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 Read more 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.
2011 was a budget year like no other in Wisconsin’s history. We take a look back at the year with a Top Ten list of the Wisconsin Budget Project’s most popular blog posts.
#10 Questions to Ask Before Privatizing Government (June 3, 2011)
Ten basic questions to help policymakers, the public, and the media debate privatization proposals.#9 Grim Days for Schools, with Grimmer Days Ahead (November 16, 2011)
Severe budget cuts to public education in Wisconsin have resulted in thousands of job losses, larger class sizes, and fewer academic opportunities for students. #8 Public Employees Receive First Diminished Paycheck (August 25, 2011)
Public employees with relatively low salaries or hourly wages stand to lose thousands of dollars a year, the equivalent of as much as six months of grocery costs.#7 Value of Governor’s “Tools” in Dispute (April 13, 2011) Read more
Many local governments will not be able to take full advantage of the “tools” proposed by the Governor and will be negatively impacted due to circumstances beyond their control.
Today, public sector workers in Wisconsin will receive their first paycheck reflecting reductions in their compensation mandated by the budget repair bill passed earlier this year.
Public employees with relatively low salaries or hourly wages stand to lose thousands of dollars a year, the equivalent of as much as six months of grocery costs. Some public workers at the lower end of the income spectrum could face as much as 15% in lost income and increased costs beginning this week.This pay cut will hit low-wage public employees the hardest, and could potentially push many families that are barely scraping by into insolvency. Wisconsin Council on Children and Families highlighted these changes in a recent brief, showing how the cuts in compensation could affect low- and moderate-wage workers like janitors, beginning teachers, and public school kitchen workers.
The budget repair bill, which inspired massive protests across the state, requires public sector workers to pay a larger portion of their health insurance costs and contribute more to their retirement accounts.
If you just can’t get enough detailed information about Wisconsin’s 2011-13 biennial budget (Act 32), then you can celebrate that the Legislative Fiscal Bureau has just released the final version of their comprehensive summary of the budget. It’s a comparative summary that describes every area of the Governor’s original budget, and all of the subsequent changes made by the Finance Committee and full Legislature, or by the governor’s veto pen.
The new LFB document isn’t restricted to Act 32. It also includes a section about the “budget repair” bill (Act 10) and sections summarizing a couple of other bills enacted this session that relate to fiscal policy issues. The new comparative summary is 918 pages long, but online you can access it by agency. However, if you’re less of a glutton for budget minutiae, the Wisconsin Budget Project’s summary Read more is a mere 43 pages – focusing primarily on issues relating to children and families.
The Joint Finance Committee’s version of the budget bill delegates sweeping power to the Department of Health Services (DHS) to make changes relating to Medicaid and BadgerCare eligibility, services, cost-sharing, and enrollment procedures. Until January 2015, those policy choices, formerly the responsibility of state legislators and the Governor, would be handed over to an unelected official, the DHS Secretary.
These provisions, which have now been removed from the budget repair bill (Act 10) and folded into the biennial budget, raise constitutional concerns regarding the separation of powers between the legisaltive and executive branches. Like Act 10, the proposal strips from Wisconsin citizens our right to hold state legislators accountable for the policy changes that could affect hundreds of thousands of Wisconsinites. A new WCCF blog post Read more provides a link to a June 5th Legislative Reference Bureau drafter’s note, which raises questions about the constitutionality of the power shift. In addition, the blog post explains how the JFC version exacerbates the problem of excluding the public because it allows the sweeping grant of authority to be exercised by the DHS Secretary without using rulemaking or holding so much as a single public hearing.
Legislators passed the budget adjustment bill with the intent of severely curtailing collective bargaining rights of public employees at the state and local level. Ironically, their actions may have the unintended short-term effect of making it more difficult for unions to make financial concessions.
