Tuesday, March 31, 2015

The mess in Indiana, and why I'm still visiting

As a former resident of Indiana for 7 years of my life, and someone who still has numerous friends in the state, I've got a few added thoughts on the mess in the Hoosier State resulting from the Jim Crow-like legislation that just was signed into law.

First of all, I understand the idea behind the #BoycottIndiana and appreciate the idea behind artists such as Wilco and comedians Nick Offerman and Megan Mullaly in cancelling upcoming performances in the state. This is a bill that is intended to allow discrimination against gay people, and others deemed "undersirable" by a straight white patriarchy. If it wasn't, Indiana Gov Mike Pence wouldn't have said adding GLBT protections "wasn't on [his] agenda", and gave absurd dodges to George Stephanopolous's relatively soft questions in what Charlie Pierce rightfully said "may be the worst performance by a purported human being in the history of television." Oh, if Pence didn't know the bill was bigoted BS, then why he did he cowardly sign the bill in private, and surrounded by people like this?

I'm sympathetic to the boycott concept that many are promoting. It often takes direct damage for a lot of people to wake up and see the injury that blind allegiance to a political party or indifference can cause, and the direct threat is the only way donors will back off their support of these fuckheads. It's a reason I refuse to spend a dime in the 262 area code, and would encourage people to lower their tourism spending in Wisconsin this Summer, so it slaps some people in the face as to just how bad things are under Scott Walker, and makes them realize the consequences of their voting behavior. It is interesting to see the uprisings and anger in Indiana, where people have casually voted Republican because that's what they've always done in those parts, and because debating and talking about issues is divisive and icky. So now you've got something going on that's even more divisive and ickier because you chose not to stand up and do something. We'll see if it has a long-term effect on voting patterns, as while Indiana is a red state, it's not as red as you may think, and if someone goes off the deep end (such as Richard Mourdock saying pregnancy due to rape was "something God intended" in 2012), they are more than willing to vote in a Democrat statewide.

As for me, I am not going to be boycotting Indiana this weekend- I'm still going to go to the Final Four, to see my alma mater make history, and to see my friends. But I'd be completely in favor of huge rallies during this weekend in Indy to keep giving attention to the Jim Crow law, and it should include members from the numerous musical acts that will be performing at the March Madness Music Festival. I think it's often more subversive to work inside the system (such as making statements at the shows about the controversy), and I put this in a different category than Wilco or Offerman and Mullaly, because there is a much larger audience that is much more likely to be casual (at best) when it comes to thinking about political issues.

And it doesn't have to be like Bono going off for 3 minutes in the middle of a show about Africa, but instead can be done with a t-shirt or simple statements along the lines of "I perform for ALL audiences, and I don't cast anyone aside based on their background....Except for hateful a-holes that think they should speak for you. Which they don't, do they?" (Audience goes wild) "Alright, on with the tunes."

I don't know if I'll have time or energy to attend the music festival in Indy (it's a bit away from where I plan to be, but I might see Weezer on Friday afternoon), but I will be intrigued to see who takes advantage of the platform, and how they choose to do so. Interestingly, Offerman is going to perform as a solo artist at IU-Bloomington (which is very progressive and gay-friendly), and donate the proceeds to the pro-LGBT Human Rights Campaign, so there are many options that can be taken by artists even without boycotting. Regardless, I will gladly swing by any rally they have at the Capitol or Monument Circle on Friday or Saturday (both are very close to Final Four festivities), and nod my approval of people fighting against this bigotry.

Yes, politics and common decency are important to me, and boycotts have their place. I might choose not pay for anything this weekend outside of Indy, much like I do with my spending habits in Wisconsin. But being part of an experience with tens of thousands of fellow Badger fans, in support of one of my favorite teams I've ever watched in any sport, in a town I used to live in, and remaking acquaintances in the process? Yeah, I'm doing that, and I plan to have a great time doing so. I think you'll understand.

Monday, March 30, 2015

Tiny property tax cut not worth messing up Wisconsin schools...again

Today was the release of the Legislative Fiscal Bureau's rundown on what property taxes are projected to do in Wisconsin during the two year's of Governor Walker's next budget. It's a clear reminder of the choices that this Governor has made, which value the pose of cutting a few dollars in property taxes over boosting education and quality of life, and I wonder how many Wisconsinites agree with this trade-off, now that we've seen the harmful effects of these choices.

Governor Walker's budget has one provision geared toward lowering property taxes- redirecting added state aids toward schools and turning it into a write-off for taxes instead. And it also includes a budget trick of sending two years of the expanded school aids into one fiscal year, which is the only way both years of the budget can balance under this gimmick.
The Governor's budget bill (AB 21/SB 21) would provide funding increases for general school aids and the school levy tax credit. Relative to 2014-15, funding for general school aids would remain unchanged at $4,476.0 million in 2015-16 and would increase in 2016-17 by $108.1 million (2.4%) to $4,584.1 million. Funding for the school levy tax credit has equaled $747.4 million since the 2008(09) property tax year. The bill proposes an increase in tax credit funding of $105.6 million for both the 2015(16) and 2016(17) property tax years, although the combined amounts ($211.2 million) would be expended in the 2016-17 state fiscal year. This occurs because the increase for 2015(16) would be paid in July, 2016, on the same payment date for credit payments under current law. However, the increase for 2016(17) would be paid in June, 2017, on a new payment date to be created by the bill. Both payment dates are in the 2016-17 state fiscal year. Otherwise, the bill would continue the policies affecting property taxes that were contained in 2013 Wisconsin Act 20, the 2013-15 biennial budget act, and in 2013 Wisconsin Act 145, which increased funding for technical college districts and established a revenue limit for these districts.
And on the surface, the LFB indicates that this move will indeed lead to lower property taxes for the average Wisconsin homeowner, continuing the reductions that happened in this Winter's property tax bills that are the result of a similar gimmick increase in aid for the state's technical colleges that was mentioned above. And neither increase in hundreds of millions of dollars of spending has been offset by an increase in taxes.
Since total values are expected to increase faster than the median home value, the estimated tax change on a median-valued home is less than the estimated rate of change in statewide tax levies. Under the preceding assumptions, statewide net levies are estimated to increase by 0.8% in 2015(16) and by 0.9% in 2016(17). In comparison, the estimated tax bill on a median-valued home is estimated to decrease by 0.3% in 2015(16) and 0.1% in 2016(17). Tax bills are estimated at $2,832 (-$94) for 2014(15), $2,824 (-$8) for 2015(16), and $2,821 (-$3) for 2016(17) under the provisions proposed by the Governor in the biennial budget bills.

The most significant factor leading to the overall decrease in the estimated tax bill for the median-valued home varies by year. For the 2015(16) levy, the proposed increase in the school levy credit reduces taxes on this home by an estimated $33 compared to current law. For the 2016(17) levy, the proposed increase in general school aids leads to an estimated tax reduction on this home of $34 compared to the base funding level for these aids.
But the tax cuts come at what price? Look at all of the school districts in Wisconsin that are facing massive budget cuts for the next school year because of this and other Walker decisions on funding, including the huge amount of districts that are holding voter referenda in 8 days just to keep the lights on and buildings up to date. Madison's request for $41 million to update buildings is merely one of 57 such districts in Wisconsin that are asking the voters for their approval next week.
The largest question in the state is a $49 million construction referendum in Port Washington, while Wausau is asking for $39.5 million for construction projects and to pay for operations. Verona is requesting $8.3 million to buy land for future facilities, while River Ridge in Grant County wants $9.9 million to create one campus in Patch Grove for all grades in the 501-student district.

Other districts in southern Wisconsin are requesting funds just to help maintain educational programming or to retain smaller class sizes. Cambria-Friesland, Highland, Jefferson, Wisconsin Heights and Mauston are among those asking for money to cover operational expenses.

In Benton, one of the state’s smallest districts, requests to exceed the state-imposed spending limits have become a regular occurrence.

Voters in the 255-student school district have approved three-year non-recurring referendums in 2006, 2009 and 2012. If the latest referendum asking for an additional $300,000 in each of the next three years is approved, it would extend the streak to 12 consecutive years.
In its analysis, the LFB is counting on total tax levies for schools statewide to go up 1.2% next year, and down 0.9% this year. Obviously, if these referenda go through, I would think the average homeowners in those districts will be seeing their tax bills go up much higher than that. But if they don't approve, then their public schools and communities suffer, and in some of the smaller districts, may dissolve entirely.

A whole lot of the financial stresses that have led to all of this referenda could be calmed with one simple move- by sending Walker's $211 million in added funding away from property tax relief, and instead send it to the schools themselves. It wouldn't change or raise state taxes one cent, and the LFB estimates that it would only result in seeing the average home have property tax increases of just over 1% each year- well below the expected increase in home values (as Wisconsin finally begins to take part in the Obama Recovery, despite Walker's best efforts). At the same time, it would avoid a whole lot of this dragging down of local communities, forcing hard choices between raising taxes and hurting schools, and causing unneeded strife and wounds that may last beyond April 7.

