Behold What Madison Hath Wrought A Budget Driven by Politics and Devoid of Principle

Later this morning, Governor Jim Doyle will sign the 2009-2011 State Budget. While he is sure to issue a few vetoes, the bulk of this secretly-crafted, ill-conceived document will become law. We do not expect the Governor will dramatically reduce the spending (a $4 billion increase), the borrowing (a $2.9 billion increase), the taxing ($2.1 billion in this document, with room for property taxes to increase an additional $1.5 billion) or the structural deficit ($2.3 billion).

For months, your team at the MacIver Institute has kept you informed of the development of this Budget(Taxpayers Suffer Memorable Memorial Day). As secret deals were negotiated, we commented on the irregularity and impropriety of the process. When we obtained a draft of one of the versions of the deal, we blew the whistle(Secret Budget Deal Revealed). When we obtained the talking points used by those who concocted this scheme, we published them(Talking Points).

Each step of the way, on this site and at out Twitter Feed, we kept you abreast of the latest twist and turns in Madison.

The process was government at its worst. Secretive. Punitive. Arrogant. We spent a lot of our efforts exposing the bad faith dealings and back room scheming. However, it would be a great disservice to merely focus on the process. So much (bad) has happened these past several weeks that it is easy to forget just how awful and misguided the final document is. With the caveat that a few of the items below may be trimmed or eliminated by veto, we present to you, in all its gory, the lowlights of what the Governor and your legislative ‘leaders’ have wrought.

In no particular order, they are:

  • The New Income Tax Bracket – This income tax increase will raise an additional $287 million over the next two years. Raising taxes during tough economic times is always a bad idea.

  • Capital Gains Tax Increase – The Conference Committee modified earlier recommendations by decreasing the capital gains exclusion to 30%. Relative to current law, individual income tax collections would increase by $115,100,000 in 2009-10 and $127,400,000 in 2010-11. Partial victory here. The Senate wanted to tax 100% of capital gains but “settled” for a 30% exclusion. Don’t you feel better now that it is only a $242 million dollar tax increase? Wait a second. Our taxes are still going up.

  • Rising Debt Levels – The State of Wisconsin will increase general obligation bonding by $3.3 billion and face a structural deficit of $2.3 billion heading into the next budget. Doesn’t the State of Wisconsin have a balanced budget requirement?

  • Specify that the current law requirement that revenues exceed expenditures in each fiscal year would not apply in 2010-11. There’s your answer. Even though state law requires the Legislature to pass a balanced budget, this provision conveniently allows them to ignore that requirement. Further proof that despite the spin and talking points, this budget is no where close to being fiscally balanced.

  • Local Property Tax Increase of $1.5 billion – State Government graciously agreed to increase the ceiling on your local governments’ ability to raise your property tax bill from 2% to 3%. On a median value home, it will result in a $90 increase in the first year and a $130 increase in the second year. How very considerate of them. Have you ever noticed that all levels of governments seem to work well together when they are trying to screw you, the taxpayer?

  • The Elimination Of The QEO – Restore the Governor’s language to repeal the qualified economic offer, under which a school district could avoid arbitration by offering an annual 3.8% compensation increase. Despite widespread editorial support to keep the property tax protections of the QEO, the Legislature decides to do away with it and stick it to you. If you believe this is no big deal, consider this. In 2008-2009, only 18 school districts out of 291 reported they negotiated annual compensation increases under the QEO imposed 3.8%. Just 18. Now that the state-imposed 3.8% ceiling is gone, how high do you think teacher’s yearly raises will go? How high do you think your property taxes will go?

  • Double The Garbage Tax – This will raise Wisconsin’s garbage tax to the highest in the nation. Don’t worry, I’m sure your local government will just absorb the increase in their budget. They would never pass that along to property taxpayers.

  • Sick Tax + The New Sick Tax – The ‘original’ sick tax started back in February (Act 2), raising $275 million. Not happy with the size of their cut, Governor Doyle and Legislators imposed a ‘new’ hospital tax, raising $854 million more in 2009-2011. The Finance Committee then made sure this new tax applied to ambulatory surgical centers, raising $44 million more. I sure hope no one in the state gets sick anytime soon, the bill for their care might just send them into cardiac arrest.

  • Auto Insurance Changes – The Conference Committee included the highest mandatory minimums in the nation, a mandate that drivers have to pay higher premiums and a completely new provision that will force good drivers to subsidize higher risk drivers. If these mandates pass, experts predict rates could skyrocket by 30 to 45 percent for drivers in Wisconsin. Don’t worry, when it becomes too expensive to drive, moderate speed rail will take you to where you need to go. Well, as long as you bike to one of the 3 stations in the greater Milwaukee area.