The budget repair bill, part of which is currently tied up in court as Act 10, was justified in part as a way to make it easier for local governments to impose significant compensation cuts on local employees without having to bargain with the unions. Removing the ability for public employees to bargain on benefits and limiting their ability to bargain on wages would (in theory) make up for the steep cuts in local aid in the Governor’s 2011-13 budget. Local governments have pointed that the governor’s cuts exceed the amount that can be recouped in compensation cuts to local employees by a significant amount. We explored this topic in an April 13th blog post Read more .
The task of balancing the biennial budget became slighlty less onerous a week or two ago when the Legislative Fiscal Bureau announced that state revenue collections in the current fiscal year and next biennium would be $636 million more than previously estimated. Unfortunately, the news this week isn’t nearly as upbeat; in fact, several developments are cutting into the balance created by the improved revenue forecast.
Three pieces of news chip away at that balance:
- The Fiscal Bureau estimated (in Budget Paper #340) that the state share of Medicaid related spending is likely to be about $63 million (GPR) higher than the Dept. of Health Services projected;
- GOP leaders released the summary of a new budget adjustment bill that, among other things, will reduce anticipated agency lapses to the General Fund by $54 million, presumably because agencies haven’t been able to find the full amount they were directed to lapse; and
- The new budget adjustment bill would also make it official that the state won’t realize the anticipated $29.8 million in savings in the current fiscal year from increase state employee contributions for health care and retirement benefits, since the bill requiring those changes is stalled in the courts.
To help balance the biennial state budget, Governor Walker is proposing drastic cuts in aid to local governments, including counties, municipalities, and school districts. Cuts proposed by the Governor over the biennium include:
• $834 million GPR to public K-12 schools;
• $100 million GPR in shared revenue to counties and municipalities;
• $64 million in segregated fund state support for local recycling programs;
• $48 million in segregated fund state support for local transportation aid;
• $10 million GPR for mass transit aid; and
• $8 million GPR for juvenile justice at the local level. Read more
In both the biennial budget bill and the 2011 budget adjustment bill, the Governor has proposed a number of policy changes that he says will allow local governments to reduce costs by an amount that will more than make up for reductions in state aid. The bulk of these “tools,” as the Governor refers to the policy changes, hinge on implementing restrictions on collective bargaining rights, which would allow local governments to unilaterally require public employees to pay more for their retirement and health insurance benefits.
A new Budget Project brief compares how the fiscal and non-fiscal items in the final version of the “budget repair” bill (2011 Act 10) compare with the versions recommended by the Governor and then by the Joint Finance Committee. It condenses into two pages the highlights of the Legislative Fiscal Bureau’s 48-page comparative summary of the bill.
The bottom line is that bill signed by Governor Walker on March 11 includes almost all of the Governor’s proposals that were judged to be non-fiscal policy items by the Legislative Fiscal Bureau . (See our Feb. 23 blog post Read more .) However, because the Senate didn’t have a quorum, it couldn’t vote on spending increases, so none of the increases proposed by the Governor to fill projected shortfalls could be included. Although it appeared that a deal could have been reached that included all of the budget items that make changes relating to the current fiscal year, while putting non-fiscal measures on a somewhat slower track, Republicans essentially decided to do the opposite.
What does the change to the Homestead Tax Credit mean for low-income households? How much is the proposed cut to technical colleges? How might income limits for low-income health care change? Wisconsin Council on Children and Families (WCCF) has put together a two-page summary of the effects of the biennial budget and budget adjustment bills on working families that answers these questions and more.
The new release by WCCF includes a brief, easy-to-understand synopsis of proposed cuts in tax credits, health care, child care subsidies, and transit programs, and also includes descriptions of worrisome policy changes in those programs that would shut out public input. This two-page summary gives an overview of how specific proposals would affect Wisconsin’s working families, and is just the right length to share with your family, coworkers, or friends interested in state budget issues.The link to the summary, “Effects of the Biennial Budget and Budget Repair Bills for Working Families,” is here Read more .