But noooo, Scott Walker has to strike a pose to claim that he cut taxes to out-of-state rubes voting in GOP primaries in 2016, regardless of what kind of anger and damage that he leaves behind here in Wisconsin. Apparently Scott Walker has yet to understand the wisdom of one Marge Gunderson, who lives in the state that's kicked our ass economically, and understand that there's more to life than a few dollars.

PS- If dollars and cents are more your thing, note this loss in home value during the Age of Fitzwalkerstan. This is from the same LFB reports on property taxes.

Median home value, Wisconsin
2010- $167,974
2013- $147,989
2016 (projected)- $159,205

So were the handful of dollars you saved in one year of property taxes worth the $20,000 in wealth you may have lost in the first three years under Walker, or the $8,700 you'll still be out after 6 years? If your answer is yes, you are one screwed-up dimwit.

Sunday, March 29, 2015

And now...it's time to shake things up in Indy!

What a second half for UW last night. What a likable group that represents my alma mater so well on and off the court. It's mind-boggling to think of back-to-back Final Fours, but I definitely BELIEVE IT!

So now onto Indy (and yes, I will be there). As you may be aware, there have been a bit of a hullaballoo going on in Indiana this week, as dimwitted Governor Mike Pence is getting hammered for signing a bill that basically allows businesses to install Jim Crow rules against gay people. And don't tell me that's not what the law is about- just check out this passage from today's story where Pence says he wants a new bill to "clarify" the just-passed "religious freedom" law.
Asked if that legislation might include making gay and lesbian Hoosiers a protected legal class, Pence said, "That’s not on my agenda."
Well Mike, if that doesn't happen, then I'll guess the NCAA will decide that they don't want any more Final Fours in Indianapolis, and the NFL won't have any more Super Bowls there. And good luck getting young people with talent to keep choosing Indy and NW Indiana as places they want to live in.

But I do think this Final Four is a good spot for equality groups to draw the media's attention to this stupid and hateful law. And if someone asks the UW their thoughts on it, all they have to do is point to this video that they made last year, and a similar video that they played for 80,000 people in Camp Randall every football Saturday. It includes appearances from Athletic Director Barry ALvarez, football's Chris Borland, basketball's Nigel Hayes, and numerous other UW players, coaches and personnel.

Saturday, March 28, 2015

Bucks arena would be straight taxpayer cash, homey

It was hidden through a number of other headlines in the week, but the Wisconsin Legislative Fiscal Bureau released their rundown of how the state's part of funding for a new Bucks arena would work. And some of the answers the LFB gave is quite different than what we've been told.

First of all, there is no specific "jock tax" designated for the arena, as had been characterized by most people previously (including me). Instead, the money borrowed for the arena will simply be paid back through regular General Fund taxes, with the assumption that there will be more of those taxes because the Bucks are still paying big money to its personnel.
No, the proposal would not create a new tax. The "jock tax" refers to the state individual income taxes paid by professional athletes who perform in Wisconsin under current law. Nonresident professional athletes pay taxes on a portion of their compensation for services rendered to the team, based on the share of the individual's "duty days" in Wisconsin relative to his or her total duty days. However, Wisconsin does not tax the wages of individuals who are residents of states with which Wisconsin has an income tax reciprocity agreement (Illinois, Indiana, Kentucky, and Michigan). The state also taxes income earned in Wisconsin by professional entertainers who perform in this state. All income taxes are deposited into the state general fund. None of these provisions would be affected by the budget bill. There would be no specific set-aside of either existing or future taxes from the Milwaukee Bucks or other National Basketball Association (NBA) teams for any purpose.
In fact, the LFB goes on to say that the package is a lot more like the incentives done by local governments to encourage businesses to build or stay in their community, with the Walker Administration arguing that the damage from the potential loss of the Bucks in 2017 is worth the investment of taxpayer dollars.
The rationale advanced by the administration is similar to the arguments used at the local government level in support of using tax incremental financing to pay for infrastructure improvements to support private development. Some have raised a concern that the proposed financing may set a precedent at the state level in that other businesses wishing to improve their facilities or operations may ask the state to subsidize their infrastructure needs using the income tax revenues from their employees to pay for cost of those improvements in exchange for them either retaining or expanding their operations in the state.
Another question that comes up in the LFB's analysis has to do with the Walker Administration's plans to backload much of the payments on the arena's debt, which the LFB says will more than double the ultimate bill that taxpayers shell out.
The bonding scenario outlined...demonstrates that, due to the negative amortization associated with the deferred interest, the total interest costs associated with financing the $220 million would be $268.4 million, including $53.1 million in deferred interest. As a result, under this scenario, the total fiscal effect to the state associated with financing a $220 million grant would be an estimated $488.4 million. The administration's policy decision to structure the proposed bond issue so that the amount of debt service due each year on the bonds would be notionally tied to, or mirror, the additional income taxes results in an amortization schedule that cannot meet the interest due on the bonds in the early years of the transaction and back-end loads the repayment of principal to the later years of the transaction. This results in the bonding transaction having higher overall costs than if the amortization schedule had more uniform annual debt service payments.
There are a couple of alternative schedules floated by the LFB in this paper which includes level payments of $12.7 million over 30 years, which would cost nearly $107 million less in the long run, and a 20-year repayment plan that costs $16.2 million a year, but ultimately saves $167 million over the Walker proposal.

But there's a catch with not going to the Walker plan for borrowing with the arena. The Administration's plan only spends $900,000 in the 2015-17 budget toward the arena, compared to those annual payments of $12.7 million and $16.2 million, respectively. Going with the cheaper long-term plans for the arena will drive up costs in the short term, and as I've mentioned, there are already huge budget constraints and unmet needs- adding these costs would limit things even further.

And if you're thinking that choosing not to pay for the Bucks arena is going to lead to massive savings for the upcoming state budget, that's not quite right. The LFB notes that the Walker budget sets aside over $25 million for debt payments for the arena in 2016-17, but at the same time it expects to give most of that back at the end of the year.
Because there could be principal and interest payments scheduled in 2017-18, the GPR appropriation in 2016-17 ($25,234,500) would be set at a higher level than expected debt service in that year ($2,800,000). Therefore, an estimated $22,434,500 of the appropriated funds would not actually be expended in 2016-17 and would lapse (revert) to the general fund.
So if there was no money sent aside for the Bucks arena in this budget, all that would be saved from the state side is $2.8 million. The real savings comes in the later years (up to $37 million in 2045-46), but the theory is that NBA salaries will keep going up, going beyond the huge ballooning of the salary cap that will hit in the 2016-17 season.

This LFB paper would seem to indicate there is a whole lot of discussion on this issue to come, with financing details to be hammered out, and it may not be able to be resolved by the time the final budget is voted on in May or June. The Bucks still don't have a site and total plan in place as of this time, although the area just north of the arena near the old Park East freeway seems to be the likely spot, with more development associated with it than just the arena. It's at least a step in the right direction so we can see what the whole development is, but these things need to be nailed down fast, because with a tight (okay, deficit-ridden) state budget filled with potential deficits and public unhappiness, using even a few million of regular tax dollars on the Bucks arena project at the expense of needed services is not likely to be looked on favorably.

Vegas on short end of this week's Great Moments in Gambling History

Funny note from Vegas from last night's action in hoops, from the always fun-to-read ESPN Chalk gambling segment. This definitely qualifies high on the list of Great Moments in Gambling History.
Duke guard Quinn Cook made one of two free throws with 0.7 seconds remaining, capping the Blue Devils' 63-57 victory over Utah on Friday in Sweet 16 action in Houston. Duke closed as a 5-point favorite at the majority of sportsbooks, which were rooting for the underdog Utes.

"It caused a million-dollar swing with parlay liability, to the bad," MGM vice president of race and sports Jay Rood told ESPN.

With Duke leading 62-57, Cook rebounded a missed 3-pointer from Utah forward Jordan Loveridge with 10 seconds to play. Utah defenders tried to tie up Cook to force a jump ball, but nothing was called, and it appeared time was going to run out. The Utes started walking off the court. The Blue Devils began celebrating. But officials whistled a foul on Utah guard Brandon Taylor as the horn sounded. The refs went to the monitor and put 0.7 seconds back on the clock, before calling players back onto the floor for Cook's free throws. The senior missed the first one but made the second to give Duke a six-point win.

The favored Blue Devils were a popular public bet. Two hours before tipoff, 82 percent of all bets and 77 percent of the money wagered was on Duke at the William Hill sportsbook. Other books reported similar heavy action on the Blue Devils.
Thursday's Badger game had a similar ending, where the Badgers were 6.5 favorites, but were only up 5 in the last 10 seconds when UNC missed a 3, Frank Kaminsky got fouled, hit both free throws, and then UNC missed a three at the buzzer to give the Badgers a 7 point win, AND THE COVER.

