Sunday, November 30, 2014

8 crazy days and nights....

Wasn't there in person, but got to listen/watch about all of the Badgers' bad first 20 minutes, and their big comeback over the last 40. And now onto Indy!

Hey, you gotta beat Minnesota in something, cause it sure isn't in economic performance! I guess I'll have to settle for this for the time being.

Now we get the Pack vs Pats (and judging on the amount of Packer and Patriot gear I saw in the Milwaukee airport yesterday, people are already fired up for this). What a monster matchup, and a key game for the Pack, because I think a win gives them the inside track for the division and a much easier road to the Super Bowl.

Then add in Duke coming to the Kohl Center to play the Badgers in hoops on Wednesday. Is this the biggest game of the non-conference season in all of college hoops? The scalper prices at Stubhub sure think so, with the LOWEST-priced ticket listed at $130 as of today.

And then finally on Saturday, where you start the day with those Badgers hoopsters going to Milwaukee to play Marquette in the Gold's Golden Eagles' Super Bowl in what likely will be a sold-out crowd at the Bradley Centerr. Then Bucky football goes to Indy for the title game against Ohio State that night (and yes, I think Bucky can certainly win that game).

Lots of big-time games for 8 days, and it sure beats dealing with the idiocy in the malls or the foolishness coming out of WisGOP bubble world. Maybe there's a point in all that.

Thursday, November 27, 2014

Gobbling it up out East

Out with family on the eastern shore of Maryland, where we only got rain yesterday and today it's above freezing. Nice to be with loved ones today, and nice to not be working on a Thursday.

Also wanted to give a thanks to you, for clicking enough ads to let me get my first $100 check from Google for ad clicks and page views. Only took 4+ years to do it, but who's complaining, right?

I'll be back with more during and after this huge Wisconsin sports weekend. Have a good holiday, all.

Tuesday, November 25, 2014

Justice- Ferguson style, and Waukesha County style

I'm disgusted by what seems to be an obvious lack of justice regarding the decision to not charge Ferguson, Missouri police officer Darren Wilson with any crimes after Wilson shot unarmed teen Mike Brown 12 times and killed him. But it's not just the racist overtones of letting a white cop get away with shooting a black kid. It's also that it's yet another example of how the connected and powerful continue to get away with crimes (apparently including murder) solely because they have the right status and enough money to do so. If you're not in the "inner circle", then you're on your own, and the law won't help you. In fact, if you try to seek justice, it's likely that those more rich and powerful than you will use their advantages to make it a very tough hill to climb. And the cheering from racist a-holes supporters of Darren Wilson is very sickening. Are you telling me that a guy who at the very least failed to responsibly be the adult in the incident despite having a position of authority, and now stands to make big money from paid interviews and wingnut welfare (until his George Zimmerman-like self-destruction inevitably happens), is considered some kind of victim? You gotta be freaking kidding.

There's only one good moment from last night's events in the St.L area. And it's this, where a guy in a Guy Fawkes/ V for Vendetta mask jumped into Fox News' racist-porn party.

Fuck those guys, indeed.

In the "connected white person" world, it pays to be buddies with those that are in the inner circle of "justice." Look at how this has worked in Waukesha County, Wisconsin, where then-District Attorney Brad Schimel threw a case in 2010 to allow former Wisconsin Assembly Speaker Scott Jensen to get out of prison on corruption charges. This freed up Jensen to funnel huge amounts of money to get GOP candidates elected to the State Legislature through his work the school voucher lobby, including a reported $850,000 in this last election cycle, with the payback coming in the form of those GOP legislators getting more taxpayer dollars for their unaccountable privte and religious schools. Or how Milwaukee County GOP official Christopher Wiesmuller can take a Scott Walker aide across county lines to Waukesha County, actively work with the aide to cover up evidence in the John Doe case, and act so heinously that he was later reprimanded by the Wisconsin Office of Lawyer Regulation. But Waukesha DA Schimel, who knew of these actions, chose to let Wiesmuller go without one criminal charge being filed.

Schimel's reward for choosing GOP loyalty over fair justice? He ended up being the GOP's candidate for Attorney General this November, and the voters of the rest of the state were dumb enough to vote him in, where no doubt this back-scratching routine will repeat itself on a statewide level. With that in mind, don't expect any charges or legal action to follow Public Service Commission Board member Ellen Nowak, despite serious impropriety. Nowak is a Scott Walker appointee to the PSC Board (her previous job was... chief of staff to the Waukesha County Executive), and showed whose side she was on when she appeared on a panel with the CEO of a large state utility, and seemed to give advice to energy executives on how to screw over users of alternative energy. This is part of an overall rate scheme that will in effect raise the utility costs for small residences while cutting the costs for large (read: corporate) users.
Ellen Nowak, a regulator for the Wisconsin Public Service Commission, and Wisconsin Energy Corp. (WEC) Chief Executive Officer Gale Klappa participated in a panel together at a utility industry conference in June. Her discussions with Klappa at the conference should have disqualified her from voting on a pending rate case, said Bryan Miller, a co-chairman of the Alliance for Solar Choice...

Wisconsin Energy had initiated the process for raising its rates in April. Less than three weeks after the Edison Electric Institute event, the company submitted a detailed proposal that included a fixed fee for customers with solar power, sometimes called distributed generation or D.G.

That proposal was approved Nov. 14 by the commission 2-1, with Nowak voting in favor. She was appointed by Governor Scott Walker.

“The traditional rate design will no longer work with the growth in the D.G. environment,” Nowak said on the panel. “We need to make more of the fixed costs more in line with fixed charges, particularly so those customers who don’t participate in DG are not paying for those who do.”
It's also telling that it's Bloomberg News that's running this report, and not the Milwaukee Journal-Sentinel or other state media. Hmm, think JournalComm might be getting a benefit from this new rate system and possibly be receiving nice ad revenues from these utility companies, and that's why they're not very willing to look into Nowak's connections and sketchy behavior? Guess it pays to be connected.

This is what distresses me most about the state of events in both Ferguson and in Wisconsin. There is a small, incestuous group of cronies that is perverting justice, and using that legal advantage to get even further ahead of the average person than their large bank accounts already allow them to. In the meantime, the rest of us don't see the courts as a place that the evildoers and exploiters can be kept in line, even if they break the law and do damage to average people. And if that trend gets much worse, there will be plenty of other Ferguson-type riots from people who do not believe the legal and legislative system will work for them, and they're going to use other, more destructive means to change a situation they cannot accept.

I don't get why this awful situation has to get worse, but it seems it has done so over the last decade-plus. And what does it take to stop this state's and this country's trend toward becoming a full-fledged banana republic?

Monday, November 24, 2014

Lower growth revisions show Wisconsin deficit may get worse

The Wisconsin Department of Revenue finally released an updated Wisconsin Economic Outlook last week. This used to be a quarterly report but the frequency of this release has been slowed in recent years, and this report was only the second of 2014, 9 months after the first one came out in January (and conveniently released after the November elections).

In the wake of this report, the good folks at the Wisconsin Budget Project noted that the DOR lowered the amount of current and future-year economic growth compared to their last report. That’s important to bring up because the budget “surplus” that was projected earlier this year was based largely on these stronger growth numbers for both the state and the nation as a whole, leading the Wisconsin GOP-run Legislature and Walker Administration to add in further tax cuts to “give back” the surplus. As the Budget Project points out
The January economic report was issued in conjunction with increased state revenue projections, which helped persuade state lawmakers to enact substantial tax cuts. But over the last 10 months the estimates of Wisconsin’s economy, i.e. the state’s “gross domestic product” (GDP), have changed as follows:

•The anticipated [U.S] GDP in 2014 is now $152 billion less (-0.9%) than assumed in January.
•The estimate for 2015 is $210 billion lower than previously anticipated (-1.1%).
•The anticipated 2016 GDP is now $234 billion less than estimated in January (-1.2%).
The higher figures were used by Wisconsin’s Legislative Fiscal Bureau to forecast a $1 billion surplus this January. But now with the lower growth in these years, the potential revenue growth for the State of Wisconsin should also be lowered, which would increase the already-large deficit that is forecast for these next two years as a result of Walker/WisGOP tax cuts and one-time gimmicks that spent out the projected surplus.

It’s not just U.S. GDP that was lowered in the DOR’s November forecast compared to prior years, but also a number of local and national economic stats. And the lower numbers for 2014 also lower the base for future years, increasing the gap (much like how Wisconsin’s revenue shortfall in 2013-14 has set off larger deficits in future years).

Personal Income forecast, U.S., Wis. Economic Outlook
2014 +4.6% in Jan, +3.6% now ($147.8 billion lower)
2015 +5.0% in Jan, +4.7% now ($207.4 billion lower)
2016 +5.3% in Jan, +5.3% now ($223.4 billion lower)

Total job growth, Wisconsin, Wis. Economic Outlook
2014 +41,000 in Jan, +39,600 now (-1,400)
2015 +48,600 in Jan, +34,200 now (-15,800)
2016 +50,700 in Jan, +42,600 now (-23,900)

That last stat kind of seems like a big deal, where the state is projected to add nearly 24,000 fewer jobs over the next 3 years than it the DOR thought it would 10 months ago. Obviously, fewer people working would likely lower revenues from the previously estimated amounts for those years, and could portend yet another reason that we could face a huge budget crisis in the coming months.

