporation that replaced the state’s Department of Commerce. The Milwaukee Journal Sentinel’s article summed up the audit’s findings:

The Wisconsin Economic Development Corp. didn’t require financial statements from companies receiving incentives; gave awards to ineligible businesses and ineligible projects; and awarded nearly $1 million in tax credits to companies for actions taken before they had signed their contracts with the state. The agency lacked strong policies and oversight on awarding taxpayer money and then did a poor job following up to see if jobs were truly being created and other goals met, the audit found.

Read more