Been a crazy ride for the books this tourney, as they had an incredible opening day of the tourney, but now things have settled back with many favorites not only winning, but covering.

Hopefully that trend of favorites barely covering doesn't hold up today, as Arizona is favored by 1.5 over Bucky in tonight's Elite 8 matchup. Then again, I recall Arizona was a slight favorite going into last year's Elite 8 game with UW, and that ended up OK.

C'mon Bucky, let's do it again!

Friday, March 27, 2015

If GOP leggies want to reduce cuts, where's the money coming from?

So now I see that even the GOP goofballs in the Wisconsin Legislature are signaling that they're going to abandon some of Gov Walker's unnecessary overhauls. This includes plans to keep Senior Care operating as it currently does, as revealed in this story yesterday.
Gov. Scott Walker's proposal to require enrollees in the popular SeniorCare prescription drug program to first sign up for Medicare Part D coverage is dead, the Republican co-chair of the Legislature's budget committee said Thursday.

Walker's idea ran into bipartisan opposition in the Legislature, and the AARP and other groups representing senior citizens strongly disapproved of it. They feared the changes would increase costs for prescription drugs making it difficult for cash-strapped older people to make ends meet....

"I wouldn't say changes are off the table," Nygren, of Marinette, said of SeniorCare. But he said the current structure of the program will be maintained. SeniorCare members whose annual income is less than $18,832 pay $30 per year, as well as co-pays of $5 for generic drugs and $15 for brand name drugs. Costs increase along with a person's income.
Also this month, Assembly Speaker Robbin' Vos and other GOP legislators have indicated that they want to reduce the size of Walker's proposed $300 million in cuts to the UW System. These legislators are starting to understand that they'll have to deal with the consequences of Walker's pose-filled budget, and public blowback and self-preservation are starting to outstrip party loyalty.

There's one problem with the GOP legislators' plans to restore these programs - WHERE ARE THEY GOING TO PAY FOR THIS? If you look at the numbers in Walker's budget, it's held together by a string, even with all the cuts to education and Senior Care and other programs, and with increases in tax revenues of 4.7% next year and 3.8% in 2016-17. I haven't heard those Republicans say anything about raising taxes or even closing any loopholes to raise revenues, so where are those funds going to come from?

Not that I'm really one to help the WisGOPs, but I do have a suggestion if they want to restore some of these funds in order to head off a mass revolt at the polls in 2016. The Wisconsin Budget Project noted that a Walker and WisGOP-supported tax cut for corporations and agribusiness has cost the state much more revenue than anticipated.

The Manufacturing and Agriculture Tax Credit gradually reduces income tax rates for businesses engaged in manufacturing or agriculture. When the credit is fully phased in in fiscal year 2017, many businesses engaged in those activities will not have to pay any state incomes taxes at all, and others will have their income taxes reduced by at least 95%.

The projected cost of virtually eliminating income taxes for manufacturers and agricultural producers has ballooned since lawmakers passed the measure in 2011. This year, the tax cut is slated to reduce taxes for businesses by $152 million, more than twice as much as was originally estimated. Once the tax cut is completely phased in, the credit will cut taxes for business by a whopping $285 million per year, a price tag $156 million higher than originally expected...

Given the poor design of the tax cut and its burgeoning costs, the best thing for lawmakers to do would be to eliminate the tax credit entirely. However, the Legislature’s focus on cutting taxes makes outright repeal unlikely. It would be more politically palatable for lawmakers to compromise by simply halting the phase-in of the credit at the 2014 level. That move would increase state revenues by $226 million over the upcoming two-year budget period, and still give manufacturers a hefty tax cut.
The state's revenue collections for February continue this trend of declining corporate revenues, as they were down 23.2% compared to February 2014, and are now down 9.35% for the fiscal year to-date. A 9.35% decline for the entire fiscal year would leave corporate revenues $60 million below the already-lowered revenue estimates that were in the LFB estimates 2 months ago, and start the state in a lower base, making it even harder to come up with the revenues to reduce Walker's budget cuts.

Regardless of what type of bubble-world Scott Walker and other right-wingers live in, the fact remains that there needs to be some kind of revenues to allow for state agencies to function, and for Wisconsinites to get the services they expect. And barring some kind of unforeseen massive windfall in revenues from tax season (coming from people who hire folks to avoid paying those taxes), there will not be the money available to restore those funding levels under current law. Which sure makes you wonder what other shell game or cuts in other areas can be cooked up by the Legislative GOP to avoid the cuts that their constituents are telling them not to allow.

Wednesday, March 25, 2015

The real damage in Wisconsin- bad wage growth

A lot of attention has been given to Wisconsin's lousy "40th place in the U.S." jobs record that came out as part of last week's release of the Quarterly Census on Employment and Wages (QCEW). And rightfully so, as Scott Walker was elected in 2010 on a promise to improve the state's economy, and is trying to avoid this fact as he talks up his record to out-of-staters as he campaigns for president. But the other element to that report might deserve even more attention, as Wisconsin was even worse when it came to wage growth (42nd in the nation), with average wages barely keeping pace with inflation, and Wisconsin's middle class being hollowed out. And Walker's recent signing of (right-to) work-for-less legislation will only make this trend of lagging Wisconsin wages even worse.

Here are four statistics form the QCEW that illustrate Wisconsin's awful record on wage levels, and its lack of wage growth.

Average private sector weekly wage, Sept 2014
Ill. $982
Minn $971
Mich $881
Ohio $846
Wis. $809
Ind. $797
Iowa $783

Change in avg. weekly private sector wage, Sept 2013-Sept 2014
Iowa +3.87%
Ohio +3.30%
Ill. +3.15%
Minn +2.75%
Mich +2.44%
Ind. +1.79%
Wis. +1.76%

Sure doesn't look like skyrocketing wages were a problem in Wisconsin, were they? Sure makes you wonder if that was a reason why the Legislature and Walker slammed through work-for-less in the rushed manner that they did. Or maybe it was Walker's desperate attempt to curry the favor of the oligarchs at the 21 Club in NYC, since he and the Legislature changed course on work-for-less right after Scotty hung out with them on one of his campaign trips.

This is especially true when you look at Wisconsin manufacturing, which already paid some of the lowest wages in the Midwest, and those wages weren't going up by very much. In fact, these lists might help explain the fictional Wisconsin "wage gap" that greedy business owners constantly harp about, because the problems these places have in finding workers are really a reflection of the better wages that are paid Wisconsin's neighbors in Illinois and Minnesota attracting talent.

Average weekly wage, manufacturing, Sept 2014
Ill. $1,189
Minn $1,167
Mich $1,157
Ind. $1,050
Ohio $1,048
Wis. $994
Iowa $986

Change in avg. weekly manufacturing wage, Sept 2013-Sept 2014
Ill. +4.76%
Ohio +2.85%
Iowa +1.97%
Ind. +1.94%
Minn +1.92%
Wis. +1.84%
Mich +0.35%

Hmm, how's that "work-for-less" thing working out for Michiganders that work in manufacturing? Oh wait, it's working EXACTLY how the greedheads want it to.

Now combine the weak wage growth with the numerous about of corporate tax cuts that have been handed out by Walker and the Wisconsin GOP over the last four years- tax cuts that are leading to higher-than-expected rent-seeking, and exploding budget deficits. Combine that with the weak wage growth, and it tells you that Wisconsin workers were already being ripped off, with the gains from their productivity being redirected to their bosses, even before work-for-less passed.

The result is the speeding up of a bad trend of increasing inequality in Wisconsin since the start of the Bush years, resulting in the Pew Charitable Trusts releasing information this week showing that Wisconsin has lost more people out of its middle class than any state in the nation since 2000. This "middle-class" figure is defined as households that make between 2/3 and 2 times the median household income, and as you can see, despite real median household income dropping, we still saw this large exodus out of the middle class.

Median household income, Wisconsin, 2013 dollars
2000 $60,344
2013 $51,467

% of households with "middle-class" income
2000 54.6%
2013 48.9%

So explain to me how this trend of stagnant wages and higher inequality is going to be reversed by doubling down on the same anti-worker, trickle-down BS that landed us in the mess we stand in today in Wisconsin? Someone should ask that of our fair Governor as he galavants around the country, since he still, you know, pulls a paycheck from us.

Tuesday, March 24, 2015

In politics, Menard's gets a great deal from you!

