Wisconsin Lawmakers Indicate a Willingness to Take Money from Education and Health Care to Fund Highways
Governor Walker and other state lawmakers have said they are open to redirecting money from a pot intended to support education, health care, and safe communities, and using the money for roads instead. That approach could lead to future budget cuts that damage academic opportunities for Wisconsin schoolchildren, lengthen the amount of time to graduation for University of Wisconsin students, and make it harder for communities to afford important services like trash collection and street cleaning.
State road projects are funded with resources from Wisconsin’s Transportation Fund. About a decade ago, state lawmakers froze the gas tax on each gallon of gas sold – the main source of revenue for the Transportation Fund – and inflation has eaten away at the tax’s value since then, shrinking the amount of resources available to build and maintain Wisconsin’s transportation network. The result is that there is not currently nearly enough money coming into the Transportation Fund to pay for all the highway projects lawmakers want. Read more
Governor Walker has proposed significantly increasing resources for Wisconsin’s public schools, a move that has gotten a great deal of attention – and has attracted some controversy for the size of the increase. But his budget also includes a major increase in the amount of public money that goes to pay for private school tuition, a fact that has been mostly overlooked.
Through the state’s private school choice program, Wisconsin uses publicly-funded vouchers to pay tuition at private schools across the state. To participate in the program, students must have family incomes of up to 300% of the poverty level if they live in Milwaukee or Racine (about $73,000 for a family of four) or of up to 185% of the poverty level if they live in the rest of the state ($45,000 for a family of four). About 36,000 students are expected to receive publicly-funded vouchers to pay for private school tuition next year. Read more
House Plans to Cut Medicaid Would Jeopardize Critical Health Services for Students
Wisconsin schools have a lot at stake in the debate about federal support for Medicaid. Even though Wisconsin ranks 19th nationally in the size of its school-age population, our state ranks 7th highest in federal funding for Medicaid services provided by schools.
According to a new report by the Center on Budget and Policy Priorities, Wisconsin schools received more than $187 million for Medicaid services in 2015, including more than $107 million in federal Medicaid funds. That amount is higher than in all but six other states, despite the fact that Wisconsin ranks near the bottom in total Medicaid spending per child. These figures indicate that Wisconsin schools have done a good job of utilizing federal assistance to support school-based health services.
Medicaid provides health care for more than 1.1 million Wisconsinites, including about 500,000 children, but many people are unaware of its significance for schools. Read more
Governor Walker has proposed a back-to-school sales tax holiday, a gimmick that would reduce the resources available to support Wisconsin’s schools, university system, and communities, without providing any real economic benefit.
Under the proposal, purchases of school supplies, computers, and clothing would be exempt from the sales tax for one weekend in August. This move would cost the state an estimated $11 million a year in lost tax revenue, and local governments an additional $750,000 a year in lost revenue. This reduction in revenue would make it harder for Wisconsin to make the kinds of investments in education, health, and workforce systems that can spur economic growth.
A sales tax holiday would do little to boost consumer spending or give a tax break to Wisconsin families with low incomes. There are a whole host of downsides to a sales tax holiday, including:
- Instead of encouraging consumers to spend more money, sales tax holidays simply shift the timing of the spending;
- A sales tax holiday on back-to-school items involves lawmakers picking winners and losers among types of goods that should be exempt from the sales tax;
- Sales tax holidays are not an effective tool for giving a tax cut to individuals with low incomes, since a large amount of savings is also given to people in higher income groups as well.
Governor Walker has proposed increasing the state’s Earned Income Tax Credit for some families, a move that would improve child well-being and expand economic opportunity for families with low and moderate incomes. He included the measure in his proposal for the budget period that runs from July 2017 to June 2019.
Expanding Wisconsin’s EITC would give a much-deserved break to working parents with low and moderate incomes. The EITC lets working families keep more of what they earn to help meet basic needs and pay for things that allow them to keep working, such as child care and transportation. This tax credit offers working parents a hand up by encouraging and supporting work. It’s a modest investment that can make a big difference in the lives of families.
