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The Citizen's Guide to the Wisconsin Budget What you need to know about the 2019-2021 State Budget

Welcome to the MacIver Institute's guide to the 2019-2021 state budget. This is your one-stop shop for all things related to the behemoth $84 billion taxing and spending budget bill.

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July 15, 2019 | By Ola Lisowski

Complete Analysis: The 2019-21 Wisconsin State Budget

Disasters avoided, the reform(less) budget, unneeded spending increases all across the board, and the march to a flatter, fairer tax code

The 2019-21 Wisconsin state budget is now law. After months of debate, numerous public hearings, countless hours making its way through committee, dozens of amendments voted on and almost 80 vetoes, Assembly Bill 56, the state budget bill, has been signed into law by Governor Tony Evers and is now Wisconsin Act 9.

There is something for everyone to love in this budget – from fiscal conservatives, far-left progressives, Republicans, taxpayers, Democrats, big-government loving special interests, lobbyists, to local governments – and something in this budget for everyone to hate.

That makes this budget different than any other budget in recent memory. It really should come as no surprise, however, given the fact that we have divided government with Democrat Tony Evers as governor and both houses of the Legislature comfortably controlled by Republicans.

Disasters Avoided - Big Labor, The Big Loser

To fully understand how we got to this place, you have to start at the beginning when Evers introduced his budget proposal in late February.

Simply put, Evers introduced the most irresponsible and anti-taxpayer budget in recent memory.

Assembly Speaker Robin Vos (R-Rochester) described the Evers budget as a “big liberal wish list.” Looking at the expansive list of progressive policies that vastly grow the size and scope of government, it is hard to argue with that description.

From Medicaid expansion, the end of recent welfare work requirements, an unneeded increase in the state’s minimum wage, a green pipe dream to make the state carbon-free, the creation of many new government programs, an assault on proven education reform programs, the decriminalization of small amounts of marijuana, to the end of the property tax freeze — the budget wasn’t just a big liberal wish list, but a radical progressive’s best dream. As proposed, Evers’ budget would have also:

  • Hiked the gas tax and tied it to inflation, for a total gas tax increase of nearly 10 cents per gallon
  • Raised taxes on job-creating manufacturers by limiting the Manufacturing and Agriculture Tax Credit
  • Raised taxes on retirees by ending a long-term capital gains tax exemption
  • Repealed the state’s right-to-work law
  • Restored the state and local prevailing wage
  • Rolled back tax protections that have led to a property tax freeze, giving local units of government more power to raise property taxes
  • Frozen enrollment in school choice programs
  • Ended the Special Needs Scholarship Program
  • Stopped new independent charter schools from opening until 2023
  • Raised the minimum wage to $8.25 in 2020, followed by annual 75-cent increases until it reaches $10.50 in 2023, then tying it to inflation and creating a task force to study how to get to a $15 per hour minimum wage for everyone
  • Raised the minimum wage for government workers to $15 per hour in 2021
  • Spent $5 million to provide internet access for welfare recipients
  • Eliminated work requirements for able-bodied adults with school-aged dependents
  • Eliminated drug testing for most public assistance programs
  • Created a new statutory goal for a minimum broadband speed across the state
  • Tied revenue limits for school districts to inflation
  • Deferred to agency rules and guidance documents, bypassing the Legislature and broadening the powers of the administrative state
  • Created a $2 billion structural deficit while raising general fund taxes by $1.3 billion, and local property taxes by untold millions more
  • And much, much more…

Thankfully, the Republican-led Joint Finance Committee (JFC) quickly removed all of these disasters. In its first executive session on the budget, it stripped out 131 policy items and more than $1 billion in tax increases. Almost every single big-government provision – except for gas tax indexing – was pulled out in JFC’s first budget action.

As we examine the final product today, it is important that we take time to remember how bad Evers’ original budget was and give Republicans credit for removing all of this bad public policy.

Medicaid expansion would have devastated health care affordability for the average Wisconsinite, pushing up premiums and severely limiting access to care. Low-income individuals who currently have subsidized, private plans for cents on the dollar would be forced onto a government plan with less access to providers and worse health outcomes. It would also push thousands more Wisconsinites onto a system that is already struggling to stay sustainable – just 2.6 Wisconsin workers support each Medicaid recipient today. In 1998, 7.2 workers supported each recipient. As it stands, Medicaid already has a serious math problem. Pushing enrollment even higher would only make health outcomes, access, and the program’s cost worse.