Isn't it sad that it takes national writers to give the real story about what is going on in Wisconsin during the Age of Fitzwalkerstan? That example was borne out today with this story from Michael Isikoff in Yahoo News, who gave us more information about the source of money that was behind Gov Scott Walker's survival in the recall election of 2012, and why there's a John Doe investigation against Walker and his buddies today.
So a little more than three years ago, when Menard wanted to back Wisconsin Gov. Scott Walker — and help advance his pro-business agenda — he found the perfect way to do so without attracting any attention: He wrote more than $1.5 million in checks to a pro-Walker political advocacy group that pledged to keep its donors secret, three sources directly familiar with the transactions told Yahoo News.

Menard’s previously unreported six-figure contributions to the Wisconsin Club for Growth — a group that spent heavily to defend Walker during a bitter 2012 recall election — seem to have paid off for the businessman and his company. In the past two years, Menard’s company has been awarded up to $1.8 million in special tax credits from a state economic development corporation that Walker chairs, according to state records.

And in his five years in office, Walker’s appointees have sharply scaled back enforcement actions by the state Department of Natural Resources — a top Menard priority. The agency had repeatedly clashed with Menard and his company under previous governors over citations for violating state environmental laws and had levied a $1.7 million fine against Menard personally, as well as his company, for illegally dumping hazardous wastes.
Yes, that $1.8 milllion in "special tax credits" that Menard's got was through the Wisconsin Economic Development Corporation (WEDC). Keep that in mind for later.

Isikoff's article goes on to describe the money-laundering operation that Wisconsin Club for Growth ran for Walker, as well as the oligarchs that chipped in to help the cause, without having to sack up and put their names behind their donations.

Now you can't tell me that the Madison and Milwaukee newspapers that have been covering John Doe and WEDC for 4 years didn't have a clue about this. Which makes you ask "Why didn't they report the story?", and did that reason have to do with the promises of millions of dollars of Scott Walker ad money? (looking at Journal Communications' blowout Fourth Quarter earnings from 2014, I'd say signs point to "YES.")

It also reiterated two other themes I have constantly hit on during this disastrous reign in the Age of Fitzwalkerstan.

1. John Doe 2 at its core is a money-laundering case, with the extra bonus of hiding the names of campaign contributors, which keeps people in the dark when they get kickbacks like WEDC tax credits. That's why Club for Growth is fighting it so hard- because any charges and trials that come from it would reveal the money train, and expose the cycle of "campaign donation- tax cut- additional donations" that have helped to increase inequality in this country over the last 35 years.

2. WEDC is an absolute mess, both ethically and in competence of operations. Yes, those paying attention knew that already, but Walker made an incredible statement to the Journal-Sentinel today on the subject (in a story that's conveniently buried in their news feed and off the front page).
In 2013 and 2014, the Wisconsin Economic Development Corp. chaired by Walker awarded Menard's namesake chain of hardware stores up to $1.8 million in tax credits. The governor and his aides responded that he had not been directly involved in those awards.

"I haven't engaged in any of that and there's going to be lots of stories going forward," Walker told a reporter after a meeting of the state Building Commission.
Walker's spokesmodel also is quoted in the Isikoff article claiming that the donation to Club for Growth and the resulting tax cuts were total coincidence. The problem with those statements is that Walker is THE CHAIR OF THE WEDC BOARD and has been since it started in 2011. How the hell wouldn't he know about what he was approving of as the head of the group that signed off on those tax credits. And not having a clue what's going on under your nose really isn't an attractive attribute for someone asking to be president, isn't it?

By the way, WEDC is still literally throwing millions of taxpayer money away without having a clue where it went or what it was ultimately used for, as we saw again last month.
Assembly Minority Leader Peter Barca, D-Kenosha, issued a letter Thursday urging the Wisconsin Economic Development Corp. to hire an acting chief financial officer after previous CFO Stephanie Walker left in January. She was the organization’s fourth CFO since its creation less than four years ago.

Barca said the hire is critical because WEDC has had problems tracking state loans and grants. A May 2013 audit found the quasi-public agency was not following state law in how it was keeping tabs on millions of dollars in taxpayer subsidies, and earlier this week the Milwaukee Journal Sentinel reported that the agency continues to have difficulties despite assurances that the problem had been addressed.
Hmm, untraceable donations to Walker turn into unaccountable millions handed out to Walker donors corporations through WEDC. And as Isikoff's story from today shows, WEDC is still proving to be a nice source for Walker contributors to see some return on their investment, which makes me wonder just how much info is in the unreleased parts of the John Doe investigation that will be discussed before the Wisconsin Supreme Court next month.

Not that I expect the paid-off Wisconsin media to draw these connections too deeply, but maybe Isikoff's article is a sign that the national media will ask the questions that have gone dormant far too long, and perhaps we will see pay-for-play corruption brought into the light that we previously only saw from Illinois (once upon the time, we took pride in our politics being cleaner than what those FIBs did). And if Walker's presidential run starts faltering as the state's economy and budget has faltered, is it possible that some big-name GOPs might throw Scotty overboard before he destroys the GOP on the national ticket in 2016.

Monday, March 23, 2015

A strong dollar and lower rates? Not all that good

A couple of good articles on Econbrowser I want to point you toward from recent days dealing with the always-nerdy but often-important issue of foreign exchange and interest rates.

The first is from UW Professor Menzie Chinn, who talks about the strengthening of the US Dollar over the last 8 months, and why that may not be as good for the economy as that connotation sounds.
The US trade deficit has shrunk considerably since its peak of 5.9% of GDP in 2005Q4. It was 3.1% of GDP as of 2014Q4 (second release). The non-oil trade deficit has exhibited a much smaller decrease; the 3.8% deficit has shrunk to 2.1% as of last quarter. Notice that the real value of the dollar, lagged two years, has an inverse relationship with the trade balance. Hence, eventually, it makes sense that the deficit will eventually deteriorate (relative to counterfactual) as a consequence of the recent appreciation....

As in previous instances, I rely on statistical models of trade flows, taking into account at a superficial level vertical specialization and heterogeneity. Imports depend on domestic GDP and the real value of the currency; exports depend on foreign economic activity and the real value of the currency. Since oil imports and agricultural exports are primarily denominated in dollars, I omit these flows from the calculations. In this paper, I find the long run (in a statistical sense) elasticity of nonagricultural exports of goods with respect to the real exchange rate is 0.690 (Table 2), and nonpetroleum imports of goods elasticity is 0.446 (Table 3). These estimates are obtained using dynamic OLS (DOLS), following Stock and Watson (1993). Assuming the 20% appreciation is sustained, then exports are about 13.8% lower than they otherwise would be, and imports about 8.9% higher.

Given that nonagricultural exports are 1349 billion Chained 2009$ (SAAR), and nonpetroleum imports are 1976 billion Chained 2009$ in 2014Q4, then such changes would be equivalent to 174 and 184 bn Ch.09$ at annual rates. This implies about a 2% decrease in the level of real GDP, relative to what it otherwise would be (assuming a multiplier of unity). Obviously, the impact of the 20% appreciation would take some time to affect flows, so the impact on GDP growth would be relatively small per quarter.
Simply put, the stronger dollar makes imports cheaper, which encourages more of them to come in, and lowers exports for US businesses. We may already be seeing some of that, as January 2015 had a drop of $3.7 billion in exports compared to January 2014, with very little change in overall imports to offset it. To boot, those exports figures were down $5.5 billion (around 4%) on a seasonally-adjusted basis from December 2014. That may be just a one-month blip, but with the dollar staying strong through the middle of March, lets see if February holds up with that trend.

Also on Econbrowser is James Hamilton from UC-San Diego, and he mentions last week's meeting of the Federal Reserve, which cheered markets by seeming to take a wait-and-see approach on raising interest rates off of its current near-zero level.
It’s also worth noting that the median FOMC “longer run” interest rate prediction came out at 3.75% from both the December and the March meetings, though the distribution of the individual “dots” from the latter has clearly drifted down. With a long-run inflation objective of 2%, that implies an equilibrium real interest rate of 1.5-1.75%. Compare that to the yield on a 10-year Treasury inflation-protected security that is now below 20 basis points.

All of which raises the question: does the Fed know something the market doesn’t, or vice versa? Tim Duy concludes “it is now clear the bond market is not moving toward the Fed; the Fed is moving toward the bond market.” But my answer to the question is: a little of both. Based on the historical evidence reviewed here I think it’s reasonable to expect an equilibrium real rate significantly above 0.2% and significantly below 1.5%. But given my own (and everyone else’s) uncertainty about exactly where the number is within that range, it makes sense for the Fed to wait a little longer before raising rates.

And as Menzie pointed out last week, international developments are leaving the Fed little choice. One important channel by which monetary policy can influence the Fed’s targets for output and inflation is through the exchange rate. A higher interest rate in the U.S. than in other countries means a stronger dollar. That makes it harder for the U.S. to export goods and makes imports more attractive, both of which mean a drag on U.S. GDP. And insofar as a stronger dollar means a lower dollar price for internationally traded commodities, it also takes us farther below the Fed’s 2% inflation target. When other countries are lowering their interest rates, that by itself tends to bring down U.S. output and inflation, and mitigates any argument for raising U.S. interest rates.
And note that the yield on the 10-year note has been diving over the last 2 1/2 weeks.