When the Wisconsin Department of Administration released its revenue estimates and budget requests last Thursday, the Wisconsin Budget Project returned with another blog post to sum up the situation.
The bottom line is that state lawmakers rushed through a package of tax cuts this year – despite early warning signs that tax revenue was starting to fall short of the projections, and that their actions were creating a severe imbalance between revenue and spending. If they are unwilling to roll back any of those tax cuts, they will have to cut more than $2.4 billion from current commitments and agency spending proposals to balance the budget this year and in the next biennium.

If lawmakers insist on making additional tax cuts, that will require even deeper cutting in the public investments that are critical to Wisconsin’s economic vitality, such as our public schools and universities.
With state revenues reflecting that lowered amount of hiring and economic activity, and revenues coming in below the DOA’s rosy scenarios are indicating, it may be closer to a $3 billion gap that has to be closed. But then again, Walker and the WisGOPs have been apt to choose politics over sensible policy, as long as it suckers enough low-info and mis-info’d voters into keeping them in power. So from that perspective, maybe these two rounds of Koo-Koo tax cuts worked.

But those reckless tax cuts and the deficits that they have led to are going to cause a whole lot of hard times to those of us outside the WisGOP “inner circle.” Not that the insider’s club at the Capitol really cares about that.

Saturday, November 22, 2014

Wisconsin deficit already spiraling higher

The deficit that resulted from Thursday's Wisconsin Department of Administration's summary of budget requests and revenue projections were bad enough. To review, $197 million must be made up in the next 7 months, and over $2.2 billion more in the 2 years after that. But those numbers may be soft-selling how badly the situation really is, and Friday's release of October's numbers from the Wisconsin Department of Revenue indicate that the deficit may grow larger.

At first glance, the October figures look disastrous, as total revenues were down 3.7% compared to October 2013, and income taxes were down a stunning 11.0%. But I also know that approximately $55 million a month is being reduced due to the changing of the withholding that began in April, so I add in that amount, and...the numbers still aren't good. Income taxes still end up down 3.7% compared to last year, and adjusted total revenues were up less than 1%. That's well behind the 5.0% that the DOA projected for revenue growth in this fiscal year, and even fell behind the 3.5% that the LFB originally projected back in May. Based on the first four months of FY 2015, I projected all major components of the State of Wisconsin's revenues, to see where we're on track to end up at June 30, and the numbers I am comparing this to are the figures from the 5% revenue gains that were projected in the DOA report.

Projected Wisconsin revenues vs. DOA projections FY 2014-15
Individual Income Tax- DOWN $306.3 million
Sales Taxes- UP $33.5 million
Corporate Taxes- DOWN $19.2 million
Excise Taxes- In line, I'll say even.
Other taxes- No real difference

Being $292 million short on revenues from the DOA's rosy scenario would mean that Wisconsin would have a $489 million shortfall in this fiscal year, much more than the potential year-end deficit that Scott Walker faced in 2011 when he claimed the state was "broke" and had to institute Act 10 as a result.

In addition, if that revenue shortfall were to hold, it would lower the base in the following years, and cause those years to have higher budget deficits than the massive ones the DOA is already predicting. If you keep with the 2.9% average revenue increase that Wisconsin has seen over the past five years (straight from otherwise-BS assumptions that the GOP's Co-Chairs of the Joint Finance Committee pulled out before the election to claim the budget was in "surplus"), the deficit numbers for the two years in the next budget are as follows:

Deficit in Fiscal Year 2015-16 $1.364 billion
Deficit in Fiscal Year 2016-17 $1.575 billion

Obviously, there's a long way to go between now and June 30, 2017. But if there is no turnaround in the downward trends on revenues or the increasing amount of expenses (BadgerCare Plus enrollments have consistently gone up in the 6 months after Walker's Obamacare-related changes happened in April 2014), those bad numbers could worsen, making it extremely likely that there will be some kind of budget repair bill to fix the deficit for the 2015 Fiscal Year.

That's not the only bad budget news that broke on Friday, as WKOW's Greg Neumann posted an excerpt of his interview with Wisconsin DOT Secretary Mark Gottlieb, who previously asked for $751 million in tax and fee increases to pay for needs in the upcoming budget. Neumann quotes Gottlieb in a story on Friday as saying the Transportation Fund deficit is now as high as $900 million, with the assumption of that DOT budget is to fill much of that hole with hundreds of millions of dollars in transfers from the General Fund. With the General Fund's red ink growing by the day, it becomes less likely that those funds can be transferred over to the DOT, and that means there would have to be even more tax increases and/or cuts in aid and projects at the DOT as a result.

Stay on this story, because you can bet the fiscally-ignorant and paid-off Eastern Wisconsin media will continue to ignore what is truly becoming a fiscal crisis in Wisconsin. And if the Dems in Wisconsin had any guts or smarts, they'd be blaring this story wide, and pre-empting potential one-time gimmicks that Walker might try to plug this exploding deficit.

Friday, November 21, 2014

Wisconsin jobs up in October, still lagging behind U.S., neighbors

Yesterday featured another monthly jobs report from the Wisconsin Department of Workforce Development. In general, it was a decent number, with 4,000 private sector jobs created in October 2014, while September’s private sector jobs total was revised down by 300, for a total increase of 3,700. Not bad, but slightly below the national rate of growth, since the U.S. as a whole added 209,000 private sector jobs (214,000 jobs overall) in October, and the previous months were revised up.

When you plug those figures in, it means that while the Wisconsin numbers went up in October, the Walker jobs gap has grown yet again, now just below 71,800 private sector jobs, and 66,000 jobs overall.

Wisconsin’s job growth was strangely uneven in October, as manufacturing employment went up by 5,400 seasonally-adjusted jobs, but the rest of the state’s private sector LOST 1,400 jobs, and the “Professional and Business Services” sector dropped 3,500 jobs last month. It’s the sort of report that makes me want to see where the November figures end up, because it almost seems like the seasonal adjustment for October threw a lot of figures off.

Job change, Wisconsin Oct 2014, non-seasonally adjust. vs seasonal adjust.

Manufacturing +400 non-seasonally adjusted , +5,400 seasonally-adjusted
Prof.-Bus. Services -500 n.s.a, -3,500 s.a.
Leisure-Hospitality -7,000 n.s.a, +1,500 s.a.
Trade +3,600 n.s.a, -1,300 s.a.
Government +12,900 n.s.a, -3,900 s.a.

While Wisconsin’s drop in unemployment to 5.4% is also nice (particularly given that it’s in a month where the participation rate went up), that merely matches the 0.1% drop nationwide, and the state stays 0.4% below the national rate. The 2.3% drop in unemployment in Wisconsin during the Age of Fitzwalkerstan isn’t near the 3.3% drop in the rest of the country since January 2011, as the Obama Recovery has continued. And with the Bureau of Labor Statistics releasing the monthly jobs figures for all states today, we can see that Wisconsin's job gain was less than a majority of our Midwestern neighbors, and we were especially dwarfed by our neighbors across the St. Croix, who added more than twice as many private sector jobs as we did.

Change in private sector jobs, October 2014, Midwest
Minn +10,200 private, +9,500 overall
Ohio +8,400 private, +1,000 overall
Mich +7,200 private, +7,200 overall
Ind. +5,300 private, +7,300 overall
Wis. +4,000 private, +100 overall
Iowa +2,300 private, -200 overall
Ill. -2,000 private, +900 overall

Democratic-run Minnesota has now gained 46,300 private sector jobs over the last 12 months, while Wisconsin has only created 31,000, despite us having a higher population and job base than Minnesota (hopefully we can at least beat them on the football field a couple of time in the next 8 days). And Wisconsin is still barely out of the cellar for private sector job growth in the Midwest over the 45 months that Scott Walker has been in office, just nudging past Illinois in recent months.

These overall stats show why that despite the last couple of months going well in Wisconsin, it's sickly hilarious to hear Scott Walker try to talk up Wisconsin’s job growth on his national “pleae take me seriously for President” tour. Because a minute of research from national journalists would show Wisconsin still badly lagging the Obama Recovery, and much of its Midwestern neighbors, since the Age of Fitzwalkerstan began in January 2011.

Thursday, November 20, 2014

Right on cue- at least $2.4 billion in deficits for Wisconsin

Yep, just as I suspected. The Wisconsin Department of Administration summarized the state’s budget requests and estimated revenues for the next budget, and what do you know? We have a $2.2 billion deficit in the next budget, along with another $197 million to make up in the next 7 months! This is the DOA report that I talked about earlier this week, and you can click here to see all of the nuts and bolts from it.

To review, we ended 2014 Fiscal Year on June 30 at a net balance of $516.9 million. And now with the DOA report, the deficit blows up this way.

