- Establish formulas for capping the rate of revenue growth for the state, each school district and technical college district, and most other local governmental units.
- Require state revenue collected in excess of the cap to either be deposited into a budget stabilization fund or returned to taxpayers in the next fiscal year.
- Require local revenue in excess of the cap to be returned to taxpayers in the next fiscal year.
- Limit spending from the state budget stabilization fund – so it can only be used: a) to provide tax relief, b) for certain emergency events, or c) in a fiscal year in which the amount of allowable revenue is greater than the amount of collected revenue.
- Is it appropriate to always prevent policymakers from using budget-balancing strategies that push back the fiscal pain, such as borrowing from another fund or refinancing debt (as was done by Walker and the legislature in both the budget and budget repair bills), no matter how dire the state’s economic and fiscal circumstances?
Almost all of the sponsors of AJR 100 are Republicans, with the exceptions of Rep. Molepske and Rep. Ziegelbauer (who is an Independent). However, a Senate Democrat, Julie Lassa, is circulating a bill to require the state to use GAAP accounting. Her proposal would actually require the current GAAP deficit to be paid down at a faster pace than AJR 100, but Senator Lassa wouldn’t make the changes constitutional requirements. Thus, the debate over the issue is likely to boil down to the question of whether this sort of fiscal policy belongs in the Wisconsin Constitution or in the statutes.
Will Procedural Delay Shed Some Sunlight on Rainy Day Fund?
The proposed constitutional amendment (AJR 21) to establish a “fiscal responsibility” fund for Wisconsin was debated on the Assembly floor Thursday, and the measure’s proponents got most of what they hoped for. They fended off all 6 amendments that were offered by Democrats, and the measure was moved to the “third reading” stage on a party-line vote of 56-39 (with Rep. Zigelbauer, an Independent, joining the Democrats in voting “no.”).
The only disappointment for the authors of the measure (AJR 21), was that they were unable to muster a two-thirds vote to suspend the rules and advance the bill to a final Assembly vote. As a result, the fast-tracked bill has been sidetracked temporarily – until the next floorperiod begins on May 10. Although I expect the measure to be approved then, the 3-week delay creates a least a modest hope for shedding some light on the concerns we have about the very restrictive standards for using the rainy day fund. Read more
Hurry Up and Wait: Assembly Unnecessarily Rushes Passage of Constitutional Amendment for a Rainy Day Fund
Recently Introduced Resolution Gets Floor Vote Today
Amending the Wisconsin Constitution involves a long and deliberative process. A joint resolution must be approved by both houses of the legislature in one biennial session, and then reintroduced and approved again (without any changes) in the next two-year session. It must then be ratified by Wisconsin voters in a statewide referendum. Thus, a constitutional amendment proposed now can’t receive final approval any sooner than the first statewide election in 2013.
In light of the importance of constitutional changes, the long process is intended to ensure careful consideration of a proposed amendment. With that in mind, it is very surprising and disappointing that a recently proposed constitutional change requiring contributions into a rainy day fund is being rushed through the Assembly. The proposal, Assembly Joint Resolution 21, was introduced on April 1 and is scheduled for a vote on the Assembly floor today. Although establishing a robust rainy day fund is a laudable endeavor, the proposed standards for taking money out of the fund are so strict that a majority of legislators wouldn’t have been able to tap the fund (without a two-thirds vote in each house) during either the 2009-11 biennial budget or the current 2011-13 budget process – despite the dire effects of the Great Recession on state revenue and safety net programs. Read more
The Wisconsin Budget Project has released a new analysis of a proposed amendment to the state Constitution that would require the state to make specific contributions to a rainy day fund.
Establishing a rainy day fund could help cushion against future economic downturns; however, this proposal would make the fund difficult to access in times of need and could have the side effect of driving up state-imposed fees. Worse, it would enshrine these changes in the state constitution, severely limiting the Legislature’s options for confronting a budget crisis.
The proposed constitutional amendment, Assembly Joint Resolution 21, would:
- require contributions to a state “fiscal responsibility fund” intended to be used in a recession;
- specify that if the fund level gets high enough, the excess must be returned to taxpayers; and
- have the effect of capping state taxes (but not property taxes).
There are some positive aspects to this proposal. A robust rainy day fund would have been very useful in the current situation, as the state struggles with options to fill the revenue shortfall in the 2011-13 budget. Read more
In the future, will a supermajority of the Legislature be required to raise tax rates? The current Legislature continues to take steps to move us closer to such a requirement.
When the Wisconsin Budget Project last posted on this issue, it was to report that the Governor had proposed a bill in the special session that would require a two-thirds majority of the Legislature to raise the rates for the sales, individual income, or corporate income taxes. The supermajority requirement would not apply if a statewide referendum approved the hike.
That supermajority bill has passed the Assembly and is scheduled to be voted on in the Senate on Tuesday. Meanwhile, a more restrictive proposed constitutional amendment has been introduced. Unlike the bill, the proposed amendment does not include a provision to bypass the supermajority requirement if a statewide referendum approves an increase in the tax rate. Read more
A proposed amendment to the Wisconsin Constitution got a boost Tuesday from the voters in all of the 53 counties that put the proposal to an advisory vote. The measure would prevent state lawmakers from transferring dollars from the Transportation Fund to use for other purposes. Governor Dole and the legislature used such transfers to help the state close holes in the General Fund budget, to the consternation of highway builders and other supporters of transportation spending.
Advisory referendums often don’t have much impact, but in this case I think the proposal has an excellent chance of becoming part of the state constitution.
Support for the measure was strong in all 53 counties, ranging from 61.5 percent in Trempealeau County to 85 percent in Dodge County. It is likely to be taken up by the legislature early in the session, but if it’s approved (which appears likely) it will need to be passed again during the 2013-14 legislative session, and then must be ratified in a statewide referendum. Read more