  • Extends the State’s platinum health and retirement benefits to the boyfriends and the girlfriends of state employees.

  • New Phone Tax – Impose a 75 cents/month phone tax but give it a sympathetic name “Police and Fire Protection Fee”. LFB estimates this new fee will bring in over $100 million dollars over the next two years. Not satisfied with their take, Lawmakers moved up the starting date of this tax to September 1, which will bring in $5 million dollars more.

  • Education Cuts – $295 million less for our schools over two years while blowing holes in the revenue limits (friend of the property taxpayer) for nurses, school safety, above-average transportation costs (whatever that means) and energy efficiency. Throw in the repeal of the QEO and you have the makings of a property tax increase perfect storm.

  • Double The Nursing Home Bed Tax – The Governor and the Legislature jack up the assessment from $75 per licensed bed to $150 per licensed bed in 2009-10 and to $170 per licensed bed in 2010-11. Well, everyone knows that caring for your elderly Mom and Dad costs practically nothing. It’s about time the infirm start paying their fair share.

  • Prevent the Use Of Private Contractors During Hiring Freeze – With all the so-called ‘cuts’ to state government and laying off of state employees, this is the “don’t you dare think about using less expensive and more efficient private companies to do the work” provision. Wisconsin is facing the worst fiscal crisis in our history but rather than do a top to bottom review of what essential services we need to provide, the Legislature decides it is more important to protect the jobs of their union buddies.

  • Provide University of Wisconsin System (UW System) Staff With The Right To Collectively Bargain – At a time when the State needs to look for efficiencies and savings everywhere possible, the Legislature increased our labor costs at the UW. How long before we see a strike during Homecoming week?

  • It gets better. As FoxPolitics discovered, the Conference Committee included new language “whereby research assistants may determine whether to form themselves into collective bargaining units by authorization cards in lieu of secret ballot.” The unions cannot get card check passed at the national level so they go to their buddies in Wisconsin to quietly slip it into the budget at the last possible second. No hearing, no media scrutiny, no chance for the public to voice their opinion.

  • Allow Independent Home Care Providers To Unionize – The proposal is “based on a statewide model developed by the Service Employees International Union (SEIU).” Gee, do you think this model developed by the union focuses on the patient or the worker?

  • Various Items And Funding Schemes For Regional Transit Authorities – Non-elected bodies with taxing authority always make us nervous. A Milwaukee Transit Authority has been created that will let Milwaukee County supervisors levy a 0.5% sales tax to raise $60 million. It would also authorize creation of a regional transit authority for a commuter rail line linking Milwaukee, Racine and Kenosha that would be paid for by raising the $2 car-rental fee to $18. Also created is the Chippewa Valley Regional Transit Authority in Eau Claire County, the Chequamegon Bay Regional Transit Authority in Ashland County and Bayfield County and the Dane County Regional Transit Authority in Dane County. Do you think the Chequamegon Bay Authority will pool local resources to buy a fleet of canoes to go from lake to lake?

  • School Aid “Adjustments” – The title of this one sounds good. The Legislative Leadership must be rethinking their decision to cut school aids by $295 million dollars. Wait, under their idea of an adjustment, state aid to “wealthy districts” will be cut even further. According to Steve Walters of the Milwaukee Journal Sentinel, this provision is targeted at the “Elmbrook, Oconomowoc, Mequon-Thiensville, Fox Point-Bayside and Nicolet” districts. I wonder if these Wisconsinites will feel rich this fall when they dig a little deeper to pay their local property taxes.

  • Cigarette Tax Increase – Cigarette smokers will pay a $2.52-per-pack tax, or 75 cents more than they do now. Why don’t we just outlaw tobacco and be done with it? State government needs the $310 million in tax revenue.

  • Treatment Of Police Officers – Criminals in Milwaukee are innocent until proven guilty but that same right won’t apply to Milwaukee Police Officers. The City of Milwaukee will be able to withhold pay and benefits from any fired officer during the appeals process, even if the officer was fired for a rule violation. Our men and women in blue deserve better.

Budget Pork – At a time when the state faced a $6.6 billion dollar deficit, Lawmakers miraculously find enough spare change to fund over 100 individual pork items. Some of the most blatant:

  • $50,000.00 for a children’s playground in Beloit.

  • Earmarks to food pantries in Burlington, Union Grove, Rio, South Milwaukee and Lodi. We know times are tough for all non-profits, but why does this select group get direct aid from the state?

