The Joint Finance Committee (JFC) meets again this week on Thursday, May 23, starting at 10:00 in Room 412 E.   Some of the major areas coming up on Thursday are the Department of Justice, DOT, and the UW System.  (It appears that the committee will not meet on Friday, May 24.)    

A full list of the items on the May 23 agenda can be found here, with links to each of the papers.   The outline below includes links to a few of the many Legislative Fiscal Bureau papers: 

Financial Institutions 

• Regulation of Rental-Purchase Companies (Paper #275)

Justice 

• Internet Crimes Against Children Taskforce (Paper #392)
• GPS Tracking Grant Program for Individuals Subject to Domestic Abuse or Harassment Restraining Orders or Injunctions (Paper #415)
• Transfer the Office of Justice Assistance (Paper #405)
• DNA Collection at Arrest and the DNA Analysis Surcharge (Paper #410)  

Transportation — Local Transportation Aid 

• Mass Transit Operating Assistance — Convert Funding to GPR and Mass Transit Funding Level (Paper #640) 

Transportation — State Highway Program

• Major Highway Development Funding (Paper #652)
• State Highway Maintenance — Routine Maintenance Funding and Program Restructuring and Traffic Signal and Intelligent Transportation System Installation, Replacement, and Rehabilitation (Paper #657)

Higher Educational Aids Board 

• Reestimate Wisconsin Covenant Scholars Grants (Paper #365)
• Dental Education Contract (Paper #366)

University of Wisconsin System 

• PR Appropriation Balances (Paper #675)
• GPR Funding Increase and Compensation Plans (Paper #676)
• Incentive Grants (Paper #677)

Jon Peacock Read more

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.

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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

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

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

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

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.

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Legislative Proposals Squeeze Local Governments from Many Directions 

In Wisconsin and across the country, most government bodies finance the cost of post-retirement health benefits for their former employees on a pay-as-you-go basis.  A number of Republicans in the legislature want to change that and begin requiring local governments, including school districts, to pre-pay those benefits for any public employees hired after 2014. 

Evidently, the proponents of the change decided that converting to up-front financing of those benefits is working so well for the U.S. Postal Service that it’s time to do much the same thing for local governments.  Okay, that’s probably not their reasoning, and I have to confess that I’m not sure what their primary argument is.  However, a good State Journal article by Steven Verburg about the debate over the proposed legislation says that the bill’s proponents contend their intent is to protect workers from being cheated out benefits they have been promised. Read more