ENDING FY 2014 BALANCE +$516.9 million
ENDING FY 2015 BALANCE -$132.1 million
MINUS required reserves -$65 million
TOTAL TO BE MADE UP BY JUNE 30, 2015 $197.1 million

2015-17 budget
FY 2016 REVENUES $15,540.4 million
TOTAL EXPENSES $16,636.4 million
DEFICIT IN 2015-16- $1.096 BILLION

FY 2017 REVENUES $16,125.5 million
TOTAL EXPENSES $17,243.6 million
DEFICIT IN 2016-17 $1.118 BILLION

And by the way, those revenue numbers from DOA are quite rosy. They anticipate a 4.98% increase in revenues for Fiscal Year 2015, while the Legislative Fiscal Bureau has only estimated a figure near 3.5%. I estimated adjusted revenues to be up 3.74% based on the figures through September (we’ll see October’s numbers tomorrow), and if that 3.74% holds up for the rest of the fiscal year, the amount that needs to be filled by June 30, 2015 increases to around $391 million - above the $279 million in the state's rainy day fund.

With that in mind, I’ll take you back to a document that the LFB wrote two months ago, in light of the $281 million revenue shortfall that hit in Fiscal Year 2014, which followed two rounds of Koo-Koo tax cuts that Gov Walker signed onto.
Revenue Shortfall Provision. Section 16.50(7) establishes a separate process that must be followed if there is a larger revenue shortfall. Under this provision, if at any time after enactment of the biennial budget, the Secretary of Administration determines that previously authorized expenditures will exceed revenues in either year of the biennium by more than 0.5% of the estimated GPR appropriations for that fiscal year…the Secretary is required to immediately notify the Governor, the presiding officer of each house of the Legislature, and the Joint Committee on Finance of the revenue shortfall.

Following this notification, the Governor is required to submit a bill to the Legislature containing recommendations for correcting the imbalance between projected revenues and authorized expenditures. Further, if the Legislature is not in a floor period at the time of the Secretary's notification, the Governor is required to call a special session of the Legislature to take up the matter of the projected revenue shortfall and to submit a bill dealing with the shortfall to the Legislature for consideration at that special session.

It is important to note that s. 16.50(7) gives the Secretary of DOA discretion as to how and when the determination of a revenue shortfall is to take place. Once that determination is made, the Governor is required to submit recommendations correcting the imbalance between revenues and expenditures. However, the statutes do not specify a time frame for either the DOA Secretary’s determination or the submission of the Governor’s recommendations.
But don't fear, Walker DOA Secretary Mike Huebsch is claiming that there won’t be a need for such a budget repair bill in the coming months, because they’ll use currently-undisclosed methods to close the budget gap.
The challenges of fiscal year 2014-15 are largely a result of adverse federal tax law changes commonly referred to as the federal fiscal cliff, which impacted many states. This led to tax planning distortions that were a consequence of both the 3.8 percent surcharge on investment income included in the Affordable Care Act and the expiration of capital gains tax reductions, both of which took effect in 2013 (both moves haven’t exactly crashed the stock market, now have they?). This meant that in 2012 taxpayers divested at the expense of future years, negatively impacting state tax revenues. This was a risk my department highlighted in this report two years ago (this didn’t stop Walker and the WisGOPs from cutting taxes based on that one-time bump in revenues), and referenced in the Annual Fiscal Report last month.

However, through continued prudent management of agency resources, the shortfall noted above will be addressed and the current biennium will end in balance.
Huebsch uses the always-fun “uncertainty” excuse, which gets a double “BULLSHIT” because it not only does it blame tax changes due to the implementation of Obamacare that have already been in effect for more than one fiscal year, but in addition, federal tax revenues went up by 8.9% in the just-completed federal fiscal year, and the country's having its best job growth in the last 15 years. Yeah, not really buying into that one.

And oh yeah, the state has to give an additional transfer of $25.75 million to the Transportation Fund this fiscal year (because Walker's DOA held it back in the last fiscal year to make the FY 2014 balance look better ahead of the election), and has passed a 4% increase in many local road and transit aids that has to be paid off. So the real question is how will the Walker folks intend to make up the few hundred million dollars in unspecified cuts that will undoubted have to happen, and when will they tap the rainy day fund to pay off some of their fiscal recklessness.

Hmm, maybe some national reporters might want to ask that of our fair Governor as he’s galavanting around the country while his state goes broke, claiming he hasn't raised taxes while Walker's DOT asks for $750 million+ in tax increases and higher fees to expand expressways as a payback his buddies at the Road Builders. There are a lot of us in Wisconsin who pay Scott Walker’s salary that’ll be interested in these answers.

Tuesday, November 18, 2014

Bucks arena- jock tax ups and downs, and JournalComm's big payoff

In light of last week’s attempted shakedown of billionaire Milwaukee Bucks owner Marc Lasry by pissant Assembly Speaker Robbin’ Vos, (leading to Lil’ Vossy getting skewered by Bruce Murphy today at Urban Milwaukee), let’s get back to talking about the prospects for a new Bucks arena.

When the change in ownership happened last April, Lasry and fellow new Bucks owner Wes Edens indicated that they would pay $100 million out of their own pockets toward a new arena, and outgoing Bucks owner Herb Kohl said he’d chip in another $100 million himself. There are also indications that naming rights and/or other investors could contribute another $100 million toward the project, making the total private investment reach $300 million. The rest would likely be made up by some kind of public funding or incentives, and estimates indicate that the total cost of a new Bucks arena would be between $400 million to $500 million, which means the public would be on the hook for $100 million to $200 million.

With that in mind, the Wisconsin Legislative Fiscal Bureau released a report last week which looked into the possibility of using what’s known as a “jock tax” to pay for the public funding side of the Bucks arena. I mentioned the jock tax issue in relation to the Bucks arena a few months ago, but what it basically does is split up the salary of athletes and other entertainers into the number of days they are in a given state, and then taxes them accordingly.
As an example, assume that an NBA player that is a resident of Florida has 210 duty days in a year, and two of them are in Wisconsin. In this case, the player’s allocation percentage would be 0.95% (2 divided by 210). Therefore, 0.95% of the player’s compensation for services rendered as a team member would be taxable in Wisconsin. If the player’s total compensation for services rendered to the team was $2 million, then $19,000 of that compensation would be taxable in Wisconsin. However, if the player was a resident of one of the four [tax] reciprocity states (Illinois, Indiana, Kentucky or Michigan) none of his compensation would be taxable in this state.

This office obtained information regarding NBA players and other employees who were potentially subject to Wisconsin income tax as of December, 2012. After conducting a search of tax returns filed for tax year 2012, the Department of Revenue indicates that these individuals, in the aggregate, paid state income taxes of approximately $10.7 million in that year.
The LFB then projects out how this may work in terms of generating funds for a new arena, which they assume will be built by the state borrowing the money and then paying back the costs via the jock tax.
…Assuming a flat, 20-year repayment structure on the bonds issued for a new stadium facility for the Milwaukee Bucks, $10.7 million in annual revenues associated with the estimated amount of existing state income taxes on NBA players and other employees subject to the state’s individual income tax could support approximately $150 million in state general obligation bonding, based on current interest rates. The total 20-year cost to repay the $150 million in general obligation debt would be $214 million, which includes $64 million in interest costs.
$150 million toward the arena would likely be enough to make the project whole, and with the NBA’s salary cap likely to go up significantly in future years due to the huge TV contract that it signed last month, that also makes it likely that a jock tax would add even more than $10.7 million a year down the road, meaning that it would pay for any overruns, or the jock tax could be retired in less than 20 years.

Now here’s the downside to any type of jock tax being put in place – the state wouldn’t be levying any additional tax on these NBA players and personnel, it’d merely funnel the money into a separate account that can only be used toward a Bucks arena. It essentially would decrease the revenue available for state government, since those millions of dollars can’t be used for other General Fund needs like it is now. So while it would keep the general taxpayer’s money out of the funding equation for the Bucks arena, what’s concerning to me is that this move would still have statewide effects. The $10.7 million+ of lost revenue would result in cuts elsewhere, or it would have to be made up through some other kind of tax increase or other form of added revenue. And when we may have an estimated $2.5 billion budget deficit already in the next budget, adding to the red ink might not be a great plan.

The location of a Bucks arena is obviously another key component to this question. It was reported by Milwaukee Magazine’s Jim Owczarski last month that the team is considering a purchase of the current Journal Communications building across 4th Street from the Bradley Center and the building next to it on State Street, with the arena possibly facing the Milwaukee River across 3rd Street. Owczarski quotes the local Milwaukee alderman in the story as seeming to prefer the JournalComm site to building on the site of the old Bucks arena at the MECCA (now known as the UWM Panther Arena).
An arena that has sightlines to the green space of Pere Marquette Park and the river is appealing to the Bucks ownership group.

Fourth District Ald. Robert J. Bauman said that while he has no direct knowledge of any negotiation between Journal Communications and the Bucks – "I don't know that specifically, but I'm not surprised – it's a logical area of exploration for them" – he did say Journal Square makes sense as a location for a new multi-use facility.

"If that site is big enough by itself, then I think that's a very viable option," he said. "If they have to span 4th Street and also demolish the (UWM Panther) Arena, as well – that's going to be a big, big political argument.
Putting the arena in that spot definitely could look cool if done right, Owczarski has a new blog post up today that gives an idea of how the arena might look, with the arena floor perhaps being underground.

The corporate side of this potential deal has some intrigue as well, as the soon-to-be-merged Journal Communications likely could use the money from a potential sale of its headquarters, and JournalComm needs Bucks games on AM620 to keep listeners in winter. This is especially true considering that the soon-to-be-Scripps-owned Station of Sykes now has no Badger sports, which means at least a 2-month gap of no major sports programming between the end of Packer season and Opening Day at Miller Park if the Bucks leave.

