What to Expect From Walker’s State of the State Address

January 10, 2017

By James Wigderson
Special Guest Perspective for the MacIver Institute

It is the unfortunate trend of the modern welfare state that major addresses by politicians tend to devolve into a list of policy proposals and updates on five-year plans. Governor Scott Walker’s state-of-the-state address Tuesday afternoon will probably continue that unfortunate trend, a fault that is not entirely his. So don’t expect great oratory, but it’s worth paying attention to the details beyond what the governor saved using Kohl’s cash last week.

Walker will no doubt spend much of his speech focused on the past successes of his administration. According to the MacIver Institute, as of the last budget income taxes have been cut by $750 million and property taxes were cut more than $800 million since 2011. The typical homeowner’s property taxes decreased by $116 compared to 2010. Act 10 continues to save the taxpayers money, over $5 billion and counting.

Somebody in the Walker Administration should put up a sign like McDonald’s celebrating, “billions and billions saved.”

Meanwhile, tax revenue is actually up. The state’s “rainy day” fund is the healthiest ever. Wisconsin is no longer lurching from budget crisis to budget crisis, using raids on segregated funds and one-time federal money to fill holes. Wisconsin is in sound financial condition.

The employment situation is better than the national average, too. Wisconsin’s latest unemployment number is 4.1 percent. Labor participation is sixth highest in the United States.

We should also expect Walker to repeat his position against raising gas taxes and registration fees to fill the gap on transportation spending unless there are corresponding cuts in taxes elsewhere. This will pit him directly against Assembly Speaker Robin Vos, other Republicans in the legislature, and the road builders.

It is encouraging that Walker told the MacIver Institute in December that one of his top priorities was to push for more federalism by asking the federal government to let the states do more without federal interference. That interview followed a letter to President-elect Donald Trump which asked Trump to block-grant Medicaid, education and transportation funding. Walker also asked for the power to drug-test some recipients of public aid in the Supplemental Nutrition Assistance Program and FoodShare programs. These are all policy goals that we’d like the governor to include in his state of the state address as well.

Unfortunately, Walker’s letter to Trump did not include the call to repeal Davis-Bacon, the federal version of the prevailing wage law requiring government contractors to pay above-market wages, increasing the costs of projects done with federal money. Rather than try to play shell-games of figuring out which pot of transportation money should pay for what construction, wouldn’t it be easier to ask the federal government to repeal the law?

Meanwhile, Republicans in Wisconsin could complete the job of repealing the state version of the prevailing wage law to lower the costs of state public projects. Republicans in the legislature have also proposed preventing local governments from requiring Project Labor Agreements that raise the costs of public works projects, too. Walker’s support of these reforms would be a continuation of the success of Act 10.

On Monday, Walker also released a letter to House Majority Leader Kevin McCarthy reiterating Wisconsin’s request to have Medicaid funds sent to Wisconsin via a block grant to let Wisconsin control the program at the state level. Walker points out that Wisconsin is the only state to refuse to expand Medicaid using federal Obamacare funding to not have an insurance coverage gap. In the letter, Walker points out that Wisconsin actually has better coverage than three-quarters of the states that did take the extra Obamacare funding.

Walker needs to celebrate that success again to remind both parties that asking for the expanded Medicaid money from Obamacare, especially as Congress is poised to get rid of the program, would be a terrible mistake.

Walker should also propose lifting the caps on statewide school choice, or moving to universal school choice using Education Savings Accounts. Walker famously said that he trusts parents when it comes to school accountability. Then Walker can show it by allowing every Wisconsin parent a choice where their children go to school.

Finally, given the nearly unprecedented Republican majorities in the legislature, now is the time for Walker to be bold on tax reform. Wisconsin still has a fourth income tax bracket, an unfortunate holdover from Governor Jim Doyle’s administration. It’s time to move Wisconsin to a simplified income tax system with one tax bracket and end the progressive income tax.

The question to Walker and the legislature is, if not now, when? Republicans will likely never have bigger majorities in the legislature, and the state Senate is even more conservative after the last election cycle. Walker’s challenge to the legislature should be the type of bold reforms that propelled Wisconsin into the national spotlight. As the late Margaret Thatcher said to former President George H. W. Bush, “this is no time to go wobbly.”