Since late spring we’ve been raising concerns that the biennial budget bill cuts funding for the welfare-to-work program known as Wisconsin Works (W-2) based on faulty assumptions. This June 17 paper examines the problem and explains how reducing W-2 spending and shifting federal block grant funds made it easier to cut state taxes in the budget bill.
This week the Walker Administration acknowledged the W-2 shortfall and submitted a plan to the Joint Finance Committee (JFC) to narrow the funding gap by $9.6 million. The plan submitted to JFC by the Dept. of Children and Families (DCF) and Dept. of Health Services (DHS) closes part of the gap by using unallocated federal funding known as “income augmentation” revenues. These funds are received by the state as the federal share of state and local spending for things like Targeted Case Management and the Medicaid HealthCheck program.
For as long as I can remember, Wisconsin legislators have talked about why non-fiscal policy measures don’t belong in state budget bills. The practice of including such items in the budget often prevents those measures from getting much public input or legislative scrutiny, and to the extent that those items do get debated, that reduces the capacity of policymakers to focus on the hundreds of important state fiscal choices that should get lawmakers’ undivided attention.
I strongly agree with the arguments for keeping non-budgetary policy out of the budget, which is why it’s so disappointing that the recently enacted biennial budget is loaded with non-fiscal measures that don’t belong in such legislation. An August 7 memo from the Legislative Fiscal Bureau provides a comprehensive list of the 118 non-fiscal policy items that were in the budget initially or subsequently added – including those that were ultimately enacted and the much smaller number that were deleted by the Legislature or vetoed by the Governor. Read more
Wisconsin’s Federal Funds Conundrum: Inconsistent Approaches Undermine Arguments about Sustainability
Short-term Federal Dollars Build up the Balance Used for Permanent Tax Cuts
I find it very puzzling how state lawmakers decide if they will accept federal dollars and how they explain their choices. State budget writers routinely accept many sources of federal funds, such as highway dollars, yet they question the sustainability of other sources – such as the enhanced Medicaid funding that would actually save Wisconsin taxpayers $119 million during the 2013-15 biennium. At the same time, other much less reliable sources of federal funds are being used to generate lapses to the General Fund, thereby helping increase the size of the permanent tax cuts in the budget bill.
These inconsistencies in how lawmakers decide what to do with federal funding are timely this week because the Joint Finance Committee votes tomorrow (July 18th) on a plan for using lapsed funds (including a couple of federal funding sources), and because of the recent news about the state’s decision not to fully utilize additional federal dollars that could bolster employment services for people with disabilities. Read more
When the end result of the budget process includes an unsavory collection of special interest measures that reflects poorly on our state, it’s time to pay attention and demand reforms in this sausage-making. A great place to start would be to keep non-fiscal policy out of the budget – at all stages of the process.
Committee Adds $30 Million GPR to Assist Hospitals with Higher Uncompensated Care Costs
This afternoon the Joint Finance Committee (JFC) approved the Governor’s plan to expand BadgerCare to cover about 80,000 additional childless adults who are below the poverty level, which is financed primarily by making almost 90,000 parents over the poverty level ineligible for BadgerCare. However, the Governor underfunded the plan, and the omnibus motion approved today by JFC (by a party-line vote of 12-4) adds $106 million GPR to the bill.
Part of the increased spending is because of the one significant change the committee made to the Governor’s proposal. They added $30 million GPR and $43.6 million of federal matching funds to help hospitals with the higher cost of uncompensated care that is expected after the state cuts in half the current income eligibility ceiling for parents.
With the added funding for hospitals (which is just for the 2013-15 biennium), the Governor’s plan is now expected to cost state taxpayers about $490 million GPR more during the period 2014 through fiscal year 2021, compared to the BadgerCare compromise offered by Democrats on the committee. Read more
Conservative members of the Joint Finance Committee (JFC) who support the Governor’s BadgerCare changes are in a tough spot. On the one hand, they don’t want to add funding to the budget, and would like to free up as much funding as possible for income tax cuts. On the other hand, they don’t want to take the enhanced Medicaid financing from the Affordable Care Act (even though it would allow the state to do a much better job of closing the large gap in BadgerCare coverage and reducing uncompensated care for hospitals). A new Legislative Fiscal Bureau (LFB) paper makes it clear that those two objectives are at odds.
The LFB paper (#321) compares three basic alternatives relating to possible changes in BadgerCare: 1) the Governor’s plan, which caps eligibility of parents and childless adults at 100% of the federal poverty level (FPL) and has the effect of cutting in half the current eligibility limit for parents; 2) covering parents and childless adults to 133% of FPL; and 3) covering childless adults to 133% and retaining current eligibility of parents (up to 200% of FPL). Read more
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:
- 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)
- Mass Transit Operating Assistance — Convert Funding to GPR and Mass Transit Funding Level (Paper #640)
- 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)
- 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.
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.
In each biennial budget, the governor generally proposes many non-fiscal policy changes that don’t belong in a budget bill. One example this session is the controversial proposal to exempt rent-to-own companies from having to disclose their interest rates. (Read more in this Journal Sentinel article.) The budget is the one bill that the legislature has to pass, and the temptation to use it as the vehicle for a lot of unrelated policy measures is irresistible.
Most of the rest of us, including many legislators, frown on the practice because the budget is such a huge and complex document that the non-fiscal policy items typically don’t get adequate attention from the public, and they aren’t reviewed by the appropriate legislative committees. That’s why the Joint Finance Committee (JFC) typically starts the budget process by stripping non-fiscal policy items from the bill – at least that’s what they enthusiastically do when the governor is a member of the other party or control of the legislature is split. Read more