MADISON, Wis. (CBS 58) – About $70 million in budgetary spending cuts have taken effect across several agencies as the state tries to manage the likely long-term economic effects of the COVID-19 pandemic.
The largest cut is with the UW System which saw a $40.8 million budget reduction. The next largest cut was for the Department of Health Services which saw a cut of $7.5 million.
The Evers administration’s planned actions were initially praised by Republicans, but have since drawn some criticism.
“After claiming that he would cut state operations spending by 5%, the plan released by Governor Tony Evers […] shows actual cuts to operations spending of less than 2.5%,” Rep. John Nygren (R – Marinette) said in a statement released this week. “Making matters worse, nearly two-thirds of the cuts are being shouldered by the UW System. While Gov. Evers’ initial announcement was promising, this additional information leaves more questions than answers.”
Remember that we do not have a tax surplus… yet. We have a projection that says that we will have a surplus at the end of the budget next summer. Bearing that in mind, this is a good bill. It takes a projection that says that the state is collecting more taxes than it needs and reduces the taxes accordingly. If the projection is wrong and we head into deficit, then they can adjust taxes the other direction. To my point in a column a few weeks ago, however, this is not spending money we don’t have. It isn’t spending anything at all. It is simply having the government collect LESS so that it does not run as much of a surplus over the term of the current budget.
The tax cut bill would would deliver an average reduction of $106 for most qualifying filers. Married couples who file jointly would see an average cut of $145; all other filers would see an average reduction of $81. The bill also would reduce taxes for manufacturers by nearly $45 million by exempting their machinery and tools from property taxes and trim state debt by $100 million.
This is a good bill. It is unfortunate that Governor Evers will likely veto is so that the government can overcharge for their services and spend more.
by Owen | 1356, 28 Oct 1919 | Politics | 3 Comments
Despite record taxing, the state will still not have enough to cover it’s projected spending. It’s the spending, stupid.
Wisconsin had the highest budget reserves in 40 years this June largely due to a spike in corporate tax revenues, according to a report from the nonpartisan Wisconsin Policy Forum. However, the report says the state’s reserves are still slightly below the national average and the current state budget will spend $800 million more than the state is projected to take in by 2021.
The analysis looked at Wisconsin’s Annual Fiscal Report that provides data on state taxes, spending and reserves. It shows the state had $1.7 billion in budget reserves after taking in more than $17 billion in tax revenues during the prior fiscal year, which ended June 30. That was a year-over-year increase of 7.4 percent and the largest annual percentage increase since 2000, according to the report.
Jason Stein, a researcher for Wisconsin Policy Forum, said the overall increase in the state’s tax revenues was driven largely by a spike in the amount of Wisconsin corporate tax revenues. He said the state collected more than $442 million in corporate taxes.
“Corporate taxes, especially, rose almost 50 percent,” said Stein. “So, that was the most they have risen, the fastest rate since 1964. So, that’s really an exceptional change. And it was due to a couple things and one of them was due to that federal tax law.”
There are only three acceptable uses for a government surplus. 1) return it to the taxpayers; 2) pay down debt; & 3) put it in the rainy day fund. In this case, the rainy day fund is already well funded. In this case, they should just give it back.
Wisconsin collected $76 million more in taxes than anticipated last fiscal year, prompting lawmakers from both parties to claim credit for a sign of positive economic growth in the state.
The nonpartisan Legislative Fiscal Bureau on Monday announced general fund tax collections for the 2018-19 fiscal year, which ended June 30, were up 7.4% from the previous year.
The $17.3 billion collected in taxes was $75.5 million, or 0.4%, more than anticipated in May when the state was finalizing its 2019-21 budget.
The MacIver Institute has a good rundown of the budget after Evers’ 78 line item vetoes. Here’s the short version: Evers got 80% of what he wanted, so he signed it with a few tweaks. Big-spending Republicans got 80% of what they wanted. Conservatives got nothing.
Politically speaking, this was a disaster for Republicans. They managed to piss off conservatives in their base with a big-spending budget without appeasing or winning a single vote from the other side. Meanwhile, Evers walks away with a 80% win and can continue to demonize Republicans for not giving him everything.
Evers received the budget on Friday. He has until July 5 to decide what to do.
The Journal Times asked Evers’ office about specific provisions in the budget regarding transportation and education, along with several Racine County-centered provisions. Evers’ office did not specifically respond.
Evers’ office stated that the governor’s “team is reviewing the Legislature’s changes to the budget, and the governor looks forward to receiving the biennial budget bill as soon possible.”
The worst case scenario is that Evers vetoes out the few good things in this budget, like the tax cut, and leave the rest of the crap (massive spending increases, fee increases, etc.) in place. Wisconsin would be better off if Evers vetoes the whole thing and we revert to the previous budget. And then, perhaps, the Republicans will realize that their duty is to their constituents and not Evers and the Madison swamp.