If you are still not sure if Medicaid expansion is a bad idea, just look at the states that have accepted it and what a financial hardship it has been for those states. Medicaid spending in Ohio, for example, skyrocketed 35 percent in four years – from $18.9 billion to $25.7 billion between fiscal year 2013 and 2017.

In Arizona, costly visits to the emergency room have jumped more than 300 percent and providers have shifted an additional $700 million in costs onto private plans after the Medicaid expansion. In Rhode Island, Medicaid enrollment ballooned 63 percent and state spending on the program has increased 25 percent since expansion, forcing the state to consider a new payroll tax on employers.

It also would expand welfare in a time of unprecedented economic growth. The final budget delivers substantial increases in health care and medical assistance funding without using money from a debt-ridden federal government that has failed to keep funding promises to states.

Those are among the many reasons why Republicans fought so hard to keep the idea out of the budget.

The same can be said of Republicans’ defense of worker freedom.

It’s no secret that Big Labor targeted Gov. Walker as public enemy number one and made removing him from office its number one priority in the entire country. No one should have been surprised when Evers’ first budget proposal handsomely rewarded his Big Labor allies with a full-out assault on worker freedom and the taxpayer.

Evers proposed bringing back Big Labor’s favorite trifecta: repealing right-to-work, reinstating the prevailing wage law, and forcing large public works construction projects to use project labor agreements.

Wisconsin’s previous prevailing wage statute, which arbitrarily and unnecessarily tied wages on taxpayer-funded construction projects to inflated rates paid by unions, was repealed for local and state projects by Gov. Walker. Without interference from the government, wages are set by the market and driven by competition, saving Wisconsin taxpayers millions of dollars. Remember the case of the Grafton water tower?

Evers’ budget also would have eliminated Wisconsin’s right-to-work law. It’s called right-to-work precisely because it prohibits private-sector labor organizations from making compulsory union dues a condition of employment. Wisconsin workers have shown, en masse, that they don’t want to join unions: active membership in the National Education Association fell by 42 percent from 2013 to 2018. The percent of Wisconsin workers who belong to a union fell from 15 percent in 2008 to 8.1 percent in 2018.

Simply put, if unions provided a service that members thought was worthy, such dramatic drop-offs would not have occurred. Clearly, workers are voting with their feet and they are voting that they do not need unions.

Evers’ budget would have reinstated project labor agreements (PLAs) for public works projects. Local governments, beholden to Big Labor, use PLAs to stipulate that only union firms can bid on a project, shutting out competition and dramatically increasing the cost of projects that taxpayers pay for.

Ultimately, much of what makes the 2019-21 budget a good document is marked by what’s not in it. That is thanks to Republicans and their willingness to stand up to Big Labor and the far left. That also makes Big Labor the unquestioned big loser of the 2019-2021 state budget debate.

Finally, we would be remiss to not mention one last issue left untouched in the 2019-21 budget: Act 10. Walker’s signature 2011 reform was repeatedly slammed by the now-governor on the campaign trail and in years past. Nowhere does the budget roll back taxpayer protections created by the law, including increased contribution levels for public sector employee benefits or annual union recertification votes. For the taxpayer, that is a major disaster averted.

A Fiscal Arms Race – Making Everyone But The Taxpayer Happy

There’s no way around it: this budget spends a lot of money. When Evers released his budget plan in late February, Republicans slammed the new governor for spending far more than the state could afford. Yet, in the end, Republicans backtracked on the fiscal austerity rhetoric and in many cases, ended up spending a lot more than what was necessary.

Evers had proposed increasing total government jobs by 701 full-time positions over the biennium. That would have brought the total number of all-funds state positions to 71,990.57 in 2020. JFC’s plan increased total positions by 482, up to 71,771.59 by 2020. That’s still a sizable increase. Plus, this budget gives all state employees 2 percent raises in each year of the biennium, and by constantly adding to state rolls, those types of increases will only be more expensive in the future.

