June 27, 2013
As the Governor prepares to put his final touches and signature on the 2013-2015 state budget this Sunday, the special interest groups in Madison are working overtime to convince the Governor to make one more final change to the document before it becomes law. High-priced lobbyists know that the window to slip in one more pork project, one more “technical change” to benefit his/her organization is rapidly closing.
What is missing from this conversation, however, is what is best for you, the taxpayer. The Governor and the legislature hear from capitol insiders and well-organized “community groups” all the time. But what about your voice?
The MacIver Institute, as a service to taxpayers around the state, has assembled the most important changes this budget needs to turn it from a very good budget to the very best budget for taxpayers.
10. Delete Pork Projects
When will politicians learn? Taxpayers are sick of their hard-earned tax dollars going to fund needless and wasteful pork projects. While the politicians may think they have gained the temporary love or support of their local Mayor, all they have really done by pursuing pork projects is hurt our children and our grandchildren who will be forced to pay for their reckless spending habits for years to come. The complete list of pork found in the 2013-2015 budget is too long to include here but we wanted to highlight just four projects to give you a sense of how much of your hard-earned tax dollars are being wasted on pork:
The condition of the barns owned by Dane County is such a critical and necessary function of government that it is a fiscal priority for the State of Wisconsin? The Norskedalen Heritage Center? If you look at the Norskedalen website, it appears that most of the work to date was completed through the generosity of private donations and foundations. But now state taxpayers are being forced to support this Norwegian cultural center in the Coon Valley. We taxpayers are already paying for the Lac du Flambeau Indian Tribal Cultural Center, the Hmong Cultural Center and the Swiss Cultural Center, which were all approved in prior budgets. Does every ethnic group and/or collection of people, who at one point in history immigrated to this state, need a state-sponsored cultural center? We predict when the Wiccans come a calling for their money, and they will come a calling, taxpayers will finally be outraged. But, by then, it will be too late.
And lest you think the pork is limited to building projects, the Joint Committee on Finance passed a motion requiring the Department of Corrections to spend $360,000 of your taxpayer dollars on a contract with the Freedom Life Skills Program, “a nonprofit organization that teaches life skills and character development to inmates who will be released to parole or extended supervision.” Now, we are confident the good people at Freedom Life Skills do an outstanding job but isn’t this the sort of decision best left to the professionals at the Department of Corrections?
Finance apparently doesn’t trust the bureaucrats at Transportation either, adding a requirement that the Department spend $3.6 million dollars to move County Highway LS in Manitowoc and Sheboygan counties. To stop Finance members from inserting pork amendments into the budget that leap their districts ahead of everyone else, maybe we just need to create a research-driven transportation plan for the state. Wait, that is exactly what the Transportation Projects Commission (TPC) was supposedly set up to do. If the legislators are going to ignore the TPC, maybe it is time to end the TPC all together.
We could, unfortunately, go on and on, but the point is this: the Governor would be giving taxpayers a well-deserved break if he vetoed out all of the different pork projects from the budget.
9. End the Stewardship Program
As a free market think tank, we find it hard to swallow the very idea of government purchasing private land just so it cannot be put to productive use in the economy and we have long been a critic of Wisconsin’s Knowles-Nelson Stewardship Program. Before the Finance Committee made a modest cut to the program, debt service payments were scheduled to total $91.8 million in ’14 and $94.6 million in ’15. Almost $100 million a year for state government to needlessly collect and hoard land!
Don’t forget that the federal government buys land and your local community is always adding land to its park system. And most importantly, there are non-profit alternatives out there that do the very same thing, buy land in the name of “preserving it for future generations.” If a private organization is willing to tackle a problem, government doesn’t need to and should instead focus on critical services for the poor and vital programs for those who cannot help themselves. Buying private land is not a necessary function of government.
One of the private alternatives, The Nature Conservancy, bragged in its 2013 Spring Report that it recently acquired 30.5 acres of land in the Mukwonago River Watershed that will provide “additional opportunities for walking, wildlife-watching, hunting, cross-country skiing and other recreational activities.” Wait, the Mukwonago River Watershed? That must be near the Paradise Valley Wildlife Area where Joint Finance just approved $1.23 million of taxpayer money out of the Stewardship Fund to pay for the purchase of some swampland.
Do you think anyone in state government contacted The Nature Conservancy about purchasing the parcel?