When you put these two items together, it’s no surprise that JournalComm’s paper and media have been pushing hard for this new Bucks arena, as they stand to get quite a payoff from it (yet another reason not to trust their outlets). But given that the 2017 deadline is approaching for the Bucks to have an arena deal in place, or else the NBA could buy the team back and likely would move it elsewhere, we will get to find out soon enough just what the entire package looks like, who’ll be paying up, and who’ll be getting paid off.

DOT budget part 2- How it'll drive our deficit higher

This is the second part of my analysis of the Wisconsin Department of Transportation's budget request, and its plans to use General Fund tax dollars to fund items in the Transportation Fund.

The first part I want to bring up relates to funding of transit. Transit systems are currently given state assistance through the Transportation Fund, and while it appears the DOT budget request plans to keep Transit in the Transportation Fund (unlike what Gov Walker has requested in his last two budgets), General Fund money will be used for the state's funds. The argument the DOT gives for doing so goes like this.
The purpose for transit operating aids in Wisconsin is defined in section 85.20(2), Wis. Stats., in part to promote the general public good. While this statutory purpose was defined years ago, it has never been more evident than today. With changing demographics, lifestyles, and societal influences, transit services have grown beyond transportation and mobility to truly serving the general public good –jobs, economic development, education, commerce, and health. Therefore, it would be seem that funding for state aids serving the general public good should come from general public revenues.

Transit services do not however provide any revenues to the state’s Transportation Fund. User fares go toward the costs of the service and the systems themselves pay few state Transportation Fund revenues. Funding transit services with Transportation Revenues, therefore, directs fees paid by users of other modes of transportation to a service serving the general public good. Funding transit operating aids from the state’s general fund, rather than the Transportation Fund, would further strengthen the concept of and relationship between user fee revenues and investments in transportation infrastructure.
In other words, since transit operators generally don't pay much if any Transportation Fund taxes (city bus systems generally are exempted from paying gas taxes), they don't need to be getting Transportation Fund dollars. Hmmm.....

With this in mind, the DOT budget request asks for $275.8 million in added General Fund money, with almost all of that increase being used to fund transit and some intriguing new transit proposals that are in the budget request (such as $30 million to help transit systems buy new vehicles, and $20 million to establish new routes and/or re-establish ones which had to be cut in recent years). But this may prove quite difficult to fully fund, as the General Fund pays for a lot more than just Transit Aids, which means yet another agency has to try to muscle in and get a piece of what are already very limited funds (you’ll see how limited in a bit).

The other spot involving General Fund money paying for Transportation involves a transfer from the General Fund into the Transportation Fund, where the money can be used for any Transportation Fund program. This number was set at 0.25% of General Fund taxes in 2011 (item Number 5 in this document has more info on it), and $110.3 million was added on top of that in the last budget. Now, the DOT budget request wants to up the amount even further, and in doing so gives an ominous warning about future General Fund revenues.
Amend s. 16.5185 Wis. Stats. to increase the transfer from the General Fund to the Transportation Fund from an amount equal to 0.25 percent of the moneys projected to be deposited in the general fund designated as “Taxes” in the summary in s. 20.005 (1), to an amount equal to 1.00 percent.

The effective date of this change is June 30, 2016….

Under current law gross state revenue for the Transportation Fund from all sources, not including proceeds from the sale of GO and TR bonds is expected to fall 2.6 percent in the 2015-2017 biennium compared to the 2013-2015 biennium. Available state revenue is expected to drop 4.3 percent compared to the 2013-15 biennium. As a result, the Department is proposing an increase to the existing continuing General Fund transfer first authorized in 2011 Wisconsin Act 32.
Why would state revenue drop 4.3% compared to this current budget? Is the revenue picture even worse than the LFB has indicated it is? Are there some other kind of tax giveaways to come or funds being blocked off that lowers the amount of funds available for use? That’s the kind of statement that leads to more questions than answers, and it gives me another reason to give a look at what the Department of Administration will hint at when it releases its summary of budget requests and revenues later this week.

What we do know is that between the proposals that would use of GPR funding for Transit, and the increased transfer of General Fund money for the Transportation Fund, this means the total amount of General Fund money being used by the DOT would be upped to $548.36 million over the 2015-17 budget. That's up $275.8 million above the adjusted base amount in the budget, and $476 million above what the LFB estimated for a transfer when it estimated the structural deficit back in May. So let's add that $476 million to the $2.1 billion General Fund deficit that is already in existence for the next budget, so that puts us around $2.5- $2.6 billion in the red for this upcoming budget in the General Fund. In addition, if the warnings of a state revenue drop are correct, then that deficit will blow much higher, because the $2.5 billion deficit not only assumes all budget requests would be paid for, but it assumes revenue growth of 2.9%. RUH ROH!

The options to dig out of this budget mess were limited even further this November. That’s because the constitutional amendment approved by voters on November 4 disallows any transfers back from Transportation to the General Fund if the General Fund runs short or if the Transportation Fund is overfunded. So the General Fund is now unable to be bailed out if the Transportation Fund’s tax and fee increases (mentioned in this post) get more money of out Wisconsinites than expected, or if costs end up lower for the many road projects that are proposed. That’s a huge reason why I voted NO on that issue, and the siloing off of those funds could come home to hurt the state’s finances in a big way over this next budget, if the DOT budget request is any indication of where the state truly stands.

This is why we need to be vigilant over whatever numbers come out in these coming months, because the hints from the DOT's budget request and plans to transfer funds from the General Fund to the Transportation Fund indicates a huge budget deficit, likely worse than the situation Scott Walker faced when he took office in 2011- and the "tools" of Act 10 have already been used up. Keep your eyes peeled and be ready to follow the bouncing balls in what is sure to be a budget built on rosy assumptions and a lot of shell games.

Monday, November 17, 2014

The DOT budget- Pay up if you want those Transportation projects!

One of the big headlines in Wisconsin over the weekend that didn't involve the dominance of Melvin Gordon III or Aaron Rodgers dealt with the Friday afternoon release of the Wisconsin Department of Transportation's budget request and plans for the state's Transportation Fund. There is a lot to go into here, and I want to split up my analysis into two parts. The first will deal with gas taxes and registration fees related initiatives that strictly within in the Transportation Fund. The second deals with the large amount of General Fund money that are slated to be transferred into the Transportation Fund, which not only will change how transit and other DOT programs get funded, but also will put an extra strain on a General Fund budget that already seems slated for a huge deficit over the next 2½ years.

On the Transportation Fund side, it started the 2015 Fiscal Year on July 1 with just under $117 million in the black. However, that number is expected to go down to barely over $1 million by next June 30, because of an anticipated 4% increase in costs without a matching increase in revenues. With huge needs in the 2015-17 budget such as increased payments for the Zoo Interchange and I-94 projects in Southeastern Wisconsin, and needed increases in shared payments to cash-strapped local governments, the DOT has developed several initiatives in its budget request that are designed to raise more money for the Transportation Fund. (you can click here for more details, and if you feel like reading all of a 582-page document).

One initiative sure to get plenty of attention is the proposed increase in gas taxes, which fits the DOT’s Transportation Finance and Policy Commision’s call in 2013 for a nickel-a-gallon raise. While it’s not a copy of Governor Walker’s trial balloon of using an excise tax based on price instead of the flat 30.9-cent-a-gallon fee on gasoline that we use today (a silly idea that I ripped when it came out last month), the DOT’s proposal has a price-based element included in it.
Under this proposal, the existing state excise tax for gasoline and diesel fuel consumed for highway use is reduced to $0.135 for all grades of gasoline and $0.163 for diesel fuel intended for highway use. A new variable component based on wholesale price is added. For purposes of calculating a new 8 percent variable tax component of the excise tax, a permanent minimum wholesale price of $3.081 per gallon for diesel fuel and $2.800 per gallon for all grades of gasoline would be established beginning September 1, 2015. This proposal increases the annual cost of operation for a mid-size sedan by about $28 annually in Wisconsin.

Under this proposal, on April 1, 2016, and each April 1 thereafter, DOR is required to adjust the cents-per-gallon tax resulting from the 8 percent tax applied to the average annual wholesale price of gasoline and diesel fuel. The average annual wholesale price of gasoline and diesel fuel in Wisconsin will be determined by DOR based on wholesale price information obtained from the federal Energy Information Administration. Increases to the total tax rate on motor vehicle fuel due to changes in the annual average whole sale prices of gasoline and diesel fuel may not exceed five percent on April 1, 2017 and each April 1 thereafter. The Department of Transportation is required to publically announce the new rate.