In what can only be called a great disappointment for taxpayers, legislative Republicans tried to keep up with the liberals when it came to government largess. In some cases, they even outdid Evers’ original spending proposals. Prison guards, personal care workers, nursing homes, and Family Care direct care workers get considerably more funding than Evers requested.

Note: GOP’s 2019-21 State Budget figure reflects document *before* vetoes. Final figure will be slightly different.

Taxpayers should also question the wisdom of pumping $655.4 million more GPR into the status quo educational system that fails too many children and is experiencing flat enrollment. In this biennium, state support to K-12 schools will reach more than $14 billion, and DPI’s total budget spends north of $15.2 billion. Evers had proposed a $1.6 billion increase for the agency he headed until January, including more than $600 million to increase special education categorical aids. The final budget sends $330 million more into the equalization aid formula and $97 million more for special education categorical aids, along with a litany of other changes.

Note: JFC budget shows figures *before* vetoes. Charts will be updated when final figures become available.

Still, JFC rejected the vast majority of Evers’ proposed changes to the school funding formula, such as adding another weight for impoverished students (counting them as 1.2 pupils instead of 1.0 for funding purposes). That led Evers’ supporters to slam the education plan, calling it a “$900 million cut.”

Only in Madison and the fantasy land of the nonsensical progressive is a $655 million increase in spending described as a cut.

Lost in this debate is the fact that Wisconsin’s K-12 population has stayed relatively flat for many years. If we are not experiencing a huge influx of new elementary kids to educate, why do our schools need $600 million in new funds? And this $600 million increase is on top of the $600 million increase included in the 2017-2019 state budget. Over a billion dollars in new funding to educate the same number of kids? Are we seeing any noticeable return on our increased investment?

Also lost in this debate is the fact that more and more families are choosing other educational choices outside of the public education system. Choice, charter and home schooling are all growing in popularity. That’s no surprise given that statewide English proficiency sits at just 44 percent, and math proficiency at 41 percent.

The K-12 educational system has continually failed many Wisconsin students, with thousands of new UW freshmen requiring remedial math or English. Those classes come with zero credit and the cost of full tuition, putting students behind before they even begin. Plus, many of these are students who were told they were doing well in school. More than half of Wisconsin’s five-star high schools sent more than 1,000 students who needed math remediation to UW.

And when just 54 percent of our public education dollars reach the classroom, we must ask how hundreds of millions of dollars will improve student achievement? For their part, legislative Republicans acknowledged the system is broken. But they didn’t take the opportunity to couple a significant funding increase with required better outcomes and meaningful systematic reform.

The same can be said for the UW System and the $220 million more it received compared to the last budget. Like the K-12 system, enrollment at UW has slowly fallen over the years. With a strong economy and record-low unemployment, young people now know that the math has changed. It’s no longer a given that taking on tens of thousands of dollars in student debt will pay off in the long run, and enrollment trends reflect that.

Still, the capital budget sends over $1 billion in new funding for building projects across the UW System. Numerous campuses, like UW-Eau Claire and UW-Milwaukee, will get brand new buildings, and every campus will see millions more in improvement projects.

Before the JFC vote on the capital budget, finance Co-Chair John Nygren (R-Marinette) spoke passionately on how broken the system is. He lamented that taxpayers pay UW lobbyists that then lobby the state for more money. He also lambasted the fact that UW officials are the drivers of new projects, setting rates and budgets for new buildings, knowing that the Legislature usually just goes along with the plan.

Nygren is exactly right on this – but he and every other JFC Republican voted for the package. It’s refreshing to see legislators make strong arguments at the table. But it’d be more refreshing if they would actually pass the reforms they say they want.

The health care debate brought a similar tone. Republicans held strong in refusing to expand Medicaid, but they instead agreed to send $1.6 billion in all funds to DHS. Of that increase, $917 million (all funds) is the cost-to-continue price tag for the state’s massive Medical Assistance programs.

Rather than pursuing innovative reforms in taxpayer-provided health care programs like direct primary care, self-funded association health plans, limited duration health plans, and dental therapy, JFC pumped more money into the Medicaid system they acknowledge is broken.

Like so many other parts of the state budget, the new, incredibly generous funding for DHS came with little-to-no reforms attached. For taxpayers, this is frustrating and a huge missed opportunity to make Wisconsin a better place to live. Too many politicians are content just throwing more money at these programs without addressing the fundamental causes of the problems and without making needed reforms to these programs.