8. Reduce Bonding
Speaking of stewardship borrowing, let’s look for ways to reduce all forms of bonding in the budget. The more we are in debt, the worse off we are as a state. The veto pen is a great tool to reduce the state’s borrowing costs and give taxpayers some relief.
While the Finance Committee improved upon the Governor’s general obligation (GO) and revenue obligation (RO) bonding proposal, reducing the state’s new debt from $2.17 billion down to $1.8 billion, more should be done. As MacIver reported back on May 30th, the total amount of outstanding debt currently owed by the state is $8 billion, with GPR supported bonds accounting for $5.31 billion of the debt owed. Even more troubling than the overall size of the debt is how fast it has grown in recent years. In the last nine years, GPR debt grew by $2 billion, but half of the total was added in the last three years.
While insiders will tell you that interest rates have never been lower for this type of borrowing, taxpayers should be alarmed at our growing debt. What if the economy doesn’t recover as predicted and instead takes a swan dive again next year? The state of Wisconsin would be in a better position to handle such a fiscal crisis if it had less debt, not more.
As the very sage and understated Rep. John Klenke (R-Green Bay) said during the Joint Finance debate, the math matters and we really haven’t even begun to tighten our belt.
7. Reduce Spending Everywhere
The 2013-2015 budget as amended increases general fund spending by three percent compared to the last budget. While the majority of the increased spending is attributable to higher costs of healthcare for the poor, there is just too much new spending in this budget.
Like the $2.2 million to replace older state vehicles with 80 NEW vehicles. Guess the 1,500 vehicles we already have are just not getting the job done. 1,500 vehicles? No wonder they call this the Central Fleet.
Or the $500,000 for the creation of regional intergovernmental affairs office director positions “to conduct public outreach and promote coordination between agencies and authorities.” Four new positions to coordinate the many different and increasingly complex layers of government? Isn’t that what every other state bureaucrat already does?
There is the $8.2 million in additional spending added by Joint Finance to increase walleye production at various state fish hatcheries and the directive that DOT erect two signs for the Shrine of Our Lady of Good Help.
Divine intervention to find the shrine would be less expensive and, some would argue, much more effective.
Even though it is not new spending, the $1 million dollars we spend every year on the “Diesel Truck Idling Reduction Program” is not an essential function of state government and unnecessary spending. Why state government needs to provide “financial assistance to eligible Wisconsin freight motor carriers to purchase and install idling reduction technology” is beyond us.
There are countless more examples of unnecessary spending found in this budget and we hope that the Governor will root them out.
6. Slash UW Funding Even Further
We know it looks like we are piling on at this point, but in truth we believe there is more taxpayer savings to be found in the UW budget. Back in April, the Legislative Fiscal Bureau announced the UW-System had over a billion dollars in cash reserves, with over $400 million of it coming directly from recent tuition hikes as the chart below shows. At the Governor’s request, the Joint Committee on Finance adopted a two-year tuition freeze while cutting $183.8 million and 13 positions from the UW budget. Despite all the political grandstanding and feigned outrage over the UW being out of control, there are still over 2,500 UW employees who make more than $100,000 a year in base salary. There are over 20,000 UW employees who make more than the state average wage of $39,176.
As astounding as those figures are, the final straw for us that the UW still had some budget fat in need of a trimming was our discovery of the University-sponsored conference, Fighting Forward: A Labor and Working Class Summit. Fighting Forward brought together a dozen UW employees and liberal political organizers from across the country to criticize capitalism and devise ways to eventually abolish it all together. One breakout session was entitled “Putting Militancy Back in the Labor Movement.” Do they not remember how some tried to bring militancy to the chaos at the Capitol and how it paralyzed our state for what seemed like an eternity?
Sounds like we need to start over at the UW and rebuild her from the ground up, putting you, the taxpayer back in charge. A dramatic and deep cut from the Governor’s veto pen would force UW to focus on its original mission, preparing our young people to be leaders and innovators of the very capitalistic system that some in the UW are now trying to destroy.
5. Restore Performance-Based Budgeting
One of the Governor’s most important but least-noticed reforms that he introduced was his attempt to move state government to a performance-based budgeting model. Right now, taxpayers are scammed by the base-year doubled budgeting model where a bureaucrat looks at last year’s budget, adds in three to five percent more spending without justification or thought and calls that the bare-minimum base budget that cannot under any circumstances be “cut.” Governor Walker proposed moving more of state government to real-world budgeting.
