Friday, February 27, 2015

Returning to Idiot America

Heading back to the mainland tomorrow, so I'll be able to catch up with all the shenanigans that have been going on in the crazy week I've been away. But I've been using the time to re-read some great books that seem even more fitting today, including Naomi Klein's Shock Doctrine and Charlie Pierce's Idiot America .

Pierce mentions that Idiot America (best exemplified by the average Fox News watcher) has three Great Premises. Given our fair Guv's descent into a further depth of stupidity than I even thought possible this week, let me give you Pierce's summary of those premises and see how it applies to today.
The First Great Premise: Any theory is valid if it sells books, soaks up ratings, or otherwise moves units.
And a corollary of that is anyone who can move those units is given credibility, even if what they have to say it absurd bullshit.
Which leads us, inevitably to the Second Great Premise: Anything can be true if someone says it loudly enough.
If that doesn't define Milwaukee AM talk radio and other GOP-aganda, what does? Repeat the lie loud enough, send it around to enough venues, and it becomes "something people are talking about" and has to inevitably be followed up by the "legitimate" media. Much like how Walker has flat-out lied about the threats he has faced from protestors in the last 4 years (very few, despite the damage he has tried to impose), and that the state was bankrupt and flailing when he took over (actually it was adding more jobs than it is today, and the Doyle/Dem budget ended up in a surplus with better revenues, the direct opposite of today's budget mess).
The sheer initial force created by the effort people are willing to put behind the promulgation of what they believe to be true inevitably leads to the Third Great Premise: Fact is that which enough people believe. Truth is determined by how fervently they believe it.
In this mentality, you can claim that 100,000 teachers, bureaucrats, librarians, and other public employees are just as scary and destructive as ISIS, and enough rubes might suck it up.

In a better time, we had a media that would call this BS out, and ultimately humiliate and expose a candidate who clearly was clueless and/or so blatantly dishonest. But because a whole lot of people at Journal Communications stand to make a lot of money on Scott Walker books to go with their revenues from Scott Walker ads, they tend to stay silent when our fair Guv makes a fool out of himself and lies about the way things are back home.

Which is why it is up to us to continue to respond vocally and forcefully, to counteract the pull of Idiot Wisconsin and Idiot America, which is fueling the (likely already fading) Scott Walker boomlet. We need to generate equal heat to grab the casual bystander's attention, and if our response is based on fact, it's a lot more likely to succeed over the long run.

That being said, the mistake too many Dems have made in Wisconsin is in thinking that being kind and appealing solely to reason will encourage enough voters to agree and win midterm elections. The other guys have bellowed from the Gut, and that's been enough to get 29% of the voting-age population to pull the lever for Walker, and keep this destructive Reign of Error going. Reason and facts do matter, but so does a little fire, and I hope we see more of it back home in Wisconsin from the good guys tomorrow and over the coming weeks.

Thursday, February 26, 2015

The Guv's budget in plain English

Big day for Wisconsin budget geeks, as the Legislative Fiscal Bureau has released its analysis of the Governor's budget. The link will get you to the front page, and you can click on any department of revenue item you want from there.

So dig in, and let me know what you find unusual in it.

Wednesday, February 25, 2015

We must keep speaking up

Some may say that the fact that the WisGOP/Walker machine plans to blast through "work-for-less" is a reason for those of us who oppose this theft to hold our fire. I completely disagree. We need to be speaking up and exposing these crimes against workers and most of the rest of Wisconsin, and send the message that we do not approve.

See, Scott Walker's main message as a presidential candidate is to appeal to the Nxion/Cheney wing, and show that has smashed all opposition, and that the people must follow along with what he wants to do, even if it has nothing to do with what he said on the campaign trail.

Instead, we can turn the tables, expose how radical and failed these policies are, and sink Walker and the GOP nationally and in the state of Wisconsin. But only if we speak up and refuse to accept the budget-ridden economic underperformance that is happening to our state.

That's my thoughts on the strategy and approach to take. The budget is clearly caving in, as yesterday's subpar revenue figures show (corporate taxes down 21% from Jan 2014!), and work-for-less is not likely what most Wisconsinites elected these people to do (if it was, they would have said so outside of the 262. They did not). So this time, we keep up the pressure, and don't water it down like the DPW has tried to do far too often.

Monday, February 23, 2015

Solidarity from South of the border

It was about 100 degrees warmer today where I was at vs my home, if you factor in the wind chill. So that helps explain why you haven't seen much from me in recent days, even with all the craziness breaking out with work-for-less and our fair Gov dropping racist dog-whistles everywhere against our president.

But I'm sending big wishes for the brothers and sisters to draw some serious attention to what these bums are doing over the next few days, and reiterating to the rest of the country that cutting wages and worker rights are harmful to an economy.

And if you have to take it to the next level, then that may be what has to be done. Chuck D has always been quite a worthy prophet to listen to, and he certainly applies here.

Public Enemy - Shut Em Down from Cena do Louco on Vimeo.

Friday, February 20, 2015

"Unintimidated"? Try coreless coward

I'd like to thank John Peterson at Democurmudgeon for directing me to these two excellent clips from the last 24 hours that illustrates just how weak our Governor's act has been.

The first includes MSNBC's Chris Hayes and the always-awesome Charlie Pierce, who start off by bringing up Rudy Giuliani's disgusting dog-whistle claiming that President Obama "doesn't love America" because "he wasn't brought up like we were." Then they mention the complete lack of tact that passes for a reaction from the special guest at Giuliani's speech at New York City's posh 21 Club- Scott Walker.

That incident was also discussed on another MSNBC show that had a guest with Wisconsin ties today. Ed Schultz had the Capital Times' John Nichols on to discuss the fast-tracking of (right-to) work-for-less legislation for next week, which just so happens to emerge less than 48 hours after Scotty dines with those right-wing oligarchs at the 21 Club. Nichols mentions how Walker is so gutless that he is willing to let anything slide and promote any type of idiotic policy, if he feels it'll help his chances at the Republican nomination in 2016.

And you really have to ask yourself, you know, where's the "there" there with this guy? If he is so intimidated by his donors and powerful players, how can you expect him to lead as a president?
But perhaps the most damning statements about Walker's lack of character came from the Washington Post's Dana Milbank. Milbank is usually beholden to Beltway BS which tries to pass off bad behavior as "just part of the game", and he usually pulls his punches accordingly. Not this time, as the headline gives you an idea where his column is going: "Scott Walker's cowardice should disqualify him," and says Scotty is "avoiding anything that might resemble leadership."
Last week, in London during the annual Darwin Day observance, he refused to answer a question about evolution. “I’m going to punt on that,” he said when asked about evolution at a British think tank. “That’s a question a politician shouldn’t be involved in one way or another, so I’m going to leave that up to you.”

At home in Wisconsin, Walker’s leadership has been conspicuously missing. His tax cuts have left the state with a $283 million deficit that needs to be covered by midyear and a deficit projected at $2 billion for the two years beginning in July. Bloomberg News reported this week that the state will delay $108 million in debt payments due in May — a move that will ultimately increase the amount Wisconsin has to pay.....

That dinner Wednesday, at New York’s 21 Club, is where Giuliani challenged Obama’s love of country. Even the former mayor preceded his outrageous allegation by saying, “I know this is a horrible thing to say . . . ”

Walker surely knew it was horrible, too, but he refused to say so — and in this failure he displayed a cowardice unworthy of a man who would be president.
Shoot, he's unworthy of running a hot dog stand on Water Street, let alone the state or the country.

Let's hope people are starting to see the reality- that there is no center to Scott Walker, and the guy can't win anything resembling a fair fight. Which is why he hides behind the GOP-agenda machine in Wisconsin media, never takes direct responsibility for anything that goes wrong, and never will appear in public in an unscripted situation.

As Lee Elia would put it: "Unintimidated? My f***ing a$$!"

A primer on the lies, deception and truth of (right-to) work-for-less

Given today's headline of the Wisconsin GOP deciding to introduce and ram through (right-to) work-for-less bill, as well as Governor Walker's promise to sign such legislation (proving that his statements on the subject in his governor campaigns were lies), let's review some of my prior posts about how stupid and regressive this idea is.

1. Wisconsin isn't having a problem with high wages restricting job growth, as Wisconsin's wages and wage growth has been lower than most of the Midwest from early 2013 to early 2014. In fact, the only states that were in the same range as Wisconsin's lame 1.2% wage growth in the last year were Michigan and Indiana...who were the two Midwestern states that passed this stupid legislation in the 2 1/2 years.

2. Here's something I wrote last month that went over a study from a Marquette University economist which showed that (right-to) work-for-less would cost Wisconsinites billions of dollars. Take a look at Dr. Abdur Chowdhury's analysis, and you may remember this specific passage.
The potential net loss in direct income to Wisconsin workers and their families due to a RTW legislation is between $3.89 and $4.82 billion annually. Using a conservative estimate of an impact multiplier of 1.5, the total direct and induced loss of a RTW legislation is estimated between $5.84 and $7.23 billion annually. Based upon the two estimates of lost incomes and an overall effective tax rate of 4.0%, the economic loss in state income taxes is estimated between $234 and $289 million per year.