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One more thing… this is a big part of the problem:
“The reality is he’s the governor for four years, so you can either choose to argue 24/7, or set aside things that would cause arguments and focus on the things where you can hopefully find that middle ground,” Vos said.
What an incorrect vision of the job of the opposition leader. If Speaker Vos is just going to lead the Republicans to “set aside things that would cause arguments,” then what is the point? The entire point of having more than one party is that they DISAGREE and ARGUE about it. If Vos is just going to do his job with the goal of avoiding arguments, then he is the wrong person for the job.
On a largely party-line vote, the Republican-controlled state Assembly on Tuesday approved an $81 billion, two-year spending plan with last-minute changes to increase funding for district attorneys and allow carmaker Tesla to sell directly to consumers.
The changes could appease a handful of skeptical conservatives in the Senate, which is also controlled by Republicans and where one more “no” vote could sink the budget in that chamber.
Senators take up the plan Wednesday. If passed, it would then go to Democratic Gov. Tony Evers, who has broad authority to make changes.
Here is the vote.
Huzzah, huzzah for local representatives Gundrum, Brandtjen, and Ramthun. Apparently, they are the only conservatives left in the Assembly. How quickly this caucus snapped back to the Left without Governor Walker as a guardrail.
What’s wrong with you, Knodl? Jagler? Sanfelippo? Is this what you think your constituents want, or have you gone native? This vote is disgraceful.
And Robin Vos? You will never be governor of this state. You peaked and you blew your chance to be anything more than yet another Madison swamp creature.
Now we head to the State Senate. Hopefully my senator, Duey Stroebel, has a change in heart from his ill-advised JFC vote, joins the other conservatives in the caucus, and spiked this budget until they can come up with something better.
MADISON (CBS 58) — The state assembly is set to vote on Wisconsin’s next budget this Tuesday. However, lawmakers on both sides will have to compromise before it’s passed.
University of Milwaukee political science professor Mordecai Lee said that’s the challenging part. “The Republican Legislature and the Democratic Governor are barely talking to each other.”
Two GOP lawmakers have threatened to vote against the $81-billion proposal drafted by their party. If one more Republican senator vows to vote against it, the budget won’t pass.
Those senators say there’s too much spending. “Overall the spending has just taken over. It is less than Tony Evers’ budget, however, Tony Evers’ budget was astronomically expensive,” said Sen. Stephen Nass.
My column for the West Bend Daily News is online and in print. I’m not a fan of the budget that the JFC passed. Yes, they resisted the ultra-liberal policy ideas of Evers, but this budget could have been passed by any Democratic legislature in the past 40 years and you wouldn’t be able to tell a difference.
Wisconsin’s Joint Finance Committee has finished the state budget and sent it to each house of the Legislature for approval. House Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald have said that they expect their respective houses to pass the budget and send it to the governor within the next few weeks. Conservatives in both houses will have to delay that timetable because this budget still needs a lot of work.
Simply put, the budget passed by the Republicans on the Joint Finance Committee spends too much, borrows too much, raises too many taxes and fees, and fails to deliver on the promises made by Republican politicians in the last election.
When Gov. Tony Evers was elected, Wisconsinites knew that they were getting a governor who is much more liberal than Gov. Scott Walker. What they did not fully appreciate, perhaps, is just how liberal and rigid Governor Evers would be. During the first few months of Evers’ term, the Republicans reached out several times to find common ground and compromise on some of Evers’ stated initiatives. Each and every time, Evers rebuffed them and insulted their efforts to anyone who would listen. Evers even went so far as to call Republican leaders sexist for having the temerity to want to actually speak with the governor instead of his underlings.
While isolating himself in his Fortress of Hebetude, Governor Evers underscored his unwillingness to compromise by unleashing a budget proposal so riddled with liberal largesse that the Republicans in the Legislature had to toss it in the dustbin and start from scratch. Yet, despite everything, the budget passed by the Republicans on the Joint Finance Committee is far closer to Evers’ budget than they would like to admit. They cast aside most of Evers’ liberal policies, but left in place the bulk of the spending and taxing.
Overall, the budget passed by the JFC increases state government spending by about $4 billion, or 5.2%. That compares to a spending increase of $6.4 billion, or 8.3%, proposed by Governor Evers. That compares to an average inflation-adjusted personal income growth rate of 1.5% since the Great Recession according to the Pew Charitable Trust. Once again, state government spending outstrips Wisconsinites’ ability to pay.
