Category Archives: Wisconsin politics

05.16.13
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Stewardship of our tax dollars, or not

I have been one of the few bloggers in this state critical of the state’s gobbling up land through the Knowles–Nelson Stewardship Fund.

Units of government already own 16 percent of land in this state. Every piece of land purchased through the stewardship fund — or, for that matter, purchased by any unit of government — extends the burden of paying for government services on the owners of the 84 percent of tax-paying land. (And Wisconsin already has the second highest property taxes per capita in the Midwest.)

If you read the news releases (which the DNR used to send to my former employer), land purchased under the Knowles–Nelson Stewardship Fund is restricted from use by those paying for it to “low-impact recreational activities.” Usually not fishing, not hunting, and never a recreational activity that involves internal combustion engines. (The horror.) Put another way, your tax dollars are paying for activities you can’t partake in unless the Department of Natural Resources approves.

The previous governor spent $86 million per year on buying land. Gov. Scott Walker reduced that to $30 million per year, which is $30 million higher than it should be. Walker’s budget proposes to increase that to $64 million over the two-year budget cycle.

WisPolitics reports the back-and-forth about simply reducing Stewardship Fund purchases:

Sen. Joe Leibham, R-Sheboygan, said the debt service on Stewardship purchases are now $1.6 million a week, adding that’s an unsustainable level. While he said he supports the aims of the program, he also said there is obviously a problem when the program has been bonding $60 million a year and the debt service on that borrowing is now $90 million annually.

“We should be proud as a state we’re maintaining a strong investment in the Stewardship Program, but we’re also ensuring this program doesn’t get further out of control,” Leibham said.

Rep. Jon Richards, D-Milwaukee, said the GOP proposal amounts to a 22 percent cut in bonding for the program while seeking the sale of 10,000 acres of land. He also slammed the money set aside for the Bearskin State Trail, saying Republicans had found money for pork in a GOP district while everyone else was getting a cut.

“Even George Orwell couldn’t say that you’re saving the program. How in the world can you say that?” he said.

The committee voted 12-4 to reject a Dem amendment to keep bonding in the program at the current level of $60 million each year.

Others are starting to question government land purchases at all. From Media Trackers:

Two dozen conservative grassroots and tea party groups on Tuesday called on lawmakers to halt the Department of Natural Resource’s stewardship program. Under the proposed state budget, the Warren Knowles-Gaylord Nelson Stewardship Program is slated to receive $64 million over the next two years to purchase more land for the state. The purchases are to be funded entirely by bonds, which will require the state to pay for the spending in the future, with interest.Payments for existing debts incurred in previous years by the stewardship program will total $84 million over the next two years.

“Citizens should be asking at least two serious questions of Wisconsin state legislators as the Joint Finance Committee heads into a decision this week on funding for the Knowles-Nelson Stewardship Fund,” the joint statement declared.

Those questions are, “How much land should the state of Wisconsin own? And how great a debt burden should the State of Wisconsin be allowed to impose on taxpayers in order to maintain an ever-longer list of public lands?” …

The groups signing on to the press release hail from across the state, and included leaders like Kim Simac, who ran for state senate in 2011 and now works as a coalition builder among grassroots conservatives.

The people spearheading this effort point out:

Since creating the Knowles-Nelson Stewardship Fund in 1989, the Wisconsin State Legislature has authorized nearly a billion dollars in borrowing to pay for related land purchases and acquired nearly 600,000 acres of property. Today debt service alone on moneys borrowed to accommodate Stewardship purchases total over $80 million a year. Another $60 million is requested for each year in the governor’s proposed 2013-2015 biennial budget, for continued Stewardship purchases – not counting funds necessary to maintain property already owned. Yet, together, the State of Wisconsin and the U.S. Forest Service already own 3.2 million acres of this state’s land, amounting to a shocking 20 percent of total land area. …

We must now be frank as Wisconsinites: the Stewardship Fund is doing more harm than good to our state economy and job creation. A freeze in funding levels is simply not good enough. It is time that we cut the Stewardship Fund budget significantly, start paying down the debt it has created, and, wherever possible, return land to the private sector.

We call upon the Wisconsin Legislature to remove Stewardship funding from the 2013-2015 Biennial Budget. We also call upon the Wisconsin Legislature to take action that would begin restoring Stewardship lands to the private sector in order to begin to reduce the annual $80 million in debt service on Stewardship borrowing.

What has the Stewardship Fund purchased? Among other things, a golf course, reports Brian Sikma:

Wisconsin taxpayers bought a golf course for $11,134 an acre thanks to the Department of Natural Resource’s stewardship program. The program uses bonding – a form of debt financing – to purchase land that DNR bureaucrats believe should be set aside for conservation purposes. Around 5.17% of Wisconsin land is owned by the state, while nearby states like Iowa and Illinois only own respectively 0.64% and 1.14% of their state’s land.

The state purchase of the golf course land came in 2009 and was a topic of heated public debate. Two courses totaling 970 acres, including land and lakes, were purchased together for a total price of $10.8 million, or $11,134 per acre. Governor Scott Walker (R), early in his administration, sought to at least partially undo the golf course spending that happened under Governor Jim Doyle (D). …

Because the stewardship program uses bonds, which allow the DNR to spend money it doesn’t have, its total cost to taxpayers is significantly greater than the amount lawmakers have authorized it to spend. Buried in a Legislative Fiscal Bureau report on the program, its true cost to taxpayers is explained. “Debt service payments (principle repayment and interest) on the up to $1.43 billion authorized for the program could total approximately $2.2 billion” for the duration of the program’s bonds.

Bonds issued to pay for the land purchases generally run for 20 years, meaning that from 1989 (the start of the program) until 2020 (the scheduled end of the program) the bonds would run from 1989 until 2040.

