Omnibus Motion on DCF Issues Frees Up Additional TANF Funds to Address Recent W-2 Growth
The Joint Finance Committee (JFC) approved an omnibus motion (#364) late today that makes a few improvements in the Department of Children and Families (DCF) budget, but which is nonetheless very disappointing in many important respects. We’ll take a closer look at that motion soon, but here’s an overview of the good and bad news – starting with the positive parts of the motion:
- It cuts state GPR support for the EITC by less than the Governor recommended. His budget would have used an additional $27 million per year of federal TANF funds to replace state funding for the EITC. The motion reduces that funding shift to $19 million per year, thereby not siphoning off as much of the TANF funding to use elsewhere in the budget.
- The motion reduces the cut to Wisconsin Works (W-2) by $18 million, which reflects the fact that W-2 spending has grown by 8.5% since last fall, instead of declining by 5.9 %, as DCF anticipated.
Shifting Federal Funding for Low-income Families to DOR Leaves Very Large Gap in W-2 Budget
New Legislative Fiscal Bureau (LFB) papers reinforce concerns raised several weeks ago in the Budget Project’s issue brief about the federal funding being siphoned away from programs supporting low-income families. The LFB papers, which are on the May 21 agenda for the Joint Finance Committee, examine the budget bill’s proposals for the use of federal block grant funds intended to serve low-income families.
One of our concerns was that the budget makes deep cuts in the funding for W-2 based on the unrealistic assumption that W-2 participation and spending would drop by 1% each month from the level in December 2012. Although we noted that participation has been increasing, rather than decreasing, LFB paper #196 shows that the difference is even more substantial than we thought because the cost per family has also grown. As a result, W-2 expenditures have increased 8.5% since September of last year, whereas the Dept. Read more
Going, Going, Gone – How the Budget Eliminates the TANF Balance and Shortchanges Low-income Families
Several important aspects of the budget bill’s funding for public assistance programs have received little or no attention:
- The bill siphons off funding intended for low-income families and uses it for other purposes, such as tax cuts.
- The proposed budget eliminates the current $84 million balance in federal funds from the block grant known as Temporary Assistance to Needy Families (TANF), even though spending is being cut significantly for the three major programs financed with the TANF funds.
- The budget may significantly underfund Wisconsin Works (W-2), because participation in the program has grown sharply over the past three months, and the proposed W-2 spending assumes a substantial drop in participation.
A new issue brief released today by the Wisconsin Budget Project explains how the budget has the paradoxical effect of eliminating the TANF balance, even as it makes cuts to the following programs:
- It cuts W-2 funding by $34 million over the next two years;
- It reduces funding for child care subsidies (Wisconsin Shares) by about $35 million; and
- It decreases total spending for the state Earned Income Tax Credit (EITC) by about $16 million.
A proposal by Republican state legislators could have the effect of cutting the maximum number of weeks of unemployment benefits by half or more.
The new proposal would link the maximum duration of state unemployment benefits to the state’s unemployment rate. In all but the worst economies, the proposal would result in Wisconsin offering fewer weeks of unemployment benefits than the current maximum of 26 weeks. The table below shows the maximum number of weeks of unemployment benefits proposed at each unemployment rate.
If this policy had been in place over the past decade, jobless workers would have had access to far fewer weeks of state-funded unemployment benefits. The chart below shows the number of weeks of unemployment benefits that would have been available during each quarter of the last decade. The current maximum of 26 weeks of state-funded unemployment benefits would have been available only at the peak of the recession, if this policy had been in place. Read more
Preliminary Thoughts on the “Chained CPI,” from a Policy Perspective and Strategic Perspective
Until recently, most Americans probably hadn’t ever heard of the “chained CPI,” and the rest of us generally tuned out any discussion of the idea. That is likely to change significantly in the coming weeks and months, now that President Obama has endorsed it as a deficit reduction strategy. There are many different parts of the President’s budget package that I’m tempted to write about, but this one is likely to be the most hotly contested, and it’s worth starting to explore the pros and cons.
