Property Tax Cut Contributing to Deep Budget Cuts Benefits Second Home Owners and Profitable Corporations, Among Others
The budget proposed by Governor Walker includes significant new tax cuts, as well as deep cuts to the University System and public schools to pay for the proposed tax cuts and ones in the past. A new analysis by the Wisconsin Budget Project describes how one of the new tax cuts would do little to lower property taxes for Wisconsin homeowners on their primary residences.
In the budget, Governor Walker has proposed a $211 million increase over two years for a property tax credit called the School Levy Credit. But the way the credit is structured means that an estimated $103 million, or 49% of the proposed increase, would go towards boosting the bottom line of businesses and corporations, reducing property taxes for owners of second homes, cutting taxes for people who live outside of Wisconsin, and other purposes that wouldn’t do much to lower property taxes for Wisconsin homeowners.
If lawmakers want to cut property taxes, there’s a much better way of doing it that provides targeted relief to people with high property taxes relative to their incomes. Read more
Number of Childless Adults in BadgerCare Jumps by More than 7,000 in February
The latest open enrollment period for the federal insurance Marketplace caused tens of thousands of Wisconsinites to apply for health insurance – sharply increasing the number of people signing up for subsidized plans and also causing a big jump in BadgerCare enrollment. Those trends are a major success story for the Affordable Care Act, but they pose a challenge for state lawmakers.
The number of childless adults in BadgerCare has jumped by more than 10% since December, which significantly increases the program’s cost. However, that unanticipated surge in enrollment also substantially increases the amount the state could save if state lawmakers accept the federal funding that would pay almost all of the cost of covering childless adults. Read more
In a misguided attempt to encourage job growth, Wisconsin lawmakers have passed dozens of tax cuts in the last few years. Those tax cuts have a poor track record: they have not done much to improve the lives of Wisconsin’s families, and the Wisconsin economy continues to create significantly fewer jobs than the national average.
Governor Walker has overlooked the failure of tax cuts to boost Wisconsin’s economy, choosing instead to double down on a strategy that has made it harder to make investments in Wisconsin’s schools, workforce, and communities. His budget proposal includes more than $300 million worth of new tax cuts, as well as deep cuts to the University System and public schools to pay for the proposed tax cuts and ones in the past. Read more
The proposed budget bill contains a very substantial increase in state funding for Medicaid programs in Wisconsin, including BadgerCare, but it also makes a number of negative changes to BadgerCare and SeniorCare, as well as to other health care services for the elderly and people with disabilities.
A new Wisconsin Budget Project summary of the major health care portions of the budget bill explains that the largest factor in the increased spending is the much greater-than-anticipated growth in BadgerCare participation among adults without dependent children. The following chart uses Legislative Fiscal Bureau data to illustrate the comparative role of different parts of Medicaid in boosting the cost of maintaining current health care programs by $643 million during the 2015-17 budget.
As that bar graph shows, the state’s share of spending for childless adults is expected to grow by almost $383 million over the next two years, relative to the amount appropriated for the current fiscal year. Read more
The Governor and some proponents of the budget bill have understated the size of the proposed cuts to the University of Wisconsin System.
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.
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