While considerable efforts are being made by certain legislators to pass the RTW law in Wisconsin, the empirical evidence on the effect of adopting such a law does not support prescribing it as an economic policy tool. Overall, this study shows that RTW legislation would provide no discernible economic advantage to Wisconsin, but would impose significant social and economic costs. Low wages would weaken consumption. Higher rates of labor turnover and adversarial labor-­‐management relations would decrease productivity. It would also burden the state with higher ‘mop-­up’ costs [costs for social programs such as child care and food stamps].
That same post also includes a similar analysis from Bruce Thompson in Urban Milwaukee, which shows that states that don't have this stupid legislation have higher incomes than states who do, and a lot of those allegedly booming "right-to-work" states are places like North Dakota and Texas that were seeing benefits from the oil boom. A boom that has now busted.

3. And here's a post that debunks a set of lies from the Oligarch and Mediocre Businessmen's Club Wisconsin Manufacturers and Commerce. One of the biggest lies from these folks is the claim that Michigan and Indiana have done better since instituting work-for-less (if anything, job growth slowed down since putting these laws on the books), as well as WMC's bad habit of wanting to shift taxes and costs onto the little people and use big government at the state level to override local interests.

Lastly, the timing of this is VERY interesting, as the national media has caught on to Gov Walker's Administration trying to fill this year's budget hole by skipping $108 million in debt payments and putting them off into future budgets, and January revenue figures due to come out in the next week will likely show the budget gap to be even worse (Assembly Dem Leader Peter Barca and Joint Finance member Gordon Hintz were all over this today). It's also worth mentioning that this work-for-less news is breaking 2 days after Walker spent time at the elite 21 Club in New York City to "pledge allegiance to charlatans and cranks" that have been wrong about the economy for the last 35 years. There aren't many coincidences with these guys in the Age of Fitzwalkerstan, and giving the go-ahead to this idiotic, divisive bill would be a classic misdirection move, as well as a nice kiss-up to big-money oligarchs for the Walker 2016 campaign.

As for how to fight it, first of all, we have to give as many facts as possible and go on the attack against WMC, AM 620/1130, and other GOP-agandists who will lie about the "freedom" to get screwed over at work. I also think there should be active, vocal opposition to this, and if it means tens or hundreds of thousands walk off the job to come to the Capitol, I say DO IT. We need to send the message that this guy's agenda is not accepted and is not working, because the hidden subtext for Walker 2016 is that "I can impose every right-wing dream on people, and eventually they sit back and accept it, giving us more power." I'd also suggest cutbacks in every other type of personal spending, to wreck the budget even further, and give real economic damage to any organization that backs this regressive BS (the Wisconsin Democracy Campaign is a great source here).

I just feel bad that I'll be on vacation and have to miss all the fireworks next week (well, as bad as trading 10-degree weather for 80 degrees can be, anyway).

Thursday, February 19, 2015

You cut college funding, you'll pay for it

Ben Casselman has an article up on that goes over changes in state funding for higher education in recent years, and focuses in on our fair Governor’s latest proposal.
In his latest budget, Gov. Scott Walker proposes reducing spending on the University of Wisconsin system by $300 million over two years, a 13 percent cut. The plan is drawing national attention, in part because Walker has emerged as a strong early contender for the Republican presidential nomination.

Wisconsin, like most states, slashed spending on its public colleges during the recession. Between 2008 and 2012, Wisconsin cut per student spending by 19 percent after adjusting for inflation, according to data from the State Higher Education Executive Officers Association. That’s pretty close to the national average cut of 24 percent over the same period. (North Dakota was the only state where per student spending actually increased.)

Since the recession ended, states have been restoring funding, albeit gradually. Forty-two states increased per student spending in fiscal year 2014, according to the left-leaning Center on Budget and Policy Priorities, although funding remains below prerecession levels in nearly every state. Wisconsin was one of eight states that kept cutting as the economy improved.
The article also includes a chart that shows the clear correlation between lower state spending on schools and higher tuition/fees. But note that it’s not exactly a 1-to-1 correlation (more like tuition goes up 17% for every 20% cut), and that the trend indicates there would be a small increase in tuition over the last 6 years even if state spending is held constant and after accounting for inflation (not surprising, but likely something to look into).

You’ll notice that Wisconsin is in a nearly one-to-one relationship here, with the decreases in funding per student and increases in tuition/fees both between 21 and 22%, even with Walker’s tuition freeze that started in 2013-14 (the last year of the graph’s data). If the Governor’s proposal was to pass as presented, with another 2-year tuition freeze included, you’d see Wisconsin well off on the bottom left end of this graph by 2017. That would leave them out with South Carolina, Louisiana and Arizona, who are the three states that cut the most in higher ed spending over those 6 years, each cutting by more than 40% over those 6 years.

Is it safe to say that if you’re in the same league as Arizona, South Carolina, Louisiana and it isn’t in regards to how warm your temperatures are in mid-February, it may be a clue that you should reconsider what your state is doing?

Minor property tax cut = bigger hurt in future budgets

One of the attributes of Scott Walker’s proposed budget is another provision that could cut property taxes, estimated at about $5 a year on a median-valued Wisconsin home. Like what was done last year with technical colleges, this will be done by increasing a state aid provision that goes directly to reducing levies on schools. And just like last year, it’s being done in a cynical, gimmicky way that will not help school services, and drives up the state’s deficit.

This time, the “property tax relief” mechanism is done through the state’s School Levy Credit. According to Walker’s budget, the School Levy Credit is increased for 2016, but the way it’s paid out is quite intriguing. This language comes from page 1030 of the 2015-17 budget bill.
In the 2016−17 fiscal year, the department of administration shall distribute $853,000,000 on the 4th Monday in July, 2016, related to the 2015 property tax levies, and $105,600,000 on the 4th Monday in June, 2017, related to the 2016 property tax levies.

SECTION 2535. 79.10 (7m) (a) 1. b. of the statutes is created to read:
79.10 (7m) (a) 1. b. In the 2017−18 fiscal year, and in each fiscal year thereafter, the department of administration shall distribute $747,400,000 on the 4th Monday in July, related to property taxes levied in the prior calendar year, and $105,600,000 on the following 4th Monday in June, related to property taxes levied in the most recent calendar year.
Having those extra payments come in July 2016 is noteworthy, as it means that the higher payments that go to the local governments as part of the school levy credit are delayed until the following fiscal year (2016-17). Then they backload the permanent increase of $105.6 million starting with June 2017 (also in the 2016-17 fiscal year), so the books balance in future years. This is done to try to make the 2015-16 budget seem balanced, but it also causes a larger-than-usual increases in expenses for 2016-17 ($958.6 millon), before settling at $853 million starting with the next budget. So that extra $105.6 million in payments help could well lead to yet another budget deficit that have to be repaired in early 2017, but Scotty’s planning to be out of town by then, so he can dump it on the next legislature and governor to clean up.

And a UW professor hit on an interesting point with this proposed school levy increase- some of the biggest beneficiaries of it won’t even be Wisconsinites. Andrew Reschovsky is the go-to guy in this state when it comes to analyzing the state and local taxation, and has studied the school levy credit and who pays it. He notes that Walker’s proposal would give much of its breaks to people such as FIBs with cabins up North, and other rich people with property in Wisconsin.
However, only about half of any increase in the credit would provide Wisconsin homeowners reduced property taxes on their primary residences, according to a study of the School Levy Credit by La Follette School economist Andrew Reschovsky.

"The School Levy Credit provides property tax relief to all owners of property located in Wisconsin, regardless of whether they are residents of the state," says Reschovsky, who is a professor emeritus at the University of Wisconsin–Madison and a fellow at the Lincoln Institute of Land Policy. "In practical terms, this means that under the governor's proposal, a large part of the property tax break goes to owners of commercial and industrial property and out-of-state owners of vacation homes."

"While these individuals and businesses might welcome a tax break," Reschovsky notes, "providing non-homeowners with property tax relief comes at the cost of less spending on public education."

In his study, which was published in State Tax Notes in February 2010 and as a La Follette School working paper, Reschovsky also found that "on a per student basis, the benefits of the School Levy Credit are much greater in property-wealthy school districts than in property-poor school districts."
So if you’re in a rural Wisconsin school district without a lot of those vacation homes or an urban district, you get basically nothing out of this levy cut. Actually, you might end up with less than nothing, because the $126.975 million in per-pupil aid adjustments to schools that’s going out this year drops to ZERO, with only $60 million in regular school aids added back for 2015-16 (by comparison, voucher schools and charter schools would see a $4.5 million increase in funding for next year- no favoritism there, noooo). Interestingly, this per-pupil aid resumes in 2016-17, and at a higher level of $141.9 million. These extra expenses indicate to me that the 2016-17 budget may be structurally out of whack in future years, especially if there is some kind of economic downturn or other reason causing the projected 4.2% growth in revenues to not pan out.