The currently proposed state budget authorizes the DNR to spend $64 million on the stewardship program, or $32 million each year. But while lawmakers are mulling giving the green light to that new spending, the budget also spends $84 million just to pay off the debt from previous land purchase spending. The vast majority, $70.7 million, of that debt repayment comes from the state’s general fund, which comes from taxes.

That kind of debt financing comes out to $115,317 a day that Wisconsin taxpayers are spending just to pay off land state government already purchased. …

For comparison, the amount of money Wisconsin will spend paying for the stewardship debt is greater than the amount it will spend on some state agencies or parts of state government. The Supreme Court’s proposed budget, for example, is $63.2 million for the next two years, and the state Department of Tourism’s two-year budget was proposed at $35.7 million.

This chart shows the cumulative effect of debt for Stewardship Fund spending:

I referred to the Stewardship Fund last week, and got this spittle-flying response:

The Knowles-Nelson Stewardship program assists with acquisition of land critical to outdoor recreation and tourism. Last time I looked tourism was a major industry in the state and brought in millions of dollars annually from outside the state. Is that a bad thing in your mind?

That’s right, readers. Before the DNR and the Department of Tourism came into existence, apparently no one was smart enough to figure out that Lake Michigan, Lake Superior, the Wisconsin River, the Mississippi River, the Driftless Area, the forested Great White North and most other areas of this state were worth driving to see. Road America? The Wisconsin Dells? The Packers? Who cares? If the state wasn’t making these “critical” land purchases totaling somewhere between $30 million and $86 million in land every year, the tourism industry would collapse.

On the one hand, I could suggest that people who think the government should be in the land business for what clearly is not a core function of government should declare which government spending should be cut — school funding? Health care? Transportation? Government employee salaries and benefits? — to fund land purchases. On the other hand, the government should  not be in the business of buying land for something that is not a core function of government. The state is not buying land to build schools, or new roads, or fire stations. Nor is the state buying land for the purpose of future development, as cities and villages do with land within Tax Incremental Financing districts. At a time when the state budget is in nine-digit deficit by the correct measure, while the national economy (which means Wisconsin’s economy too) sucks, the state continues to buy land, even at Walker’s proposed lower level, because the environmentalist left continues to hold the state in thrall.

A couple years ago, the Tax Foundation created a Taxpayer Bill of Rights Calculator that showed how, between 1977 and 2009, state and local government spending would have increased under various spending and taxation limits — the rate of inflation, population growth, growth in personal income, etc — and how much government spending increased instead. Our lack of spending and tax controls means that state and local government spends twice as much — nearly $60 billion — per year than it would have had spending been limited to inflation and population growth. And what has that excess taxation gotten us? Debt of $84 million and growing to pay for unusable land, among other things.

The groups mentioned in this blog are correct. The correct level of Knowles–Nelson Stewardship Fund land purchases is zero.

05.14.13
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Texas vs. the U.S. (including Wisconsin)

Barack Obama went to Texas on his perpetual-campaign tour Thursday.

Texas is the state that, in terms of job growth, has basically propped up the entire U.S. economy, according to Texas Gov. Rick Perry:

The Texas Model works:

• While the U.S. lost 2.5 million net jobs over the last five years, Texas created 530,000 net new jobs.
• Over the last 10 years, Texas created 33 percent of the net new jobs nationwide.
• Texas has been the top exporting state in the nation for 11 straight years.
• Texas is ranked #1 on CNBC’s 2012 Top States for Business list.

And just this week, Chief Executive magazine ranked Texas the best state to do business for the ninth year in a row, and Site Selection Magazine ranked us the most competitive state in 2012. Mr. President, the Texas Success Story can be the American Success Story.

Investors Business Daily adds:

And since the recovery started in June 2009, Texas has outperformed Obama on every important economic measure.

Jobs: Private sector jobs have shot up 10% in Texas since June 2009, which is twice the national growth rate. And while U.S. employment is still 2% below its pre-recession peak, in Texas it’s 5% above the state’s previous high.

Labor force: Nationwide, the labor force — the number of people who have jobs or are actively looking — has remained virtually flat since the recovery started, climbing just 0.3% over the past 45 months. Texas, in contrast, has seen its labor force climb 6.2%, as workers flood the state.

Wages: According to the Bureau of Labor Statistics, average annual wages in the U.S. rose 5.4% from May 2009 to May 2012. In Texas, they rose 6.1%.

Per capita income: Texans have also seen their per capita personal income grow faster than the nation as a whole, increasing 13.3% compared with 10.5% nationwide, Bureau of Economic Analysis data show.

GDP: And Texas’ economy has grown faster than the overall economy since Obama took office. Between 2009 and 2011, real GDP in Texas expanded 8.7%, while the nation’s overall GDP managed just 4.6% growth, according to the BEA.

And while Obama and his backers complain that austerity is now standing in the way of economic growth, Texas proves that more government spending and government jobs aren’t needed to grow the economy.

Overall state spending has been flat since 2010, according to the National Association of State Budget Officers, and BLS data show that state and local government jobs dropped 16,500 since the recovery started.

The two statistics that stand out like sore thumbs are personal income growth, which in Wisconsin has trailed the national average since the late 1970s, and government spending, which is twice what it would have been had the state had controls on spending on taxes back in the 1970s.

With discontent in this state over its subpar job growth, and of course the pathetic national economic “recovery,” Perry says Texas’ economy is based on:

 Low taxes

 Lawsuit abuse reform

 Predictable and effective regulations

 Balanced budgets

 Accountable schools and a competitive workforce.

