No New Surplus Revenue Makes Budget Debate More Difficult For The Politicians

Will the repeal of prevailing wage, an effort to end taxpayer theft, gain momentum to ease the tight budget?

MacIver Institute Budget Blog | May 7, 2015

Legislators hoping that Legislative Fiscal Bureau (LFB) Director Bob Lang would deliver good news of higher tax revenues for the 2015-17 budget are now coming to grips with the reality that there are no surplus dollars as they continue their review of Gov. Scott Walker’s proposal. The LFB’s May re-estimates show no variation from original projections in January.

This means Legislators will have to be more disciplined if they want to fix certain self-proclaimed funding priorities – K-12 education, the UW System, and the transportation budget.

The news has set off a flurry of statements from legislators and questions from taxpayers as the budget continues to take shape.

Assembly Republicans are uniting under the banner of restoring the $127 million first-year cut to K-12 categorical aids, which wouldn’t be replaced until the second year under Gov. Walker’s budget. This was the sentiment of Speaker Robin Vos (R-Rochester) during a transportation group event on Wednesday, and Joint Finance Committee (JFC) members Dean Knudson (R-Hudson) and John Nygren (R-Marinette) announced that Assembly Republicans are “committed” to eliminating the cut.

Vos also indicated that he would like to see transportation bonding come down from a proposed $1.3 billion to around $900 million.

No new revenue also makes softening the $300 million cut to the UW System a much harder task, which top lawmakers have identified as third on the priority list behind K-12 and transportation. However, JFC Co-Chairs Nygren and Alberta Darling (R-River Hills) recently announced that the proposal to move the UW System to its own public authority is dead. The focus will instead shift to possible flexibilities that could be granted to the System to help with budgeting.

As for transportation, it is still a mystery how lawmakers might reduce the amount of bonding that was proposed by the governor. Republican leaders have rejected the idea of a gas tax increase, but both Vos and Senate Majority Leader Scott Fitzgerald (R-Juneau) have indicated that registration fee increases may be on the table.

Legislative leaders seem fixated on trying to find new taxes or fees to increase transportation spending. No one has asked if we are spending our current transportation revenues wisely or if there are ways to lower road-building costs so our already-high gas tax revenues might go a little farther. Shouldn’t we at least take a serious look at the spending side of the equation before we start talking about raising taxes?

Voters in Michigan soundly rejected a substantial gas tax hike, registration fee increase and sales tax increase package aimed at improving roads. The margin was 80 percent against to 20 percent in favor. Will Wisconsin’s lawmakers take notice?

Rep. Knudson and Sen. Tom Tiffany (R-Hazelhurst) have introduced a proposal to allow counties to raise money for local roads through a 0.5 percent local sales tax. The new tax would have to go to referendum first to be approved by county voters.

The LFB’s revenue news could make prevailing wage repeal a bigger player in the transportation funding debate. Repeal of the wage setting law has the potential to save millions on public construction projects around the state. However, Fitzgerald told reporters that support for prevailing wage repeal is “fuzzy” in the Senate, which would need 17 Senators to agree on getting rid of the law.

Gov. Mike Pence of Indiana just signed into law a repeal of the Hoosier State’s prevailing wage law equivalent, the “common construction law.” Indiana taxpayers will now reap the benefits of not having to pay for inflated labor costs on public projects.

Stay tuned to the MacIver Institute as the budget’s puzzle pieces continue to move about.