And I don’t see much leeway in the tight revenue limits on schools districts, so that will cap any potential property tax increase that may need to be imposed to make up the difference, meaning significant cuts for public schools next Fall. This is similar to the $406 million giveaway Walker and the WisGOP Legislature did for technical colleges, where the extra money was limited to property tax relief, and could not generally be used for other purposes such as instruction or reducing tuition. And just like with those tax cuts, this levy credit is also not paid for with extra taxes, raising the state’s deficit for this budget and future ones.

So this increase in the School Levy tax credit is yet another cynical Walker shell game, which gives a one-time small drop in property taxes at the expense of better services and a stronger bottom line in the state budget. I guess Scotty’s counting on the rubes to continue to be bought off, and to ignore the fact that their community’s quality of life and the state’s economic competitiveness goes down the drain.

Monday, February 16, 2015

Wisconsin cabinet changes have plenty of revolving doors with dirty energy

You may have noticed that we're in the midst of our coldest stretch of the winter if you live in Wisconsin, with lows of -10 expected here in Madison for both Wednesday and Thursday. This naturally means higher heating costs to keep your house in a livable condition, and I want you to keep that reality in mind as you read about the shake-up in the Walker Administration that happened on Monday night.
Gov. Scott Walker announced a number of changes in the ranks of his top administrators Monday, including the replacement of state Department of Administration Secretary Mike Huebsch with former Madison Gas & Electric executive Scott Neitzel.

Neitzel, who abruptly stepped down as senior vice president of the utility company late last week, will lead the powerful agency, which is responsible for the state’s two-year budget plan, introduced by Walker in early February.

Huebsch is moving to the Public Service Commission, where he’ll serve as one of three commissioners appointed by the governor. Ellen Nowak, who is currently a commissioner, will replace Phil Montgomery as chairperson, starting March 1.

Bob Seitz, previously a spokesman for Gogebic Taconite, has been named executive assistant for the Public Service Commission.
So we have a utility VP taking over arguably the most important position in the Governor's cabinet, replacing Huebsch, who moves on to the PSC, giving Walker appointees all 3 votes on the Commission. And oh yeah, Seitz scores a highly-paid appointment at that same utility commission than 3 years after his company allegedly worked with Walker to funnel a $700,000 donation to the Wisconsin Club for Growth to help Walker's campaign in the recall election of 2012. After Walker was retained and the GOP re-took both houses of the State Legislature, the first bill they passed was intended to clear the way for a Gogebic mine project up North (which has since busted along with other commodity prices). Oh, but I'm sure former PR man Seitz will act completely on the up-and-up in his new gig at the PSC.

Gee, you think the mining and utility interests are going to have a lot of constraints put on their desires to dig and pollute anywhere with these guys in charge? And if you think these guys are going to look out for consumers and limit electric price increases in the name of fairness, let me take you back to the last few weeks of 2014, when Madison Gas and Electric (the new DOA Secretary's former company), Milwaukee's WE Energies, and Wisconsin Power and Light in Central Wisconsin were given the OK to raise rates for residential customers. In fact, WE and MG + E pulled a scheme that raised fixed fees but lowered the per-unit outlet, which shifted even more of the burden to residential customers while giving a break to business ones.

This seems especially galling given the drop in gas prices in recent months, since this enables these utilities to grab huge profits due to the higher rates and lower cost of production. It's almost like this was the plan all along! Shoot, if I didn't know any better, I'd think it was something other than coincidence that soon-to-be PSC Commissioner Ellen Nowak was an attendee at a convention with We Energies' CEO, and Nowak recommended a price scheme that puts the screws to people who try to use alternative energy to save themselves money.

This is the real payoff of donations and "independent expenditures" from Koch Industries and the mining industry. Big profits for them and cushy taxpayer-funded appointments to big-time state jobs for a couple of the well-connected, while the everyday person gets the shaft from the higher rates. Enjoy that thought as you hunker down from the cold and see more of your take-home pay get burned up from these higher rates schemes in the coming weeks.

More Walker "credit card" budget tricks

Thanks to good leg work by the four Democrats on the Joint Finance Committee, we just found out one of the ways the Walker Administration hopes to fix their current-year budget deficit - put it on the ol’ credit card! The two Dem Reps on the Joint Finance Committee, Gordon Hintz and Chris Taylor, put out this humorous but also dead-serious press release today exposing the trick, which was never approved by the State Legislature.

(MADISON) The Legislative Fiscal Bureau released a memo late Friday revealing the Walker Administration intends to close part of the $283 million shortfall in the current fiscal year by delaying payment on $108 million in debt that was due to be paid off in May. Putting off this payment will impact the next budget in the form of additional debt service payments and interest costs.

“The credit card has been Governor Walker’s favorite tool wherever he’s been in charge. He borrowed as Milwaukee County Executive. He borrowed money as Governor to balance the state budget. He wants to borrow money to pay for roads. And he effectively wants to borrow money from the future to pay for his tax cuts today. That doesn’t sound fiscally responsible to me,” said Rep. Gordon Hintz (D-Oshkosh).

In a February 5 letter responding to concerns about the shortfall raised by Democratic members of the Joint Finance Committee, Department of Administration Secretary Mike Huebsch stated that “we will end with a positive [budget] balance by reducing government spending and making fiscally responsible decisions”. There was no mention of the decision to effectively borrow more money in the future to pay for poor decisions of the past four years.
So how is the Walker Administration able to do this on their own without legislative approval? Let’s go to what the LFB sent to the Dem legislators, which not only goes over the types of refinancings that can be done with state debt, but also how they were able to try to sneak this one over in the first place.
The proposed restructuring of the May 2015 GPR (general taxes) principal repayment of a portion of the state’s outstanding commercial paper, which is identified in the attachment, would involve delaying $108,000,000 in GPR principal that had been previously scheduled to be retired. Unlike outstanding bond principal, restructuring a commercial paper payment does not require the Legislature to authorize any refunding bond authority in order to carry out such an action. Rather, the administration can simply direct the Department of Administration Capital Finance officials to not make the scheduled principal repayment. This can occur because the state’s commercial paper program is effectively a short term line of credit, in which the state, under the agreed terms of the line of credit, is only required to make annual interest payments on the principal borrowed on the line of credit.... As a result, DOA Capital Finance has established a principal repayment schedule for the state’s outstanding commercial paper, including a May, 2015 payment of $108,000,000 budgeted for in the 2013-15 budget. However, because only the interest on the outstanding principal is due under the credit agreement, the administration can defer paying the principal on these obligations in any given year.
So they’re using this commercial paper delay to avoid $108 million in expenses in this year, and kick it into future years, with previously-unforeseen interest payments going on top of that, driving up overall expenses to the state….with the plan that Scotty and much of this WisGOP crew will be long-gone before it hamstrings future budgets.

And the LFB memo notes this extra cost starts to be realized in the next budget.
While the 2015-17 budget bill does not include debt restructuring, the expenditure reduction from the May, 2015 restructuring action is included in the opening general fund balance for the 2015-17 biennium under the Governor’s budget proposal. In addition, the Governor’s biennial budget proposal would increase GPR debt service by $544,900 in 2015-16 and $18,746,900 in 2016-17 relating to the administration’s decision to restructure $108,000,000 in outstanding state commercial paper principal that would otherwise be due in May, 2015.
Cool deal, huh? In other words, this trick is costing taxpayers more than $19 million in the next budget, and likely between $90-$100 million in future budgets. All to avoid having to do a one-time budget repair bill, in order to pump up his “fiscally conservative” talk to a few hundred rubes in Iowa.

By the way, that same LFB memo also notes that this is far from the first time the Walker Administration has pulled this type of refinancing stunt. You may remember State Sen. Kathleen Vinehout uncovering $558 million in refinancings done in Walker’s first 18 months in office. Add in this $108 million, and now you have more than $666 million of can-kicking that has been part of Walker’s “balanced” state budgets, and this is merely General Fund money (I swear the $666 million number is pure coincidence). It does not include the $991 million that was borrowed for the state’s Transportation Fund, nor does it count the $1.3 billion in borrowing that is part of the next Walker transportation budget.

Between this $108 million debt trick and last week’s hasty suspension of raises for state workers over the final five months of the 2015 fiscal year, does anyone else notice that the Walker Administration is running scared and running out of options to take care of their busted budget? They’re praying hard for strong revenue numbers over the next 2-3 months to take care of their self-inflicted problem, but as I’ve said before, don’t bet that paying off.

Which makes me wonder, what other panicked measures are going to be taken over the last 4 ½ months to make the numbers look like they balance in Fiscal Year 2015? And the longer the Walker Administration stalls on admitting their failure and putting up a budget repair bill, the worse a correction it is going to have to be.

Sunday, February 15, 2015

Four years since Act 10, state employees still not getting pay back

If people think that Scott Walker's Act 10 was a one-time blow to public employees in Wisconsin and it got the state's books in order, think again. This story from Thursday reiterates that budget deficits in Wisconsin are as bad as they ever have been, and they still provide an excuse to limit public employee pay yet again.
Gov. Scott Walker's administration has suspended merit raises and retention pay increases to help deal with a budget gap that must be plugged by the end of June.