Where is all of that spending going? The JFC budget includes spending an additional $500 million on K-12 schools. This is on top of the $639 million in additional spending that the Republicans included in the previous budget. The JFC budget spends more than $12 billion on K-12 education — by far the largest total in state history. But despite the massive spending increases, Wisconsin’s government schools continue
to deliver mediocre results. Spending more money on mediocrity will only encourage more mediocrity.
The JFC budget spends an additional $58 million on the UW System. This is the same system that lavishly wastes money on useless infrastructure and bloated staff while enrollment continues to decline. On top of the $58 million for operations, the UW System would receive another $1 billion to dump into more buildings. Much like so many local school districts, UW officials continue to prioritize swank buildings over delivering a better education.
When it comes to transportation, the JFC budget would spend an additional $484 million. Despite a recent report that detailed the waste and poor management that is endemic in the Department of Transportation, Republicans decided to throw more money into the pockets of the road builders without demanding a single iota of additional accountability or reform. Once again, the spending comes with a promise of some future reform that nobody really believes will happen.
I could go on, but you get the point. At the last minute, the Republicans threw in a moderate income tax cut of $321.5 million that would lower the second-lowest income tax bracket. While tax cuts are always welcome, this one is a calculated distraction. Evers will almost certainly use his powerful line-item veto power to veto the tax cut while leaving all of the spending in place. Republicans will then loudly wail about the veto of tax cuts in the press while celebrating the spending increases in private. It is the kind of cynical political gamesmanship that make people hate politicians.
The Republican leaders and the Joint Finance Committee had the opportunity to pass a fiscally conservative budget that drew a sharp contrast with Evers’ liberal budget. Instead, they gave the people a budget that could have been passed by any Democratic Wisconsin Legislature in the past 40 years. Now it is up to the rank-and-file Republicans and conservatives in the legislature to buck their leadership’s tax and spend proclivities and give the people who elected them a budget they can afford.
Republicans on the Legislature’s Joint Finance Committee voted along party lines Thursday to pass a two-year state budget that rejected many of Gov. Tony Evers’ top priorities, saying their plan lives within the state’s means while increasing funds for schools and roads.
Republicans also voted Thursday for plans that would cut taxes on the average taxpayer by about $75 in the 2019 tax year and $136 in 2020, which would amount to a $457.6 million income tax cut overall.
[…]
Speaking shortly after the vote, Sen. Majority Leader Scott Fitzgerald, R-Juneau, said Senate Republicans would meet to discuss the budget on Tuesday. Some GOP senators, like Sen. Steve Nass, R-Whitewater, have said they’re unhappy with how much the bill would borrow and spend, not to mention increased fees on vehicle titles and registration.
The news outlets are horrible about reporting the budget. They spend a lot of time comparing it to Evers’ budget and talking about the politics of it without actually telling us what’s in the blasted budget. You can go to the JFC website to get details, but you have to dig.
In the last budget, the Republicans missed the opportunity to pass a real conservative budget and it was a substantial reason why a lot of Republicans sat home last year. Here they go again. I get that we have a liberal governor with a powerful veto pen, but the Republicans barely even phoned in a fight over spending. The budget just passed by the JFC increases spending by $4 billion dollars, lavishly rewards money pits like Transportation and UW without even a hint of reform, and jacks up fees. The legislative Republicans on the JFC and in leadership gave in to the pressures of Madison and ignored the people who elected them.
Then, perhaps realizing that this budget is bad, they throw in a tax cut as a separate bill to distract us from how awful the budget is – knowing full well that as a separate bill, Governor Evers will veto it. Imagine what kind of tax cut we could have if they actually cut spending and put the tax cut into the budget. Imagine if Republicans fought for their constituents like Democrats do.
Speaker Vos, Senate Majority Leader Fitzgerald, and the Republicans on JFC should be ashamed of themselves.
My column for the Washington County Daily News is online and in print. Here you go:
Wisconsin has long been a tax hell where it is more expensive to live, work, and play than in most other states. Gov. Scott Walker and the legislative Republicans made some progress over the last eight years in making the state more affordable, but now many of those same legislative Republicans are allowing the state to slide back.
One of the myths perpetuated by Wisconsin’s liberals is that Governor Walker and the Republicans cut spending and starved government when Walker was in office. We have all heard the claims of cutting “to the bone” and draconian austerity measures. All of those claims are wrong. The truth is that every state budget that Walker signed spent more than the previous one.
What Walker and his Republican partners in the Legislature did was keep the spending increases smaller than normal while cutting taxes, deregulating, and aggressively working to improve the business climate. The result was a sustained period of improving in the national tax burden rankings (primarily because other states were jacking up taxes while Wisconsin held steady), higher employment, private-sector growth, and increasing tax revenues that resulted in budget surpluses.