In a nutshell, the “chained CPI” is a way of adjusting the traditional measure of cost of living increases by taking into consideration that as certain goods and services become more expensive, people shift their consumption to other goods and services that are more affordable. For a good summary of the issue, see the NPR story Tuesday. Read more
Upping the Ante on an Act 10 Tactic (of Tapping TANF) Helps Free up Funds for Tax Cuts
The “budget repair bill” signed by Governor Walker two years ago today contained a number of significant changes that didn’t get a lot of attention at the time, since they were overshadowed by the tumultuous debate about the collective bargaining measures. One of those was a budget shell game that removes $37 million per year from the federal block grant known as Temporary Assistance for Needy Families (TANF).
The two-year anniversary of the signing of Act 10 is a timely opportunity to take note of that maneuver because the Governor is proposing to double down on that strategy in the 2013-15 budget. His proposed budget bill increases the size of the TANF transfer by $27 million per year.
As we explained in a WCCF blog post in July 2011, the budget repair and biennial budget bills reduced by $111 million over three years the TANF funding available for intended purposes like the Wisconsin Works program (W-2) and child care subsidies for low-income workers. Read more
Small Disagreement Suggests Deep Dispute over Role of Unemployment Insurance Advisory Council
The state Assembly passed a bill Wednesday to approve a bipartisan idea, but in the process rekindled debate about respect for collective bargaining. What made the debate interesting and significant is that it could have been avoided by simply passing the version of the bill approved by the Unemployment Insurance (UI) Advisory Council, with the full support of the labor and business groups on that advisory body.
The substantive merits of the debate, which concerned only a small part of the bill, are far less important than the procedural matter of whether the Legislature decides this session to depart from the long practice of deferring to the recommendations of the UI Advisory Council. The Council uses a consensus process that provides stability to the state laws relating to unemployment benefits and taxes. Both the labor and business groups prefer that stability to the erratic swings in the UI system that could occur if the law is changed significantly every time control of the legislature changes hands.
he automatic budget cuts included in sequestration would harm Wisconsin’s families. But it would be even worse to replace sequestration with deeper cuts in domestic programs, as some members of Congress are advocating.
A minimum wage bill, SB 4, was introduced in the Wisconsin Senate on January 31 by Senator Wirch and Rep. Mason. A total of 34 legislators have signed onto the bill. Unfortunately, none of the cosponsors are Republicans.
The minimum wage in Wisconsin has been $7.25 per hour for most workers since July 2009. Senate Bill 4 would increase it to $7.60 (except for minors and currently exempt categories of workers), and beginning in September 2014 would require the Dept. of Workforce Development to make annual adjustments for inflation. It would also allow local governments in Wisconsin to set higher minimum wages.
The minimum wage has already increased in about a dozen states this year, including 10 states where it rises annually with inflation. As an article in the USA Today reported, a total of 23 states have either increased it already this year or are considering bills or ballot measures to increases their minimum wage. Read more
Work Sharing Bill Could Be the One Easy Issue in a Very Contentious Session on Unemployment Insurance Policy
In the last couple of years, Wisconsin hasn’t exactly been aggressive in pursuing opportunities for federal funding. However, I’m guardedly optimistic that state policymakers will decide to take advantage of federal start-up funds to help initiate a work sharing program that allows employees whose hours have been reduced to collect partial unemployment insurance (UI) benefits.
As I explained in a WCCF blog post yesterday, State Senator Julie Lassa (D-Stevens Point) presented a draft of work-sharing legislation at a recent meeting of the Unemployment Insurance Advisory Council, which advises the Legislature and Governor on UI issues. The council agreed to forward the proposal to the U.S. Department of Labor for review – to ensure that Wisconsin would qualify for federal start-up funding under a law passed by Congress about a year ago that encourages states to adopt this type of work-sharing legislation. Read more