Walker sent a memo to state agency human resources directors on Feb. 5 announcing the freeze, the Wisconsin State Journal reported Friday.

It's unclear how many employees will be affected. University of Wisconsin faculty, academic staff and appointees will not be affected, but UW System spokesman Alex Hummel said the freeze will apply to classified employees, including custodians, administrative assistants, information technology workers, accountants and food service workers.
Well, that seems to be a little different than what this pile of GOP-aganda from the MacIver Institute claims, which is that Act 10 leads to worker pay increases resulting from the savings generated by cutting workers' take-home pay. The argument is that by reducing automatic pay increases for all workers, it'll allow "flexibility" to pay truly outstanding employees.

But the numbers that we do know from the state's 2012, 2013, 2014 and 2015 Annual Fiscal Reports (which you can search from this page), shows that MacIver (as usual) is not telling the truth. The post-Act 10 years of 2012 and 2013 gave few increases, and while there was a nominal increase in 2013-14, with a 1% salary increase for many public employees (woo-woo!), even those will be limited for this year, in a desperate attempt to balance Walker's deficit-ridden budget.

Compensation Reserves paid out, 2011-2015
2011-12 $19.7 million
2012-13 $19.0 million
2013-14 $57.9 million
2014-15 (projected) $35.0 million

Even in the highest comp reserves year of 2013-14, that increase is less than 0.4% of the total appropriations of that year's budget. But the Walker Administration is still trotting out the claim that "raises will be coming", with the immunity-receiving Cullen Werwie quoted as saying the merit raises and retention pay items are supposed to resume in the following budget. Really? Because one look at the salary and compensation changes that are in the state budget show that any type of raise for most employees is highly unlikely. The amount set aside for increases in salaries and fringe benefits are set aside in a category known as "Compensation Reserves," and page 33 of the Budget in Brief includes the table of the budget figures, which includes those Comp Reserves.

Compensation Reserves, 2015-17 budget
2015-16 $10.7 million
2016-17 $18.5 million

That's it, less than 0.1% of a budget that exceeds $32.8 billion in appropriations over those two years. That's not including the effects of inflation or increases in fringe benefit costs. Unless you believe that there will be no inflation in the next 28 months (riiight), then this will inevitably mean pay and staffing cuts.

A similar trend has happened at the local level, where Act 10 "tools" have not made up for the cuts in state aids to schools and other local governments in the Age of Fitzwalkerstan. Given that the 2015-17 budget offers no increases to these communities, and is slated to cut $150 a pupil to public schools, the downward cycle of lower pay for public employees is likely continue.

But you know who did do better in the aftermath of Act 10? Rich people and corporations, who have received billions in tax breaks during the last 4 years in Wisconsin, with little job or wage growth to show for it. You know who else got a whole lot of extra money the last four years? Scott Walker, who received more 3 times as many campaign contributions for his 2014 campaign than he did in 2010, from $11.1 million in 2010 to $34.7 million in 2014, according to the Wisconsin Democracy Campaign.

The connection is obvious- Act 10 and related moves to cut public employee pay may have reduced the amount of money that went to those people, and instead was combined with lower funding to schools and other local governments to allow for tax cuts to the rich and corporate. That money went back to Scott Walker and the Wisconsin GOP in the form of campaign contributions, those guys get re-elected, and the cycle begins all over again, this time with another group of workers to screw over by cutting wages, which allows for more money to be diverted to corporations and the rich.

Nice bit of theft, isn't it? It only sucks for the 98% of us that aren't in on it.

Saturday, February 14, 2015

Walker rejection of Menominee Bucks offer doesn't add up

Wanted to follow up on the Bucks arena situation, where we've had some interesting discussion since the Menominee Tribe offered to basically front the state's part of any funding deal for a new Bucks arena in exchange for allowing them and the Hard Rock organization to build a casino near Kenosha (I discussed some ups and downs of it here). The Walker Administration rejected the offer immediately, with Administration Secretary Mike Huebsch saying they were "done" and had "moved on" from the issue. But Bruce Murphy at Urban Milwaukee dug into the Menominee's proposal some more, and found the Walker Admin's refusal to reconsider mysterious, to say the least.
So why did Walker reject the deal? His Secretary of Administration Mike Huebsch wrote a memorandum noting the Potawatomi tribe (which owns the Milwaukee casino and opposes the Kenosha casino) has threatened to sue the state and could gain $250 million. The tribe claims the state would have to repay its payment of $25 million per year [that their compact has been in effect] because its contract with the state guarantees no casino competitor within a 50 mile radius.

But the Walker administration hired the Dykema Gossett law firm, under a contract that would pay up to $500,000, and its attorney R. Lance Boldrey concluded that if the Potowatomi won the dispute, it would then be ruled by an earlier 1998 contract, which means it would lose nearly 2,000 slot machines and could also open the door to getting its contract cancelled by 2019. “It does not appear to be in anyone’s best interest to pursue a remedy that results in a reversion to the 1998 compact,” Boldney wrote.
So it seems like both the Potawatomi and the state would be in position to renegotiate the terms of that compact, which could be done along with approving the Kenosha casino.

Did Huebsch follow that advice, given that Mr. Boldrey is a lawyer and Huebsch attended (but did not graduate) from fundie college Oral Roberts University? OF COURSE NOT! Funny how these guys don't have much regard to those with knowledge or facts.

But it gets better. Murphy then performs an actual act of journalism and goes to a law professor at Michigan State who specializes in Indian gaming law, telling the prof about the $275 million the Menominee have offered to back up any state litigation losses related to approving the Kenosha casino, and the professor goes "Seems like that would cover the risk." Which blows away Huebsch and Walker's claim that fear of taxpayer costs due to litigation is the reason they turned down the Kenosha casino, and also knocks down their main buck-passing excuse to try to pin blame on ex-Governor Jim Doyle for signing the compact with the Potawatomi to help balance the deficit-ridden budget Doyle inherited from Tommy Thompson and Scott McCallum.

On the other side of the equation, Hard Rock International President Jim Allen says having enough money to make up those payments to the state once the Kenosha casino would open won't be a problem either, as Wisconsin's "skim" off of the potential casino's winnings is much less than they pay in neighboring states.
Adding in the $275 million bond, this makes this a $1.7 billion deal for the state. But can the casino generate enough revenue to pay for this?

That’s a slam dunk, noted Allen, whose company has long experience in the gaming industry, because the percentage of revenue charged casinos by Wisconsin is much lower than in other states. He noted that Hard Rock pays 42 percent of gaming revenues in Ohio and gaming companies in other states “pay 30 percent, 40 percent, 50 percent, even 60 percent” of gaming revenues. Even with the payment for the NBA arena and $275 million bond included, he noted, “we would still be under 20 percent of revenues in what we pay to the state.”
So why wouldn't the Walker Administration at least strongly consider the Menominee's offer, which would allow it to get out of the business of taking on the Bucks arena issue, and also allow for this casino project to get underway? It's not because this administration automatically shoots down the expansion of any gambling in this state. They would never have delayed their decision on the Kenosha casino for over a year to shake down both sides for 2014 campaign donations deliberate over the issue if this was the case.

It doesn't have anything to do with the fact that a couple hundred fundies in Bumblefuck parts of Iowa matter more to Scott Walker than the Wisconsinites that, you know, he gets paid by and is allegedly working for in his day job, is it? Noooo, it can't be that at all.

I remain ambivalent on the Bucks arena, as I still need to see its final site and how this all fits together. And given the state's bad budget, I'm very reticent to see any diversion of state funds into specific projects and out of the huge unmet needs this state has. This offer by the Menominee on the Bucks arena allowed the state budget to not be affected by this potential Milwaukee project, and the building of the casino would likely raise job and income tax revenues in the short-term (as it's being built) and long-term (as it opens up), which seems to be a win-win scenario.

As Murphy sums up in one part of his story, "This is one of the most astounding political decisions I’ve seen in more than three decades of covering state and local politics." And like a lot of things with the Fitzwalkerstanis, what seems dumb when the decision is made will likely prove to be a lot more foolish and costly over time.

With that, I'm onto braving the cold and questioning another bad Walker decision- the one that would cut the UW System's funding to balance his deficit-ridden budget, another decision that is being done for selfish reasons and will hurt the state's chances for economic growth.

Thursday, February 12, 2015

Time to give the truth about UW funding

“Well, it’s only a 2.5% cut….”

This is the latest talking point given out by Republicans trying to defend Governor Walker’s proposed reductions for the University of Wisconsin System, and it's being relayed by WisGOP spokespeople on AM radio and paid Koch-bots polluting comment pages. It seems like a “modest proposal” to the casual outsider, and the GOPs are cynically hoping the everyday Wisconsinite doesn’t look at how the UW schools really operate, to hide the full picture on just how crippling this cut would be

What Walker and his supporters come up with this “2.5% cut” talking point is by conflating the $6.1 billion in one-year total expenses for the UW System, and then taking $150 million a year out of it. However, one look at the first page of the 2014-15 UW System budget shows why this line is disgustingly dishonest BS.