Which of these apply to Wisconsin or the nation? Definitely not low taxes. (Wisconsin is fifth highest in state and local taxes and eighth worst in business tax climate, and when state taxes are added, the U.S. has the highest corporate income tax rate in the world.) Lawsuit abuse reform? According to the Institute for Legal Reform, Wisconsin’s legal environment ranks 15th. (Texas ranks 36th, which probably is the reason for Texans for Lawsuit Reform.) “Predictable and effective regulations”? In Wisconsin? The land of Damn Near Russia?

Wisconsin has a legally but not factually balanced budget. Our schools are definitely overrated (while the education establishment screams bloody murder about attempts to make schools accountable), and our workforce appears to be overrated as well in the opinion of the only people who count, employers. And on each of these points where more needs to be done, the Legislature, which according to media reports is controlled by the Republican Party, has done next to nothing.

What is the Wisconsin Model? High taxes, 3,120 levels of government, grossly excessive regulation, slavish financial devotion to public schools, and, by the way, below-average business and personal income. Three and a half decades (or more) of the same old thing isn’t working.

 

05.09.13
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How to help the middle class (but they won’t)

I have been around Wisconsin media so long that I know both of the people in this piece — Tom Still of the Wisconsin Technology Council (formerly of the Wisconsin State Journal), and former U.S. Rep. Steve Gunderson (R–Osseo):

A report released this month by the Brookings Institution confirmed what many observers already suspected: Metro Milwaukee lost almost twice as many private-sector jobs in the decade of 2000-’10 as the average for the nation’s 100 largest metro areas.

What hurts most is not that metro Milwaukee’s 6.8% job loss was well above the national average of 3.9%, but that a large share of those jobs were good jobs – with decent wages, benefits and some sense of security and opportunity until the bottom fell out. …

Rebuilding the endangered middle class in America is the subject of The New Middle Class: Creating Wealth, Wages, and Opportunity in the 21st Century, written by former Wisconsin congressman Steve Gunderson, now president and CEO of the Association of Private Sector Colleges and Universities.

The book provides an unvarnished look at why the American middle class has eroded over time, beginning with events, trends and policies dating to the 1970s, and offers some paths forward – assuming there is sufficient private and public will to follow them.

Gunderson, who also served in the Wisconsin Legislature before representing the state’s 3rd Congressional District as a moderate Republican for 16 years, grew up in what he described as a classic middle-class environment. His grandfather was a farmer, his father a car dealer and virtually everyone around them in the northwest Wisconsin community of Pleasantville fit that profile.

Today, Gunderson believes, the middle-class ethos that contributed so much to the nation’s civic and economic fabric is threatened – not just in Wisconsin, but across the nation, at a time when competition from abroad has increased and the middle class is growing in emerging nations.

“Everyone thinks the end of the middle class began at the end of the recession,” Gunderson said last week. “It didn’t. It began in the 1970s. The good news is there is still time to save it.”

The book outlines a host of reasons the number of statistical middle-class households and their income growth has stagnated. Those include the instability of private and public retirement plans, the crumbling of the housing market following the growth bubble, policies and practices that encouraged a culture of personal spending vs. saving, global competition, a lack of innovation in some industries and more.

Of late, Gunderson argues, one of the biggest factors contributing to the decline of the middle class is political gridlock.

“Both parties talk a great deal about restoring the middle class, but neither of them does anything about it,” he wrote. “The truth is – they can’t. The middle class cannot be restored in this era of severe political polarization. Unless politicians from both parties are willing to make compromises and restore the middle ground of American politics, the middle class will continue to erode. Throughout our history, consensus has built the middle class. Now, partisanship has destroyed it.” …

The consensus Gunderson proposes … begins with understanding the world has changed and the economy that existed a generation or even a decade ago has changed with it. The “knowledge economy” of the 21st century requires skills that weren’t necessarily needed for middle-class jobs in the past. That has heightened the need for higher education that doesn’t stop at the edge of a traditional college campus. …

To Gunderson, that’s not just more people with bachelor’s, master’s and doctoral degrees, but lifelong learners with certificates that address the needs of employers in emerging sectors that are most likely to create middle-class jobs.

Rebuilding the American manufacturing advantage, stabilizing retirement plans, easing the home-ownership crisis and solving the federal deficit riddle are also part of the equation. At the center of it all is what Gunderson describes as a “middle class compact” that focuses on fostering a growth economy, something he believes Democrats and Republicans alike can embrace.

Rebuilding the middle class, in Milwaukee as with anywhere else, is essential to economic security, civic cohesion, democracy and even national security. It’s a task that cannot begin soon enough and that cannot be accomplished without public and private cooperation.

I was a big fan of Gunderson when he was a congressman. He raises interesting points, though I see absolutely nothing about how you foster a growth economy that “Democrats and Republicans alike can embrace” because of the nature of today’s politics. (Not that politics was beanbag in the permanent-campaign ’90s either, but those seem like the good old days now.)

Bill Clinton, the president during Gunderson’s last two terms in Congress, was about Bill Clinton, so he worked with whatever side was the majority in Congress. Barack Obama is much more of an ideologue, and split control of Congress doesn’t help. Politics is a zero-sum game, remember — one side wins (gets (re)elected, gets their legislation passed, generates big campaign donations), the other side loses.

Obama and his Democrats have, in fact, been actively hostile to the middle class, not to mention, as we know, their employers. Neither side agrees on how to create a “growth economy,” which makes those other four goals impossible, but when one side refuses to make things better for the middle class, that turns your book into fiction.

05.08.13
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WEDC vs. the Legislature(s)

The Wisconsin Reporter reports:

The operation at the Wisconsin Economic Development Corp. apparently is so muddled that the Legislative Audit Bureau could not adequately “assess the effectiveness of WEDC’s economic development programs.”

