MacIver Budget Blog | April 15, 2015
[Madison, Wisc…] A number of legislators showed up to the Wisconsin Conservative Action Conference to talk about their budget priorities and voice a few of their concerns. With a friendly crowd at hand, Republican leaders revealed their true feelings on hot button issues such as UW funding and the growth of Medicaid.Assembly Speaker Robin Vos (R-Rochester) drew special attention to Wisconsin’s biggest cost driver – Medicaid spending. Cost-to-continue Medicaid spending is set to increase by 12 percent over the biennium in all funds and 15 percent in state GPR. Thats a $647 million increase in just state money over two years to the nearly $10 billion program.
Vos described ways that people have fraudulently used Include, Respect, I Self-Direct (IRIS) dollars, a long-term care program for the developmentally disabled, physically disabled and frail elderly. According to Vos, IRIS dollars have been used to buy things like hot tubs and trampolines as well as to take vacations. Someone also apparently found a way to pay their uncle $85,000 to look after their son under the IRIS program.
With benefits like these, its no wonder the program has grown so rapidly over its six-year existence.
Sen. Steve Nass (R-Whitewater) held nothing back as he railed against the governor’s proposal to make the UW its own public authority. Nass said that he simply does not trust the Board of Regents to keep education costs at a reasonable level. Just a day earlier, the Board of Regents voted to allow UW-Madison and most other 4-year universities to substantially raise tuition for out-of-state students. Nass hammered home this point, claiming that the Board is doing nothing to address the actual cost of education, which always seems to be rising.
The senator also claimed that Wisconsin’s technical colleges are able to teach basic courses such as English or Public Speaking for 40 percent less than their UW System peers, despite often paying their professors more. If true, this point should receive more attention in the UW funding debate.
The Joint Committee on Finance will start voting on the budget this week with a few of the smaller, less controversial items on the docket. Small changes to the state’s court system’s, technical colleges and other minor departments and programs will most likely see approval. Look for Democrat members to take this monumental starting point to grandstand in opposition to the governor’s budget.
Pay increases amounting to one percent for state attorneys and the state building trades were approved by the Assembly on Tuesday. Both pay raises passed unanimously and there has been no sign of discontent thus far with the deal.
Finally, the Legislative Fiscal Bureau (LFB) released their analysis of the State Building Commission’s (SBC) recommendations for capital projects in the 2015-17 biennium. The SBC is chaired by the governor and oversees the state’s capital projects while managing existing state buildings.
LFB’s analysis is noteworthy because for the first time in recent memory the SBC has slightly trimmed the amount of bonding they recommend compared to the governor’s budget. The last four budgets have featured SBC recommendations with anywhere from $410-$520 million in new General Fund Supported bonding, that is, new state GPR supported borrowing.
By contrast, this year’s SBC recommendations mirror the governor’s original stance on no new GPR bonding, relying instead on existing, or “residual” bonding authority from previous budgets to continue to fund 42 ongoing state projects.
This means that the amount of GPR dollars dedicated to debt service will be below four percent if the governor’s capital budget is approved. That level has not been achieved in five years and would be accompanied with the smallest capital budget in 12 years.
While this is all great news for fiscal conservatives, the $1.3 billion in bonding for transportation projects in the state is still a sticky issue. Instead of being paid for by state GPR money, transportation borrowing is repaid with transportation fund revenue, which comes from the gas tax, registration fees and other related fees. Transportation fund revenues have been essentially flat for some time now, and 16 percent of those revenues are currently going to debt service.
If the governor’s transportation bonding is approved, transportation fund revenue going to pay off debt would most likely reach 20 percent.
The MacIver Institute will keep you updated on the budget votes this week. Stay tuned for more updates as the process continues.