Category of UW System expenses
GPR (General Taxes) $1.18 billion
Academic tuition $1.35 billion
Gifts, Grants and Contracts $1.21 billion
Federal Indirect Costs (reimbursed by fed sources) $149.1 million
Auxiliaries (athletics, dorms, other self-supporting) $698.1 million
General Program Ops (UW Press, sports camps, etc) $250.7 million
Other (largely financial aid, other outside initiatives) $1.27 billion

As you can see, most of these other areas aren’t touched by general tax dollars – GPR makes up less than 1/5 of the UW System’s expenses, and even when you add tuition dollars to that total, it’s still only 41.4% of all expenses. The majority of UW System dollars cannot be directly changed by state actions, and cannot be used for general, everyday expenses. The anti-UW righty politicians and media types know this, but they’re counting on the fact that the rubes listening to them don’t.

And here’s the second prong of attack against the UW that’s being tried out. “Well, you have all this money left over, and so what’s the problem?” This is referencing the $1.3 billion or so of money that the UW System had in its coffers at the end of December, which the Journal-Sentinel dutifully reported on today. Naturally, the pro-Walker J-S leads with that big-number headline, and also prints a Walker spokesperson dropping the “it’s only a 2.5% cut” BS. Only later in the story do they give the important detail that follows, which is that most of those reserves can’t be used on everyday expenses.

The UW System's total unspent program revenue balances — including tuition, student fees and federal reimbursement for overhead costs associated with research — was $1.36 billion as of Dec. 31, UW officials confirmed Wednesday. A year ago, the balances totaled $1.49 billion, which UW System officials say was $129 million more than current balances. The UW System's total annual budget is $6 billion.

UW System officials say they have been making strategic, concerted efforts to draw down the carryover balances, which infuriated lawmakers two years ago because the money wasn't fully disclosed, and UW officials didn't even know how much they had in total until a nonpartisan audit. UW System officials have acknowledged they were less than forthcoming about the cash balances, but said they were a necessary cushion against future enrollment losses and revenue volatility.

Unrestricted cash balances have decreased by $151.2 million in the past year, and tuition carryover has been reduced about $175.8 million systemwide, UW System officials said Wednesday.

Two years ago, the UW System and its campuses were holding onto $414 million in unspent student tuition. That's when the governor and Legislature forced a two-year resident undergraduate tuition freeze — a freeze that Walker says he wants to continue another two years to further force down tuition balances.
And many of those reserves are set aside for specific projects, such as new dorms that Walker’s Department of Administration continues to hold up from construction. So much of the alleged “slush fund” has a lot of its potential spending frozen in place, and is the result of Walker Administration actions, in addition to the explicit intentions of UW donors and federal agencies.

And good business practice would tell you that reserves can be A CUSHION IN CASE SOMEONE CUTS ONE OF YOUR REVENUE STREAMS. You know, like Walker is trying to do to the UW as a political pose (with the tuition freeze) as well as to fill the deficit caused by his unfunded property tax cuts and his giveaways to the rich and corporate?

By the way, if the GOPs are so concerned about the UW System holding money back in their coffers, why aren’t they following their own advice, and tapping the $280 million that’s in our rainy day fund? This would cover almost all of the proposed UW cuts for the next two years, or take care of nearly all of the current-year $283 million deficit. What’s the problem, Republicans? Shouldn’t all reserves be utilized in case of a shortfall to stem off cuts? Or does it just apply to dem ejukated libr’ul types at the UW?

Yes, I’m biased when it comes to talking about funding the UW System. I’m a proud two-time Badger grad that credits the offerings of the UW System with changing my life, and allowing me to gain skills and a perspective on the world that I never would have had without it. I am furious at the lies and smears that the anti-thought crowd is trying to pull over in their desire to get even and grab power over anything perceived as left wing. I am also furious at a Wisconsin media system that is more than willing to give access to that crew, but won’t give equal time to those members of society that are teaching, discovering, creating and learning while the pissed-off mediocre white guys are whining over the AM airwaves.

We have to stand up to this bullshit loudly and forcefully (you too, DPW), and not expect that bystanders and a new group of voters will automatically understand the true value of an educated workforce and a top-notch university system. Because if those of us do not defend this System and the added value of educated thinkers to a society, then the Dark Age types can slip their agenda of “cut, privatize, and downgrade” in, and the damage to one of Wisconsin’s best resources and economic advantages will be near impossible to undo.

EDIT: Let me add in the spreadsheet on UW funding that frequent commentator lufthase made. It's a good resource to show the history of state funding cuts and reliance on outside funding that has been going on for the better part of the last 20 years.

Wednesday, February 11, 2015

Walker Admin's brings back budget lie of "What if?"

This is how zombie lies start, and then continue to live when you have a media that won’t call out bullshit.
[Wisconsin Department of Administration] Secretary Mike Huebsch says should state revenue projection come in higher than anticipated, Gov. Scott Walker's top focus would be cutting taxes…..

The Legislative Fiscal Bureau typically re-estimates state revenues for the upcoming biennium in May if it sees evidence they need to be adjusted. Lawmakers have already suggested any additional revenues should go toward things like boosting K-12 funding, reducing the size of Walker's proposed $300 million cut to the UW System or lowering the amount of bonding for transportation.

Huebsch said after tax cuts, additional revenues would likely be directed toward some of the five largest areas of spending in the state budget, including K-12 education, Medicaid, the university system, shared revenue and corrections.
Here’s why that statement is crap. THERE IS ZERO EVIDENCE THAT REVENUES WILL BE HIGHER, and if anything, are likely to be lower. It’s like saying “well, here’s what I’d do if I hit the $500 million Powerball tonight,” but I sure as hell wouldn’t plan on it happening. And I definitely wouldn’t expect others to think that's how I was planning my future. But the Walker Administration has pulled this hopeful "well, if this happens and this happens and this happens” garbage continually for the last year, and our media sits with its thumb up its ass and lets it waft out there as if it’s going to happen. It never does.

Let’s start by going back to the LFB’s revenue estimates from 3 weeks ago, which is a starting point for this budget. Here’s what the LFB predicted would happen with income tax revenues through June 30, which covers the rest of the 2015 fiscal year, as well as the next fiscal year.
Over the remainder of 2014-15, it is anticipated that collections will increase by 15.1% due to several factors. First, refunds for tax year 2014 will be significantly reduced and final payments will be increased because of the decreased amount of withholding taxes paid since last April. Also, beginning in April, 2015, growth in withholding collections should improve significantly because the current-year receipts will no longer be compared to collections that were based on the previous, higher withholding tables. In addition, it is believed that federal tax increases enacted late in 2012 induced taxpayers to realize additional investment income in that year, which otherwise would have been realized in 2013. This is believed to have artificially suppressed collections last Spring, which should lead to a "bounce-back" this year. These positive impacts will be partially offset by the effects of state tax reductions, primarily the decrease in the bottom marginal tax rate enacted in 2013 Act 145 and the continued phase-in of the manufacturing and agriculture credit. As noted, for the entire year, income tax collections in 2014-15 are expected to be 4.1% higher than in 2013-14.

An above-average growth rate of 6.7% is estimated for 2015-16, primarily because a large one-time revenue loss associated with the withholding table changes will no longer occur. In 2016-17, the increase in individual income tax collections is estimated to more closely approximate the increase in personal income, as a more normal pattern of growth in tax collections returns.
And LFB predicts that increase in 2016-17 to be another 5.2% on top of the increases at the end of 2014-15, and in 2015-16. That’s a huge hill to climb, and is only feasible because the LFB predicts real GDP growth in the U.S. staying between 2.7% and 3.1% for each of the next 3 years, which is faster that the decent growth we've seen in the last three years. The LFB also made that prediction assuming that 7 million additional jobs added, meaning that the Obama Jobs Recovery would keep cooking along, and going on 7 straight years of job growth.

Maybe that happens, and maybe Wisconsin keeps up with that strong growth and fewer Wisconsinites rent-seek on tax breaks and actually pay a fuller amount. But I wouldn’t count on it, and not just because we might be due for some kind of economic slowdown, but also because revenues are unlikely to keep up. Income tax revenues dropped by more than $426.5 million from January-April of 2014 vs the same four months in 2013 (a drop of 17.7%), and only about $55 million of that was due to lower withholdings that hit last April. With extra tax cuts thrown in and accelerated for tax year 2014, and inflation barely over 1%, do you really think we’ll get back to near 2013’s levels for the next 4 months?

In addition, LFB’s prediction that refunds will be lower and revenues higher in early 2015 leads to budget and/or economic problems, regardless of whether that prediction is right or wrong.

1. If it is true, then a whole lot of Wisconsinites are in for a negative shock when they get those lower tax refunds, and/or have to pay in. It makes it also less likely to keep sales tax revenues increasing at the level they have in future years (over 3% growth is predicted for the rest of Fiscal Year 2015, and for Fiscal Years 2016-17)

2. But if they’re wrong, and tax refunds due to tax avoidance encouraged through the two rounds of Koo-Koo tax cuts keeps revenues down, then we have a bigger revenue shortfall for this fiscal year (which must be corrected, and little time to adjust). It also makes for a lower base to start the 2015-17 budget with, which makes the already-ambitious growth amounts needed to balance in Walker’s budget become even higher.