The bureau’s audit, released Wednesday, found information WEDC submitted to the Legislature in November “did not contain all the required information, contained some inaccurate information and did not clearly present information about the number of jobs created and retained as a result of its programs.”

Auditors found it “difficult to assess the accuracy and completeness of the number of jobs that WEDC reported” because WEDC did not independently verify the information submitted by the companies that took WEDC cash or tax credits, or follow up on the 55 percent of contractually required progress reports that were never submitted. …

The audit found that internal WEDC documents show no jobs created or retained as a result of Community Development Block Grant awards, whereas WEDC’s report indicated 302 jobs created and 63 jobs retained.

The audit was so alarming that Rep. Samantha Kerkman, R-Randall, and Sen. Robert Cowles, R-Green Bay, co-chairs of the Joint Legislative Audit Committee, called for a public hearing May 9.

That’s just the tip of the 94-page iceberg released by the audit bureau, which underline’s the quasi-public economic development corporation’s neglect of statutory requirements and internal policies in almost every facet of operation.

With the hearing tomorrow (and an emergency meeting today), I have a thought for Rep. Kerkman, Sen. Cowles and the rest of the Legislative Audit Committee: You’re looking in the wrong place.

The much bigger question is whether or not WEDC is improving the state as a place to do business. The answer depends less on WEDC than on what the Legislature does.

First: Rep. Peter Barca (D–Kenosha) claims the state needs to return to the previous Department of Commerce. The mere fact that Barca got a job with the U.S. Small Business Administration as a Band-Aid for his boo-boo of losing his Congressional seat to Mark Neumann does not make Barca qualified to pontificate on business or business climate.

More important than Democrats’ stupid political games-playing is the fact that the economic development corporation model works in this state. If it didn’t, there wouldn’t be this many economic development corporations in this state. Economic development corporations employ people who know what they’re doing in economic development.

Barca’s preferred model, the Department of Commerce (and its predecessor Department of Development), was the state agency that was supposed to promote business while simultaneously regulating business. That’s not very business-friendly, but then again neither is this state. And, by the way, the Department of Commerce was the agency that watched while the state hemorrhaged jobs during the Doyle administration.

If the WEDC has problems, they need to be fixed immediately. But the problems with this state’s business climate have little to do with the WEDC and much more to do with things that have predated the WEDC.

What’s been done about the $2.2 billion Doyle tax increase? Hardly anything. (Not that Doyle should be exclusively blamed; remember when Wisconsin had the highest state and local taxes in the nation under Gov. Tommy Thompson?) Has state government been restructured to be considerably smaller and perform better? Have any state employee positions been eliminated? Have we gotten rid of any of the 3,120 units of government in this state? Has the job-killing Department of Natural Resources been reformed at all? (Ask the developers of the restaurant not far from here, whose lot remains completely undeveloped thanks to the DNR.) Has a single regulation been repealed?

The reason Wisconsin continues to perform badly in state business climate comparisons — regardless of how the issues of importance are ordered or weighted — is because nothing significant has been done to improve this state’s business climate. This may be the most regulation-happy state in the country not named California. (And because we have regulations, we have regulators, government employees who make more money and have much better benefits than those whose taxes pay those salaries and pay for those benefits.) Schools in this state are not as good as we like to think they are, which means workforce quality isn’t as good as we think it is. Businesses don’t like unions. The supposedly courageous Walker refuses to sign right-to-work legislation. Our vaunted quality of life generally matters the least, believe it or not, to businesses making location decisions.

Those are things the Legislature decides to do. The WEDC is in charge of marketing Wisconsin as a place to do business. It’s tough to do that when the product isn’t very good. The Legislature needs to improve the product WEDC is trying to market.

Remember the phrase (attributed,  possibly even accurately, to Albert Einstein) that insanity is doing the same thing repeatedly and expecting different results? Well, Wisconsin has been a high-tax high-regulation lots-o’-government state for at least 100 years. (That would be when the income tax started.) And our economy has been subpar for at least the last 35 years, and probably long before that. Until our approach changes, the results will continue to be mediocre at best.

 

05.07.13
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The risk we take by not taking risks

Glenn Harlan Reynolds:

When the economy was last this bad for this long — back in the dreaded Jimmy Carter era — there was one upside: While inflation raged and unemployment stayed troublingly high in America’s big businesses, a lot was going on in America’s garages. Steve Jobs and Steve Wozniak werestarting Apple, Bill Gates and friends were starting Microsoft and a variety of other new entrepreneurial ventures were lining up for takeoff.

So you might hope that there’s a similar silver lining in today’s economic Slough Of Despond. But so far, that hope would seem to be unjustified.

At any rate, the latest data indicate that start-ups are becoming rarer, not more common. A new report from JPMorgan economist Mike Feroli indicates that employment in start-ups is plunging. New jobs in the economy tend to come from new businesses, but we’re getting fewer new businesses. That doesn’t bode well. …

One reason, I suspect, for a job market that looks more like Europe is a regulatory and legal environment that looks more like Europe’s. High regulatory loads — the product of ObamaCare and numerous other laws — systematically harm small businesses, which can’t afford the personnel needed for compliance, to the benefit of large corporations, which can.

Likewise, higher taxes reduce the rewards for success, making people less likely to invest their money (or time) into new businesses. And local regulatory bodies, too, make starting new businesses harder.

But I wonder if the biggest problem isn’t cultural. Since 2008, this country hasn’t celebrated achievement or entrepreneurialism. Instead, we’ve heard talk about the evils of the “1%” ” about the rapaciousness of capitalism, and the importance of spreading the wealth around. We’ve even heard that work in the public sector is somehow nobler than work in the private sector.