It is a formula that works for a while, but it does not fix the root cause of the issue. Wisconsin is a tax hell because the government spends too much. Politicians can feed the spending beast without tax increases for a while by borrowing, juicing the economy with tax cuts and deregulation, and financial gimmickry, but eventually the bill must be paid. State government does not have the ability to print money like the federal government.
Now that Governor Walker has been replaced by a doctrinaire, tax-and-spend Gov. Tony Evers, the legislative Republicans who worked so well with Walker are regressing.
The state budget is being crafted by the Legislature’s Joint Finance Committee. Once the JFC is finished with the budget, it will be sent for votes and possible amendments in the Assembly and the Senate. Since the Republicans still command sizable majorities in both houses of the Legislature, the Republicans are in complete control of what goes into, and what gets left out of, the budget.
Over the past few weeks, the Republicans on the JFC have been on a spending spree. They decided to spend an additional $500 million on K-12 education despite no correlation between spending and educational
outcomes. The Republicans increased spending on UW by $58 million even though the UW System has refused to consolidate and economize in the face of declining enrollment.
Last week, the JFC cranked up spending on transportation to the tune of $484 million. Perhaps remembering the 2017 audit completed by the Legislative Audit Bureau that found billions of dollars of waste and overruns in the Department of Transportation, Republican leaders have promised a series of reform bills are in the works, but it is worth noting that they are willing to spend the money before any reforms are even introduced — much less in place.
On those three items alone, Republican leaders in the Legislature are already committing increasing spending by over a billion dollars — and there are dozens of state departments to go.
Republicans are also already acknowledging that the days of increasing spending without tax increases are over. Their desire to spend more is outstripping their ability to keep taxes in check. In order to support the spending increases for transportation, the Republicans voted to increase vehicle title fees by $95 and annual registration fees by $10. They expect these to extract an additional $393 million from hardworking Wisconsinites to support their gross spending habit.
Even during the Walker era, Wisconsin’s Republicans have never been able to shake their spending addiction. They spend a little less than Democrats, but never actually cut spending. And if we never cut spending, we can never sustain cutting taxes. Now that Governor Evers has moved the spending goal even higher, the Republicans in the Legislature seem to be reveling in exploding spending without any pressure from the governor’s office to restrain themselves.
The Republicans lost every statewide election in Wisconsin last year largely because they gave up on the conservative revolution and failed to give the Republican grass roots anything to be excited about. Their behavior in this budget is evidence that they have not learned the lesson.
MADISON, Wis. (WSAW) — $753 million more than anticipated: that’s what Wisconsin’s legislative fiscal bureau announced Wednesday as extra funding for the next biannual budget.
But Wisconsin’s Department of Revenue (DOR) Secretary Peter Barca tells NewsChannel 7 that extra money may not be quite what it seems.
On Tuesday, the Department of Revenue released a statement showing a sharp increase of revenue coming in from corporate tax collections compared to 2018, which Barca says largely contributed to that extra $753 million.
When Gov. Tony Evers released his executive budget proposal at the beginning of March, Republican leaders in the Legislature immediately dismissed it as an unserious liberal manifesto — which is precisely what it is. Last week, the Legislature’s Joint Finance Committee began the serious work of crafting a budget for Wisconsin. Their first step was to toss most of Evers’ silly budget in the trash and start from scratch. Despite Evers’ bravado, the Republicans have a strong hand to play and are on the right side of public opinion.
In a time of divided government, it is worth remembering the relevant powers of each branch of government. The legislative branch has the power to create legislation and the power over where to spend tax dollars. The executive branch has the power over administrative rules (filling in the gaps to execute laws) and the power to veto legislation which the governor disapproves.
Governor Evers has already shown that he is not shy about using his veto power. In fact, he vetoed the middle-class tax cut, which was the very first bill to reach his desk. But while Evers can veto things he does not like, he does not have the power to create laws that he wants. To get a law that he wants to his desk, Evers must be willing to negotiate and compromise with Republicans, but Evers has shown that he has little aptitude or appetite to deal.
This delineation of powers is relevant to the actions taken by the JFC last week. The committee scrapped almost all of Evers’ non-budgetary policy initiatives including expanding Medicaid, legalizing medical marijuana, capping school choice, increasing the minimum wage, granting driver’s licenses to illegal aliens, repealing right-to-work, closing the dark store loophole, ending the property tax levy freeze for counties and municipalities, and dozens of additional initiatives that never belonged in the budget.
What is left are mostly just the nuts and bolts of funding Wisconsin’s state government,which what the budget is supposed to do. As the legislative Republicans go about assembling those nuts and bolts, recent polls show that a majority of Wisconsinites support conservative legislative goals.