Huebsch’s happy talk is also an infuriating reminder of the lies the GOP told during the 2014 election campaign, where Joint Finance Co-Chairs John Nygren and Alberta Darling made up an extremely unlikely scenario based on high revenue growth and no added expenses, and then claimed a “535 million surplus” when the LFB scored it out (because they’re not allowed to say “this will never happen"). I called this “what-if” report out as complete bullshit at the time, as could anybody else that did more than 2 minutes of digging. But there was Scott Walker claiming this “what-if” scenario as fact on the campaign trail, even while Mary Burke and the Dems tried to point to more realistic LFB estimates of a $1.8 billion structural deficit that was coming.

Turned out the Dems’ and LFB’s original assumptions were pretty close to the reality in 2015, as the LFB's January estimates said the GOP’s rosy revenue scenario would fall short by $256 million, and even with Gov Walker’s cuts in the 2015-17 budget, total General Fund expenditures are still slated to be up by nearly $865 million. That’s a $1.12 billion difference from the alleged “surplus” on those items alone. But because our media was too paid off interested in seeming “objective” to examine the numbers closely, they didn't shoot the BS down, and enough rubes fell for the GOP-aganda of a “balanced budget/ surplus,” allowing Walker to slip by with 52% of the vote in the November 2014 election.

This is why you have to push back on garbage like Mike Huebsch’s, because the average citizen doesn’t understand budget numbers and projections, and certainly doesn’t have the time or capability to evaluate who’s lying and who’s likely to be right. Watch for these zombie lies about “upside revenue surprise” over the next couple of months, even if official Department of Revenue figures start to reveal the truth about how much in the tank we are, because the WisGOP-aganda machine has to try keep the outrage down as to just how badly Scott Walker’s trickle-down mentality has failed in Wisconsin.

P.S. Hey Sec. Huebsch, if the budget is doing so well, then why did the Wisconsin Office of State Employee Relations, under your department’s orders, just sent out a letter today saying that they couldn’t afford to give any raises until further notice? Read between the lines, folks!

Do the Evolution, Scotty!

I guess this is a fitting song for those of us in Wisconsin today, after our "Unintimidated" Governor decides to punt on the origins of man the home country of Darwin.

I'm ahead I'm a man
I'm the first mammal to wear pants yeah
I'm at peace with my lust
I can kill 'cause in God I trust yeah
It's evolution baby

I'm at piece I'm the man
Buying stocks on the day of the crash
On the loose I'm a truck
All the rolling hills I'll flatten' em out yeah
It's learned behavior uh huh
It's evolution baby

Admire me admire my home
Admire my son here's my clone
Yeah, yeah, yeah, yeah
This land is mine, this land is free
I'll do what I want but irresponsibly
It's evolution, baby

I'm a thief, I'm a liar
There's my church, I sing in the choir:
It kind of fits, don't it?

Tuesday, February 10, 2015

Menominee offer for Bucks arena needs to be put on paper

Well it looks like the Menominee Tribe and the Hard Rock Casino folks have just thrown an interesting curveball into the Bucks arena discussions, as the Menominee is now offering to replace the $220 million in state funding that Gov Walker offered up in the state budget. Instead, the Tribe is now saying that they’d be willing to pay that $220 million themselves, if Gov Walker will reverse his earlier decision, and sign off on allowing the casino in Kenosha.

In addition, Menominee Tribal Chair Gary Besaw said that the Menominee would pony up more money to cover for any losses that might result from the Potawatomi Tribe or other tribes not paying the state, as retribution for breaking earlier gaming compacts limiting the amount of gaming that could be permitted.
Besaw also said the Menominee will increase to $275 million the bond it would post to cover any potential, but very unlikely, state losses from other gaming agreements. The $220 million arena contribution and the $275 million bond would be on top of the $1.2 billion in Kenosha casino gaming proceeds the Tribe has already committed to the State of Wisconsin, making for a total contribution to the State of $1.7 billion.

(Ed. Note : The gaming proceeds “payback” to the state was previously reported as $1 billion over 25 years, and it was included as one of the last-ditch offers from the Menominee 2 ½ weeks ago, as noted in this article from Rich Kirchen of the Milwaukee Business Journal.)

“Gov. Walker has claimed many, many times that he will not leave taxpayers on the hook for $100 million or more in supposed losses due to gaming agreements with the Forest County Potawatomi. Candidly, his position is puzzling because no one – including the governor’s own outside counsel that he specifically hired to examine our project in detail – believes such losses are possible. Nonetheless, we’ve put a strengthened proposal to indemnify the state on the table,” he said. “Menominee guarantees that if the State has to refund all of the money the Potawatomi gave the State in the past, Menominee will cover that. If the Potawatomi refuse to honor their obligations and pay the State any more money going forward, Menominee will cover that. And if the Potawatomi try to sue the State – even though legal and policy experts have said such a lawsuit would be unsuccessful – Menominee will even pay for the State’s lawyers.

“Gov. Walker, the fact of the matter is that taxpayers are off the hook,” Besaw added. “They’re off the hook for any costs related to the Kenosha casino, and now they are off the hook from any burden related to a new NBA arena in Milwaukee.”
On its face, it sure looks like a no-lose situation when you’re talking about state finances, as the Menominee’s cash offer reduces the need for borrowing the $220 million, or for any kind of a “jock tax” which would divert Bucks employee income taxes from the General Fund and designate it for the arena. In fact, the state’s budget problems were mentioned in the Menominee’s release, with the intimation that allowing for the Tribe to pay into the arena would free up funding for other services that Gov Walker is planning to cut in his current budget.

That’s a good side benefit from the Menominee, but the catch is that it doesn’t help Wisconsin’s budget issues in the short term. Very little of the state money “saved” would be made up over the coming 2-year budget (meaning Walker’s cuts and deficits are still there), but instead the savings would hit in later years, because there would be no debt to pay off. In fact, in the immediate time period, there’s a chance that the Potawatomi would want their $49 million back from the state if the Kenosha project were to go through, as the Potwatomi had held back two years of payments as Walker was debating this casino, and only paid it last month when Walker turned down the Hard Rock project. Yes, the Menominee have offered to make up the difference for those payments as well (gives you an idea how successful they think this casino is going to be), but this also could drive up some state litigation expenses as that issue gets decided.

Putting that point aside, there is a lot of detail to clear up from the Menominee’s proposal.

1. This Menominee “offer” sure resembles a bribe to get Gov Walker to change his mind on allowing the project (although they insist it's not a bribe). Officially, you can call this “negotiating” because it's being done in public, but there’s a crassness to this that kind of takes me aback (well, from the tribe’s side, anyway. With Walker you expect it.) And how this would be paid in is a bit confusing.
The $220 million would be paid over 25 years and the total cost to the Kenosha casino including interest would be close to $300 million, Allen said. He said that would "basically mirror" the funding mechanism Walker has proposed for the arena.
Apparently, the money basically repurposes a "community needs" fund that the Hard Rock people had put in their October 2014 offer to Walker, so their argument is that it's not much more that's being shelled out. But would this money be sent to the state, or the team, and would there still be a need for a jock tax, but Menominee's money would replace whatever goes out of the state's coffers? I need to see this part.

On the flip side of this, it’s also no different than a corporation ponying up millions to get naming rights for a sports facility, like the giant brewing company in Milwaukee did to have the new baseball stadium be called Miller Park. This sort of back-scratching is regular everyday business in 21st Century pro sports, so I suppose when viewed through that lens, it’s not that big of a deal.

2. Who oversees this new arena, and who will have a say in its operations? Would this mean the Menominee now has a large voice in future plans for this, since they shelled out a lot of the money for it? Related to that, would the state get any say in this at all, if they’re not putting up any taxes or administration for it? Remember, in Walker’s budget bill there is also a provision to have a 9-person board administer the jock tax revenues and oversee operations of the new Bucks arena, similar to the Bradley Center Sports and Entertainment Corporation that oversees the current Bucks arena.

So would there have to be a similar governing structure set up, or would the arena be “given away” to Bucks ownership once it is built? This is something that would have to be fleshed out with the Menominee’s proposal, although that could conceivably be done after approving a new casino in Kenosha.

3. There still hasn’t been the answer as to where this arena would be built, and what other development would be part of it. This is the piece I’ve been waiting for before giving my final “yea or nay” thought on this arena deal, because I think it works better as a larger development that includes more than just the arena. Kirchen mentioned last month that the “favored site” now seemed to be just north of the BC, around 4th and Juneau, near land that was the site of the former Park East expressway.

I like the idea of locating the arena there, as a lot of that land is vacant and/or underdeveloped, and it could create a nice visual "welcome to downtown Milwaukee" as you get off of Highway 43. But I want to know if this is linked into other developments and businesses, and what kind of funding the City and/or County would be expected to contribute as a result. This could be in the form of the county selling some land it owns in the area, or with the City offering a TIF or some other incentive, but I do want to see where all of these pieces fit in. We keep hearing "soon enough", but the site decision has already been put off from its original plan of late January.

