Progressive Thinking

Senator Kathleen Vinehout writes about the recent reports of a structural deficit going into the next biennial state budget, her conversations with the Legislative Fiscal Bureau and agency reports showing shortfalls in Medicaid and Transportation funds. These fund shortfalls are not included in the structural deficit reported by the Legislative Fiscal Bureau.

MADISON - “I don’t want another cent from the state until you guys pay the bills,” the business-owner from Durand told me. “I am tired of hearing about tax cuts and deficits.”

“I want all the bills paid: schools, roads, Medicaid, the tech colleges, the debt, all of them paid. Then talk to me about giving me my money back.”

News of the rising structural deficit going into the next state budget has many people offering advice about budgets. People aren’t happy about talk of a new round of tax cuts in the face of an expected $1.8 billion budget shortfall.

Many are asking whether the projected ‘surplus’ that justified the last tax cuts was real. Most everyone is convinced ‘tax cuts’ really mean “vote for me and pay for it later.”

“Why does the state give away money when local government hasn’t gotten its fair share in 20 years?” an Eau Claire woman recently asked. She read about local officials considering a registration fee on vehicles.

“They need money to plow the streets. We end up paying more when the state does these tax giveaways. Why doesn’t the state just give the city what it needs to keep up the roads?”

I recently met with Legislative Fiscal Bureau (LFB) staff to get to the bottom of the state’s fiscal problems. The Bureau is the nonpartisan arm of the Legislature that advises lawmakers on budget matters. I learned revenue numbers – tax receipts collected by the state – are down. Corporate income tax receipts are particularly down – over 9% below budget estimates.

New tax cuts to certain business took a toll on money used to pay the state’s bills. For example, reduced taxes on manufacturing and ag businesses are estimated to cost over $50 million just in this past budget year.

The state has bills that are sum sufficient – must be paid in full regardless of whether or not they are over budget – such as the state’s fast growing Medicaid program. These bills are not figured into the recently released shortfall numbers. Earlier this summer the Department of Health Services (DHS) reported the Medicaid program was over $90 million in the red.

Part of the budget problems stem from an ideologically motivated decision to not take several billion in federal funds that would free up hundreds of millions in state cash that could be sent to schools, cities and counties.

Budget problems don’t end with the state’s general fund budget – the part of the budget that pays for health, education, the UW, prisons and local government. There is also a serious gap in the state’s Transportation Fund.

Not paying bills today has long-term impacts on services we take for granted, like schools. Many superintendents are forced to delay maintenance and capital improvements. One superintendent showed me a budget in which he had zero dollars put aside for capital improvements.

Governor Walker and legislators who voted for the past two budgets took over $1 billion cumulative out of public schools over the past four years- at a time when they spent more than $4 billion in new money over the last budget of Governor Doyle.

The effect of spending cuts to our communities might not be seen right away. There’s a lag between passing the state’s two-year budget and witnessing the effect of a lack of state funds on local services. At first these cuts may show up in small ways: new towel fees for sports, higher prices for school lunch, reduced city pool maintenance, fewer snowplows on the road, and higher fees for city water.

But over time, the effect of fewer state dollars and the resulting delays in maintenance turns into higher property tax bills when, for example, schools go to referendum to pay for maintenance or to simply cover the costs of operations.

Over the years, a community can become a less desirable place to live. Local elementary schools close. Class sizes are bigger. Roads crumble. Pools close.

The Durand businessman ended his recent advice by saying, “If you give away money you need to pay bills, it’s going to cost all of us more in the long run”

I couldn’t agree more.

The Legislative Fiscal Bureau (LFB) on Monday estimated the budget for state government will face a nearly $1.8 billion shortfall for the next two-year budget.

MADISON - The expected shortfall for the next two-year state budget starting in July has risen to nearly $1.8 billion, the non-partisan Legislative Fiscal Bureau reported Monday. The report paints a dire picture of Wisconsin's finances under the leadership of Governor Scott Walker.

These new budget numbers prove that Gov. Walker has not been honest with us.

Despite having had budget surplus that came at great expense to our public schools and local communities in the form of reductions to shared revenue and local road aids, and the thousands of Wisconsin residents who find themselves without health care, Walker’s Administration has squandered that surplus leaving us with both an actual and structural deficit.

As noted in the LFB Memo, the $115 million shortfall exceeds the 0.5% statutory trigger requiring action by the Secretary of the Department of the Administration and possibly the Governor and the Legislature. Unless corrective action is taken the structural deficit is likely to reach or exceed $1 billion.

Because this budget deficit will have short-term and long-term implications on the residence of Wisconsin, on Monday four Wisconsin Senators, including our Dave Hansen (D-Green Bay), demanded in writing that Gov. Walker address this crisis and outline all the decisions he might make that will impact Wisconsin families and communities.

