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
There’s been a lot of talk in Wisconsin over the last couple of weeks about the need to ensure that tax breaks and loans awarded by Wisconsin’s economic development agency are limited to businesses that are creating jobs and fulfill their job growth commitments. Yet almost no attention has been paid to the fact that the state’s largest tax credit for corporations is ballooning in cost and is distributed to businesses operating in Wisconsin regardless of whether they are expanding or slashing their workforce in our state.
In the wake of the audit of the Wisconsin Economic Development Corporation (WEDC), that privatized agency has gotten well-deserved criticism for failing to demand that jobs be created with each of its contracts, and for failing to ensure that grant and loan recipients hit wage and job targets or at least submit information showing whether jobs were being created or retained. Read more
The Joint Finance Committee will vote Thursday on whether to divert more funds from the federal welfare reform block grant to help finance unrelated parts of the state budget. The amount of those funds transferred to the Department of Revenue (DOR) has already been increased dramatically in each of the last two budgets. $62.5 million per year from the Temporary Assistance to Needy Families (TANF) block grant is being used to replace state funding for the Earned Income Tax Credit (EITC), and that maneuver reduces the funding available for important programs to assist vulnerable low-income families.
According to a Legislative Fiscal Bureau paper (#215) , federal law would allow the state to transfer up to $12.3 million more to DOR in the next biennium, in order to back out state General Fund dollars for the EITC.
Optimally, legislators should decrease the use of TANF funding for the EITC, which is what the Department of Children and Families (DCF) proposed last fall in the budget request they submitted to the Department of Administration. Read more
Wisconsin’s property tax credit for low-income homeowners and renters is declining because – in contrast to most of the rest of the tax code – it isn’t adjusted for inflation. New figures released last week by the Legislative Fiscal Bureau (LFB) show the credit is falling even faster than the Governor’s budget assumed, and the following chart illustrates the decline.
Lawmakers hoping to avoid some of the damaging budget cuts proposed by Governor Walker had pinned their hopes on tax revenues coming in higher than originally anticipated, thereby boosting the resources available to invest in Wisconsin’s schools, communities and workforce.
However, new estimates released today show no increase in tax revenue over the original projections.
That news is sure to put key GOP legislators in a bind, especially ones who have indicated they would like to undo some of the damaging cuts in the Governor’s budget and make budget changes that have strong public support. The legislature’s budget committee even postponed their deliberations last week, hoping for news of higher-than-anticipated tax revenues. That hope has now been dashed.
Fortunately, there is another way to build a budget that invests in Wisconsin and avoids the worst of the cuts proposed by Governor Walker, even without higher than anticipated tax revenue.
By reallocating resources and avoiding new tax cuts, legislators can support Wisconsin’s excellent public schools, a university system that drives innovation, and a healthy workforce. Read more
Today is April 15th, the deadline for most people to file their income tax forms without penalty. We hear a lot of negative messages about taxes on this day. But this Tax Day, let’s remember that creating jobs and building broad-based prosperity requires investing in what works – and we can’t do that without taxes.
To build a strong Wisconsin economy, we need to invest in assets that help businesses thrive and help hard-working people climb into the middle class. That means Wisconsin needs to continue our tradition of supporting high-quality schools and preschools, an affordable university system, a healthy workforce, and a clean environment.
Taxes make these investments possible.
When state lawmakers cut income taxes for the wealthy or for corporations, we undermine our ability to support important services that Wisconsin businesses and residents rely on every day. We should focus on making sure we have the resources we need to invest in the building blocks of job creation and economic growth. Read more
Legislators Can Avoid Deep Cuts without Raising Taxes
Wisconsin needs a budget that invests in the building blocks of a strong economy. Healthy families, safe and stable communities, and a well-educated workforce are assets critical to helping Wisconsin remain an attractive place to live, raise families, and do business. By strengthening these resources, the state budget can lay the groundwork for broad-based prosperity and an economy that works for everyone.
Unfortunately, the budget proposed by the Governor makes deep and unnecessary cuts to investments vital to Wisconsin’s long-term economic success. For example, the proposed budget would reduce resources for public education – a cut that would come on top of dramatic reductions in resources that have already occurred. The budget would also make deep cuts in state support for the University of Wisconsin System, giving a tremendous blow to one of the engines of Wisconsin’s long-term prosperity. The proposed budget would also make it harder for people with disabilities to get the help they need to contribute to their communities. Read more
To build a strong economy and broad-based prosperity in Wisconsin, we need to make sure everyone has the chance to thrive economically. But Wisconsin’s tax system is stacked against people with low and moderate incomes, making it harder for those taxpayers to make ends meet or get ahead. Meanwhile, the very richest Wisconsin residents pay a much smaller share of their income in state and local taxes.
Wisconsin’s middle class, once one of the strongest in the country, is shrinking faster than in any other state. That trend should set off alarm bells for policymakers, who should be using the tax system and other tools to help Wisconsin’s middle class grow and prosper. Instead, lawmakers have created a tax system in which middle-income taxpayers pay a much higher share of their income in state and local taxes than do the very richest taxpayers.
Wisconsin taxpayers in the top 1% by income, who earn at least $399,000 a year, pay $6.20 in state and local taxes out of every $100 they earn, on average. Read more
A tax cut that nearly wipes out income taxes for manufacturers is now expected to cost the state more than twice the original estimate, and has reduced resources for Wisconsin’s public schools and university system.
The Manufacturing and Agriculture Tax Credit gradually reduces income tax rates for businesses engaged in manufacturing or agriculture. When the credit is fully phased in in fiscal year 2017, many businesses engaged in those activities will not have to pay any state incomes taxes at all, and others will have their income taxes reduced by at least 95%.
The projected cost of virtually eliminating income taxes for manufacturers and agricultural producers has ballooned since lawmakers passed the measure in 2011. This year, the tax cut is slated to reduce taxes for businesses by $152 million, more than twice as much as was originally estimated. Once the tax cut is completely phased in, the credit will cut taxes for business by a whopping $285 million per year, a price tag $156 million higher than originally expected. Read more
Property Tax Cut Contributing to Deep Budget Cuts Benefits Second Home Owners and Profitable Corporations, Among Others
The budget proposed by Governor Walker includes significant new tax cuts, as well as deep cuts to the University System and public schools to pay for the proposed tax cuts and ones in the past. A new analysis by the Wisconsin Budget Project describes how one of the new tax cuts would do little to lower property taxes for Wisconsin homeowners on their primary residences.
In the budget, Governor Walker has proposed a $211 million increase over two years for a property tax credit called the School Levy Credit. But the way the credit is structured means that an estimated $103 million, or 49% of the proposed increase, would go towards boosting the bottom line of businesses and corporations, reducing property taxes for owners of second homes, cutting taxes for people who live outside of Wisconsin, and other purposes that wouldn’t do much to lower property taxes for Wisconsin homeowners.
If lawmakers want to cut property taxes, there’s a much better way of doing it that provides targeted relief to people with high property taxes relative to their incomes. Read more