10-year T-bond closing yield
March 6 2.24%
March 23 1.91%

We're now closer to the low of 1.67% that we saw on Feb. 2 than the 2.24% high of March 6. But the strong dollar would indicate that interest rates should go up (because it makes foreign investors less likely to buy our more expensive debt). So does that mean the dollar goes down to match the lower interest rates, or the dollar stays strong, and rates eventually slide up? Or is there a third option, that shows that the economy is slowing down and that there's more slack in the labor market than the Fed originally thought, so they have to keep things low and keep the cocaine party on Wall Street rolling.

I think we're going to find out pretty soon, but there's been an odd push and pull in the currency and debt markets in recent weeks.

UW System cuts having an effect, even before they're law

Even though Gov Walker's debilitating budget has yet to be agreed to by the Wisconsin Legislature or signed into law, that doesn't mean the universities in the System aren't already taking steps to deal with the Governor's pose job. An example showed up in the Eau Claire Leader-Telegram over the weekend, where UWEC administration has reacted to the proposed cut and other revenue reductions by giving buyout offers to 324 faculty and staff.
The separation incentives, which call for an unspecified number of faculty and staff to receive a one-time payment of 50 percent of their base salary in return for voluntarily leaving the university, represent one tool UW-Eau Claire administrators plan to wield in absorbing a massive projected budget cut.

While the Legislature has not made decisions yet on GOP Gov. Scott Walker’s proposed $300 million reduction in UW System funding over the next two years, UW-Eau Claire Chancellor James Schmidt said the time frame is too tight — the new state budget is scheduled to take effect July 1 — to respond after a final budget passes.

UW-Eau Claire is projected to lose $13.74 million in revenue over the next two years, with a $7.6 million decrease next year, under the current formula that divides state funding among universities. That comes after a $4.5 million base reduction the campus already faced from a previous budget cut.

Though Schmidt stressed that he believes cutting higher education funding that much is “terrible public policy,” he told the Leader-Telegram editorial board last week he doesn’t have the luxury of waiting to see how the Legislature might adjust those numbers.
This is the reality of having to run your business while arrogant legislators decide to play around with their funding. In addition to the cuts, another problem is that Gov Walker is proposing to freeze in-state tuition, which causes a double-whammy when funding from the state is being cut at the same time, and costs of everyday operations continue to rise.

So without the revenues and staff, the System can't plan to offer as many classes as normal (this is especially a problem because students have been signing up for Fall classes over the last month), and it jeopardizes other initiatives that the System and the Legislature might want to do. An example is the headline story in today's Wisconsin State Journal, which says that the budget constraints reduces the chances that high schoolers will be able to take classes for college credit next year.
The University of Wisconsin System will no longer cover the cost of a dual-enrollment program for high school students to earn college credit.

The Wisconsin State Journal reports school districts were told by UW System President Ray Cross that they would have to pay for the program next year. The system is facing $300 million in budget cuts in Gov. Scott Walker's proposed budget.

The program, which was approved by lawmakers two years ago, allows students to get college credit for high school courses that match classes at UW campuses. About 7,400 students take part in the program...

Cross said districts, which typically partner with one UW System campus, can negotiate lower tuition costs. The Middleton-Cross Plains Area School District negotiated a rate of about $30 for each credit with UW-Oshkosh, amounting to a cost of $70,000.

"We had already decided that if something didn't change, we would be unable to offer this option for students next year because the cost would have been at least $350,000," Middleton district spokesman Perry Hibner said.
You can bet a lot of other schools won't be able to get or afford the lower rates that the Middleton district is shelling out for, and so the students in those districts won't be able to get a jump in their college careers. This is especially true because Walker's budget is also set to cut aids of $150 a student for K-12 schools, which is leading to massive deficits across the state, and "extras" such as allowing students to grab college credit will likely be one of the first things to go.

So now we have students entering the UW System with fewer credits and college experience to their name, inevitably making them pay for more credits to graduate, and possibly extend their stay in school for another semester or two. Which means more resources are required to teach more students, but the state is refusing to pay their share of those needs, which means it becomes less likely for pay for high-level instructors and offer required classes for the students when they need them. And then the downward cycle repeats.

And for what? So corporations can get another tax cut that leads to more profit hoarding and rent-seeking. And we end up with more stagnant wage growth for future workers that are generated from a declining UW system? How in the world is this the right direction to take?

This is why I got infuriated when I read the tweets from GOP legislators congratulating UW hoops for making their 4th Sweet Sixteen in 5 years, and propping Stevens Point for winning the Division 3 title. Yeah WisGOPs, it is pretty cool to see our college hoops continue to dance in March, but I'd rather see you sticking up for the 140,000 students and tens of thousands of workers at the universities that house those hoops teams, instead of driving down one of the few economic advantages that this state has.

Sunday, March 22, 2015

Grumpy NCAA rant on a gloomy Sunday

As I hang around the house on a cold, dreary Sunday waiting for the Badgers to play tonight, these tweets sort of sum up what I'm thinking right now.

Sports bar industry has to be hating this, too. The way these game times are set up, it's only worth it to get to sports bars to see multiple games after 5pm on Saturday and Sunday, and a whole lot of people aren't going to make that kind of effort. And why the hell are we having games that tip on 9pm on a SUNDAY? So ratings are manufactured to be 2 points higher in prime time? As I mentioned last year, between that and the extra-long TV timeouts, CAN WE STOP THE GREED ALREADY and not chase the last dollar for once, NCAA?

Sorry, just an "old guy" rant that comes to my mind as it's 3:30 and my only option for March Madness is to see Duke hammer on an overmatched San Diego State team in front of a home crowd in Charlotte.

Why isn't the progressive People's Budget getting press?

Let me jump off of my previous post regarding Paul Krugman's column on the Congressional GOP's fiscal fraud. If you watched the dreck that is Sunday talk shows, you might not think there are other ideas out there on how our federal government should tax and spend. For example, there is The People's Budget, which was released by Rep. Mark Pocan and the rest of the Congressional Progressive Caucus at the same time as the GOP's budgets, and it takes a very different direction than the cynicism and austerity of the GOP budget.
The People’s Budget closes tax loopholes that companies use to ship jobs overseas. It creates fair tax rates for millionaires and provides needed relief to low- and middle-income families. It invests in debt-free college, workforce training and small businesses within our communities, helping return our economy to full employment and giving a raise to Americans who need it most. Investments in The People’s Budget boost employment and wages by addressing some of the biggest challenges of our time: repairing America’s rapidly aging roads and bridges, upgrading our energy systems to address climate change, keeping our communities safe, and preparing our young people to thrive as citizens and workers.

A fair wage is more than the size of a paycheck. It’s having enough hours, paid overtime, sick and parental leave, and affordable health and childcare. It’s being able to afford a good education for your kids and never living in fear that your job will be sent overseas. It’s knowing you can make ends meet at the end of the month. The People’s Budget helps achieve that with a raise for American workers, a raise for struggling families and a boost to America’s long-term global competitiveness.
And oh yeah, the Economic Policy Institute scored the items in the People's Budget and found that not only would the People's Budget add 4.7 million jobs this year through direct investment and hiring, but unlike the GOP's budget, the People's Budget actually will reduce the deficit after that and manage the debt.
Reduce the deficit- in the medium term. The budget increases near-term deficits to boost job creation, but reduces the deficit in FY 2017 and beyond relative to CBO’s current law baseline. The budget would achieve primary budget balance (excluding net interest) and sustainable budget deficits below 2 percent of GDP in FY2017 and beyond.

Target a sustainable debt level. After increasing near-term borrowing to restore full employment, the budget gradually reduces the debt ratio to a fully sustainable 66.0 percent of GDP by Y2025. Relative to current law, the budget would reduce public debt by $3.2 trillion (11.6 percent of GDP).
So explain to me how this proposal and past People's Budgets get little to no media coverage, while Paul Ryan's "magic asterisks" and other absurd, failed assumptions are held up as "deep thoughts worthy of discussion" that get Purty Mouth Pau-Lie a seat at all the Sunday talk shows? Especially when the People's Budget is more fiscally sound and has ideas that are supported by more people when you put the options to them in polls?

The answer to that question lies in who owns the media, and who pays for the ads in the media. And it's why a "balance in media" movement needs to happen sooner than later.

Today's Sunday read- Krugman on GOP fiscal "fraudsters"

Required reading this weekend from the New York Times' Paul Krugman on the absurdity of the recently-released budgets by the House and Senate GOP. Here are just a few samples.
So, about those budgets: both claim drastic reductions in federal spending. Some of those spending reductions are specified: There would be savage cuts in food stamps, similarly savage cuts in Medicaid over and above reversing the recent expansion, and an end to Obamacare’s health insurance subsidies. Rough estimates suggest that either plan would roughly double the number of Americans without health insurance. But both also claim more than a trillion dollars in further cuts to mandatory spending, which would almost surely have to come out of Medicare or Social Security. What form would these further cuts take? We get no hint.