Countries where those attitudes prevail tend not to produce as much entrepreneurialism, so it’s perhaps no surprise that as those attitudes have gained ascendance among America’s political class and media elite, we’ve seen less entrepreneurialism here. …

Some people, of course, will start businesses no matter what politicians and pundits say, and will do so even in the face of hostile legal and regulatory climates. But their numbers will be fewer, and so will be the numbers of jobs generated. As millions of Americans are unemployed — while millions more have dropped out of the workforce entirely — perhaps it’s time for our political class to think harder about the messages it’s sending. And perhaps it’s time for voters to send the political class a message of their own.

That message, by the way, is grossly overdue in Wisconsin.

 

05.06.13
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Just what we need

You might think after the 2010 elections, three rounds of recall elections, and the 2012 elections, Wisconsinites would be sick of politics.

One, however, apparently is not: Reince Priebus, former chair of the Wisconsin Republican Party, and now chair of the national GOP. At the state convention last weekend, Priebus said, according to Wisconsin Report:

“When we talk about the growth and opportunity plan, we’re talking about being a permanent party, a party that understands we’re in permanent politics all the time,” Priebus told the hundreds gathered at the Republican Party of Wisconsin‘s Republican State Convention at the Patriot Center in the Marathon County village of Rothschild.

“The other side is engaged in a permanent, across-the-board campaign that started five years ago and never ended….We are becoming a granular, coast-to coast-operation that will go toe-to-toe and surpass our opponents, but it’s got to start now,” said Priebus, key-note speaker for the weekend event. …

Part of that growth, he said, hinges on changing the presidential nomination process, including halving the number of primary debates – “a travelling circus” – and moving the national convention, where the presidential nominee is officially named, from August to June.

That announcement led Priebus to answer attacks from within the party that he’d become “too establishment.”

“It’s not an establishment takeover; it’s using your head,” the Kenosha native quipped.

The thought that comes to mind is a quote from some wit about most people’s (supposed) attitude about their employer’s management, that they want them to stop managing them. While replacing idiot Democrats with Republicans would be preferable, what would be most preferable is for government to stop trying to run, or ruin, our lives. Politicians are not your friend, whether they have a D or an R after their names. Political parties are not run in your best interests; political parties are run in their best interests.

Why, for instance, should voters choose Republicans when they appear to offer very little different from Democrats? The state budget is now cash-balanced (as opposed to correctly balanced, as in according to Generally Accepted Accounting Principles), but nearly all of Gov. James Doyle’s $2.2 billion tax increase remains in place. The state still buys tens of millions of dollars of land for no reason and no use (the Knowles–Nelson Stewardship Program). Government-employee unions still exist. The job-killing Department of Natural Resources still exists unchanged. State and local governments, all 3,120 of them, still employ far, far, far too many people, and nothing at all has been done to reduce Govzilla’s sucking the marrow out of us Wisconsinites.

Now that a few weeks have passed since the Boston Marathon bombings, it should be clear that, from the failure to catch the brothers planting their bombs before the race to their (probably unconstitutionally) locking Bostonians in their houses (those houses they didn’t raid, that is) to find the one surviving brother, government screwed up much more than it did well. The only people who appear to have done their jobs well are the first responders after the bombs went off. Recall that the surviving brother was caught only after the stay-in-your-homes order was lifted.

The lesson that has been repeated time and again is that politicians, regardless of party, will work to consolidate their power unless they are prevented from doing so. That is why we have a Bill of Rights in the U.S. Constitution. That is why we need a Taxpayer Bill of Rights in the state Constitution. Government does much, much, much, much more to us than for us, particularly in an overgoverned state like Wisconsin.

05.01.13
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How you get to number five

How did Wisconsin get to ranking in the top five in state and local taxes in the nation, while the state’s per capita income ranks around 25th?

Disrespect from the political class for the taxpayer, as demonstrated by Media Trackers:

On a per capita basis, Wisconsin taxpayers are paying more in property taxes now than they did just over 20 years ago. Numbers from the state Department of Revenue, and first touted by the office of state Rep. Michael Schraa (R), show that per capita property taxes were higher in 2010 than they were in 1990, even when adjusted for inflation. Property taxes as measured by revenues and tax bills had trended upwards under previous governors before a property tax freeze was implemented in Governor Walker’s first budget.

Walker has insisted that his second biannual budget, which is being debated by the legislature, must include an extension of the property tax freeze. Because the measure also ties in with Walker’s move to control overall public school spending, some lawmakers, particularly in the Senate, have expressed concern over plans to potentially reduce the percentage – and possibly amount – of revenue coming into local government through property taxes.

Republican Senator Luther Olsen has indicated that believes schools should get more money because many of them are strapped for cash. Asked by Gannett Wisconsin Media about what he plans to do about school funding, Olsen promised to “die trying” to secure more money for schools through changes in the state budget.

“If you look at the governor’s budget, the money he does give to schools is property tax relief,” Olsen complained. Schools just “can’t handle that,” the 62 year-old concluded in his Gannett interview.

So is property tax relief an unnecessary endeavor because the state is not generating enough revenue from property taxes?

Some of the more accessible property tax data is available in 5-year increments, making a study of property tax trends between 1990 and 2010 a reasonable way to study overall property tax revenues.

In 1990, the total value of the Wisconsin property tax base was $141.4 billion, and property taxpayers paid $4.07 billion in property taxes for that tax year. In 2010, the value of the property tax base had grown to $495.9 billion and taxpayers paid $9.34 billion in taxes.

Wisconsin’s population saw a significant increase over that same time period. It is possible to look at the per capita rate of property taxation and index it for inflation to see how the per capita property tax burden has fared in that two decade span. Not everyone in Wisconsin pays property taxes, but property taxes impact living costs and indirectly or directly affect every resident in the state.