For example, in a recent poll of likely voters conducted for Wisconsin Manufacturers & Commerce, a state business group, found that 60% of likely voters oppose raising property taxes on businesses and 53% oppose raising the gas tax. Some 77% oppose raising taxes on manufacturing, And 69% oppose eliminating the property tax levy freeze, and 77% oppose raising energy taxes. Up to 83% oppose indexing gas taxes and 63% oppose eliminating drug testing for welfare recipients.
All of those things that Wisconsinites oppose were things that Governor Evers included in his budget proposal and the Republican threw out — except for the gas tax increase. Republicans should take note of that. They are on the right side of these issues except for some of the Republican leadership’s maddening affection for raising the gas tax.
Over the next few weeks, the Republican-led Legislature is going to hash out a budget and send it to Governor Evers for his signature. Governor Evers has arguably the most sweeping veto power in the nationwith the ability to strike out words and sentences to make the budget more to his liking, or he could veto the whole thing. What he cannot do is write new language into the law. That is the exclusive prerogative of the Legislature.
What Governor Evers decides to do with the budget will determine how likely he is going to be able to get any of his agenda done for the rest of his term. If he uses his veto pen to strike out every Republican initiative he can, then those same Republicans are unlikely to every put a bill that Evers wants on his desk. If he accepts some compromise, then some of the ideas stricken from his budget proposal may see life again in a separate bill.
In the end, the Legislature holds an ace. Wisconsin will not shut down if Evers vetoes the entire budget and the state enters the new fiscal year without a new budget. By law, the old budget that was passed by many of the same legislative Republicans and signed by Gov. Scott Walker will continue in force. From a conservative perspective, a new fiscal year with no spending increases and no tax increases sounds pretty great.
Over the next few weeks, the Republican-led Legislature is going to hash out a budget and send it to Governor Evers for his signature. Governor Evers has arguably the most sweeping veto power in the nation with the ability to strike out words and sentences to make the budget more to his liking, or he could veto the whole thing. What he cannot do is write new language into the law. That is the exclusive prerogative of the Legislature.
What Governor Evers decides to do with the budget will determine how likely he is going to be able to get any of his agenda done for the rest of his term. If he uses his veto pen to strike out every Republican initiative he can, then those same Republicans are unlikely to every put a bill that Evers wants on his desk. If he accepts some compromise, then some of the ideas stricken from his budget proposal may see life again in a separate bill.
In the end, the Legislature holds an ace. Wisconsin will not shut down if Evers vetoes the entire budget and the state enters the new fiscal year without a new budget. By law, the old budget that was passed by many of the same legislative Republicans and signed by Gov. Scott Walker will continue in force. From a conservative perspective, a new fiscal year with no spending increases and no tax increases sounds pretty great.
MADISON – State Transportation Secretary Craig Thompson conceded Wednesday that Democratic Gov. Tony Evers’ plan to eliminate a required markup on gasoline may not save as much money as his boss has claimed.
Thompson made the acknowledgment as Republicans who control the Legislature’s budget committee ripped apart Evers’ budget and made clear they would not go along with plans he campaigned on.
“Today is a reset for the budget as proposed,” Rep. John Nygren, co-chairman of the Joint Finance Committee, said at the committee’s first budget meeting.
The Marinette Republican called the plan “irresponsible” because of its $1.3 billion in tax increases before the panel heard testimony from Evers’ allies who oversee the departments of public instruction, transportation and health services.
Gov.-elect Tony Evers and Lt. Gov.-elect Mandela Barnes have announced they will hold four public listening sessions before Christmas to get the public’s input on the upcoming state budget. The four sessions will be today in Green Bay, Wednesday in Wausau, Dec. 18 in La Crosse and Dec. 19 in Milwaukee.
Since all four sessions begin during working hours and, like most tax-paying Wisconsinites, I work for a living, I will not be able to attend and give the incoming administration my thoughts in person. This column will have to suffice.
As the Legislature and governor begin the process of crafting the next state budget, they must do so with the understanding that Wisconsin is not immune from the economic winds blowing across the nation. While the underlying economic metrics remain strong, several leading indicators, including the wild movements in the stock market, foretell a looming recession within the next year or two.
Since Wisconsin uses a biennial budget, it is likely the next recession will come during the budget our elected officials are about to write. They must write that budget understanding recessions always lead to a decrease in state tax revenue while making higher demands on state services like welfare and Badger-Care. To that end, the overriding objective of the next state budget should be to reduce spending, reduce taxes and continue to pump money into the state’s rainy day fund, because rainy days are in the forecast.
From a revenue standpoint, the state of Wisconsin is in great shape. Thanks to the series of tax cuts that Gov. Scott Walker and the Republican legislators have delivered over the past few years, tax revenue is flowing into state coffers at historic levels. There is no shortage of money for politicians to spend.