The memo asks Walker: "Will our neighborhood schools take another funding hit? Will our streets be plowed so people can go to work? Will more students be denied financial aid to attend the UW or State technical College? These questions need to be answered sooner rather than later."

The Senator’s memo went on to request “that you provide us with the specific actions you intend to take to resolve this fiscal crisis including but not limited to which programs you intend to cut, by how much, how your cuts will impact the services they receive from their government and when you intend to act?”

The memo concludes “There is no positive way to spin our state’s perilous financial position. Despite the claims made by the Walker Administration and others a deficit that exceeds the trigger for emergency action and sets the stage for a billion plus structural deficit is not good news.”

The Walker campaign continues to run glossy ads trumpeting the "success" of the Walker Administration and Walker himself continues to dodge responsibility for the crisis, saying that "increased revenue" could erase the deficit.

According to Senator Dave Hansen of Green Bay:

“With what seems like each passing day the economic news for Wisconsin under Governor Walker and the Republicans seems to get only worse:

• 37th in the nation for job creation.
• Last in the Midwest for job growth.

• $281 million revenue shortfall.
• $115 million budget deficit.

"And now this:

• A nearly $1.8 billion structural deficit.

"When Governor Walker ran for Governor he promised to get rid of the structural deficit, balance the budget and create 250,000 jobs.

"Instead we got some of the biggest cuts to public schools in the entire country, deep cuts to our UW campuses and state technical colleges and cuts to local communities to help fund police and fire protection and repair local roads.

"In return Wisconsin’s economy is failing and we’re facing a nearly $1.8 billion structural deficit that will cost the average family $1,200 over the next two years.   With this latest news from the non-partisan Legislative Fiscal Bureau the results are in: Governor Walker and the Republicans have not only broken their promises, they have failed Wisconsin.”

MADISON - On what planet does anyone think there is not enough money in politics, not enough special interest influence, and too much public awareness of the buying and selling of our government?

Well, on Earth there is Rudolph Randa and the Five Supremes. It's been the better part of a half century since a rock and roll band could get away with a name so lame, so they must be judges.

In 2010 the five-member majority on the U.S. Supreme Court ruled that corporations and other interest groups can spend as much as they want to influence American elections. And then earlier this year the court doubled down on its infamous Citizens United decision and struck down a key federal limit on campaign contributions made by individuals.

In a country of well over 300 million people, just over 1,200 individuals reached the $123,000 limit on overall donations to federal campaigns in the 2012 elections. The ruling majority on the high court found intolerable the way the law cramped the style of 0.000003% of the nation's population and invalidated that law.

A month later Wisconsin's $10,000 annual limit on overall donations from individuals for state and local elections experienced the same fate. Fewer than 300 individuals had managed to bump up against the state limit in 2010 and 2012 elections combined, including 173 living outside Wisconsin. Just like that, five one-thousandths of 1% of the state's population had their ability to legally bribe state lawmakers increased exponentially, and they are taking full advantage.

Now this week Randa orders Wisconsin election officials to stop enforcing a law limiting how much candidates can collect from political committees run by special interest groups, parties and legislative campaigns.

Randa is the judge who also ordered a halt to the latest John Doe investigation into political corruption in Wisconsin. He ruled that there is nothing illegal about candidates and interest groups coordinating their election activities.

"Coordination" sounds abstract and mundane and benign. What Randa actually blessed is money laundering. What is under investigation is apparent conspiracy to get around legal limits on political donations as well as disclosure requirements by steering money intended to aid a candidate for state office to a tax-exempt "social welfare" group that does not have to publicly report the origins of its money.

If the skewed judgment of Randa and the Five Supremes stands up over the long haul, Americans will be left with a right to free speech that is proportionate to the size of their bank accounts, two parties joined at the billfold, and a tiny fraction of 1% of the population fully empowered to lord over the rest of us.

Senator Kathleen Vinehout writes about the delays Wisconsin farmers face in shipping grain to market.

MADISON - “The farmers are coming to me saying ‘we need drivers to get the corn to market. We need barges and trains to get the harvest to market.’” Barb Gronemus recently told me. “Kathleen you need to pay attention to problems with shipping grain.”

Former State Representative Barb Gronemus might be retired, but she’s still on duty answering the phone and making calls. One of those calls was to alert me to a growing problem farmers are facing getting grain to market. I began researching the situation and found former Rep. Gronemus was spot on.

Increased oil and sand shipments in the Midwest are delaying grain shipments. Some say the railroad companies are playing favorites because the oil industry pays a premium. Farmers worry they are losing money as their grain sits in storage instead of being transported to market.