  • State funds earmarked to pay for recycling bins in the Town of Wrightstown. We kid you not. Recycling bins.

  • $500,000.00 for the Opera House in Oshkosh. We might suggest they give Oshkosh $500,000.00 NOT to refurnish the Opera House. Just kidding. It’s a joke.

  • Prohibit the swim police from requiring a lifeguard be on duty at the Milwaukee Athletic Club’s swimming pool.

  • Make the Shepard Express the paper of record in the Milwaukee area. This is another new item slipped in at the very last possible second. The Conference Committee eases circulation and geographical requirements so legal notices can be printed in the Shepard Express. Does their former colleague Lou Fortis still own that paper? Would this be retaliation for the Milwaukee Journal Sentinel’s criticism of the budget process?

  • Municipal Liquor Licenses in Capital Improvement Areas – 8 new liquor licenses for the Pabst Farms development in Oconomowoc. Let’s get our drink on.

  • And if they run out of beer at Pabst Farms, the Legislature gave a liquor license to Monona and 3 more to St. Francis.

  • $500,000.00 earmark for a new environmental center in Madison. Don’t they have like 17 of them already? It’s Madison.

  • Require the Department of Commerce to fill a job vacancy by October of this year. Why would the Legislature care about the area development manager position in Western Wisconsin? Would they have someone specific in mind?

  • $100,000 for HIV/AIDS programs of Black Health Coalition of Wisconsin Inc.

  • UW Madison School of Nursing building project – require the Building Commission to allocate $3,006,000.00 ($2,004,000 in building trust funds and $1,002,000 in gifts) for advance planning of the project for potential enumeration in the 2011-13 building program. The UW did not asked for this project to be built but the Senate slipped it in. After statewide criticism of the unnecessary project, rather than delete the whole thing, Leadership decides to spend the money on planning just to secure some votes.

  • Provide $3.2 million for grants to the City of Milwaukee for “the purposes of furthering engineering to meet the needs of businesses and the state.” Sunset the appropriation on June 30, 2012. This provision is not a “difference” between the two houses. This is new pork stuck in the budget with no one’s name on it, no hearing to discuss the merits and no idea what it does. Engineering services in Milwaukee are so scarce it is now the responsibility of the State of Wisconsin to help provide for them with general tax revenues? Is

  • Let 400 retirees of now-closed Tower Automotive in Milwaukee pay premiums to enroll in state health-care programs. Pretty sweet deal if you can get it.

  • Provide the Madison School District $1.5 million of general tax revenue for Four-Year Old Kindergarten grants.

  • Study a high speed rail stop in Waterloo. Raise your hand if you want the train to stop in Waterloo? We thought so.

  • Earmark $55,000 annually to Diverse & Resilient, Inc. (rather than to the Gay Straight Alliance for Safe Schools, Inc.) from the amounts appropriated for the Brighter Futures program.

  • $50,000 for Barron County Restorative Justice Programs.

  • $50,000 for Merrill center for abuse victims.

  • $10,000 for Oneida County trail crossing.

  • $100,000 for Lake Koshkonong management study.

  • $108,000 for Plum City/Union Fire Department equipment. State law currently requires municipalities who receive these grants to help the state fight forest fires on state land. Seems reasonable, right? Not here. Plum City gets a waiver so it doesn’t have to help the rest of us out.

  • Apparently Plum City wasn’t through. How about $60,000 for the Plum City School District. Do the legislators even know where Plum City is?

  • $521,800 to expand Langlade County Family Care program.

  • $500,000 for Eisner Ave. project in Sheboygan County.

  • $400,000 for bicycle lanes on County Highway B in Douglas County.

  • $300,000 to monitor Petenwell and Castle Rock flowages.

  • Require the Public Service Commission to provide $300,000 annually to a nonstock, nonprofit corporation that is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code and that has a history of advocating on behalf of residential ratepayers for affordable rates to be used to offset the corporation’s general expenses. Oh joy. Let’s give a group state taxpayer dollars so they can turnaround and sue state government. That makes a whole lot of sense.

To be sure, there is more, but at present, this is all we could stomach to point out.

Some have called this budget the worst public policy document in the history of the State of Wisconsin. While others may view this as hyperbole, we challenge them to find a budget that was less prudent or more irrational.

This is what happens when priorities are sacrificed on the alter of politics. Moreover, when the press and the public are shut out of the process, those with power are emboldened to follow their most base instincts. The process and the product are, therefore, equally grotesque.

Sadly, Wisconsin’s economy, and the families of this great State, will bear the scars of this folly for decades to come.

By Brett Healy
A MacIver Perspective