According to the U.S. Census Bureau, Wisconsin’s population in 1990 was 4,891,769. In 2010, Wisconsin’s population was 5,686,986. That means that in 1990 the per capita property tax paid was $831.73. By 2010, the per capita property tax paid had risen to $1,642.83. Using the Bureau of Labor Statistics’ inflation calculator, the 1990 per capita tax would have been $1,387.63 in 2010 when adjusted for inflation.

The difference in inflation-adjusted 1990 per capita property tax payments and per capita property taxes in 2010 is $255.20, or a total of $1.45 billion when multiplied out across the state’s 2010 population.

Except for those living in facilities exempt from property taxes — prisoners, residents of mental institutions and college residential students come to mind — everyone pays property taxes, either directly in the case of homeowners, or indirectly in the case of renters. When adjusted for inflation, your property taxes, whether you pay directly or indirectly, increased by 18 percent from 1990 to 2010. Have the quality of state and local governmental services improved by 18 percent in the past two decades? (A suggestion that government services have deteriorated by at least that much is more likely to be accurate.) Other than gasoline (whose price has nearly tripled since 1990), has the price of anything you buy increased by nearly one-fifth without any improvement in features or quality at all in the past two decades? This comes in a state near the bottom in personal income growth over those two decades (and longer).

(Note: The numbers in the above paragraph were corrected by an alert reader. Remember, journalism is the opposite of math.)

Media Trackers goes on to say that “A variety of factors contribute to rising property values and changes in local property tax rates.” One of them is the lack of state and local spending and tax controls in the state Constitution. Unlike in most states, the only thing that restricts spending or taxes is the whim of the Legislature and local politicians. Gov. Tommy Thompson enacted the Qualified Economic Offer law to restrict teacher salary increases. Gov. James Doyle got rid of it. Thompson also enacted the school district revenue caps, but the Legislature can change that.

Some Republican legislators are proposing taking technical colleges off property taxes and increasing the state sales tax from 5 percent to 6 percent to fund technical colleges. This has been proposed before, and this is not necessarily a bad idea. (Though it really needs to be discussed separately from the state budget process.) Given the fact, however,  that every single initiative to reduce property taxes — in rough chronological order, instituting the income tax, instituting a 3-percent sales tax, increasing the sales tax to 4 percent, increasing the sales tax to 5 percent, and allowing counties to institute a 0.5-percent sales tax — has failed to reduce property taxes, you can guess how likely this proposal is to reduce property taxes.

Media  Trackers adds:

When President Barack Obama declared, “We don’t have a spending problem,” earlier this year, conservatives mocked him. “The United States has a revenue problem. Taxes at all levels of government are too low,” wrote two far-left progressive policy analysts in The American Prospect in 2012. Conservatives insist that the proper way to view the problem is as a spending problem because government expenditures are creating a perceived need for more revenue when in fact, tax collections are up.

Freezing property taxes slows the rise in per capita property tax revenues. Because property values can and are rising coming out of the housing slump, as the MacIver Institute has pointed out, property tax revenues will not stay stagnant. But under Walker’s plan, neither will they rapidly outpace inflation with property owners seen as a sort of magical ATM machine for local governments looking for more revenue. …

The problem is that if property taxpayers are protected only by Walker’s freeze, what happens when Walker is no longer governor? The 1990–2010 period had, remember, Republican Thompson and Democrat Doyle, along with Republican, Democratic and split control of the Legislature. Little happened to protect property taxpayers in the former governor’s term, and nothing happened to protect taxpayers, period, in the latter governor’s term.

If Republicans were serious about tax relief, they would introduce a Taxpayer Bill of Rights mechanism — in the state Constitution, not merely in state law that can be overturned by less taxpayer-friendly politicians — that (1) strictly limited growth in spending to some combination of  inflation and population growth, and (2) required voter approval for tax increases. I notice no such proposal in this Legislature or from this governor.

04.29.13
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You say you want a revolution …

A group of first-term Democratic legislators is pushing for something guaranteed to not happen in this session of the Legislature — redistricting reform, reports WSAU.com:

Representative Mandy Wright from Wausau says the current law allowing the majority party in the Assembly and state Senate to redraw the political boundaries every ten years is flawed. “We would like to stop the finger pointing and stop the color game, and make sure that redistricting is handed over to a non-partisan agency that can objectively draw the district lines.”

Wright says the non-partisan Legislative Reference Bureau would be a good candidate to put the board together.

Iowa established more than three decades ago a non-partisan body to redraw the political lines. Wright says the Iowa model will help to reduce political bickering and save money. “To date, we have spent two million taxpayer dollars on redistricting, on the redistricting session that most recently happened. The bill that we’re proposing in Iowa cost the state approximately one thousand dollars.”

Wright says the likely outcome would be a voting district which more closely reflects the population. She says it’s likely to lead to less bickering between the parties.

Reform, however the proponents define it, is one of the oldest political themes. This country is the result of radical reform of how British colonies were governed. The Republican Party owes its existence to the desire to reform race relations by eliminating slavery. Wisconsin politics today was shaped, for better or worse, by the Progressive movement more than 100 years ago.

Today, and probably well before today, reform has been proposed first by those on the political outside. And in the dictatorship of the majority that is the state Assembly, no one is more outside than first-term representatives from the minority party. That’s not a judgment of the merits of their proposal; that is political reality. Given that the first and most important goal of a politician is to stay in office, when Democrats eventually regain control of the Assembly, this proposal to reform redistricting has at least a 50–50 chance to slip their minds.

To be potentially unfair to Wright and the other first-term Democrats, who theoretically had nothing to do with this, while their party controlled the Legislature, one year before the 2010 Census, redistricting reform was nowhere to be found on Democrats’ agenda, and for an obvious reason — Democrats wanted the ability to draw the maps themselves after the 2010 Census and 2010 election.

