Walker and Wisconsin

Brian Riedl:

Wisconsin Gov. Scott Walker is seemingly in the fight of his political life—again. Elected narrowly in 2010 and 2014 (and surviving a recall election in 2012), he trails state education superintendent Tony Evers by a few points in his quest for a third gubernatorial term. One summer poll showed that just 34 percent of Wisconsin voters believe Walker deserves re-election, although his numbers have since modestly rebounded.

It is not surprising that a Republican governor of a purple state is struggling in 2018. The surprise is that Scott Walker may lose despite building a record of achievement that should be the envy of any governor, even Democratic ones in some respects. (Full disclosure: I was born and raised in Wisconsin, and I occasionally advised Walker a few years ago.)

After succeeding Democratic Gov. Jim Doyle in 2010, Walker inherited a free-falling state with a $2.5 trillion structural budget deficit, rising taxes, and an 8-percent unemployment rate.

Faced with a state balanced-budget requirement and soaring public employee costs, Walker pushed through the “Act 10” reforms that required public employees to contribute to their own pensions and pay at least 12.6 percent of the cost of their own health insurance premiums. Act 10 also limited collective bargaining between the public employee unions and the state—which had driven benefits to exorbitant levels—and also allowed school districts to shop around for employee health care providers. These reforms helped balance the budget while requiring little of public employees that is not already required of private sector workers.

Walker has since maintained these balanced budgets while nearly freezing property tax collections for eight years, and reducing income tax rates across the board. Tax rates were cut the deepest in the bottom bracket, which is now at its lowest rate since 1985.

And yet public services were not starved.

Start with health care. Although Wisconsin turned down the federal Medicaid expansion funding, Walker enacted his own health care expansions that completely eliminated the health coverage gap for low-income families. This past summer, he won federal approval for a $200 million reinsurance program for 2019 that will result in a 3.5 percentdecline in costs for the average family on the ACA marketplace exchanges (11 percent lower than without this program). The U.S. Department of Health and Human Services now ranks Wisconsin fourth in overall health care quality.

Walker has since maintained these balanced budgets while nearly freezing property tax collections for eight years, and reducing income tax rates across the board. Tax rates were cut the deepest in the bottom bracket, which is now at its lowest rate since 1985.

And yet public services were not starved.

Start with health care. Although Wisconsin turned down the federal Medicaid expansion funding, Walker enacted his own health care expansions that completely eliminated the health coverage gap for low-income families. This past summer, he won federal approval for a $200 million reinsurance program for 2019 that will result in a 3.5 percentdecline in costs for the average family on the ACA marketplace exchanges (11 percent lower than without this program). The U.S. Department of Health and Human Services now ranks Wisconsin fourth in overall health care quality.

Moving to education, Wisconsin’s per-capita education spending has remained near the national average, as have teacher salaries and benefits (despite Act 10). The state’s average starting teacher salary—$36,983—is in line with neighboring states.

More boldly, the University of Wisconsin system—which enrolls more than 170,000 students across more than a dozen universities—is now in year six of a historic 10-year tuition freeze for in-state undergraduates. In the 11 years before the freeze, tuition had jumped between 6 percent and 18 percent every year. At the flagship University of Wisconsin at Madison, in-state tuition is now 26 percent lower than the University of Minnesota, 27 percent lower than the University of Michigan, and 33 percent lower than the University of Illinois.

Finally, Wisconsin has balanced its books while maintaining a state pension that is 99-percent funded—tops in the country and dwarfing neighboring Minnesota (53 percent funded) and Illinois (36 percent). Illinois in particular has been brought to its knees by a long-term pension shortfall estimated between $130 billion and $250 billion.

Wisconsin’s economy is also roaring. Despite the aforementioned 8 percent unemployment rate when Walker took office, Wisconsin’s rate has fallen below 3 percent for the first time ever measured even despite a higher-than-average labor force participation rate. The state also ranks second in the country in manufacturing jobs created over the past year.

The University of Wisconsin’s Center for Research on the Wisconsin Economy (CROWE) reports that per-capita incomes are growing fasterthan nearly all neighboring states. In fact, Wisconsin’s average private earnings rose by 6.6 percent last year, compared to 1.8 percent in Minnesota. CROWE research also shows that, since 2010, Wisconsin families have enjoyed real income growth of 13.1 percent (14.3 percent including tax relief), which well exceeds the national average and represents $11,200 in new income per family.

To recap: under Governor Scott Walker, Wisconsin eliminated its budget deficit while significantly cutting taxes and maintaining America’s top-funded pension system. Health care coverage is expanding while health premiums are falling. University tuition is enjoying a historic ten-year freeze, and K-12 education spending remains healthy. The state is benefiting from its lowest unemployment rate ever measured, and family incomes are soaring.

Yet only 34 percent of voters consider this record to be worthy of re-election. Three reasons have emerged.

First, Trump’s unpopularity—even in Wisconsin, which he narrowly won—is driving many voters to punish all Republicans.

Then there is voter complacency. It is not uncommon for voters to get the “eight-year itch,” and begin to take strong economic and budgetary progress for granted. Anyone can find some priority they want further emphasized, and a challenger candidate can promise all things to all people. Specifically, surveys show that Wisconsin voters want even more spending on schools, roads, and health care, and are skeptical of $4 billion in incentives that lured Taiwanese manufacturer Foxconn to pledge a $10 billion investment in Wisconsin. Many others have never forgiven Walker for Act 10 (which brought the aforementioned recall election), even though eliminating the state’s $2.5 billion structural deficit left few plausible alternatives.

Finally, Scott Walker has long been considered a polarizing figure. He has certainly not backed down from partisan fights. Across the state, scars remain from the 2011 Act 10 debate that brought massive liberal protests and even State Senate Democrats fleeing the state to deny the necessary quorum to pass the legislation. Walker’s brief 2016 presidential run was widely criticized by Wisconsinites as an act of hubris from a governor who had been on the job for only six years (even he now admits it was a mistake).

Legendary baseball manager Casey Stengel famously declared that “the key to being a good manager is keeping the people who hate me away from those who are still undecided.” Roughly 45 percent of this purple state’s voters have long been committed to Walker’s defeat. Despite an extraordinarily successful gubernatorial record, holding the remaining 55 percent together will require Scott Walker surviving the Trump effect, a tendency to polarize, and voter complacency.

Regardless of how you or I feel about everything Walker has done, it should be obvious that if you want the state to return to the days of a cratering economy, vote for Tony Evers and other Democrats.

 

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