The Reformless Budget

As we’ve written above, on issues from K-12 education, Medicaid, higher education, welfare reform to the capital budget, legislators enacted few reforms to go along with the billions more in new spending they provided. One possible reason for this missed opportunity: Evers has the most powerful line item veto in the country. The majority of the few reforms contained in this budget were predictably vetoed out by the governor.

Nevertheless, it’s crucial that both sides fight for their beliefs and make their positions known. Taxpayers deserve an honest and genuine debate about the direction of our great state. If the capital building program is clearly broken, what’s the harm in proposing a groundbreaking new strategy to fix it? Debating an idea in public is always better than agreeing to compromise behind closed doors.

Why didn’t we have a debate about the needed reform of MPS? Why didn’t we have a debate about the remedial education crisis and the fact that hundreds of Wisconsin high schools send thousands of students to the UW system unprepared to pass basic English and math tests? Why didn’t we have a debate about the need to empower parents to choose a school that’s right for their children?

Why didn’t we have a debate about the size, scope, and cost of state government?

Apparently The Only Area That Needs Reform – Transportation

Republicans deserve kudos for including one important transportation reform in their Department of Transportation (DOT) omnibus motion: a pilot program for design-build projects. Rather than hiring a construction company after a road is designed, this active building method would bring in the construction company during the design phase. The theory is that the company can apply its practical experience to find efficiencies and cost savings that DOT engineers might otherwise miss. Evers used his veto pen to take out the part about it being a pilot program, meaning it is now officially in the DOT’s tool box.

Still, many fiscal hawks wanted more accountability for the troubled agency, giving rise to a separate transportation reform package that moved through the Legislative process in order to secure enough Republican votes in the Senate.

One reform bill proposed outside of the budget expands the number of road plans “on the shelf” so that the project pipeline can be managed more efficiently.

Another piece of legislation in the transportation reform package targets a practice that has cost taxpayers a lot of money — single-bid contracts. The bill would require the DOT to rebid projects that receive but one bid if that bid exceeds the department’s estimated cost of work by 10 percent or more. A fallback provision would allow the DOT to avoid the requirement in cases of a threat to public safety, if JFC approves.

As MacIver News Service recently reported, the state has awarded 58 single-bid contracts worth $309 million since January. DOT Secretary-Designee Craig Thompson, who spent years working on behalf of road builders and other transportation interests, now heads a state agency that refuses to release the original cost estimates, even after the contracts are awarded.

The state highway program audit in 2017 found that one-bid contracts cost the state an average of $4.5 million a year from 2006 to 2015.

The most controversial reform bill would require local governments considering implementing vehicle registration fees — or wheel taxes — to first get approval from voters through referendum. More controversially, the measure demands communities with existing wheel taxes to take the question to voters within 18 months of proposing a fee increase.

Another reform measure before the Legislature would create a Subgrade Efficiency Provision in state law, allowing contractors to use DOT-approved alternative, lower-cost materials for the under layer of road projects. The change could lead to big cost savings for the contractor and, ultimately, the taxpayer.

A related reform would require the DOT to use project materials for sources on the DOT right-of-way, rather than paying higher costs to source and transport materials from more distant locations.

While that package moved through the Legislature as its own set of bills, the Assembly also amended the budget bill on the floor in order to ensure its passage in the Senate. That amendment did away with a JFC transportation provision that would have given the committee the authority to approve the implementation of a mileage-based fee. Instead, any recommendations from a study committee would have to be included in the Department of Transportation funding request for the next budget.

Critics worried that a decision on tolling recommendations and the controversial mileage fee would ultimately be in the hands of one committee, not the full Legislature. That became a moot point, as Evers vetoed the tolling and mileage studies out of the final budget.

Implementing these reforms in the DOT became even more urgent with the passing of the state budget. The DOT received a $600 million funding boost in the new state budget, which included the enumeration of two new major projects.

A Tax Cut To Bring Fiscal Conservatives Home – Continuing The March Towards A Flatter, More Equitable Tax Structure In Wisconsin

Wisconsin has long had one of the country’s most regressive individual income tax systems. The bottom tax rate of 4 percent is among the very highest in the country for low earners. Walker made progress in flattening the tax rate to benefit every single Wisconsinite, but the lowest rates have remained particularly punitive.