I support redistricting reform because of which party the redistricting process benefits — not the Republican Party or Democratic Party, whichever is in power in a Legislature in a year ending with the number one, but the incumbent party, which is always in power. Given the reelection rate of incumbents in an era when trust is in our elected officials is at an all-time low, the process obviously favors the incumbents.

In fact, I support many political reforms, although the reforms I support aren’t necessarily the same that Wright and her fellow freshman Democrats support. Dave Zweifel, editor emeritus of The Capital Times, may have supported returning to a part-time Legislature when Democrats controlled the Legislature, but I highly doubt it. Nevertheless, Zweifel is right, but in addition the state should be employing half or fewer the number of staffers of legislators the state currently employs.

Gov. Scott Walker claims, as did his predecessors, that the state budget is balanced. State law requires the budget be balanced, but only on a cash basis, not upon Generally Accepted Accounting Principles, which (1) is more appropriate for an enterprise that spends $35 billion a year, and (2) is what the state requires of every other municipality.

Wisconsin has the fifth highest state and local taxes in the nation, and has been in the top 10 every year for the past three decades. One reason is that the state constitution includes no limits on taxing or spending for state government or any other unit of government other than the uniformity clause. Having limits on spending and/or taxes would force fiscal responsibility on Democrats and Republicans of any amount of legislative experience.

Redistricting reform, GAAP budget balancing, and restrictions on spending and taxation need to be part of the state Constitution. All of those initiatives can be classified as protections of citizens from government, whether that’s government taking too much of their money, or legislators creating for themselves or their parties lifetime roles as state legislators.

The U.S. Constitution, you see, is a document full of what the federal government cannot do to its citizens. The Wisconsin Constitution contains similar restrictions on government (in the case of gun ownership rights, the Wisconsin Constitution is superior to the U.S. Constitution). You’d never know that, though, from looking at not merely levels of taxation in this state, but from looking at what  government does that government should not be doing.

I’d suggest the first-term Democrats in the Legislature — for that matter, every legislator, present and future — commit to memory article 1, section 22 of the state Constitution: ”The blessings of a free government can only be maintained by a firm adherence to justice, moderation, temperance, frugality and virtue, and by frequent recurrence to fundamental principles.”

 

04.24.13
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Steve somewhat agrees with a Democrat!

I have known Joe Wineke as a particularly odious Democrat, a former state senator and head of the Wisconsin Democratic Party. During a political issue in which Wineke was on the wrong side, someone commented that “Wineke” was pronounced “WHINE-icky.”

Then I heard from Wineke’s successor as head of the state Democratic Party, and Wineke sounded statesman-like in comparison.

I’m not sure what happened to Wineke, because based on what he wrote for the Wisconsin Policy Research Institute, he’s starting to make sense:

By any definition, Wisconsin is in economic trouble.  Recent reports rate the state 44th in job creation and, according to CNBC, 46th in the quality of our workforce.  Even worse, for the past 30 years, we have ranked 48th in personal income growth.  We are not creating enough jobs, our workforce is not diverse enough and our income lags well behind the rest of the country.  If something does not change and change soon, Wisconsin could be last in the nation in job creation.

It is imperative that we change the way we do business. We need to think big and de-politicize the process while doing so.

State government likes to talk about job creation, but consistently thinks small.  Both political parties waste time blaming each other.  Republicans think we can fix everything by cutting taxes and weakening the regulatory climate.  Democrats play the “soak the rich” card at any available opportunity and often reject anything that smacks of business help.  Neither plan does much to create well-paying jobs.

Wisconsin should look at four areas that will create greater economic opportunity for our state. We need to:

  1. Make major investments in business capital.

  2. Change our tax code.

  3. Fix our transportation system.

  4.  Provide major investments in education.

The detail of Wineke’s bullet points:

Start with business capital.  It is no secret that businesses (especially small and start-up business) are having a very difficult time getting private-sector funding.  Recently, the Wisconsin Alumni Research Foundation and the State of Wisconsin Investment Board came up with a plan to provide up to $30 million in investment capital.  A good start, but the amount of funding is so small that it will only help on the edges.  Wisconsin needs to create a large business and venture capital fund, place it out of the hands of politicians and fund the program through bonding.

This is at least worth pursuing, although how you “place it out of the hands of politicians” is an excellent question. (In fact, Wineke’s desire to “depoliticize the process” seems naïve, though well-intentioned.) There’s also a policy question of whether you really want government involved in financing business, although that is already the case with such organizations as the U.S. Small Business Administration.

Second, we need to look at taxes.  Wisconsin should follow the four basic principles of sound tax policy: simplicity, transparency, economic neutrality and stability.  Start by eliminating the tax on tangible personal property.  It is poorly administered, is complex, treats businesses worse than other property owners and is very unstable.  Currently this tax raises around $260 million per year and is entirely placed on the business community.

We should also rewrite our sales tax code.  We currently exempt more from the sales tax than we collect, creating unfair disparities.  For example, internet sales are tax exempt in Wisconsin.  Customers on Main Street pay.  It is grossly unfair and puts our merchants at a disadvantage.  But, once again it will require our elected officials to think outside the box.

There are points to be made on both sides of the Internet sales tax, but revising the sales tax while keeping the revisions revenue-neutral is worth considering. Tax revenues should increase because of increasing economic activity, not because of increasing taxes. As long as Wineke correctly wants to get rid of the personal property tax, he should also favor dumping the corporate income tax, which, like the personal property tax, is not paid by businesses, but is paid by businesses’ customers.