With a tax mechanism in place as outlined above the sum of the fixed rate tax and the 8 percent tax applied to a minimum wholesale price of motor vehicle fuel can never be lower than $0.359 for gasoline and $0.409 for diesel fuel. Under this proposal all refunds of motor vehicle tax allowed under current law and all exemptions to motor vehicle fuel tax will remain in effect.
There are two parts of the statement that confuse me. First, is this bill requiring only a tax floor or does it include a price floor on gas? There’s clearly a tax floor of 35.9 cents for gas and 40.9 cents for diesel, but the language about a “permanent minimum wholesale price” gives me pause. Right now, wholesale gasoline futures are trading at just over $2 a gallon, and diesel is in the neighborhood of $2.50. That is well below the “permanent minimums” of $2.80 for gas and $3.08 for diesel that is listed in the DOT budget request, and not far off of the after-tax pump price of $2.85 I saw this morning in Madison. It’s one thing to have a 5-cent raise in the gas tax, but it’s entirely another to make Wisconsin motorists pay a price well above the rate they’d pay in almost any other state. I’d like to see that possibility investigated and the language cleaned up. But otherwise, it’s not a bad idea- if you think it’s a priority to spend money to fix and expand roads, you’d better be paying for it (fiscal conservatism at its finest!).

The gas tax increase is expected to add $358.3 million to the DOT’s coffers in the next two years. Another bump up in the DOT’s revenues involves $378.9 million that would come from a new fee that Wisconsinites would pay when they first buy a vehicle.
The Department is requesting the creation of a fee for new passenger vehicles (automobiles, vans, sport utility vehicles, light trucks, motorcycles) to address critical transportation priorities.

This fee would be collected at the time of initial vehicle registration. The fee would be calculated at 2.5 percent of the manufacturer’s suggested base retail price (MSRP), exclusive of destination charges.
Basically, it’s a one-time shot that’s paid when you buy a car, and the DOT argues that Wisconsin’s relatively low sales tax of 5% is a mitigating factor when you compare this fee to neighboring states. However, the kicker is that the sales tax is General Fund money, while this license fee is solely for the use of the Transportation Fund.

It also will likely encourage some individuals that have dual residency between Wisconsin and other states to license that vehicle in the other state, causing Wisconsin to lose the license revenue entirely (for example, my aunt and uncle currently use their Vilas County address as the place of registration for their vehicles instead of in their home state of Illinois). One of the advantages Wisconsin has had over other states when it came to taxes is that we have traditionally had a much lower amount of registration fees, and that we didn’t have a sales tax that increased as the price of gas went up. Both of these advantages would be pretty much go away under this plan.

There’s also a theme of equity across the spectrum of vehicles in this request. Grabbing a lot of attention is the $50 added registration fee for owners of hybrid and electric vehicles, which the DOT claims will help to make up for the fact that those vehicles use less gasoline and therefore pay less into the system. But what hasn’t been mentioned is a $25 credit that would be given to owners of cars and light trucks that run on diesel. The DOT mentions that the number of these types of diesel-powered vehicles have increased by over 31% in Wisconsin since 2006, to nearly 83,000 today (by comparison, there are less than 48,000 hybrids and/or electric vehicles in Wisconsin), and the DOT argues that the users of these passenger vehicles should not have to pay the same price as an 18-wheeler that causes much more stress to the roads. The net change in fees from these two moves is estimated at an increase of about $2.3 million.

Obviously, there is much more in the DOT’s budget request,including modifications to fees for items such as motorcycles and oversize permits, as well as some rail initiatives. But I wanted to limit it to just those three items listed above to allow more time to go into detail on them. At least on the Transportation Fund side, I appreciate Secretary Mark Gottlieb and DOT staff being honest about what it would take to increase revenues to pay for the high wish list of highway projects and related needs. And even with all of these tax and fee increases, the DOT still projects to end 2017 with less than $4 million to spare- a rounding error in a $2.17 billion annual budget. As you can see, there is no free ride when it comes to building roads (at least not without another fed-funded stimulus coming along), and if these proposals are put into law, a whole lot of us will be paying more for upgrades in highways and maintaining local roads in Wisconsin.

Sunday, November 16, 2014

A fun snowy Saturday at the Camp

Yeah, it was snowing and sub-30 degrees yesterday, but it sure made for a cool view from under the upper deck yesterday at Camp Randall.

And it isn't very cold at all when you see your alma mater administer an epic BEATDOWN, and you get to see history being made.

From 17-3 down to 59=-17 up in about 2 1/2 quarters. And not against Little Sisters of the Poor, but a nationally-ranked Nebraska team that was 8-1 going into the game. That what a hell of a lotta fun to watch, and shockingly easy.

Let's see if the Pack makes it a complete sports weekend this afternoon. I know more than a few people that were pulling the Camp Randall/Lambeau "double" this weekend, including some guys I spoke to from Philly who made the trip down to Madison as a prelude to seeing their Eagles on the Frozen Tundra. Hope they enjoyed the Saturday show from Mel Gordon and company, and that they don't find the game today as enjoyable.

Friday, November 14, 2014

This week in WisGOP corruption- frack the Bucks and the DOT

Here are three cases from the past few days that shows just how far Wisconsin has fallen from the “clean government” reputation it used to have.

1. The first issue deals with the possibility of replacing the NBA’s Milwaukee Bucks arena at the Bradley Center with a new arena, allowing the team to stay in town. If there are any changes in local sales tax or other development laws related to a new Bucks arena, the GOP-run State Legislature will have to sign off on it. Well, Assembly Speaker Robbin’ Vos went on Mike Gousha’s show in Milwaukee, and openly shook down new Bucks owner Mark Lasry, claiming Lasry’s past support of Democrats will hurt any chances of getting the state to help pass any legislation related to funding of a new Bucks arena.

John Peterson at Democurmudgeon has a good breakdown of this, and I’ll include the following passage from Robbin’.
Gousha: “Why should that bother you? You know he’s been a long time Democratic donor, why does that bother you?

Vos: “It sure does bother me because as you’re coming to us saying you want to be an active participant in the community, picking a team is something like me not picking the right team. Um, I don’t care what his political benefits are, but coming to us saying they want to have hundreds of millions of dollars of taxpayer subsidies, and not taking the wherewithal to say, I’m not gonna get involved to part in the political discussion in Wisconsin when I don’t have too, sure would have been a better decision from my perspective.”

Gousha: “It bothers you?”

Vos: “It does, I think it makes it harder for me to sell to our caucus. Don’t forget, for people who live in most of the rest of Wisconsin, they look at Milwaukee as a place that already gets too much of our money. And now what you’re doing is making an even more difficult decision happen for a lot of folks around the state. So they’ve got to be a lot smarter with their technique. I mean, I want to bring those jobs and keep them in Wisconsin, but having us give hundreds of millions of dollars to big-time donors who give to Democrats, but also have billions of dollars of their own? That’s a hard sell. So I don’t think they need to do anything that makes my job more difficult."

In addition to Vos’s obvious underlying message of "fuck you, pay me!," it seems to matter more to Robbin’ that Lasry plays ball with the state GOP and kisses the Speaker's ass than it does to debate the merits of any package relating to the Bucks arena. If that doesn’t show how petty and self-centered this GOP crew is, nothing does.

The race-based Milwaukee-bashing is also very telling (“too much of OUR money”???) Someone needs to remind Robbin’ that Milwaukee County attracts more tourist dollars than any other county in the state, and that many of us who care for that city would love the chance for it to be able to generate its own revenues instead of having its hands tied by 262 suburb boys like Vos.

2. Here's some other possible pay-for-play here. The state’s plans for the Department of Transportation’s Hill Farms building and property continues to go on behind closed doors. I touched on how sketchy I found this potential no-bid setup to be when the Capital Times first reported on it back in October, and it’s looking worse now. Channel 27 in Madison followed up on this, and reports that Scott Walker’s Department of Administration continues to say that this massive potential land deal is none of the public’s business.
In June 2013, [developer Terrance] Wall sent a letter to Governor Walker expressing an interest in buying several state properties, including Hill Farms. Wall also signaled his support for Gov. Walker's desire to eliminate the competitive bid process used to sell state properties. The state legislature passed a measure eliminating competitive bids just a few weeks later….

On October 13th, 2014, DOA posted an RFP for the Hill Farms property on its website. It required anyone interested in submitting a proposal to register for a tour of the facility by October 15th.

27 News made an open records request with DOA seeking the names of the people who took that tour, but was denied …

27 News wanted to know who was on the tour, because nine days after the registration deadline for it, Terrance Wall made a donation of $9,975 to Gov. Walker's campaign.

I notice that the "Unintimidated" Walker Administration has now backed down, and apparently will reveal the proposers on Monday- more than a week after the RFP deadline. As a guy who has worked on developing and evaluating RFPs for the state, revealing the names of respondents and attendees at required meetings is something that is public record (in fact, the Walker Administration and DOT put this on themselves by making that October 15 tour mandatory), and only allowing a few days of notice for the tour and three weeks to make a proposal on a mega-project could be construed as unfairly slanting the field toward certain bidders - a giant no-no when it comes to state procurement rules. Add in WKOW’s revelation of developer Terrance Wall’s near-max donation to the Walker campaign one week after the tour of the building, and how can you not think there is something fishy going on?

3. And the crookedness isn’t just affecting things in the big cities. Today’s story from Wisconsin Public Radio shows the DNR is letting the state’s frac sand operations go on without inspections, leading to a lack of information when it comes to pollution levels near these sites.
Fewer than 10 percent of frac sand mining operations in Wisconsin are monitoring how much dust is blowing from their sites, thanks in part to monitoring exemptions the DNR has granted to most companies that have requested them since 2012

Larger frac sand mines and processing plants are required to install ambient air monitors nearby that can measure tiny particles coming from smokestacks, sand piles and trucks. But only 11 air monitors have been installed by frac sand companies since the industry began expanding in 2010, meaning that around 90 percent of companies aren’t being monitored.