Meanwhile, both budgets call for repeal of the Affordable Care Act, including the taxes that pay for the insurance subsidies. That’s $1 trillion of revenue. Yet both claim to have no effect on tax receipts; somehow, the federal government is supposed to make up for the lost Obamacare revenue. How, exactly? We are, again, given no hint.

And there’s more: The budgets also claim large reductions in spending on other programs. How would these be achieved? You know the answer.
It'll be done by magic, I tell you! Actually, Krugman knows the real answer, as do you- it'll run up the deficit and country's debt to the point that massive cuts in Medicare/Social Security, infrastructure, and regulatory agencies like the EPA and IRS will "have" to happen, making it easier for GOP donators to get what they want. It's classic "starve the beast" cynicism, without having to admit that's what you're doing to the public.

And Krugman wisely says that these moves go past the magical thinking of the Laugher Laffer curve which thinks that tax cuts will somehow raise revenue and "pay for themselves" (we've seen how BS that is here in Wisconsin, as the revenue shortfalls and low wage growth continue to pile up). Instead, Krugman says it's a way to move income and wealth away from the majority of us, and send those gains to the "inner circle" who donate to GOP politicians and run the party.
But I’m partial to a more cynical explanation. Think about what these budgets would do if you ignore the mysterious trillions in unspecified spending cuts and revenue enhancements. What you’re left with is huge transfers of income from the poor and the working class, who would see severe benefit cuts, to the rich, who would see big tax cuts. And the simplest way to understand these budgets is surely to suppose that they are intended to do what they would, in fact, actually do: make the rich richer and ordinary families poorer.

But this is, of course, not a policy direction the public would support if it were clearly explained. So the budgets must be sold as courageous efforts to eliminate deficits and pay down debt — which means that they must include trillions in imaginary, unexplained savings.

Does this mean that all those politicians declaiming about the evils of budget deficits and their determination to end the scourge of debt were never sincere? Yes, it does.

Look, I know that it’s hard to keep up the outrage after so many years of fiscal fraudulence. But please try. We’re looking at an enormous, destructive con job, and you should be very, very angry.
Yes, you should be angry. The fruits of your work ethic are being stolen, but it isn't the poor minorities that are being the takers. We know the corporate media won't say these facts, but maybe some more Dems should do so, and start the fire from below.

Saturday, March 21, 2015

House winning big in Vegas this weekend

Interesting article from ESPN's Sports Gambling writer, David Purdum today. Looks like the Las Vegas casinos did some good business for the first round of March Madness.
Favorites were winning, but they weren't always covering the spread. Underdogs went 8-8 against the spread Friday and were 20-12 against the spread over the first two full days of the tournament.

Thursday was huge. One sportsbook said Thursday was its biggest single-day win in memory.

"Epic day, absolutely," Jay Rood, vice president of MGM race and sports, said of Thursday. "Tough day for the players coupled with the fact the books did well Wednesday, too."

"Yesterday was amazing," Dave Pemberton, director of specialty games for Caesars Entertainment, added Friday night....

The betting public isn't at its most sophisticated in March, when spring break collides with the NCAA tournament in Las Vegas. The public normally fancies the favorites and parlays at long odds. When underdogs go on runs, like they did Thursday, the books win big.
On the flip side, Purdum notes that after the crazy afternoon session on Thursday, the tournament hasn't had as much Madness in terms of who has advanced, with the Vegas favorites winning 25 of the last 26 games that have gone final. But as Purdum notes, lots of covers by underdogs who lost (such as we saw in the Badgers' game, who failed to cover when their scrubs turned the ball over twice in the final minute against Coastal Carolina), which usually is a big winner for the books

As for my bracket, lousy first day (like many people), and pretty good second day. Only missed 1 game and still have 14 of my Sweet 16 and all of my Final Four around. I don't have any cash on it so far, and Bucky cruised yesterday. Now I'm just recovering and getting ready to gear it up again this evening (although having 6 games after 5pm on Saturday and Sunday is kind of BS).

Happy 2nd round, all!

Hey Dems, listen to Sen Vinehout

This is a great interview with State Senator Kathleen Vinehout on Wisconsin Eye, talking about the upcoming election for a new Chair of the Democratic Party of Wisconsin and what the Dems have to do to win state elections in the near future.

The good stuff starts around 7:30, where Vinehout starts calling out the "consolidation of power" within the top reaches of the DPW. She clearly despises the Mike Tate/Jason Rae wing of the party (the pro-corporate, consultant-driven group, based mostly out of Milwaukee). She point-blank says "We cannot win statewide just by turning out Madison and Milwaukee." And I think Vinehout's right. It's no coincidence that Barack Obama won many more counties in 2012 than Tom Barrett did in 2010 and 2012, and Mary Burke did in 2014.

Here's the red-blue map of Wisconsin for Obama vs. Romney in 2012.

Now compare that to the 2014 governor's race with Scott Walker and Mary Burke.

Notice the number of counties in Western Wisconsin that shift from blue to red, and how much deeper the red gets in Northeast Wisconsin. This is where the Party has badly fallen down, and it's even worse when combined with the large GOP majorities that exist in the Legislature today because of this voting pattern.

It's interesting that Vinehout openly says that she feels she was a better candidate than Mary Burke for governor, and would have run if not for her auto accident that messed up her arm in late 2013. Around 20:30, she starts talking about how the Democratic Party needs to be built from the bottom-up, and that there are big-money interests that are trying to control the party and its direction, and around 24:30, Vinehout explains why Scott Walker won Governor's elections in her home county, despite the top issues being "rural schools, health care, and agriculture...and the environment," issues that Walker is weak on compared to what the people in those communities believe in (to say the least).
"What we have is a disconnect between the will of the people and their voting patterns. We can see that in all the referenda that passed around the state, people want us to take the [expanded] Medicaid money, they want us to cover the poor, they certainly want us to help the frail elderly and disabled like Scott Walker's not - he's privatizing Family Care and doing away with the IRIS program. But people want their rural schools, we can see that in referenda after referenda has been passed.

So how is it that we change this? I believe the Democrats have an obligation to reach out to the people that need information to square their opinions with how they're voting. I cannot fault the people in Buffalo County for voting against what they feel are their own values and what they care about if they don't have the information. And I hear so many people from Madison and Milwaukee say "Oh my God, those people are just voting against their own interests." Hey, let's talk about why.

-State Sen. Kathleen Vinehout
And Vinehout goes on to mention that in Western Wisconsin, the Madison-Milwaukee media complex really doesn't sink in, and she describes a "great chasm" of information that doesn't reach people's everyday lives.

While I disagree that the people aren't entirely blameless here (you are ultimately responsible for what you vote for), I agree that the Dems have not done their job in connecting the pro-Dem opinions of the people to Dem politicians. And Dems don't do enough to sell and explain that connection. They could have had a simple message for the 2014 elections that said "If you want Badgercare expanded at lower cost to the taxapayer, and you want your schools and UW System to continue to be funded, vote for Mary Burke." They never explicitly did that, and sat on their backsides and expected people with 20 other priorities in their lives to try to figure it out. And many don't have the time or energy to figure it out, especially in non-presidential years, so they either vote for something they can tangibly know and deal with (guns, property taxes, resentment), or they don't vote at all.

The Dem Party needs to change this outcome, and fast. Certainly this awful Walker budget is a place that can add to engagement and get people willing to hear a new and better direction (take a look at the huge amount of citizens that came out for Budget Hearings in Brillion and Milwaukee this week), and if Dems have any brains, they should be the ones that say "We won't allow this to continue if we're in power." It's not like Scott Walker has a huge base of supporters in the overall electorate- Scotty has never received as many Wisconsin votes in any of his three elections as Mitt Romney did while losing by 7% in 2012, and only once has received more votes than John McCain did in 2008 (and McCain lost by 14%). So while Walker's supporters may be loud (or were), they aren't as many as their yard signs indicate, and it's the Dems' job to get their message out to casual voters and remind them who really shares their values.

Given that Kathleen Vinehout has won 3 elections in swingy territory, and Mike Tate went 0-for-3 in Governor's elections as the Chair of the DPW in office, maybe we should listen to her over Tate or consultant-driven hotshot clones like Jason Rae. I don't know if I'd necessarily follow Vinehout's endorsement of Sheboygan's Martha Lanning for Chair, but I do think it's time for someone with a knowledge of smaller-town Wisconsin to carry the message and organization from the state, because the city-centered, often pro-corporate mentality that has happened to the party in recent years isn't getting the job done.

