Over the past several days, we have explored some of the big changes that have taken place in Wisconsin’s budget priorities during the first half of the 2011-13 biennium. The unbalanced, cuts-only approach that marked the most recent state budget is having a major impact on some of the state’s most important systems and institutions, an impact being felt by Wisconsinites of all ages in every part of state.
Here’s a quick summary of the impacts and challenges we have examined in this series of blog posts:
- Deep cuts to school aid, tighter revenue caps for districts, and changes in public sector labor laws have resulted in teacher layoffs and greater disparities between districts.
- Working people are paying more in state taxes, while wealthy people and corporations are paying less.
- 17,000 adults have lost BadgerCare coverage, and many people remaining in the program must pay a greater share of the cost of their health care.
Big Change #7: Reduced Funding in a Time of Sharply Rising Demand
We wrap up this seven-part series by taking a look at a large budget cut that I did not expect last year – the sharp reduction in funding for the Wisconsin’s technical colleges. The magnitude and timing of the cut came as a surprise for me because the very weak economy has generated tremendous demand for education and training in the technical college system. As Paul Gabriel, Executive Director of the Wisconsin Technical College District Boards Association, wrote in a guest blog post for WCCF:
“Record numbers of young people recently out of high school and older displaced or underemployed workers are looking to Wisconsin’s technical college system as their best option for getting education and training that will qualify them for well-paid jobs. Businesses have also shown keen interest in the technical education system, as they grapple with a mismatch between the types of skills they are looking for in employees and the qualifications of Wisconsin’s jobless workers.”
Despite the growing demand for technical college education, the 2011-13 state budget slashed their general state aid by 30%, or about $36 million annually. Read more
Big Change #6: State Budget Cuts Mean Fewer Crossing Guards, Sheriff’s Deputies, and Snow Plows
In Fond du Lac, the city has reduced the number of crossing guards who help children safely cross the street on the way to school. In LaCrosse, the city is weighing buying less road salt for the coming winter, and waiting to plow until five inches of snow have accumulated, up from three inches. In Kenosha, the city has plans to scrap Saturday bus service altogether – or double fares.
Significant reductions in support for communities included in last year’s state budget mean that scenarios like these are playing out in communities across Wisconsin. Whether it’s deferred road maintenance in Green Bay or four dozen sheriff’s deputies laid off in Milwaukee County, cuts included in last year’s budget are affecting the safety, stability, and livability of many of our communities.
Last year’s state budget reduced investment in communities by at least $128 million over two years, including:
- a $76.8 million reduction in general support for counties and municipalities;
- a $24.2 million cut for local recycling programs;
- a $17.5 million cut for road maintenance in communities;
- a $9.6 million cut for public transportation.
Big Change #5: More Money for Highways, Less for Everything Else
If there was a significant winner in last year’s budget, it was state highways. In essence, resources were taken from Wisconsin’s public schools, university system, and health care for working families and redirected toward state highway spending.
The budget required that the state make a series of transfers from the state’s General Fund – which supports most state functions – to the state’s Transportation Fund. The state transferred $22.5 million from the General Fund to the Transportation Fund last fiscal year, and is scheduled to transfer another $137.6 million this year. That’s a total of $160.1 million in transfers from the General Fund to the Transportation Fund over two years. (To put that amount in context, Governor Walker turned down a federal grant for high-speed rail because the state would have had to spend $7.5 million per year from the Transportation Fund in support of rail service.)
What made the transfers particularly problematic is that they came at a time when the state had a large General Fund deficit, even before these funding shifts were put on the table. Using General Fund dollars for highway spending dug a deeper hole for legislators to fill and resulted in larger cuts in areas like education and human services. Read more
Big Change #4: Spending Cuts Have Slowed Wisconsin’s Economy
When Wisconsin’s two-year budget passed last summer, proponents predicted that the deep spending cuts included in the budget would jump-start Wisconsin’s economy and spur private sector job creation.
That hasn’t happened.
Instead, private sector job growth in Wisconsin has been slow, public sector job loss has dragged down the economy, and Wisconsin has lagged other states in job creation. Wisconsin lost more than 20,000 jobs in the second half of 2011 after the budget passed, according to the Quarter Census of Employment and Wages. (Jobs figures for 2012 from this source are not yet available.) For 2011 overall, Wisconsin ranked 41st in job growth among the states.
The budget likely played some role in causing this slow growth, by inhibiting job growth in both the public and private sectors. How much of a role is hard to know, given that national economic trends also affect job creation in Wisconsin. Read more
Big Change #3: Shifts in BadgerCare Policy and Policymaking
Now that we’ve reached the mid-point of the state’s two-year budget, we will soon begin to see the effects of significant changes in BadgerCare policy that grew out of cuts made in the last budget bill and a dramatic shift in policymaking authority to the executive branch.
Although the changes that are beginning to be implemented this month will cause an estimated 17,000 adults to lose their BadgerCare coverage, those changes are much smaller than what the Department of Health Services (DHS) proposed last fall. The narrower cost-cutting is because federal officials concluded that the “maintenance of effort” requirements in the health care reform law cannot be waived and do not permit Wisconsin to reduce eligibility or increase premiums for children or for lower income adults.
Before we summarize the changes made in the biennial budget, it should be noted that the cuts could have been significantly worse. Read more
Big Change #2: Corporations and Well-Off Are Paying Less in Taxes, and Working Families are Paying More
One year into the state’s two-year budget period, corporations and well-off individuals are paying less in taxes than they did before the budget, and working class individuals and families are paying more.
The budget included two significant tax breaks that have already kicked in. One tax change that benefits multi-state corporations partially rolls back a recent law that made it difficult for big businesses to shift their income between different states to avoid taxation. This tax break reduced the state income tax these corporations pay in Wisconsin by $9 million in fiscal year 2012 (which ended on June 30, 2012), and will cut their tax liability by another $37 million this fiscal year.
A second tax cut in the budget reduced the tax that individuals pay on their capital gains, or profits from investments. Read more
Big Change #1: Schools Are Laying off Teachers and Disparities between Districts Are Widening
Wisconsin has long relied on a well-educated workforce as one of the foundations of the state’s economy and has made very substantial investments in our public education systems. In recent years, state support for K-12 education has accounted for about two-fifths of Wisconsin’s General Fund spending.
The magnitude of the state’s investment in public schools helps explain why, after deciding to balance the budget solely with spending cuts, Governor Walker chose to make deep cuts in school aid a key part of his budget plans. The Governor used a three-pronged strategy to cut both state and local support for public schools:
- Changes to public sector labor laws and pension system financing that sharply reduce the benefits and overall compensation of public employees, including teachers (and also sharply reduce the power of public sector unions).
- Cuts in school aid of about $792 million over two years, with $749 million of that coming from equalization aid.
July 1 marked the beginning of a new fiscal year for the State of Wisconsin. That means we are now halfway through the 2011-13 biennium, the period covered by the most recent state budget. As you may recall, that was the piece of legislation that made unprecedented spending cuts in a number of key areas, such as K-12 schools, health, care, aid to local government, post-secondary education, and other categories. It also brought tax changes that cost some of the state’s lowest-income families money, while giving breaks to corporations and some of the wealthiest households.
Over the course of this week and next, we will be publishing a series of blog posts examining how Wisconsin is faring in these key areas at the midpoint of the biennium, in hopes of illuminating the impact of the substantial spending cuts that have been made—cuts that could have been smaller had they been accompanied by measures to generate additional revenue. Read more