Companies can ask for an exemption from monitoring if they can make the case on paper and through computer modeling that the general public will not be harmed. According to data obtained through an open records request, there have been 20 applications for air monitoring exemptions in the last two years. Of those, 15 have been granted by DNR.

And the results of this lack of DNR regulation and observing of pollution levels are starting to become known. WPR also reported earlier this week that researchers from UW-Eau Claire have noted that dust levels around these mines are well above the levels deemed acceptable by the federal government.
For six years, students at the school’s Environmental Public Health Program have been working under Dr. Crispin Pierce to measure fine silica particles blowing from frac sand sites. The particles are called PM 2.5, meaning they’re 2.5 microns in diameter. A human hair, by comparison, is around 60 microns.

Pierce said that the program is monitoring the PM 2.5 because the Department of Natural Resources doesn’t do so. He and his students used ambient air monitors on loan from the University of Iowa to measure four frac sand sites in Wisconsin and Minnesota. Pierce said they found concentrations that were four times higher than federal standards. However, he said more study is needed.

“I don’t think that based upon the results we’ve found so far there will be many acute hazards for people living around frac sand plants,” he said. “But we are concerned about long-term exposure, dirty air over a long period of time increasing things like cardiovascular disease and lung cancer.”
Funny how these things all start coming out within 10 days of the election, isn’t it? And given how drunk with power the Wisconsin GOP is (despite only getting the votes of 28% of Wisconsin voters), you can bet these guys won’t just ignore this corruption being exposed- they’ll do more to make sure this type of pay-to-play is made into Standard Operating Procedure.

These guys won’t stop this act until they’re either charged in court, or the people rise up and throw them out. Which makes me wonder when that happens, and who will be the ones that make it happen.

Thursday, November 13, 2014

Given the guv's race, did the Wis Assembly and Senate go as expected?

The backroom dealings at the Democratic Party of Wisconsin have been intriguing in the wake of the losses in last week's election. As part of these discussions, Assembly Dem Leader Peter Barca was challenged for his leadership, and made the following claim to bolster the case to keep him on as the top Dem in the Assembly.
Barca told the caucus the next two successive elections -- one in a presidential year, the other with U.S. Sen. Tammy Baldwin on the ballot -- would be better for the party, noting the "headwinds" facing Dems both at the top of the ticket and nationally.

He also said vulnerable members met their goals for resources and outreach, and that each of the three Dem incumbents to lose out-performed the top of the ticket.

"If our candidates that just ran did poorly and the rest of the ticket did well, I wouldn't even ask for your vote,” Barca said.
This convinced enough Dems to keep Barca in his position, but we actually have the numbers to see if Barca's claim of "GOP year" is the reason Dems in the Legislature lost seats. I wrote an analysis about 16 months ago using the numbers from statewide elections in November 2012, and narrowed it down to the district level for State Assembly and State Senate. So we can use that as a starting point to see how those figures held up (or didn't) in the 2014 elections.

First of all, since Scott Walker currently stands at 52.9% of the GOP vs. Dem vote share (52.3% of all voters, and Walker and Burke got a combined 98.9% of the vote) let's assume that it was a GOP +2.9% year, so any district that was Dem +2.9% or less "should have" gone to the Republicans under this theory. Now, let's look at the "most representative of Wisconsin" districts across the state, and see the results. I'll start in the State Senate while counting the races that were up in 2014 on this list, and I'll use the number above 50% (if the winner went over 50%) to do an apples-to-apples comparison.

Most representative Senate districts
Vinehout (D) Dem +1.5% Result: Dem +2.4%
Schultz (retired)(R) Dem +2.0% Result: GOP +5.1%
Jauch (D)(retired) Dem +3.4% Result: Dem +1.3%
Ellis (R) (retired) GOP +4.1% Result: GOP +7.2%
Moulton (R) GOP +4.5% Result: GOP +11.1%
Petrowski (R) GOP +5.3% Result: GOP +15.7%
Lassee (R) GOP +5.5% Result: GOP +11.5%
Larson (D) Dem +6.3% Result: Dem +9.6%
Leibham (R)(retired) GOP +7.2% Result: GOP +10.0%
Lehman (D) (retired) GOP +7.9% Result: GOP +11.5%

So looking at these numbers, let's point out that the GOP would have been projected to not only hold the 19-14 Senate advantage they will have in January, they would have been up 20-13. But Kathleen Vinehout not only won a race that she "should" have lost 51.4-48.6%, she overperformed the seat's rating entirely. In fact, Vinehout has won on swingy turf all in all 3 of her races, with the last 2 of them being in GOP wave years (2010 and 2014). Maybe an unapologetic populist isn't such a bad candidate, eh?

Also worth noting- the Schultz seat may well have been lost anyway, but the GOP overperformed in that Dem-leaning seat by 4.2%, and you have to think that Chris Larson's interceding in the race and endorsement of Pat Bomhack for the Dem nomination went a long way toward him stepping down as the Dems' leader in the Senate today, being replaced by La Crosse Senator Jennifer Shilling. Bob Jauch's seat up North was made into a close race in reflection of the GOP-leaning electorate, but Dems still held on. Ellis' and Leibham's open seats in Northeast Wisconsin ended up about as expected, (it may actually indicate overperformance by the Dems given how much Walker dominated in that part of the state), and John Lehman's open seat also went about as you'd anticipate, given the statewide result.

The major letdowns for the Dems were in Frank Lassee's district in NE Wisconsin, and Jerry Petrowski's district in Wausau/ North Central Wisconsin. Dems should be competitive in those seats with some wins in a good year, but the GOP candidate got over 60% in both of those races. Also noteworthy is that Larson may have disappointed in running the statewide elections for the Dems, but he did very well in his own district, overperforming by more than 6%. Keep that in mind if Larson tries for more local office in Milwaukee for the near future.

Moving over to the Assembly, you'll see things largely held to how they should have given the outcome of the Governor's race (with a couple of exceptions), which resulted in the GOP expanding their majority from 60-39 to 63-36. Remember, GOP +2.9% was the statewide margin, so adjust each race accordingly.

Most representative Assembly seats
Wright (D) GOP +0.6% Result: GOP +0.2%
Brooks (R) GOP +0.7% Result: GOP +7.8%
Bernier (R) GOP +1.6% Result: GOP +2.8%
Tranel (R) Dem +1.6% Result: GOP +11.3%
Nerison (R) Dem +1.8% Result: GOP +9.1%
Doyle (D) GOP +2.0% Result: Dem +4.1%
Ripp (open) (R) GOP +2.6% Result: GOP +7.5%
Bies (R) GOP +2.9% Result: GOP +6.8%
Krug (R) GOP +3.0% Result: GOP +6.0%
Klenke (open)(R) GOP +3.7% Result: GOP +6.3%
Vruwink (D) GOP +4.0% Result: GOP +2.8%
Hintz (D) Dem +4.0% Result: Dem +1.5%
Riemer (D) Dem +4.2% Result: Dem +5.7%
Murtha (R) GOP +4.3% Result: UNOPPOSED
Weininger (open)(R) GOP +4.3% Result: GOP +9.1%
Larson (R) GOP +4.5% Result: GOP +10.6%
Smith (D) GOP +4.6% Result: GOP +4.9%
Rodriguez (R) GOP +4.7% Result: UNOPPOSED
Ballweg (R) GOP +4.8% Result: GOP +11.0%
Marklein (open)(R) Dem +5.0% Result: GOP +0.2%*

The only two seats where the "wrong" party won were in Steve Doyle's district near La Crosse (which could be a reflection of the La Crosse area turning Dem in general), and in Howard Marklein's former district in SW Wisconsin (a district filled with ads from the school voucher lobby), a race that's still subject to recount. It also shows that Mandy Wright, Amy Sue Vruwink and Steven Smith lost their seats not because of their deficiencies as a candidate, but because it was a GOP year. All 3 overperformed compared to what they were expected.

So perhaps Peter Barca was correct, it wasn't a lack of performance in swingy Assembly seats on Election Day compared to what was expected. But that also shows the bigger issue- why did the Dems not win statewide after the damage of 4 years of Fitzwalkerstan (and were so scared of the terrain that they didn't even run candidates in a couple of these districts)? That's a failure of the state party to not give a unified message that made people want to go out and pull the lever for the Dems. And that's a big reason why Mike Tate has to go as the Party leader, because with the state gerrymandered in such a way that a GOP +2.9% year leads to big gains for Scott Walker's party, sitting back and accepting those GOP advantages is not an acceptable option- but Tate and the DPW did just that.

These numbers also show the opportunity, because if the Dems can win the state with 52% or 53% of the vote in 2016 (as Obama did in 2012), you can see that many of these Assembly seats go into play, and some should flip back. And given some of the wacky regressive stuff the State Legislature and Walker will likely try to jam through in the next 2 years, 52-53% may be a low figure if things blow up, and the opening will be there for the Dems to jump back in if they play their cards right.

