Supermajority Amendment Puts Wisconsin’s Future at Risk

Monday, December 23, 2013 at 10:14 AM by

A constitutional amendment proposed by Wisconsin legislators would restrict the budget options of future lawmakers by making it harder to raise taxes. It would have the effect of making it more difficult to manage the state’s finances, and would probably shift costs from some residents to others and raise the cost of capital projects.

The amendment would change the state’s constitution to require a two-thirds majority of both houses of the Legislature to pass an increase in the rate of the state individual income tax, corporate income tax, or sales tax. The legislature could raise tax rates without a supermajority if voters passed a statewide referendum approving the change. A proposed constitutional amendment requires passage by two consecutive legislatures and a statewide referendum in order to go into effect.

A supermajority requirement would damage Wisconsin’s capacity to manage its budget in way that helps families and businesses. Here’s how:

  • The amendment would tie legislators’ hands and make it harder to respond to recessions. Often times, the best approach to closing budget holes created by recessions is to use a balanced mix of targeted spending cuts and revenue increases. This amendment would limit the flexibility legislators have to address budget gaps, resulting in deep spending cuts at the time many Wisconsin families are hurting, and making it more difficult for Wisconsin to find its economic footing again after a recession.
  • The amendment would shift costs from some state residents to others. Lawmakers would need a two-thirds majority to raise rates for certain kinds of taxes, putting upward pressure on other sources of revenue such as fees and tuition. Wisconsin residents have traditionally paid less in fees than residents of other states, but that could change if this amendment was added to the constitution. It would also probably put upward pressure on local property taxes by constraining the options for state aid to local governments.
  • The amendment is likely to raise borrowing costs. A supermajority requirement to raise taxes reduces the state’s financial flexibility, which is a red flag to bond rating agencies — and should concern the rest of us as well. A downgrade of Wisconsin’s tax-backed bonds would make it more expensive for the state to invest in capital projects.

It’s important to note that Wisconsin legislators have already made it more difficult to raise taxes by approving a statutory change last session requiring tax rate increases to be approved by at least a two-thirds vote in both houses of the legislature. Putting that in the statutes created a political barrier to tax increases, but not an immoveable obstacle because a majority vote could amend that procedural road block. In other words, the previous legislative action makes the proposed constitutional restriction somewhat redundant, but a constitutional two-thirds requirement would be a far tighter straightjacket for future lawmakers.

A supermajority amendment would not promote responsible budgeting or avoid future state deficits. Instead, a supermajority requirement could dig a deep hole in Wisconsin’s budget while limiting the state’s options for climbing out of that hole.

Tamarine Cornelius & Jon Peacock

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