Friday, March 20, 2015

QCEW shows Walker job record as bad as ever

Was busy watching hoops and drinking with friends yesterday (like all good Americans should on the first weekend of March Madness), so I couldn't chime in with the release of the Quarterly Census on Employment and Wages- the report Scott Walker claimed was the "gold standard" of job numbers because of its more complete sample. Well, this is problem with being as serially deceptive and spinning as Walker, because inevitably your spin comes back to bite you in the ass.

Here's the quick and dirty from yesterday's release.

Wisconsin rankings out of 50 US states Sept 2013- Sept 2014
Private sector job growth: 40th (+1.157%)
Total job growth: 38th (+1.056%)
Private sector average weekly wage growth: 42nd (+1.761%)

And DEAD LAST IN THE MIDWEST for all three categories for that time period. And yes, I know the Walker DWD "coincidentally" released numbers yesterday morning that showed huge job growth in February and positive revisions for January, but forgive if I'm skeptical, because let me remind you of what Walker's DWD was releasing about the September 2014 jobs figures, which was the last release before the November 2014 elections.
Highlights of today's BLS report of state-by-state employment and unemployment estimates (seasonally adjusted), which are each based on monthly surveys, include:

•Wisconsin's seasonally adjusted unemployment rate decline to 5.5 percent in September 2014 from 6.6 percent in September 2013 was statistically significant, and the state's September rate ranked 17th in the country (tied), outperforming four Midwest states.
•Wisconsin ranked third in the Midwest for rate of private sector job growth year-over-year.
•Wisconsin's 12-month gain in total nonfarm jobs ranked ahead of Iowa, Illinois, Michigan and Ohio.
And now we know THOSE LAST TWO CLAIMS WERE PROVEN NOT TO BE TRUE, as the QCEW shows that we were behind every Midwestern state for job growth. I'm not saying Walker's DWD was lying before the election, I'm just saying that the information wasn't yet known. ANd I'm saying, we deserve the right to be skeptical of the alleged runup in jobs reported in Wisconsin over the last 5 months, as Walker tries to take credit for a "Wisconsin turnaround" on the campaign trail, because the last 4 years of Walker's record shows that Wisconsin is still brutally lagging.

I'll have more detail on this report later on, maybe when the hoops dies down a bit. But let's see if a few people start asking real questions about our Governor and his "40th place in the US" job ranking.

EDIT: Here are two updated charts showing the rate of private sector job growth over the last 4 years measured. You can see that Wisconsin's private sector job growth peaked around March 2011- the month that Act 10 was passed. And the trend noticeably started declining around September 2011, as Scott Walker's and WisGOP's first budget took effect.

Wednesday, March 18, 2015

Walker education cuts damaging places that voted for him

It's clear that the "tools" that were part of Act 10 aren't near enough to handle Scott Walker's budget cuts, and a huge amount of school district officials testified to that effect to the Joint Finance Committee today in Brillion. These district officials said that Walker's budget is a debilitating blow that comes on top of numerous hits that district funding has taken over the years, and an example of the type of concerns voiced to the JFC members was this testimony from Shawano School District's Business Manager, Louise Fischer.
Using the current budget numbers with zero increase in the revenue limit, Shawano’s structural deficit amounts to over $600,000 for fiscal year 15-16. In addition, the per pupil categorical aid was totally eliminated in year one. This categorical aid was implemented in the last state budget to address the small increase on the revenue limit worksheet given districts then. In a nutshell, our structural deficit ballooned from a difficult $600,000 to an inconceivable $960,000.

As 3/4 of our budget is comprised of personnel costs, it can be assumed ¾ of our budget reductions need to be in personnel. Our administration team compiled a list of potential budget reductions that will impact approximately 25 personnel. I speak for my administrative team when I say the process was gut wrenching when determining whose lives these decisions impact, not only in staff layoffs but in student achievement.

It has been reported the budget in its current form will save the taxpayer $10-15. Honestly, are any of us going to hold this budget, the Governor or you in high regard because it saved us the cost of a Friday night fish fry? This $10 is insignificant to the taxpayer and devastating to a school district. I cannot comprehend how cutting public school funding this deeply benefits anyone.

The voucher system takes money from public schools. My personal contention is private schools, when receiving my taxpayer dollars, need to be held accountable, adhering to all the same standards, including open records that public schools need to adhere to and accept ALL students, no matter their needs, that wish to attend private school.
And Shawano's hardly a liberal part of the state, as Shawano County gave 65% of its vote last November to Scott Walker. Wonder what the locals think about that decision today?

And they are far from the only red-voting areas who are seeing their schools in major danger of severe cutbacks. The pro-Walker Milwaukee Journal-Sentinel had a long, front-page story this week talking about the numerous struggles around the state, including Walker's own home district in Tosa, and numerous districts across the Baggerland of Waukesha County. And these problems are directly related to Walker's pander decision to restrict state aid increases to property tax relief, alluded to by Ms. Fischer in Shawano, which disallows the schools from using extra funding for services or paying staff.
On top of that, the budget eliminates a special $150 per pupil aid payment that Wisconsin school districts received over the past two years. That appropriation was added by the Legislature in the last budget as a way to give a bump to schools without raising property taxes.

Walker has proposed returning the aid payment in 2016-'17 at $165 per pupil, but over the two years, the net effect is $135 less per pupil than what schools received in the last budget.

"We are very concerned about the lost aid," Wauwatosa Superintendent Phil Ertl said. "We are looking at approximately $900,000 in lost aid this year."

The Waukesha School District is projecting nearly $2 million in lost aid, which would result in a projected $3.7 million deficit for the coming year, officials said. The Oconomowoc Area School District would lose nearly $800,000. Menomonee Falls projects a loss of almost $600,000.
And hate to tell you guys in Waukesha County, but no one's living in Cooney or the Falls due to the swinging night life. So if the schools go downhill, your community becomes a ghost town that can't attract anyone under 50. Maybe you should have thought about that before you voted for Walker based on racist AM radio hate his "low-tax fiscal conservatism."

Let's see if the members of the Legislature (who actually have to face the people, as opposed to our absentee Governor) will try to lessen and/or eliminate the education cuts that are part of Walker's budget. But as mentioned previously, there are a ton of stretches to hold the budget together as it is, even with all the cuts. Where are they going to come up with the extra revenue to pay the schools (and the UW, which GOP legislators indicated today would also see their cuts reduced), especially when it seems more likely that the state budget will still come up short once we see the new revenue figures in May.

And with Walker being beholden to the Grover Norquists of the world (check out how Walker spokesmodel Laurel Patrick insists "there are no tax increases" despite the LFB's report this week that the budget raises $48 million by closing tax credits and raising some fees), don't bet on Walker allowing any type of tax increases to pay for this restored funding. Sure makes you wonder what form that rabbit is taking inside of that Mad Hatter headgear Walker and the WisGOP Legislature has been wearing. We'll find out soon enough, and I bet it won't be anything that plays well in Shawano....or anywhere else that gives a crap about Wisconsin's quality of life.

PS- Well, we definitely know the Walker people didn't listen to the Department of Public Instruction when it came to putting together their budget request for schools, as this expose from PR Watch shows. Is there any doubt these people are working for the scumbags in the voucher lobby, and that they could not care less who or what they leave behind in the process?

Tuesday, March 17, 2015

New revisions show WIsconsin trailing its neighbors again

We got one of what will be several bits of information on Wisconsin's economy today with the release of the state-by-state jobs numbers by the Bureau of Labor Statistics. In addition to the typical updates where we get to compare what all the states did for the last month measured (in this case, January 2015), this particular report was big because it included changes and modifications of job data of the last five years.
Effective with this release, nonfarm payroll estimates for states and metropolitan areas have been revised as a result of annual benchmark processing to reflect 2014 employment counts primarily from the BLS Quarterly Census of Employment and Wages (QCEW) (tables 5 and 6), as well as updated seasonal adjustment factors. Not seasonally adjusted data beginning with April 2013 and seasonally adjusted data beginning with January 2010 were subject to revision. Some seasonally adjusted series may have been revised back to 1990.
This benchmarking was the reason that total job numbers for Wisconsin were revised down by 25,800 private sector jobs and over 30,000 total jobs earlier this month. So now that every other state has gone through this benchmarking process, let's see where Wisconsin stands for Scott Walker's first term.

Private sector Job growth Jan 2011-Jan 2015
Mich +11.17%
U.S. +9.55%
Ind. +8.32%
Ohio +8.20%
Minn +6.98%
Iowa +6.45%
Wis. +5.92%
Ill. +5.50%

So only the FIBs are keeping us out of last place in the Midwest during the Age of Fitzwalkerstan, and it's well behind the national rate (as indicated by the Walker jobs gap of 83,000). What's even more remarkable is that the four-year record is actually an improvement over where we stood after Walker's first 3 years on the job.