The EITC also boosts local communities and economies across the state. It puts more money in the pockets of low-wage workers, who then spend it at local businesses to pay for things like groceries and child care. Read more
Tomorrow is April 18th, the deadline for most people to file their income tax forms without penalty. (April 17 is a holiday in Washington, D.C., pushing off the deadline for filing until today.) We hear a lot of negative messages about taxes on this day. But this Tax Day, let’s remember that creating jobs and building broad-based prosperity requires investing in what works – and we can’t do that without taxes.
To build a strong Wisconsin economy, we need to invest in assets that help businesses thrive and help hard-working people climb into the middle class. That means Wisconsin needs to continue our tradition of supporting high-quality schools and preschools, an affordable university system, a healthy workforce, and a clean environment.
Taxes make these investments possible.
When state lawmakers cut income taxes for the wealthy or for corporations, we undermine our ability to support important services that Wisconsin businesses and residents rely on every day. Read more
Wisconsin is a better place when we all do well. Unfortunately, while the wealthiest have seen their incomes skyrocket in recent decades, incomes have stagnated for the middle class and those who struggle hardest to make ends meet. It’s becoming harder to make it to the middle class and stay there.
Wisconsin’s state and local tax system, like the tax systems in most states, makes this problem worse. If you look at who pays taxes in Wisconsin, it turns out that middle-class and low-income families pay a bigger share of their incomes in state and local taxes than the wealthiest households in the state. We call on financially-stressed families to pay 8.9 cents out of every dollar they earn in state and local taxes, while the wealthiest households pay just 6.2 cents out of every dollar of income. And many corporations pay little or nothing in income taxes.
Some state lawmakers are seeking to restrict the ability of Wisconsin residents to raise new resources for schools, by banning certain types of school referendums and limiting others. The proposed measures have the potential to harm rural school districts, many of which are struggling to manage the financial effects of declining enrollments.
For a brief description of the proposed restrictions on school referendums, see this summary from the Wisconsin Association of School Boards.
One of the measures proposed would prohibit Wisconsin voters from permanently increasing property taxes to raise their school district’s state-imposed budget cap. Instead, voters would only be able to approve raising new revenues for a maximum of five years at a time. The state would invalidate referendums approved in the past that permanently raised property taxes and set them to expire after five years.
Eliminating the ability of voters to raise their property taxes on a permanent basis would hit rural school districts hardest. Read more
On Tuesday, voters in many Wisconsin school districts approved new resources for children in public schools.
Voters approved 40 out of 65 school referendums on the ballot, raising their property taxes to replace school buildings, improve academic offerings, and provide needed services to students.
Wisconsin residents voted to approve $465 million in borrowing for new construction and building updates, $228 million to expand school district operating budgets for a set amount of time, and $7 million to expand school district budgets on a permanent basis.
In a way, it’s not surprising that Wisconsin voters are willing to approve additional money to help educate children in their district. An overwhelming majority of Wisconsin residents think schools are doing a good job, according to a recent poll by Marquette University.
This map shows the location of successful and unsuccessful referendums. You can hover over a shape to get information on the district that held the referendum, the outcome, the type of referendum, and the dollar amount. Read more
$190 Million Annual Savings + Threats to Federal Marketplace = Stronger Case for Expansion
There are many reasons why it makes sense for Wisconsin to modestly increase the eligibility ceiling for BadgerCare. A new memo by the Legislative Fiscal Bureau (LFB) sheds light on and strengthens one of those reasons – the large savings for Wisconsin from increasing the BadgerCare eligibility standard for adults.
Ironically, the ongoing efforts to repeal or undermine the Affordable Care Act (ACA) may also bolster the case for expanding BadgerCare, since the individual insurance Marketplace created by the ACA was Governor Walker’s rationale for sharply reducing BadgerCare eligibility. But let’s come back to that point after taking a closer look at the fiscal effect of expansion.
Under the Affordable Care Act, states that expand eligibility of adults to 138% of the federal poverty level are eligible for substantially higher federal cost sharing. Taking that step would qualify Wisconsin for reimbursement of at least 90% federal funding for the costs of covering childless adults, compared to the 58% reimbursement rate in effect now. Read more