To address the skills gap in our labor force, the Governor was attempting to “incentivize Wisconsin technical colleges to address workforce needs and improve student value” by tying a portion of state funding to a set of metrics that focus on job placement and programs in high-demand fields. By 2020, the Governor proposed that 100% of funding for technical schools be tied to job-placement metrics. Fancy that, a state agency funded based on a set of definable outcomes tied to economic progress. But, of course, the Finance Committee had to snatch defeat from the jaws of victory by capping the technical college system performance-based funding at 30 percent. Maybe with a stroke of the pen, we could get closer to the original proposal.
The Governor’s attempt to introduce performance-based budgeting to our K-12 schools died an even quicker death. The Governor’s proposal to use $50 million for school performance incentive grants tied to the new school report cards was met with immediate opposition from State Superintendent Tony Evers and school officials across the state. We should not be surprised that the bureaucrats – the same bureaucrats who stood to face tough questions from irate parents when their beloved school, where every child was above average, fared poorly on the new report card – would oppose performance-based funding.
What was truly surprising was how many members of both parties quickly caved to their local school officials, wishing to buy peace in their next campaign instead of holding Wisconsin’s education system accountable. To borrow a phrase from our friends on the left, what about our children? I guess we care more that the highly-paid, slick talking administrator back home is happy. Ineffective, but happy.
4. Reduce the Amount of State Employees
The Joint Committee on Finance is to be congratulated on this one for making some progress on this problem. The Governor originally proposed adding 710 new state employees to the payroll. Finance actually cut the number of state employees in the budget bill by 730, for a net reduction of 20 compared to the last budget.
But more can be done. According to Department of Administration records, there were 37,037 state employees in 2012, up from 36,342 in 2011 (UW employees, as noted above, are counted separately from state employees). Over 800 state employees made more than $100,000 in 2012. Governor Walker’s salary, the CEO of our state, did not even crack the top 150.
Everyone is doing more with less these days. Technology allows us to be more efficient in everything we do. Gone are the days in government when, in order to accomplish more, you automatically needed more government staff. We need a hard cap on the total number of state employees for three years so that taxpayers can continue to realize the savings of Act 10 and the difficult decisions made in the last budget. Otherwise, “government hiring creep” will persistently eat away at our wallets.
3. Slam the Door Shut on the Obamacare Medicaid Expansion and Reform the Medical Assistance Program
The most talked about and debated portion of Governor Walker’s budget was his decision to reject federal dollars to expand Medicaid in Wisconsin under the President’s Affordable Care Act. Instead, the Governor proposed moving non-elderly, non-disabled adults above 100% of the federal poverty level to the federal health care exchange and using those slots freed up by the move to the federal exchange to eliminate Wisconsin’s BadgerCare waiting list. The opposition from the special interest groups was fierce and the political rhetoric was over the top. Sen. Bob Wirch (D-Pleasant Prairie) actually said that people will die if the state attempted to move Wisconsinites to the Obamacare exchange.
For a while, it looked like the intense lobbying and desperation tactics might actually be working. As MacIver reported earlier, some Senators indicated a willingness to buck Governor Walker and accept the federal money. So, when the legislature finally acted last week on the Governor’s budget and his original decision to reject the Medicaid expansion dollars stood, we believed taxpayers had dodged a bullet and a future financial mess was averted.
But, then we read the Joint Finance motion again. While it appears that the legislature said no to the medicaid expansion and provided additional state support to fund cost-to-continue care until the federal health exchange is setup, the language seems a bit ambiguous. Would those same legislators who told constituents back home two months ago that they wanted to accept the federal money insert language into the budget that might leave the door open to revisiting the Obamacare decision in the future? Stranger things have happened.
To guard against this possibility, taxpayers need Governor Walker and his legislative supporters to pass definitive language stating that the State of Wisconsin, for our long-term financial viability, rejects the federal dollars for the expansion of Medicaid under Obamacare. Once and for all. Or at least until the next election.
While we are on the subject of health care, the taxpayer needs greater protection from the sky-rocketing costs of the Medical Assistance (MA) program. Now, before our friends on the left accuse MacIver of wanting to push Granny’s wheelchair over the cliff, we believe that the MA program is a core function of state government and a vital program for many Wisconsinites. But, that doesn’t mean we can allow the costs of the program to continue to balloon out of control.