Obviously, there is a lot more that needs to come out with the Menominee's offer and the overall plan involving the Bucks arena. Maybe we see Kenosha and Racine-area politicans propose a bill in the coming days which will show how all of this financing would work from the state side. Of course, this is all moot if Walker doesn't reverse his intentions to disallow the Kenosha casino by the 19th (and it would make him look even less "Unintimidated" than he already did when he bowed to goofball Iowa fundies by turning this thing down). But it's yet another wrinkle in this multi-layered debate that makes me want to see where this is all heading. Not just for the Bucks arena, but for the casino and the budget.

Monday, February 9, 2015

How is borrowing and consolidating power "small government conservatism"?

Longtime Wisconsin Capitol reporter Steven Walters has a good summary in Urban Milwaukee regarding Gov. Walker’s plans for transportation funding in this budget, and he particularly focuses in on Walker’s proposal to keep putting highway funding on the state’s credit card.
The governor defends his request to borrow $1.3-billion more for transportation, and another $220 million for a new downtown Milwaukee Bucks arena, by saying his overall budget would borrow less than any budget in the last 10 years. It’s also important to note that Walker’s $1.3-billion bonding request includes every important statewide project – all of which are championed by local legislators, chambers of commerce and other civic groups – and increases aids to local governments.

The official budget summary puts it this way: "This includes timely investments to rebuild the Zoo Interchange, as well as the Hoan and Stillwater bridges. The governor also recommends enumeration of the I94 East/West project [west of Miller Park] to allow DOT to initiate substantive work on the project. The budget also includes $836.1 million over the biennium to keep major highway projects on schedule, such as the widening of I39/90," between Madison and the Illinois border.

What isn’t in that budget summary: The current two-year budget borrows $991 million for transportation programs, so the new proposal would borrow $1.3 billion more. It would require, by the 2016-17 budget, 22.8 percent of all state transportation taxes to go to paying off bonds, instead of for highway and bridge construction and maintenance.

The budget sends this hardball message to Republican legislative leaders and transportation special-interest groups: “If you don’t like my plan to borrow $1.3 billion, you raise taxes and fees – or you pick the major highway projects that will be delayed. And then you – and not me – get the blame for doing anything but borrowing $1.3 billion.”
So Walker passes off the duty of figuring out how to be more responsible with funding these road and highway projects to the Legislature while he galavants across the country. What an “Unintimidated” guy.

Walters doesn’t even mention the other sizable amount of can-kicking Walker pulls in this budget, the $1.5 billion in debt refinancing that is requested, continuing a trend that the Governor has pulled in all 4+ years that he has been in office, and bringing the total that the state can refinance to nearly $5.3 billion.

What’s also interesting about these borrowing provisions is that Walker wants to remove a level of oversight from his administration when it comes time to ask for more money from the debt markets, and allow his administration to oversee and pay for all project without any checks on that power. Mike Ivey of the Capital Times had an article mentioning this today, and like many other moves in this budget, it centralizes power with the Governor.
Under the Walker budget, the Building Commission would no longer meet in order to approve projects or the borrowing to make them happen. The commission — which by statute includes members of both political parties and is chaired by the governor — has traditionally met monthly.

Instead, the commission would operate under what the budget proposal calls a “passive review process” where items are considered approved unless a majority of Building Commission members request a meeting.
There is also this note from Page 42 of the budget bill.
Also under this bill, at the first meeting of the Building Commission following the enactment of the biennial budget act, the Building Commission may 1) authorize DOA (the Wisconsin Department of Administration) to contract certain public debt in an amount not to exceed the amount that the Building Commission is authorized to contract; 2) release an amount not to exceed the amount of state building trust fund moneys to DOA for planning for enumerated projects; and 3) authorize DOA to issue revenue−obligation refunding obligations. Also, after this first meeting of the Building Commission, DOA must report quarterly to the Building Commission regarding the status of projects under the state building program.

Under current law DOA may prepare a request for the issuance of operating notes and may submit the request to the Building Commission. The request must be signed by the governor and the secretary of administration and is subject to review by JCF [Joint Committee on Finance].

Under this bill, DOA is not required to submit a request for the issuance of operating notes to the Building Commission. Instead, DOA may prepare an authorizing certification for the issuance of operating notes that must be signed by the secretary, must be transmitted to the governor, and is subject to review by JCF.
In other words, if the state is running out of money to pay its bills and has to borrow for it, this seems to allow the Walker Administration to get the money without asking the full Legislature if this is OK, or if they should do other methods to come up with the funds (like cutting programs or delaying payments or raise taxes). Seems like quite the power-grab to stick into the budget for a “small government” guy, doesn’t it?

You have to think some of Walker’s GOP rivals for the 2016 nomination will bring up that Scotty is centralizing power into his inner circle by removing some of this oversight over borrowing and budget practices. And you also can’t help but notice that Walker uses the same Dubya-like “don’t tax but still spend” mentality that dropped this country into the $1 trillion+ deficit that greeted President Obama during the Great Recession (leading the increased overall debt that GOPs cry crocodile tears over but disavow any role in causing).

And once Walker’s rivals bring it up (or someone else does. HINT TO THE DPW!), you can bet that will encourage media will also start looking into Walker’s dismal record on budgeting, and they will find that Scotty is anything but the “fiscal conservative” he claims to be.

Sunday, February 8, 2015

Wisconsin Budget Project catches the K-12 cuts

The Wisconsin Budget Project has now released their overview of Governor Walker's budget, and I'd encourage you to read their breakdown of the big document. Their focus on the Governor's K-12 education policies is especially thorough, given that these changes haven't gotten nearly the coverage that other provisions have, and the Budget Project rundown illustrates why that issue probably deserves a lot more attention.
To begin this overview, it’s important to note that the Governor’s recommendations dig a deeper hole for lawmakers to climb out of as they attempt to balance the budget. That is done by allocating $105.6 million per year for the school levy credit. While increasing that credit has often enjoyed support from legislators on both sides of the aisle, committing that funding for tax relief is much more problematic at a time when the state is faced with a large deficit and making substantial cuts....

Putting a squeeze on public schools – The changes the Governor is proposing for school financing are complicated, but seem to keep public schools in a very difficult fiscal bind. In addition to maintaining current revenue caps for schools, the bill cuts total funding for the Dept. of Public Instruction by 0.1% in the first year of the biennium (and cuts General Fund support by 2%), before increasing total funds by 4.2% in the second year. But even in the second year it appears to me that schools will only be able to increase spending by about half of the increase, based on the amount of the increase that is outside of the revenue caps. In addition, the bill lifts the cap on school choice vouchers, and the growth in spending for those vouchers will apparently be siphoned out of the funding for public schools. By holding support for public schools well below the inflation rate and diverting funding for vouchers, my preliminary reading of the Governor’s plan is that it would force many school districts to make additional cuts in their budgets.

UPDATE: After studying the budget documents more carefully, it’s clear that the negative impact for schools is considerably worse than I initially thought – particularly in the first year of the biennium, when most schools will have to cut spending by $150 per student. My preliminary calculations missed that effect because one of the DOA documents creates the impression that schools are getting an increase of about $103 million per year in federal funds, which is not actually the case. In addition, I didn’t originally realize that schools aren’t able to raise property taxes to offset a $127 million cut in state categorical aid during the first year of the biennium.
So it appears that Walker is attempting to do the "spend more for property tax cuts without taxing for it" trick that he did with Tech College funding last year. This has the double-whammy of adding to the state deficit, and not allowing the funding to go into instruction, teacher pay, or anything that might improve the level of service from those schools.

There will be plenty more items to discuss as these departments go through their hearings, but the cut in per-pupil aid and related K-12 provisions are a good catch from the great folks at the Wisconsin Budget Project.

Saturday, February 7, 2015

A lights-out January US jobs report

The Obama Recovery seems to be in high-speed mode, even more than we previously knew. The January U.S. jobs report came out this morning with huge numbers not only for the start of this year, but at the end of the last one.
Nonfarm payrolls increased 257,000 last month, the Labor Department said on Friday. Data for November and December was revised to show a whopping 147,000 more jobs created than previously reported, bolstering views consumers will have enough muscle to carry the economy through rough seas.

At 423,000, November's payroll gains were the largest since May 2010, when employment was boosted by government hiring for the population count.

While the unemployment rate rose one-tenth of a percentage point to 5.7 percent, that was because the [labor] force increased, a sign of confidence in the jobs market.

January marked the 11th straight month of job gains above 200,000, the longest streak since 1994.
Not too bad, if I might say so myself. Even average hourly earnings were up by $0.12 for January, in a month when inflation is likely to drop with gas bottoming out, and it now puts the year-over-year increase at 2.2%- which is above the 1.6% inflation rate for 2014. That’s a welcome change from the largely stagnant to declining real wages we have seen in recent years.