While the Republicans have done a tremendous job in the previous few budgets, they have failed to reduce spending. Despite claims to the contrary, every single state budget for the last generation or more has spent more than the previous budget. Granted, the Republicans did not increase spending as much as the Democrats wanted to, but they increased spending nonetheless.
The vast majority of state spending is spent on a handful of budget priorities. One cannot seriously reduce spending without looking to the big budget items. The first area Evers and the Legislature should look is at education spending.
This post is going to be a little long, so strap yourself in. If you live in the West Bend School District, you’ll want to read it. The rest of y’all should find a good college football game to watch.
On Monday, the voters of the West Bend School District are invited to attend the Annual Meeting of Electors. This is an annual meeting where, theoretically, the voters approve some of the big ticket items like the tax levy and budget. In reality, all of the votes are non-binding, so the School Board can still do whatever they want. Still, it is an opportunity for voters to show up and have their voices heard.
On the agenda this year is:
7. Consideration of Proposed Resolutions
a. Resolution No. 1 – Tax Levy
b. Resolution No. 2 – Disposal of District Property
c. Resolution No. 3 – Board Member Compensation
d. Resolution No. 4 – 2019-20 Annual Meeting Date
The only thing we have any information on is the proposed budget and tax levy, so the voters will be walking in blind to whatever the resolutions are about board member compensation and the disposal of district property. We’re going to take a deeper look at the budget and tax levy, but first, let’s discuss the process a little.
In years past, the West Bend School Board began its budget process in the spring. If I remember correctly (I’m sure someone will correct me if I’m wrong), we usually got a preliminary budget in the April/May time frame. That high-level preliminary budget was posted on the district web site and the people had some time with it.
This year, the first appearance of a preliminary budget from the school district that I saw was last Tuesday morning – after the Monday night board meeting. Perhaps it was posted Monday night. But now the Electors are being asked to vote on it a week later. One. Week. That’s all the voters get to read it and understand it. There hasn’t been any time for the media or interested parties to ask questions. There hasn’t even been another board meeting where citizens could voice their opinions on it. There is really no excuse for this kind of opaqueness from the West Bend School Board. They have had this information for months, but failed to be transparent about it. Their lack of transparency is not incompetence. It is willful.
That being said, let’s look at the budget. As we get into it, we must remember the context of this budget. The West Bend School Board just postponed action on a $85 million referendum. Budgets are where we define our priorities. There is always an unlimited list of needs/wants (the distinction between the two often being in the eye of the beholder) and a limited amount of money to pay for it. The budget is where you have to prioritize that list.
There are two versions of the West Bend School District’s Preliminary Budget. Here is the summary document that is being provided for the meeting on Monday. Here is a slightly more detailed version that was presented at the School Board meeting last week. Neither version is nearly as detailed as what other districts, like Slinger, provides. Again… transparency…
Let’s start with the revenue side of the budget. There are two primary sources of revenue for a Wisconsin school district – the local property tax levy and state aid. The West Bend School District is facing a demographic and societal shift that is causing a decline in enrollment for the foreseeable future. The estimates range between a 10% and 20% decline in enrollment in the next 10 years. This is a significant impact on the state aid that the district receives because it is based on enrollment. Also, enrollment affects the property tax levy limit for the district. In short, the West Bend School District is facing a sustained period of declining revenue. In the preliminary budget (focusing on the operating budget and not the special parts), we see this manifest in a projected $233,405 decrease in revenue.
That decrease in overall revenue is despite a property tax hike. The School District wants to increase the property tax levy by $928,249 – the maximum amount allowed by law. Most of this is offset by a decrease in the levy due to some debt service coming off the books, so the impact will be minimal. But taxpayers could be enjoying a rare tax decrease if not for the School Board’s desire to tax to the max.
In light of that fact, let’s take a closer look at the spending side of the budget. Overall, the preliminary budget proposes a $1.3 million spending increase. You’re reading that right. The preliminary budget has a structural $1.4 million deficit.
The School District must have a balanced budget, so they are raiding their reserve fund to fill the gap. Superintendent Don Kirkegard acknowledges that this is not sustainable and he will be working to bend the district’s cost into the revenue number next year. I cut him some slack because he has only been on the job since July and was handed this budget. Also, he comes from another state and it takes a little time to learn the Wisconsin Way of school budgeting. This budget is the product of the interim Superintendent, staff, and most of all, the School Board.
What is driving the spending increase? Almost all of it is due to a planned compensation increase for the teaching staff. Although salary negotiations are still underway, this budget includes a 2.1% base salary increase. That is the maximum that the School Board would have to give under Act 10. That amounts to a $929,853 compensation increase. That umber is a little misleading because the budget number includes benefits, salary, and headcount fluctuations. But based on the commentary at the school board meeting last week, that number is about right. They are planning roughly a $900k salary increase.