Wednesday, November 12, 2014

Wisconsin deficit update

We haven’t had a lot of news in the last 3 weeks about Wisconsin’s looming budget deficit, since it was magically hidden until after the elections. But if you know where to look, you can find some extra insights as to where we are. I found one such example of this information today, as the state released plans to refinance nearly $297 million of the state’s debt, with the sale to investors coming in the near future.

If you take a look at the website of this bond offering, you’ll see some updates of key financial documents. The first page you should go to is on Page 19 of the PDF, where they list the differences between the years in the 2013-15 budget as projected, as well as how it actually ended up when the state’s Annual Fiscal Report (AFR) was released for FY 2013-14 last month. What they don’t do is plug in the new numbers for the 2014-15 fiscal year that we know exists today in light of that AFR, which includes the $25.4 million in added funding that must be transferred to the Transportation Fund because it was delayed from its originally scheduled transfer in FY 2014.

Looking at those figures and plugging in the reality, we see the following.

End-year balance FY 2014- +$516.9 million
PLUS Total revenues FY 2015- $15,283.3 million
MINUS Appropriations FY 2015- $15,842.3 million
MINUS Extra transfer to Trans. Fund- $25.4 million
Net balance -$67.5 million.

Seems like not much to worry about, since that figure could be made up by a few extra lapses or tapping the state’s rainy day fund. Except that projection doesn’t match reality, and what we’ve seen so far in the first few months of FY 2015.

First of all, to get up to the budgeted tax revenue amount of $14,724.6 million, the state would have to generate an increase in revenues of 5.57% compared to Fiscal Year 2014. This is a figure nearly twice the rate of revenue growth that the state has had over the last decade, and seems unlikely to reach over the next 8 months.

In fact, the bond issue document can give us more clues as to where we stand so far in Fiscal Year 2015. Moving onto page 30 in the PDF (or Page A-14), you can see what revenues came in at for 2013-14, and what they’re expected to be for 2014-15. It also gives a year-over-year comparison for the June 30-September 30 time period for each fiscal year. Using those numbers, we can see that so far:

·Income taxes are down as a total, but if you add $55 million a month to account for lower withholdings (what, you didn’t notice that extra $5 a paycheck?), they’re up about 4.33%. The problem is that they need to be up more than 6.4% to match projections.
·Sales taxes are up just over 4.9%, slightly above expectations.
·Corporate taxes are down less than 1%, and they’re supposed to jump up by 13.7%.
·Excise taxes are down -4.36%, and they’re supposed to stay steady.
·Insurance company and miscellaneous taxes (combined) are up 9.28% instead of the 6.6% they’re projected to rise by.

So project this same trend out for the year, and here’s what I get.

Income taxes: DOWN $146.95 million vs projections
Sales taxes: UP $47.54 million
Corporate taxes: DOWN $132.71 million
Excise taxes: DOWN $28.78 million
Insurance/ Miscellaneous: UP $6.21 million
COMPARED TO BUDGET: DOWN $254.69 million.

This would still be a revenue increase of 3.74%, slightly above the 3.48% that LFB projected earlier this year. But it still means a significant revenue shortfall that would drive up the budget deficit for this year, as well as future years. If you plug that revenue shortfall back into the numbers from earlier, you see the current –year deficit grows to $322.2 million, which is well past the $79 million deficit that is required to trigger a budget repair bill.

It also starts the state off from a lower base for the next budget- helping to lead to an even higher structural budget deficit for 2015-17 than the one that was projected in May. Plugging in the lower revenue figures for the future years gives a structural deficit of just over $1.25 BILLION. And if GOPs try to play the “but…revenue growth” game, I’ll add that there is now over $1.8 billion in additional spending requested by state agencies, including the additional $695 million that the Department of Public Instruction just requested to keep schools adequately funded. The requested increase in spending by state agencies is double what $900 million in revenue growth would be over the next 2 years(using the 2.9% average), and it would push the budget deficit well over $2 billion for the next budget.

We’ll see what kind of magic assumptions Walker’s Department of Administration tries to pull next week when it releases the overview of all the budget estimates and agency spending requests (here’s a copy of the one from November 2012 for the last budget). But if these first three months of reports are any indication, we’re still way down in a budget hole and it’s going to take a whole lot to pull our way out of it.

Tuesday, November 11, 2014

Turnout a minor factor in 2014 WisGOP win, vote shift a bigger one

A lot of attention has been given to the low turnout in last week’s midterm elections nationwide (estimated at 36.4%). And while Wisconsin’s turnout was well below the levels in the 2012 presidential election that led to more than 3 million votes being cast, we actually held up quite well when compared to the dreadful numbers in the rest of the nation.

The turnout for last week’s election in Wisconsin is estimated at a little over 54% based on the unofficial vote total of just over 2.4 million. This is slightly below the 2012 recall election turnout of 57.8% and 2.52 million, but well above the sub-50% levels of 2010, when only 2.16 million votes were cast (in fact, Mary Burke got almost as many votes last week as Scott Walker got in his “landslide” in 2010).

But what I want to look into is to compare these gubernatorial turnouts with the presidential turnout that gave Barack Obama 53% of the vote in Wisconsin in 2012, and see if there is some kind of correlation with the turnout. Conversely, if there is not a major turnout differential between certain parts of the state, that might tell you that the reason Walker has won has more to do with shifts of voter preference vs. a straight turnout game.

First of all, let’s look at the composition of the electorates by geography. What I will do is take the 2012 presidential turnout of the top 10 counties and/or areas of Wisconsin that cast the largest number of votes, along with the number from the rest of the state. Then, I will compare it with the 2014 turnout figures (unofficial). For the sake of comparison, I am splitting up the City of Milwaukee (very blue-voting) from the rest of Milwaukee County (varied, but with a slight GOP lean). I am also going to consolidate the “Ring of Fire” pro-GOP counties bordering Milwaukee (Waukesha, Ozaukee and Washington, or the “WOW Counties”), and then see what we get.

The largest differences here involve the diluting of the high-turnout WOW Counties and blue-voting Dane County in the 2012 presidential election- especially the WOW Counties. Those 2 counties added a combined 1.3% of the share of total votes in 2014 vs 2012 (23.57% vs. 22.27%), while the City of Milwaukee lost 0.76% of its 2012 share in 2014. The blue-leaning counties of Rock and Kenosha also had a sizable increase in their vote share in 2012 compared to 2014, so there is an argument to be made that the Dems failed to maintain the turnout advantage in those areas that helped the state re-elect President Obama.

This is another way of showing the changes in the share of the votes for these large counties and areas in Gov Walker’s three elections, to see how this works in those lower-than-presidential-turnout elections. As you’ll see, the WOW Counties grabbed a huge share of the electorate in 2010, and while it’s still the largest, some of that advantage is being slowly eaten away, while Dane County is grabbing an increasing share. This will also show that the rest of Milwaukee County is another place whose influence has gone down over the last 4 years.

And while all areas of Wisconsin had drop-offs in turnout in 2014 compared to both the November 2012 presidential election and the June 2012 recall election, this chart will show you that some places dropped off more severely than other.

Note that the City of Milwaukee, Rock County, Kenosha County, and Racine County had turnout drop-offs of more than 30% in 2014 compared to the 2012 presidential election. Each of these places include four of the five counties in Wisconsin that have an African-American population of more than 5% (Dane County and the non-City portion of Milwaukee County are the only two other areas of the state that have an African-American population above 5%), and that might be something worth keeping an eye on in 2016 with Obama not being on the ballot. On the flip side, the WOW Counties and Dane County had the smallest dropoffs (WOW at 19.87%, Dane at 20.81%), and everyone else was largely in the mid-to-upper 20s in percentage of dropoff.

What these charts indicate to me is the following.

·Dem turnout did drop off in key areas of Southeastern and South Central Wisconsin compared to other areas of the state.

·The red-voting areas of suburban Milwaukee are being slowly diluted, especially as overall turnout around the state goes up with presidential elections.

·Scott Walker used a turnout advantage in the WOW Counties and other red-leaning areas of the Milwaukee Metro Area to win in 2010, but won in 2012 and 2014 by shifting voters toward his side in other parts of the start, especially in Northeast Wisconsin (noted in this post).

So bottom line- for Dems to win in 2016 and beyond, they can’t rely on higher turnouts and favorable demographics to carry them through. They will need to also convince some voters to their side, which would hold down large GOP leads in certain areas for statewide elections (particularly in the eastern half of the state), and would win back seats in the Legislature. Turnout has not turned the outcomes in those areas toward the GOP - voter preference has - and as part of the autopsy of this election, the Democratic Party of Wisconsin should figure out why that has happened.

Monday, November 10, 2014

No Scotty, recalls did not hold Wisconsin jobs back. You did.

I headed down to Indiana this weekend to see Bucky take home another win and see some friends, and also so I could decompress from a bad week for my home state and the country at large. And fortunately, I was busy hanging out with friends on Sunday, so I didn't have to watch our fair governor desperately try to get national ink with an appearance on "Meet the Press" with Chuck Todd (not that I'd watch those DC shows anyway).

On Sunday's show, Todd asked Gov Walker about Wisconsin's bad jobs record, and Gov Walker tried again to claim that “uncertainty” before the June 2012 recall elections caused Wisconsin’s job growth to be so below-par during his tenure in office. But a quick check of the actual numbers shows this not to be true. We’ll start the clock with Walker’s inauguration in January 2011.