Even without this positive data, the January U.S. jobs report is always a big one, because it features revisions for several years in the past, based on the “gold standard” jobs report, new population information and related statistics that improves the accuracy of the originally-reported figures. Here’s the explanation from the Bureau of Labor Statistics on that, as part of the larger overall report.
In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2014. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which enumerates jobs covered by the unemployment insurance tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2013 forward. Seasonally adjusted data from January 2010 forward are subject to revision. In addition, data for some series prior to 2010, both seasonally adjusted and unadjusted, incorporate revisions.

The total nonfarm employment level for March 2014 was revised upward by 91,000 (+67,000 on a not seasonally adjusted basis, or less than 0.05 percent). The average benchmark revision over the past 10 years was plus or minus 0.3 percent.
The rest of 2014 was also given revisions, and while those numbers showed only a slight increase (17,000 more jobs added from April-October than first reported), the huge upward revisions in November and December along with the added 91,000 jobs in March solidified 2014 as the best year for U.S. job gains since 1999. It also continued a strong four-year record of gaining back jobs lost during the Great Recession.

Job gains 2011-2014
2011 total: 2.080 million (1.6%)
2011 private sector: 2.396 million (2.2%)

2012 total: 2.257 million (1.7%)
2012 private: 2.315 million (2.1%)

2013 total: 2.388 million (1.8%)
2013 private: 2.452 million (2.2%)

2014 total: 3.116 million (2.3%)
2014 private: 3.043 million (2.6%)

It’s been a pretty good four years in the U.S. We’re still not at full employment, as the 5.7% unemployment rate indicates, but we’re a whole lot better off than we were at the end of 2010, when the U.S. was struggling with a 9.3% rate.

This also brings further into focus how badly Wisconsin has lagged in growth in the Age of Fitzwalkerstan. With these huge upward revisions, the overall Scott Walker jobs gap now stands at more than 50,000 at the end of 2014, and nearly 59,000 in the private sector. This is even taking into account the large increase in jobs the state has reported over the last 6 months, which has cut around 10,000 of both of these gaps.

Of course, the state will also have its numbers be benchmarked in its next jobs report, which comes out in early March. Given that this is benchmarked to the QCEW, this would indicate that Wisconsin’s jobs numbers are unlikely to go up with these revisions, and if anything, may go down (as noted in this post).

So stay tuned, and see how much of this reality is discussed or ignored as our fair Gov’nor travails around the country trying to talk his “accomplishments” in Wisconsin. It’s quite obvious that the real success story is the strength of the U.S. economy dragging Wisconsin up, despite the austerity and income-shifting to the rich and corporate that has been a hallmark of the Scott Walker reign. Scotty won’t say this publically, but behind the scenes, you know he and his backers are saying “THANKS OBAMA” for keeping the state’s economy afloat through the November 2014 elections, which limited the damage and allowed him to fool just enough voters to slip by with 52% of the midterm vote, lifting off his current nationwide grifting campaign.

Friday, February 6, 2015

About that current-year Wisconsin deficit? It's still there

I was curious to see if Governor Walker’s budget had any comments or actions regarding the $283 million current-year budget deficit the Legislative Fiscal Bureau projected in their revenue estimates from a couple of weeks ago. This is particularly noteworthy because by law, there must be a budget repair bill if “the Secretary of the Department of Administration determines that previously authorized expenditures will exceed revenues in either year of the biennium by more than 0.5% of the estimated general fund appropriations for that fiscal year.” For the fiscal year ending June 30, that’s a little less than $80 million – which means the projected shortfall is more than $200 million more than that.

Well, the only reference to the 2014-15 budget situation is in Table 4 of the Governor’s Budget in Brief (thanks to poster GeoffT for pointing this out), and the general answer is that there is no formal bill that would take care of this deficit, but that somehow the Walker Administration will take care of it.

So how would this gap be closed? Part of the answer is that the Potawatomi will now pay the state $49 million as a thank you for rejecting the Kenosha casino their two-year payment to the state as part of their gambling compact. For the rest, compared the numbers in the LFB’s revenue estimates with the Budget in Brief, and got these differences.

Closing 2014-15 gap of $234 million
Other Departmental revenues: UP $1.8 million vs LFB
Gross Appropriations + Sum sufficient: DOWN $4.3 million
Compensation Reserves: DOWN $98.0 million
Lapses: INCREASE by $130.4 million
TOTAL: $234.5 made up, $300,000 in reserve.

The first two seem possible, although I'd like to see what went into the assumptions as to how they get to those numbers. But the big numbers are the Compensation Reserves and the Lapses. The Compensation Reserves are basically extra funds set aside on top of the amount appropriated to expenses, and this summary from the last budget describes why it’s added in.
Typically, amounts within the compensation reserves are funds to pay for such items as: (a) the employer share of increased premium costs in the forthcoming fiscal biennium for state employee health insurance; (b) the costs of any general wage adjustments or negotiated pay increases; (c) increases in the employer share of contributions to the state retirement fund for employees' future state retirement benefits; and (d) pension obligation bond payments for the state's unfunded prior service liability for retirement benefits and the accumulated sick leave conversion credit program.
In the first year of the biennium, only $57.9 million of the $78.75 million set aside in the Comp Reserves was used, (shown on Page 15 of this report) allowing nearly $21 million to lapse back into the General Fund(it’s worth noting that the 2015-17 budget only accounts for $29.5 million COMBINED in this Comp Reserve. Good luck with that).

What the Walker budget document anticipates is that only $35.0 million of a budgeted $133.0 million will be spent out of the Comp Reserves for this fiscal year. This seems overly hopeful, given that classified employees received a 1% pay increase at the start of Fiscal Year 2014-15, but perhaps the state is able to realize some savings from the employer (and employee) contributions to the state’s pension fund. That required contribution dropped to 6.8% from 7.0% of pay for 2015 largely as a result of the WRS pension fund’s strong returns in the stock market in recent years.

It is also possible that the increase in fringe benefits is lower, reflecting smaller increases in health care costs that have happened in the Age of Obamacare. Not that the Walker Administration would ever admit this, but it would be quite ironic to see Obamacare’s “bending of the cost curve” be a big reason why they would avoid the inconvenience of having to do a budget repair bill as Walker ramps up his presidential bid. A bid which has as one of its planks….defying and repealing Obamacare.

So this $98 million in Comp Reserves savings seems very ambitious, but if it is to happen, it’s only due to the Obama Recovery on Wall Street and the cost-containment that’s happened due to Obamacare. Hilarious!

The other area to look at is the lapses. The $130 million in additional lapses that is built into Walker’s budget plan for 2014-15 brings that total to $454.8 million for this fiscal year, or 2.87% of the Gross Appropriations. This would be well above the $345.2 million and 2.3% in lapses that we had in the last fiscal year. Outside of a memo by UW System President Ray Cross after word of the major UW cuts leaked out last week, I know of no other agencies that have been put on cost controls (although if I’m wrong, feel free let me know).

With that being the case, I’m wondering where all of these extra lapses might come from. My guess is that the Walker Administration is just hoping and praying and trying to avoid the issue. But I’m betting they won’t be able to do so much longer, as I am extremely skeptical that the revenue estimates that are out there will hold for the last five months of the fiscal year. Again, I’ll direct you to the LFB’s revenue estimate paper from two weeks ago, which counts on a major increase in income taxes starting in January 2015 and carrying through to the end of June.
…Over the remainder of 2014-15, it is anticipated that collections will increase by 15.1% due to several factors. First, refunds for tax year 2014 will be significantly reduced and final payments will be increased because of the decreased amount of withholding taxes paid since last April. Also, beginning in April, 2015, growth in withholding collections should improve significantly because the current-year receipts will no longer be compared to collections that were based on the previous, higher withholding tables. In addition, it is believed that federal tax increases enacted late in 2012 induced taxpayers to realize additional investment income in that year, which otherwise would have been realized in 2013. This is believed to have artificially suppressed collections last Spring, which should lead to a "bounce-back" this year. These positive impacts will be partially offset by the effects of state tax reductions, primarily the decrease in the bottom marginal tax rate enacted in 2013 Act 145 and the continued phase-in of the manufacturing and agriculture credit.
While I agree that the lower tax refunds are going to help the income tax numbers vs last year (but it’ll sure piss off a lot of unsuspecting Wisconsinites), the other parts I’m not so sure about. The “bounce-back” thing, and a 15.1% increase in overall revenues, which will blunt the corresponding drop that will happen due to rent-seekers on those tax credits? I’ll believe that result when I see it.

We should start to get an indication on the revenue figures in the near future, with January’s figures scheduled to be reported in 2 weeks, and the “tax season” months of February, March and April giving the definitive details. If those don’t reach the LFB’s lofty projections, look out below!

To summarize, some of the current-year budget adjustments that the Walker Administration says it will take care of seem to be in reach, particularly involving the Gross Appropriations, and perhaps even the Comp Reserve cuts (with a lot of help from President Obama’s accomplishments). But if the Walker Administration can’t lapse the $109 million extra it says it will, or if revenue figures continue to disappoint as they have in the first 18 months of this budget, then a budget repair bill will have to happen. And there will be very little time to correct the damage, leading to huge short-term cutbacks or budget tricks that have to be played.