The other increases are scattered around the budget. It is a little hard to tease them out because the district is also reallocating a lot of expenses. According to the Superintendent, they are working on reallocating expenses to the building level so that they can have better visibility to where the expenses are actually being spent. That’s a good thing, but it makes year-to-year trending data difficult.
The story of this budget is not really what it does, but what it doesn’t do. The West Bend School Board is facing declining enrollment and, consequently, declining revenue. Next year they are planning to ask the taxpayers to dig deeper into their family budgets and pay more for bigger, newer facilities. This budget is the School Board’s statement of priorities before asking the taxpayers for more money and they chose to kick the can down the road another year. They are choosing to not make any hard decisions nor demonstrate that they will be good stewards if the taxpayers give them almost the equivalent of an entire year’s budget to spend all at once.
Here are just a couple things this budget does not do:
Maintenance. Many of the facilities needs that are driving the perceived need for a referendum are due to years of poor maintenance. Jackson Elementary is old and falling apart, they tell us. The High School building needs serious renovations and repairs, we’re told. I defy anyone to look at the preliminary budget and determine what the school district spends to maintain their facilities. There isn’t a line item for it. According to the Superintendent, the large, capital projects like roof replacements and such are covered by the Capital Projects Fund and is about $2.3 million. More routing maintenance like carpet replacements, door repairs, fixture replacements, light bulbs, etc. are kind of tucked into the “other support services” or “central services” budget items. But those line items blend a lot of “catch all” expenses.
It is safe to say, however, that despite these pressing needs that are fueling a referendum discussion, the budget makes no serious effort to spend more on maintenance.
I tried to find some good benchmarks for what schools should spend on maintenance, but they are hard to come by. This data from the Building Owners and Managers Association says that for office space (roughly equivalent), people spend about $8.07 per square foot for annual operating expenses. That number includes some things like security, administration, etc. that are not really pertinent in a school setting. If we just include repairs, maintenance, cleaning, etc., it’s about $4 per square foot per year. The West Bend School District has 1,141,656 sq. feet of building space – not including grounds, sports fields, parking lots, etc. It is reasonable to expect that the district needs to spend $4 to $4.5 million per year just to keep their facilities reasonable cleaned and maintained. I don’t see anything near that much in the budget even as I add up the line items.
This points to a trend of School Districts intentionally under-funding maintenance, allowing facilities to decline into disrepair, and then pushing for a referendum to make up for their neglect. This budget looks like it will continue that trend.
Labor Costs. Without a doubt, labor costs are the largest expense in any school district budget. If the School Board is ever going to control costs and bring them in line with revenue projections, they have to control the cost of labor. There are only a few ways to do that. They can cut overall compensation – salaries and benefits. They can reduce the number of employees. Or they can force employee churn to create a younger, cheaper workforce.
At some point, the district needs to reduce the number of employees. There are fewer and fewer kids to teach. Therefore, there will need to be fewer and fewer teachers, administrators, and support staff to serve those kids. This needs to be done intelligently and carefully, but it needs to be done.
The School Board and this budget fail to take advantage of Act 10 to control the overall compensation costs for the employees. Employees still have a sweetheart deal on benefits. The School Board is assuming a maximum base salary increase. The School Board has not implemented merit pay or other performance-driven compensation models. They haven’t done much of anything. The compensation package for West Bend School District employees looks much like it could have in 1999 or 2005.
Once again, this budget just kicks the can down the road and fails to do anything about rising labor costs in the face of declining revenue.
The preliminary budget for the West Bend School District sends a very clear message to the citizens of the district. Despite virulent protestations about needing tens of millions of dollars in a referendum to pay for critical facilities, the School Board intends to just keep doing the same thing as if there isn’t any need at all. They are not making any hard choices or shifting any additional spending to address those needs. They are also not addressing the structural funding issues that are already impacting the district’s revenue. The School Board is planning to ask the taxpayers to dig deeper into their family budgets and give up their own priorities, but the School Board is refusing to dig deeper into their own budget. Instead, they are doing what far too many school boards do: tax to the max; give employees as much of an increase as possible; starve facilities; refuse to innovate; keep doing everything the same way and wondering why you keep getting the same results.
I will believe that there is a crisis in the West Bend School District when they begin acting like it. This budget sends the message that the School Board thinks everything is fine the way it is.
[Madison, Wisc…] The Legislative Fiscal Bureau had good news for the State of Wisconsin on Wednesday morning when it announced the state is on track to end the biennium with $137.5 million more in the general fund than originally estimated just four months ago.