Wisconsin private-sector job growth
Jan 2011- June 2012 +51,200 (+2.20% total, +3,012 a month)
June 2012-Sep 2014 +70,800 (+2.98% total, +2,622 a month)

As you can see, since the June 2012 recall election, private sector job growth in Wisconsin has slowed down by nearly 400 jobs a month. If what Walker is saying is true, you’d have seen the private sector job numbers “take off like a rocket” (as Assembly Speaker Robbin’ Vos famously claimed in Spring 2012).

This failure to increase job growth is especially striking when you consider that U.S. job growth has stayed strong in the same time period under the Obama Recovery. This includes the upward revisions that were in last Friday’s U.S. jobs report.

U.S. private sector jobs
Jan 2011- June 2012 +3.474 million (+3.23%, +204,353 a month)
June 2012- Sep 2014 +5.529 million (+4.94%, +204,778 a month)

Both of these figures are faster than the rate in Wisconsin, and that the gap grows after the 2012 recall election from just over 1% to nearly 2%. Another chart will show this even clearer. In this case, I will use the 24 months before the June 2012 recall election, and the 24 months after the recall election.

Note the trendlines for both. Wisconsin’s goes down, and the U.S.’s goes up. So not only is Gov Walker’s claim of “recall elections hurt Wisconsin’s job growth” not true, the converse could be more easily argued- that retaining Walker in the June 2012 recall election slowed down Wisconsin’s job growth, and caused it to further lag the U.S. recovery.

And with the upwardly revised jobs numbers for August and September, it means that the Walker jobs gap has grown yet again. It’s now at more than 71,000 private sector jobs, and over (63,000) total jobs. The state needs another (4,000) in the October jobs report just to keep from falling behind even further.

You’d think a numbers guy like Chuck Todd would be interested enough to predict Scott Walker’s mendacious claims on job growth and be able to slam him to his face if Scotty even tried this BS of "recalls are the only reason job growth was slow in Wisconsin." But then again, you might remember Chuck Todd infamously pulling this act last year.
MSNBC host Chuck Todd said Wednesday that when it comes to misinformation about the new federal health care law, don't expect members of the media to correct the record.

During a segment on "Morning Joe," former Pennsylvania Gov. Ed Rendell (D) speculated that most opponents of the Affordable Care Act have been fed erroneous information about the law. Todd said that Republicans "have successfully messaged against it" but he disagrees with those who argue that the media should educate the public on the law. According to Todd, that's President Barack Obama's job.

"But more importantly, it would be stuff that Republicans have successfully messaged ag1ainst it," Todd told Rendell. "They don't repeat the other stuff because they haven't even heard the Democratic message. What I always love is people say, 'Well, it's you folks' fault in the media.' No, it's the President of the United States' fault for not selling it."
So why aren’t we surprised to see Chuck Todd stand by and say nothing when Scott Walker falsely claims that recall elections held back Wisconsin job growth, because Chuckles is more interested in how convincingly Walker is spinning his reasons instead of caring about whether it is true or not.

This country is in a very dangerous place because attitudes like Chuck Todd’s and Scott Walker’s have devolved politics into a place where marketing is able to trump results. We just saw last week in Wisconsin what happens when people vote for candidates based on messaging and anger as opposed to voting for candidates that they agree with on the issues. Now we will all pay a big price for that weakness and lack of accountability from and by our media.

Thursday, November 6, 2014

Why are Wisconsinites not voting for what they believe in?

On a large numbers of questions, when you put out the progressive-preferred option, most Wisconsinites will pick it. And the numbers indicate that it includes a sizable amount of people who also voted for Governor Scott Walker, who won't put those policies into law. Take a look at the numbers from a chart put out by Public Citizen on Wisconsin regarding the numerous county-wide resolutions that asked if the state should expand Badgercare as part of the Affordable Care Act (ACA), aka Obamacare.

BadgerCare YES Votes

Percent Votes for BadgerCare/ Percent Votes for Walker

STATEWIDE 747,031 73%/52.30%

Bayfield County 5,747 78%/38.36%

Chippewa County 13,975 61%/53.75%

Clark County 6,036 58%/65.00%

Dane County 195,596 82%/29.23%

Douglas County 11,911 79%/38.12%

Dunn County 7,592 63%/53.04%

Eau Claire County 25,442 64%/48.26%

Florence County 1,232 64%/67.48%

Iron County 1,369 70%/61.06%

Jefferson County 20,473 62%/60.01%

Kenosha, City of 21,722 77%/50.30%*

La Crosse County 32,768 71%/46.11%

Lincoln County 7,576 67%/56.54%

Milwaukee County 241,591 76%/36.10%

Oneida County 11,114 69%/59.05%

Outagamie County 42,231 61%/59.46%

Portage County 20,636 72%/48.30%

Rock County 36,365 65%/42.77%

St Croix County, 22,479 70%/59.45%

Wood County 21,176 61%/57.31%

The same pattern repeated with the sizable amount of communities that approved of advisory questions asking for a higher minimum wage. And now we're going to be stuck with a Governor who won't listen to the wishes of the people (much as Scott Walker did as Milwaukee County Executive when the voters asked for 1% sales tax for transit, parks and other cultural items).

And apparently some of the areas of the state are OK with voting for a governor who is perfectly fine with the bad things that are going on in their community. One day before the election, this is what happened in western Wisconsin regarding the issue of fracking.
Two towns in Trempealeau County have voted to sue the nearby community of Independence over what they say is an illegal annexation of a frac sand mine.

During a standing-room-only meeting, the town boards of Lincoln and Burnside voted to file the civil suit challenging the rent annexation. Normally, towns have no say in annexations unless they can argue that the land being annexed isn’t touching a city’s boundaries. In this case, the frac sand mine is over a mile away from the city.

Lincoln Town Board Chairman Jack Speerstra said they’ve already lost more than 1,000 acres to sand mine annexations, and that this one needs to be challenged.

“It’s not just the loss of property, but it’s the folks around those mines and don’t have any say over how they’re going to be governed. And that’s just not right,” said Speerstra.
The Trempealeau County Board has also dealt consistently with citizen groups complaining about health concerns and overgrowth of frac sand mines over the last year. So what happened on Election Night? Trempealeau County voted 52-46 for the candidate who has no problem letting the frac sand companies run wild under his DNR- Scott Walker.

You see this pattern repeat in northeastern Wisconsin, where an administrative judge ruled that Walker's DNR was negligent in allowing large farming operations to poison the area's groundwater.
A state administrative law judge who put conditions on a closely watched expansion of a large dairy farm in Kewaunee County has found that numerous contaminated wells in the area "represented a massive regulatory failure to protect groundwater."

The Oct. 29 ruling by Judge Jeffrey Boldt will allow Kinnard Farms to expand in a region with a history of polluted groundwater. But Boldt also directed the Department of Natural Resources to use its authority to prevent more problems by requiring the farm to install monitoring wells....

In Wisconsin, the conflict is deepest in Kewaunee County — home of 15 large-scale farms, known as CAFOs, or concentrated animal feeding operations, that a have minimum of 700 milking or dry cows. The county also features a geology of fractured bedrock that allows water and contaminants to slip quickly into groundwater when layers of soil are thin.

On Oct. 22, environmental groups asked the U.S. Environmental Protection Agency to use emergency powers to investigate groundwater contamination in Kewaunee County, charging that the DNR had failed to protect drinking water. The EPA says it is evaluating the petition.

In 2013, 31% of 483 wells that were tested by the county contained bacteria or nitrates — or both — that exceeded state and federal public health standards.
And Walker's DNR Secretary Cathy Stepp (appointed for her deregulatory "open for business" beliefs) complained about the judge daring to point out that the DNR didn't do its job. So naturally, the GOP got smashed in Kewaunee County on Tuesday night right?

Final result in Kewaunee County: Walker 62, Burke 37

And I don't throw all of this on the local people who vote for candidates that won't carry out what the voters believe in. Because the Democratic Party of Wisconsin didn't put together a coherent message THAT WOULD MAKE THE CONNECTION between Walker/WisGOP policies and the bad situations that people are finding themselves in. And Dems should have actively pointing out that they would be the only ones that would work to keep the people's groundwater clean, that they would be the only ones that would deliver a higher minimum wage, and they would be the only ones to expand BadgerCare and save Wisconsin tax dollars by doing so. They didn't say it nearly enough and without any consistency. Which leaves no party discussing the issues in a manner that the people care about, and as a result, they are willing to look elsewhere.

So people end up voting Republican based on the misinformation of the right-wing GOP-agenda machine, or vote Republican because of hot-button issues like guns or abortion, or they don't vote at all. And now this state is going to go down a road of destruction that may never be able to be repaired because of the failures of the Democratic Party of Wisconsin in the 2014 elections. And no one in party leadership should be safe, from DPW Chair Mike Tate, to Senate Dem Leader Chris Larson, to Assembly Dem Leader Peter Barca. The GOP freak show that'll be in control starting in January (which'll be even worse than the group that's led the state to "last in the Midwest" for jobs) is a sickening sight, and one that should not be tolerated. And having the DPW stay in the same defensive posture that doesn't attack these regressive GOP policies and fail to stand up for true progressive VALUES that the majority of Wisconsinites believe in is something that also can't be tolerated any more.