Lawmakers Considering Proposals that would Hinder Wisconsin’s Ability to Make Investments in State’s Future
State lawmakers are considering a number of bills and constitutional changes that would make it difficult for Wisconsin to make necessary investments in local schools, communities, and health care systems. Several of the proposals are aimed at changing the budget process in ways that would make it more difficult for elected officials to boost the economy, lessen the economic effects of recessions, and protect vulnerable residents.
Wisconsin lawmakers are considering the following proposals:
More corporate tax cuts (Assembly Bill 623/Senate Bill 503) This bill contains a variety of innocuous-seeming changes to corporate tax law, but there is nothing innocuous about the cost of this proposal, which could be as much as a whopping $384 million a year! Keep in mind that this bill comes in the wake of a recent tax cut that gives manufacturers and agricultural producers a virtual pass on paying any corporate income tax at all.
At the hearing held by the state Senate on January 13, the bill author indicated he was open to changes that would pare back the cost. But any additional tax cut for corporations is too much when there are more effective ways to allocate state resources, such as reducing recent budget cuts to local schools and the University of Wisconsin System.
For more, read our January 7th post “Fast-Tracked Tax Cut Hits a Speed Bump.”
Stacking the state budget in favor of freezes (AB 534/SB 407) Every two years, state lawmakers hammer out a budget that acts like a blueprint for how the state will spend its money during the next budget period. As the first step in the budget process, state agencies submit budget requests that reflect agency spending priorities. The Governor then takes the agency budget requests into consideration when formulating his own budget proposal.
This bill specifies two pieces of information that state agencies must include in their budget requests: (1) how the agency would get by with no budget increase, and (2) what the agency would cut if its budget were decreased by five percent. The bill misses the biggest gap in what the public and policymakers need to know: what it would cost state agencies to maintain their current services (accounting for inflation, changes in the population served, etc.). Almost half the states prepare this type of cost-to-continue or maintenance-of-services estimate. Without that critical information, this bill will reinforce the mistaken notion that frozen budgets are equivalent to the status quo.
For more, read our December 22nd, 2015 post “Proposed Budget Changes Omit Key Information.”
Putting a new balanced budget requirement into the state constitution (Assembly Joint Resolution 66/SJR 55) Wisconsin’s constitution already requires the state to balance its books, but this proposal would change the standards for balancing the budget. It would prevent lawmakers from passing a budget that causes or increases a deficit based on Generally Accepted Accounting Principles (GAAP), which is a set of accounting standards developed and periodically updated by a private national organization. The constitutional amendment would also require that every year until the state has eliminated the GAAP deficit in the General Fund (and in any other fund), lawmakers would have to use at least 10% of that year’s growth in the revenue deposited in that fund to reduce the GAAP deficit. Although the proposal has the laudable goal of making state budgeting more transparent and more fiscally responsible, it would limit budget options for future lawmakers and could delegate some of the authority to set budget parameters to an unelected private organization.
For more, read our November 26th, 2015 post “Proposed Constitutional Amendment Would Limit State Options during Times of Need.”
Tying the federal government’s hands during recessions: State lawmakers are seeking support for a resolution calling for a convention aimed at amending the U.S. Constitution in a number of ways, including requiring the federal budget to be balanced every year. This limitation would have a devastating effect during economic downturns. The Center on Budget and Policy Priorities explains why:
By requiring a balanced budget every year, no matter the state of the economy, such an amendment would raise serious risks of tipping weak economies into recession and making recessions longer and deeper, causing very large job losses. That’s because the amendment would force policymakers to cut spending, raise taxes, or both just when the economy is weak or already in recession — the exact opposite of what good economic policy would advise.
ALEC and other like-minded organizations are waging a major campaign to get states to pass resolutions calling for a Constitutional Convention —the first since 1787. A convention can be convened when two-thirds of the states request one.
For more, read our February 2, 2014 post about an earlier version of this resolution: “Constitutional Convention Could Cripple Federal Capacity to Combat Recession.”
Limiting voter opportunities to approve new resources for schools (AB 481/SB 355) This proposal would make it more difficult for voters to approve additional resources for children in public schools in their districts. Under this bill (as amended), a school district would be prohibited from sending a referendum to voters for one year after an earlier referendum, if the first referendum was rejected by voters. This prohibition would apply even if the second referendum was unrelated to the first, unsuccessful, one.
For more, read our publication “Proposed Limit Would Restrict New Resources for Schools, Even as Amended.”
In conclusion, even though 2016 isn’t a budget year, it could be an extremely important year with respect to the processes for making budget decisions and the parameters for those decisions. We will provide updates on the pending proposals over the coming weeks and months.
Tamarine Cornelius and Jon Peacock