In 2010, Governor Jim Doyle was forced unexpectedly to spend $207 million more on MA than what he originally budgeted. Last session, even though the Governor and the legislature talked about reforms to the program to “bend the cost curve,” Wisconsin spent $1.2 billion more on the program, the largest increase in Wisconsin’s history and one of the largest increases in the country. And this budget allocates $1.12 billion in new MA funding just to cover the program’s cost-to-continue at current levels.
Notice a pattern?
While this is not the typical time in the legislative cycle to talk about a spending problem, this situation is serious enough that we feel the conversation and the search for fiscal solutions to the problem needs to start immediately before another cash infusion is required of the taxpayer.
2. Provide More Educational Choice
After the Governor’s decision to reject federal money for Medicaid expansion, the next most hotly debated and fiercely contested part of his budget was education. The Governor kicked off this debate back in February when he told legislators that it was a moral imperative that every child in Wisconsin have access to a great education regardless of their zip code.
To accomplish this lofty goal, the Governor introduced a wide-range of education reforms including a school performance incentive program, statewide charter school authorizer, a special needs scholarship program, testing changes, an evaluation system for teachers and numerous other reforms.
On school choice, the Governor proposed a failing school model that would have expanded educational choice to nine more school districts making 122,000 more students eligible.
Despite seemingly pro-education reform majorities in both houses, the legislature jettisoned many of the Governor’s proposals. The legislature changed the Governor’s voucher expansion proposal from one based on a failing school model to a statewide expansion with a hard cap of 500 students in the first year and 1,000 students in the second with an enrollment loss floor of one percent that would continue to guarantee a public school would not lose too many children in one year.
That means just 1/10 of one percent of the student population in the state will be eligible statewide to attend the school of their choice. For comparison purposes, Indiana’s voucher program is limited to 7,500 seats in the first year, 15,000 seats in the second year and unlimited after that. Tennessee recently proposed a choice program capped at 5,000 seats in the first year, 10,000 seats in second, and 20,0000 seats in third.
The most disappointing part of all this is that the research shows choice works. Research from the School Choice Demonstration Project shows that voucher students in Milwaukee are more likely to graduate and more likely to go to college than those in traditional public schools. The independent and influential Policy Studies Journal recently peer-reviewed this research and reconfirmed the results. Dr. Greg Forster published in April his study A Win-Win Solution; The Empirical Evidence on School Choice which found many benefits of school choice and no significant negative effects for students.
The Wall Street Journal called the entire messy situation the “GOP Wisconsin Wimpout” and labeled the expansion “token.” We agree with the Wall Street Journal and we hope the state can do better for its students. Let’s move to a educational system that emphasizes a solution that best fits the needs of every child rather than a system that forces most children to attend a specific school solely for geographic reasons. As MacIver’s columnist James Wigderson has pointed in his column Should We Fund Children or Buildings? “Buildings don’t fail. School districts fail when they fail to teach children.”
To ensure that all of our children in Wisconsin have access to educational choice, changes should be made now.
Finally, the #1 way to improve the 2013-2015 budget for taxpayers is:
1. Make the Tax Cut Bigger
The Governor and the legislature are be congratulated for their work to include an income tax cut of $648 million in the final version of the 2013-2015 budget. Rep. Dale Kooyenga (R-Brookfield) deserves special mention for his tireless work to navigate this tax package through the budget process. The difficult fiscal decisions the Governor and the legislature made in the last budget, in the face of torrential opposition, paved the way to this point today. We are now having a conversation about which taxes to cut and not which taxes to increase like in years past. Gone, too, is the biggest eyesore left over from the Doyle years, the top income tax rate of 7.75% which was adopted to punish Wisconsin’s most successful. Here again, Rep. Kooyenga has done a masterful job responding to the predictable attacks of the left that the rich just need to pay their fair share.
Quite frankly, given Wisconsin’s progressive history, we had doubts that the tax package would make it through the gauntlet.
Kudos to Governor Walker and legislative leadership.
Yet, they could have done better. Rep. Kooyenga’s original tax cut proposal was $752 million, almost $100 million more than the final compromise. A millionaire in Illinois, even with their recent tax increases, will still pay a lower income tax rate than a middle class Wisconsite. And we still need to rid ourselves of every little tax increase Governor Doyle burrowed into our tax code before he left office.
Given where Wisconsin was just a short four years ago – a $3.6 billion deficit, $4.8 billion in tax increases, unemployment over 9% – this is, all things considered, a good budget and we like the direction Wisconsin is heading.