Rejecting the Governor’s Recommendations for DOR Positions Would Open up a Huge Budget Hole
One of the positive aspects of the Governor’s budget proposals is an investment in Department of Revenue positions to increase tax compliance and improve collection of state and local debts. But despite the fact that those additional positions will yield a tremendous return on the investment, some conservative legislators have balked at providing more staff for DOR. The issue may be debated in the Joint Finance Committee (JFC) this Thursday or Friday, May 29 or 30.
Last week the committee voted to amend the budget bill by adding a $5 million appropriation for a new initiative to prevent Medicaid fraud. (The new spending includes $500,000 in 2015-16 from state revenue, and $4.5 million from federal funds.) It’s a one-time expenditure to purchase and begin implementing new software intended to identify and prevent fraud. The Medicaid fraud prevention initiative may be a good investment in future years, but — in sharp contrast to the proposed DOR positions — no savings are projected during the current biennium. Read more
By Siphoning off More TANF Funding to Pay for the EITC, Committee Undercuts Arguments Against Using Federal Funds
The Joint Finance Committee votes Thursday, May 21, on a wide range of Medicaid issues, including whether to expand BadgerCare and save upwards of $345 million that could help prevent deep cuts in higher education and other parts of the budget. The most frequent argument made by conservatives against capturing that federal assistance is that we shouldn’t accept federal funding that might not be secure. However, if you were carefully watching the Finance Committee’s budget votes last Thursday you would have gotten a very different perspective on the willingness of the majority party to accept federal funding.
There were at least two times last Thursday when the JFC voted to amend the Governor’s budget in ways intended to capture or utilize more federal funding. In one case (motion #345) the committee unanimously approved new standards that will make it easier for the Department of Children and Families to close child support cases. Read more
Legislators Change Guidelines for Agency Requests and Using Unanticipated Revenue
This afternoon the Joint Finance Committee (JFC) made several significant changes relating to how agencies’ biennial budget requests are submitted, as well as the size of the minimum budget balance and how the state handles “excess” revenue when General Fund revenue exceeds the projected amount. I think the changes approved today could be a case of taking two steps forward and one step back, but we may need to see the actual budget language before we can really assess the changes. Read more
Increase in Childless Adult Enrollment Boosts Costs and Potential Savings
The number of childless adults participating in BadgerCare is now expected to be about 6,800 per year higher than the budget bill assumed, which means the cost of not accepting enhanced federal assistance for covering that population is also considerably higher.
A paper issued by the Legislative Fiscal Bureau this afternoon contains the new enrollment assumptions for childless adults and other Medicaid groups. By using those figures to do some quick calculations, I estimate that the state would save at least $23 million more than the Fiscal Bureau calculated back in February, when it said that by expanding BadgerCare and accepting the increased federal funding Wisconsin would enjoy a net savings of $345 million during the 2015-17 biennium. (My calculation is based just on the increased childless adult caseload and assumes that other factors, such as the cost per individual, haven’t changed since February.)
[May 21 update: LFB figures released this afternoon show that the net increase in savings was a little smaller than I calculated, which suggests that other variables also came into play. Read more
If Legislators Are Truly Serious about Responsible Budgeting They Won’t Postpone a Long-Overdue Increase in State Reserves
For as long as I can remember, state politicians have been saying that Wisconsin needs to adopt more fiscally responsible budgets by doing things like increasing the state’s meager reserves and bringing revenue and spending into better alignment. Nevertheless, Wisconsin lawmakers continue to postpone building up budget reserves. Instead, when there is a projection of “surplus” revenue it is often used in unsustainable ways that add to the state’s future fiscal challenges.
This Tuesday, May 19, the committee that reviews and revises the state budget bill will have a chance to increase reserves and reduce the “GAAP deficit” (i.e., the gap between state revenue and spending obligations calculated according to Generally Accepted Accounting Practices). That will be decided when the Joint Finance Committee votes on whether to once again delay a statute that now requires increasing the state’s general fund balance to at least 2% of general fund spending in fiscal year 2017-18. Read more
Involving Stakeholders in Family Care Changes Could Serve as a Model for Other Budget Improvements
Republican leaders on the Joint Finance Committee announced a significant improvement in the state budget today – or at least in the process for developing and approving one part of the budget, the changes relating to community-based long-term care for seniors and people with disabilities. Let’s hope that similar improvements are made in other parts of the budget that have comparable problems.
One of the very troubling things about the Governor’s budget bill is that it contains sweeping changes that circumvent the usual processes for involving stakeholders and advisory committees in the development of public policy proposals. Among the numerous examples of that, perhaps the most troublesome was the dramatic set of changes to community based long-term care provided through the Family Care and IRIS programs. The development of those changes totally excluded the usual advisory role of stakeholders, and was even a surprise to the agency that has been administering those programs. Read more
Budget Committee Waits for New Revenue Estimates, Despite Other Options
The budget process came to a halt this week, and the surprising hiatus in Joint Finance Committee deliberations brings to mind the Samuel Beckett play Waiting for Godot. In this case, the “good dough” awaited by the JFC is a higher estimate of tax collections that might be issued by the Legislative Fiscal Bureau sometime next week. Let’s hope that the committee’s wait isn’t in vain, like the long wait for Godot.
It has already been a week since JFC last met, which is very unusual at this point in the budget process, and the next meeting won’t be held until Tuesday, May 5th. That’s disappointing because the delay is likely to compress the decision-making process, despite the fact that there are good alternatives for freeing up needed revenue without raising taxes. Read more
Finance Committee Shows Its Independence but only Removes 14 of the 49 Non-fiscal Measures from Budget
As the Joint Finance Committee (JFC) took its first votes on the budget bill last week, there were some encouraging signs, as well as some disappointing developments.
The most encouraging thing was simply that the committee showed a willingness to think independently and not rubber stamp everything proposed by the Governor. In light of the large number of controversial fiscal and policy changes in the budget, I’m relieved that the early indications are that the JFC members in both parties are willing to exercise their own judgment about the Governor’s proposals.
More specifically, I was very happy to see the committee vote to preserve several independent government entities that help make or influence policy and that the budget bill proposed to eliminate. A theme in this budget that has gotten relatively little attention is that the Governor has recommended abolishing or weakening numerous independent boards or advisory councils, thereby weakening the role of stakeholders and ordinary citizens in guiding the administration of state programs. Read more
New Federal Money Provides Chance to Close Large Hole in W-2 and Improve Child Care
Wisconsin got some good news from Washington over the last couple of months, in the form of supplemental federal funding for Temporary Assistance for Needy Families (TANF) and additional child care and development funds (CCDF). The plans for using part of that additional funding – $19.8 million from TANF and $3.8 million from CCDF – will be reviewed by the Joint Finance Committee (JFC) on May 6th. (The LFB paper can be found here.)
I’ve written numerous times over the past year or so about the fact that the biennial budget bill made very unrealistic assumptions about declining participation in the state’s welfare to work program, known as Wisconsin Works or W-2. The budget bill cut the W-2 appropriation and siphoned off TANF block grant funding by using it to supplant state funds for the Earned Income Tax Credit. Read more
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.