Private Sector Job Growth Jan 2011- Jan 2014
Mich +8.04%
U.S. +6.70%
Ind. +5.94%
Ohio +5.76%
Minn +5.72%
Iowa +4.83%
Ill. +4.19%
Wis. +4.16%

In fact, we were dead last in job growth until September, when a spurt of growth has put us ahead of Illinois. Todd Milewski of the Capitol Times has a good chart illustrating this information. The percentages are slightly different than what I have, but it's basically the same info, and it's worth mentioning that the last 4 months measured are the only four months that have not been measured and benchmarked to the "gold standard" QCEW report (I'm not saying, I'm just sayin'...).

At the top of the list, let's remember that Michigan, Indiana and Ohio all had massive job losses and double-digit unemployment during the Manufacturing Meltdown part of the Great Recession, and a lot of their growth in the 2010s can be credited to the comeback in those fields during the Obama Recovery. But that also begs the question- "Why isn't manufacturing-based Wisconsin joining in on that growth?" Yes, Wisconsin didn't get hit as badly as those three states in the late 2000s (unemployment topped out at 9.2% in Wisconsin in January 2010 and was 8.0% when Walker took over in Jan 2011), but it's still not an adequate excuse for why we lag so badly. Minnesota and Iowa didn't have close to the losses we had here, but they still found a way to gain more jobs and have significantly lower unemployment than Wisconsin.

So while the overall story isn't too much different than what we knew previously (we've always been last or next-to-last in the Midwest under Walker), it's still fresh evidence that the state has lagged its neighbors when it comes to job creation, under a Governor that promised the state would be "Open for Business." Maybe a few more national reporters could ask Presidential Candidate Walker why his approach has failed to either balance the budget or lead to prosperity, and see what kind of easily-disproven jibberish Scotty might respond with.

Monday, March 16, 2015

A structural surplus? No way.

This seems like an unusual difference in what we've been seeing out of the state budget.
Also Monday the Fiscal Bureau, the Legislature's budget office, released one estimate of how healthy the state's finances would be in two years if Walker's 2015-'17 budget is approved as it is written.

The Fiscal Bureau estimated that the governor's proposal would leave the state with a potential $500 million surplus in the 2017-'19 budget — a sharp improvement from the shortfall Walker and GOP legislators faced this year.
Well sure, Jason Stein, there's a structural surplus for the next budget based on current law. But if you spend more than a minute reading the actual LFB document, and it assumes a whole lot of things that lead to that number- items that would be unlikely to actually be passed into law, which artificially makes the balance better look than it really is.

1. The biggest assumption is that $700 million in lapses are built into in each year of the 2017-19 budget, or $1.4 BILLION overall. The 2015-16 budget only assumes $295 million in lapses, a little less than 2%, which is a more typical amount to build into a budget. If we assume $295 million in lapses in each year of the 2017-19 budget, that turns the structural balances in those two years to the following.

2017-18 budget -$121 million
2018-19 budget -$138 million
TOTAL DEFICIT $259 million

2. But there's another item that won't stick around, and that's a projected $142 million cut in K-12 school aids for each year of the 2017-19 budget. This would reduce aid levels back to the $150-per-student cut that districts are facing for the next school year, a move that has opened up massive deficits all over the state. You can click right here to see the budget holes that exist in your school district, and compare it to all the other holes that exist around the rest of the state. Do you really believe the WisGOPs in the Legislature want to go through all of those complaints again (if they're even in charge in 2 years, which is getting less likely by the day)? Riiiiight.

I'll be generous, not even count for 2 years of inflation, and assume K-12 school funding is kept flat at the 2016-17 Walker budget levels. Add that to the lower lapses mentioned above, and this turns the budget balance into the following.

2017-18 budget -$263 million
2018-19 budget -$280 million
TOTAL DEFICIT $543 million

3. We're not even talking about the Transportation Fund, which has huge amounts of borrowing in this budget leading to added debt service and high ongoing costs for projects if those are approved of in this budget. With no planned increase in gas tax revenues or other sources (the structural deficit document doesn't plan for an added increase in the transfer from the General Fund to the Transportation Fund), where are these added costs going to be paid from? So add those hundreds of million in Transportation Fund deficits to the half a billion in deficits I've already been figured in.

Oh, and this assumes that the revenue numbers hold up in the General Fund over the next 3 1/2 months, and that past cuts to the UW System and local governments remain. As I mentioned last week, don't expect those figures to stand, either on the revenue and spending sides.

So when you hear the Walker and WisGOP honks claim this one report means they have a "balanced budget and future surplus" (and they will...at least until the revenue numbers implode in the next 2 months), realize how much they have to stretch to get to those numbers and destroy public services in the process. Which underscores why it will never happen- because Walker is at 43% approval and plummeting since this budget and related "Walker 2016" agenda was announced 6 weeks ago. SO while the Fiscal Bureau and the Journal-Sentinel may have said today the Walker budget adds up on paper, most Wisconsinites know that it doesn't work in the real world.

Bucks arena update- slow progress?

With some of other items going on at the Capitol and in the country, we haven't talked about the Bucks arena situation recently. And there have been a couple of items over the last week that are noteworthy developments, one involving the NBA's side of the equation, and one involving events at the Capitol.

T Last week, the NBA Players Association rejected the idea of "smoothing" out an increase in the league's salary cap for the 2016-'17 season. This will result in a major one-time jump in the cap after next season, which went against the wishes of the league.
"Smoothing would have avoided a substantial Salary Cap spike in 2016-17," NBA executive vice president of communications Mike Bass said. "Under the league's smoothing approach, the salary shortfall resulting from more gradual Cap increases would have been paid directly to the Players Association for distribution to all players, and thus the total compensation paid to players in any given season would not have been impacted."

However, the NBPA has rejected this proposal in favor of a major spike to the salary cap in 2016. Experts believe the salary cap could rise to $90 million or more that year; it's at just $63 million this year. As NBA cap expert Larry Coon points out, this is a decision that should negatively affect a lot of rank-and-file union members who would have received bonus compensation under the proposed "smoothing" plan:...

The big factor here is the league's maximum salary, which is determined by the salary cap and should rise substantially in the summer of 2016. That means top free agents will be able to command significantly more money than ever before, and the vast majority of the new salary cap space will go to those players. Any leftover money will go to players who are set to be free agents that year and not to players who are already under contract.
This likely means that the Bucks would have a larger amount of "jock tax" revenue to kick in towards an arena, especially since the NBA also has a salary floor that is linked to the amount of the salary cap. This could conceivably speed up the timetable for the jock tax to pay back its share toward a new arena, while also raising the amount of foregone revenue that could be used for other needs in the state budget, since the Walker plan for the Bucks arena is supposed to divert all money to the arena project past a certain amount.

At the Capitol, Assembly Speaker Robin Vos says that his house of the Legislature might not give Gov Walker all $220 million in borrowing that Scotty wants toward the arena, but he might give him more than half of that.
Vos said he views $120 million as a base figure for the arena bonds. That is because if a new arena is not built, the state would be on the hook for $100 million in needed maintenance and improvements at the BMO Harris Bradley Center, plus a $20 million bond balance at the facility.

The Bradley Center Sports and Entertainment Corp. is an instrumentality of the state and the governor appoints a majority of the nonprofit corporation's board.

"We're going to spend $120 million to keep (the Bucks) here or to see them leave," Vos said. "That is a bottom line number I think is reasonable.

"Is there a number beyond that? $120 (million) to $150 (million) — maybe a little bit north of that. But I think our caucus is comfortable in that range because that's what we'd spend anyways."
Lowering the amount of borrowing won't have a huge effect on the current-year budget, since there is only $2.8 million set aside for net debt service in the current budget, but it certainly would lower the amounts to be paid in future years to pay off the smaller debt.

We still don't know a site for the arena, so it becomes quite difficult to figure out what local government assistance would be toward it...or if a TIF of related local tax incentive could even be part of the equation. That's because the LFB's summary of the Bucks arena bill indicates that the facility and its related buildings wouldn't pay property taxes.
Property Tax Exemption. Current law [s. 70.11(36) of the statutes] provides a property tax exemption for property consisting of or contained in a sports and entertainment home stadium of a professional athletic team that is a member of a league that contains teams with home stadiums in other states. The exemption includes parking lots, garages, restaurants, parks, concession facilities, entertainment facilities, transportation facilities, and other functionally related or auxiliary facilities or structures.
So the City and County of Milwaukee would likely be losing out on tens of millions of dollars of tax base from this new Bucks arena, which seems like quite a contribution before we even start talking about any extra streets or related infrastructure that those levels of government could give toward the arena development.

Of course, if the budget numbers implode in the coming weeks, then all bets are off in terms of what's available for this and future years. But even though the Bucks have been struggling as they try to hold on to a playoff berth, it does seem that the arena is making slow but sure progress toward being fleshed out into reality.