Stop Digging!

MacIver Institute Policy Position:

As State Budget Picture Worsens, Finance Committee Would be Wise to Freeze Spending and Reject Tax Hikes to Stimulate Wisconsin’s Economy

[New Berlin, Wisc.] Looming recalculations of the state’s fiscal condition should prompt the Legislature’s Joint Finance Committee to scrap plans that increase spending and that raise the cost of living, working and owning a business in Wisconsin. The John K. MacIver Institute for Public Policy believes a wise course of action would be to cut spending and eliminate proposed measures that would further harm Wisconsin’s business climate.

“Now is a good time to stop and chart a new course that cuts spending and the size, scope and cost of government in Wisconsin,” said MacIver President Brett Healy. “Families across the state are tightening their belts out of necessity; the state government would be wise to do the same and not rely on taxpayers handing over more of their hard-earned dollars.”

• The Chairmen of the Joint Finance Committee canceled Thursday’s planned meeting as legislative leadership meets outside of public scrutiny to develop a strategy to deal with a worsening budget picture
• Although the figures are not yet available to the public, Governor Doyle has hinted that tax collections have diminished as Wisconsin’s economy falters
• Some press accounts predict the new numbers will show that Wisconsin will begin the next Budget in a hole of as much as $7 Billion
• Initial claims for unemployment insurance increased to a total of 22,344 for the week ending May 2nd.
• Senator Mark Miller (D-Monona), Co-Chair of the Finance Committee, has said the body may need to ‘revisit’ some of the actions it has already taken regarding the Budget due to the pending fiscal projections

“Wisconsin’s economy is in bad shape and is only getting worse,” said Healy. “Now would be the worst time to increase state spending and force Wisconsin families to part with even more of their money to finance government. Furthermore, as companies struggle with layoffs and potential decisions regarding consolidation and relocation, now is also the absolute worst time to burden job providers with new taxes and policies that make it more difficult to do business in Wisconsin.”

The current budget proposal, drafted by Governor Doyle and being debated by the legislative committee contains several provisions that would further harm the state’s economy. Among the lowlights:

• The Budget proposes to increase spending by nearly ten percent and raise taxes by upwards of $2 Billion.
• Of that, $1 Billion would be new taxes on job providers and investors.
• A Legislative Fiscal Bureau analysis estimated that the budget will increase property taxes for the median Wisconsin home by $91 on this December’s tax bill and $316 the following year. It results in a 3.2 percent increase in 2009 and a 4.5 percent in 2010.
• A proposed ‘Oil Franchise Fee’ would bring in $272 million at current gas prices, but could balloon depending on summer gas prices. In addition, more than half of the revenue raised would be spent on non-highway related projects.
• Newly created Regional Transit Authorities will cost some local taxpayers hundreds of dollars a year.
• The Budget would increase the risk associated with running a business in Wisconsin by returning to ‘joint and several liability’ that allows a defendant found to bear one percent of fault to pay 100 percent of any damages awarded.

“Wisconsin’s budget and the state economy in general are in the hole,” said Healy. “And rule number one regarding holes is: ‘When you find yourself in one, the first thing you do is stop digging.'”

The Joint Committee on Finance is expected to meet again next Tuesday.