Last month, the USDA predicted a record harvest in 2014. With abundant rain and cooler temperatures, corn yields are expected to top last year’s record with over 14 billion bushels according to the Wall Street Journal. The USDA also estimates a record soybean harvest in the next few weeks.

Recent studies conducted at the request of elected officials in North Dakota and Minnesota show significant losses to farmers because of a failure by rail companies to move grain.

North Dakota Governor Jack Dalryumple recently called the grain delays in the upper Midwest “an emergency situation” as he urged federal regulators to use their power “to provide an oversight role” as farmers struggle to get grain to market in a transportation system overburdened by the oil industry.

North Dakota Senator Heidi Heitkamp released a study she commissioned from North Dakota State University showing her state’s farmers lost over $66 million in four months because of delayed grain shipments. Researchers estimated a loss of over $95 million for delays in shipping the 2013 crop - which continue through the end of the year. No estimates were made for the 2014 crop.

Minnesota Governor Mark Dayton also urged federal action to aid farmers.

In a letter to the feds, Dayton asked that a study conducted for his administration be part of the National Grain Car Council’s agenda:

“We recently calculated that Minnesota farmers suffered losses of $109 million from March through May of this year…The study will highlight for the Council the dire circumstances that Minnesota farmers face and the need for increased accountability and clarity from the Burlington Northern Santa Fe (BNSF) and the Canadian Pacific (CP) Railroads.”

Minnesota’s governor further wrote that the feds compelled the railroad companies to publically report their progress on reducing the backlog in grain shipments. Farmers were promised by the railroad companies “matters would be different in this harvest season” and “transparency would be the new normal.” Yet, the mid-August filing with the federal government accounted for only 10% of the grain cars within the BNSF failed to address the backlog of grain shipments.

Federal officials are concerned CP cannot fill 30,000 requests for rail cars for grain and other products by October. In a New York Times article from late August federal sources reported the requests and a backlog of 1,336 rail cars for BNSF and nearly 1,000 for CP.

Wisconsin farmers suffer when grain can’t ride the rails. I could not find estimates on losses to Wisconsin farmers similar to the North Dakota and Minnesota studies. But local farmers and grain dealers are concerned.

Local farmers also expressed concerns that barges and trucks are filled with sand and the sand headed for the oil fields takes up valuable transport space for grain.

Yet, Wisconsin officials have made no mention of the impending crisis.

It’s time Governor Walker and Agriculture Secretary Brancel join our Midwestern neighbors in calling for federal action to put a priority on grain shipments. It’s also time Wisconsin researchers provide data on the potential loss to Wisconsin farmers if grain can’t move out of the state.

We don’t want Wisconsin farmers dumping grain because nobody’s answered the question, “where’s my train?’

The Walker Administration tried to hide the bad news by delaying the release of the final revenue numbers putting the Fiscal Year 2014 budget on a pace to be $115 million in the hole by next June 30.

MADISON - Wisconsin tax collections for the past year came in 2 percent short of estimates, the state Department of Revenue reported Thursday, news that puts the state's budget on track to be out of balance next year.

The figures show the state collected $281.2 million less for the fiscal year that ended in June than was anticipated by the nonpartisan Legislative Fiscal Bureau. That puts the two year budget to be on a pace to be $115 million in the hole by June 30.

The Walker Administration tried to hide the bad news by delaying the release of the final revenue numbers for Fiscal Year 2014. The delay lead to several State Senators, including Dave Hansen (D-Green Bay), to demand release of the numbers in a letter to Mark Huebsch, Walker’s Secretary of Administration on August 25.

A shortfall of this size will have a significant impact on the State Budget process, beginning with the agency budget proposals which are already being developed, and could lead to cuts in existing services. Such budget shortfalls also have a magnified impact on the long term structural deficit already run up by Walker. For example, a $100 million shortfall could lead to a structural deficit of $1.042 billion over time.

Gov. Scott Walker and the Republican-controlled Legislature have cut taxes by nearly $2 billion since Walker took office in 2011, including $500 million in March, a fact they've trumpeted on the campaign trail. Walker has also repeatedly claimed credit for ending the deficit in his ads as the justification for many of his actions against public workers and schools.

In a statement on the new State Budget Crisis, Senator Hansen said on Friday:

"This is the worst possible news. The size of the shortfall is even worse than expected-far worse.

Under the Governor's and the Republicans' failed leadership we now have a $281 million deficit, we are lagging our neighbors in job growth and family incomes are falling behind.

Not only are we dead last in job creation in the Midwest since the Governor took office, but he and the Republicans have driven our state finances into the ground while our neighbors pass us by.

Minnesota for example has a $168 million surplus, they eliminated their structural deficit and they are leading us on job growth.

Under Governor Walker and the Republicans Wisconsin is clearly not moving forward."