In September, when the 2017-19 budget was passed, LFB estimated the state would end the 2019 fiscal year with $247.7 million. Now LFB predicts it will be $385.2 million.
The increase is expected to come from $76.3 million more in tax collections, $1.7 million more in departmental revenues, $97.7 million in lower spending, and a $38.2 million transfer to the budget stabilization fund.
The lower spending mostly comes from debt service adjustments. The state did some refinancing and is not issuing as many new bonds as expected.
My column for the Washington County Daily News is online. Here you go:
Huzzah, huzzah! The State of Wisconsin finished its last budget with a $579 million surplus. That is great news both in real and in political terms, but it also gives some perspective to some unpleasant truths.
There is no reason to understate the fact that $579 million is a lot of money. A lot. If Wisconsin had ended the budget with a $579 million deficit, it would have been considered a crisis and woeful example of incompetent fiscal management. But the fact that it is a surplus confirms the converse. Namely that the state of Wisconsin is in terrific fiscal health and its finances are being competently managed.
What is perhaps more important is that this budget surplus is merely one in a string of recent budget surpluses. Gov. Scott Walker and the legislature have been managing the state budget successfully for almost a decade and it is not going without notice around the nation. Just last week, Both Fitch Ratings and Kroll Bond Rating Agency upgraded the state’s bond rating to AA+. Fitch noted that, “the fiscal 2011-2013 budget marked a turning point, with extensive structural budget actions and the resolution of several lingering fiscal challenges.”
Fitch’s commentary is a heady tonic as Walker gets ready to officially announce his run for a third term in office. Whichever Democrat wins the nod to challenge Walker in the general election will have to make the case that budget surpluses are bad and the state’s bond rating is too high.
Walker and the legislature must now decide what to do with the surplus. There is a very easy answer to that: give it back to the taxpayers — $579 million is almost exactly $100 for every man, woman, and child in the state. Taxpayers would no doubt appreciate a $100 credit for each member of the household on their state income taxes next year. In any case, given the fact that the legislature just completed the new budget, which is balanced and not reliant on a surplus from the previous budget, they should reject the urge to spend it on things whose priority failed to garner funding in the current budget.
While $579 million is a fortune in real terms, it is only a small fraction of the state budget. The previous state biennial budget was $72,635,547,000. The $579 million surplus was, then, is about 0.8 percent of the entire amount. The 2017-2019 budget that just passed the legislature projects to spend $75,590,563,100. The surplus is only 0.77 percent of that budget.
It is worth remembering some of the heated debates that raged over the budget and delayed its passage by months. One of those debates was over the fictional budget shortfall for transportation that was estimated at anywhere between $400 million and $1 billion depending on who one asked. In order to fill that budget gap, the legislative Republicans separated into three camps.
The first camp was headed by Speaker Robin Vos and some Assembly Republicans who wanted to raise taxes to spend more on transportation. The second camp was represented by the Senate leadership and wanted to borrow more to cover the shortfall. The third, and smallest, camp of Republicans wanted to delay or reprioritize transportation projects to spend within the money already available.
In the end, the Republicans struck a compromise that did a bit of everything. They increased taxes on people who drive electric and hybrid vehicles, reprioritized some projects and borrowed a lot of money. In hindsight, that entire debate could have been rendered moot had they just prudently managed the resources available as they did demonstrated in the previous budget.
That fact raises the question, why were any Republicans ever even proposing a tax increase? Why any of them proposing more borrowing? Why were some of them so unwilling, in the context of a $76 billion budget, to reprioritize spending to fill what amounts to less than 1 percent of the state budget? Republicans should rightly be commended for their fiscal management these recent years, but some of them have drifted very far from their conservative moorings if they are reaching for tax increases and debt as a measure of first resort.
A $579 million surplus may be a lot or little depending on the perspective, but there is no argument about it being a good thing for Wisconsin. The taxpayers are continuing to reap the rewards of the conservative revolution begun at the dawn of this decade.
Fantastic. Let’s return it to the taxpayers. That would be about $100 for every man, woman, and child in the state. I’m sure a family of 4 would appreciate a $400 check before Christmas.
The state finished 2016-17 with a surplus of $579 million, a better ending balance than what the Legislative Fiscal Bureau had previously projected.
The last LFB estimate of a $467 million ending balance, though, did not include a final look at expenditures over the fiscal year. The Department of Administration wrote in its annual fiscal report expenses came in about $41 million less than had been expected, while revenues were up.
Gov. Scott Walker’s office touted it as the second largest closing balance for a fiscal year since 2000. The guv did not call for any new spending, though a spokesman noted Walker has previously urged lawmakers to use money saved through his budget vetoes to cover a $9.7 million boost in aid for small, rural districts in 2018-19.