Wineke’s focus on taxes ignores the fact that, while taxes are the most important component of a good, or bad, business climate, it’s not the only component. I’d love to see a Democrat take on the job-killers at the Department of Natural Resources and the other regulatory agencies that make doing business a struggle in this state.

Wisconsin business moves by highways.  It costs millions of dollars to replace or add a mile of road.  Our transportation funding system is a relic from 50 years ago.  It is dominated by a large gas tax and a registration fee that is regressive.  The United States has reduced oil consumption by nearly 15% in the past two years, reducing available tax revenue.  This trend will continue.  We must have the courage to find new ways to fund transportation.  The most logical way is to create an assessment on vehicle miles traveled (VMT).  A VMT assessment is fair.

Here’s where our paths diverge. My preferred way to fund transportation is to fund vehicular transportation, and not mass transit, bike paths or the other non-vehicular forms of transportation that suck money out of the transportation fund while having nothing to do with moving state businesses’ products from plant to seller. Apparently Wineke is OK with the state’s knowing how much you drive; I am not.

Fourth, we need to get back to funding education properly.  In recent years, education has become a “whipping post” for too many.  Instead of cutting income taxes by two dollars a week, put that money into K-12 education, technical colleges and our University System.  We also need to refocus our technical colleges away from being the portal to enter four-year campuses and get them back to teaching job skills.

When you consider that the number one area of state spending is on education, it’s unclear what “funding education properly” is, or what the result of “funding education properly is.” This state’s schools are, bluntly, overrated, despite the fact that few states’ taxpayers have been burdened by the taxes Wisconsinites pay for our supposedly great schools. Schools need to earn more money by doing better, not merely given what the education establishment defines as “funding education properly.”

The other thing about school funding is that there remains no evidence that school quality leads to economic growth on the macro (that is, statewide) level. As I’ve pointed out before, when a person’s education improves, that person’s economic opportunity improves, including leaving Wisconsin for greener pastures. We’ve had better schools than most other states for the entire 30 years our state has ranked 48th in personal income growth.

I disagree with a lot of what Wineke wrote, but I give him credit for not singing out of the Democratic songbook. (Using a bible metaphor seems oxymoronic.) The state’s business climate should be a nonpartisan issue. If you’re going to create more jobs, you have to improve the business climate, since, even in this overgoverned state, business still employs the majority of employed Wisconsinites.

Assuming that jobs are an issue in the 2014 elections, Wisconsinites should welcome Democratic candidates who come up with a superior approach to the approach of the late 2000s Legislature, which, under Democratic control, took a poor business climate and made it worse. Democratic gubernatorial candidate Tom Barrett didn’t come up with a better approach, which is why he remains the mayor of Milwaukee and why Democrats are the minority party in the Legislature.

04.20.13
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Happy (?) Tax Freedom Day

As you know, the Tax Foundation’s Tax Freedom Day is the day when we taxpayers are done paying our federal, state and local taxes for the year, and everything from here until Dec. 31 goes to such frills as housing, food and clothing.

As you know, Wisconsin has the fifth highest state and local taxes in the country.

So it shouldn’t be surprising that today, Tax Freedom Day in Wisconsin, is the 11th latest Tax Freedom Day in the nation.

I bring this up not just because Tax Freedom Day is today, but because of a snarky comment The Capital Times made about a blog of earlier this week:

Wisconsin right-wing bogger Steve Prestegard, convinced that Wisconsin under Scott Walker is doing just fine, quotes another right-wing blogger, Christian Schneider, to explain why Wisconsin is lagging so far behind other states in job creation and economic growth. The conclusions are, well, interesting.

At the risk of appearing to not appreciate the attention for my “bog,” whoever wrote this clearly didn’t read what I wrote, which was that things under Walker are not just fine, but they have been not just fine well before Walker took office. My proof is in this appalling comparison of taxes to personal income dating back to the days of Gov. Patrick Lucey:

state vs nation income

This graphic (from this page) shows this state’s percentage of income in taxes, and (in the third column) its national ranking. (We are apparently supposed to believe that ranking fifth is better than first or second.) The last column is national average per capita income, and two columns to the left is Wisconsin’s average per capita income for that same year.

Since 1977, when Jimmy Carter was president and Martin Schreiber (who took over as governor after Carter named Lucey ambassador to Mexico), and I was in middle school, Wisconsin’s per capita average income was higher than the nation’s in only three years, 1978 through 1980. Every year since then, Wisconsin’s per capita average income has been less than the national average. (And the gap was particularly bad between 2005 and 2009, when James Doyle was governor. Contrary to Christian Schneider‘s assertion that Wisconsin fared relatively well in the late 2000s recession, state per capita average income was $6,700 less than the national average between 2008 and 2010.)

Think you could have used another $1,600 of income (the 2010 difference between Wisconsin average income and national average income)? Well, thanks to the state government and the 3,120 local governments, you can’t have it. (Imagine what the state’s economy might be like if every Wisconsinite had $1,600 more in his or her wallet every year. Well, you can’t have that either.)

Politicians who oppose radical state and local tax reform would claim the link between high state and local taxes and below-average personal income is correlation, not causation. That link has been the case every year since 1980. That’s not an accident, and that’s not a coincidence. Remember the economic rule that if you want less of something, tax it? Apparently Wisconsin voters are fine with less income; they’ve been voting that way for decades.

So, for the illiterates at The Capital Times: No, Wisconsin is not “just doing fine.” Wisconsin hasn’t been “doing just fine” for a long, long time. Wisconsin will not do “just fine” until Wisconsin takes the radical step of substantially lower taxes (how about ranking 25th in state and local taxes instead of fifth?) and a much smaller government to match. That means cutting taxes a hell of a lot more than 27 cents per day and making it impossible to raise them without taxpayer approval (remember the Taxpayer Bill of Rights?).