The budget act, along with a separate bill championed by Sen. Dale Kooyenga (R-Brookfield) and Rep. Jessie Rodriguez (R-Oak Brook), lowers the bottom two individual income tax rates. In 2019, the bottom rate (currently 4 percent) will drop to 3.89 percent. The second rate of 5.84 percent will shift downward to 5.08 percent. In 2020, both rates will fall even further, with the lowest rate moving to 3.76 percent and the second rate to 4.93 percent.

Between both sets of changes, the average income tax decrease will be $91 in 2019 and another $124 in 2020, totaling $215 in income tax relief over the biennium for the average filer.

These changes will benefit every single taxpayer in the state, and reducing the bottom two tax brackets will help middle-class earners the most. The bulk of the tax relief, in dollars, will go toward those earning between $30,000 and $60,000 annually.

MacIver has long argued that a flat tax system is the most equitable and fairest method of taxation. While we’d prefer a flat 3 percent rate across the board, any flattening of tax rates is a substantial win that should be celebrated.

Plus, Republicans achieved those tax cuts of over $500 million without raising taxes on other people. Evers’ proposed tax cuts were not true tax cuts at all, but instead they were tax shifts. His plan would have limited the Manufacturing and Agriculture Tax Credit (MAC). That move would punish job creators driving the growth in Wisconsin’s economy. Evers would have also stripped back long-term capital gains exclusions, a change that would punish retirees and rob their nest eggs.

Not only was Evers’ plan based upon a punitive tax shift, but his middle income tax cut would not have changed the actual income tax rates, which are the heart of the issue. His plan would have given middle class earners 10 percent of their net tax liability back, or $100, whichever is greater. Buying down the income tax rates rather than tinkering with credits is a much more effective, direct way to fix Wisconsin’s income tax structure.

The Long Road Ahead

JFC’s budget leaves a $1.4 billion structural deficit for the beginning of the 2021-23 budget cycle. That’s less than Evers’ almost-$2 billion deficit, but it’s still a massive figure. Walker took heat for leaving structural deficits in his budgets, but taxpayers could rest assured that the former governor would never raise taxes to fill a budget hole.

Now? They shouldn’t be so sure. Evers’ original budget proposal would have raised taxes by close to $2 billion when considering the general fund and locals’ abilities to raise property tax levies. Our governor is clearly an eager tax-and-spend liberal, who will want to increase taxes to solve any structural deficit or budget hole. Will legislative Republicans be strong enough to just say NO to new taxes if the economy turns south?

The state went into this budget cycle with a $753 million surplus, higher than expected following months of strong economic growth. Yet the Legislature spent all that, and more, on various programs, leaving the state with a $1.4 billion structural gamble, with taxpayers on the hook.

All it would take is a single bad year for the economy, an escalation of the trade war, or any number of other crises for any future surpluses to quickly turn into deficits.

And two years from now, we’ll be back in the same position, with stakeholders from every corner of the state coming to the Legislature with hats and hands out, asking for more money. As we know, it’ll never be enough.

We will need to do better next time.

Full Analysis: K-12 Education

As former state Superintendent of the Department of Public Instruction (DPI), Gov. Tony Evers made K-12 education a top priority in his 2019-21 biennial budget proposal. That is, as long as students attend the types of schools he prefers.

Evers’ massive spending proposal called for nearly $1.6 billion more for DPI over the biennium, another record hike over the prior budget’s increase of more than $630 million. It would have dramatically reworked the school funding formula, based on a proposal long-championed by Evers called “Fair Funding for Our Future.” It also drastically restricted access to educational choice.

Chart reflects figures before vetoes. All numbers will be updated once final figures are available.

JFC pulled back on Evers’ proposal, opting to spend $655.4 million more in GPR for DPI. The finance committee pulled out every limitation on school choice that Evers had proposed, leaving the programs untouched. The committee also removed the majority of his proposed changes to the school funding formula.

In the end, Evers’ veto pen increased DPI’s overall spending to a more than $700 million hike over the biennium. The state aid spending increase to DPI is the largest across all agencies.

With the veto pen, districts will receive larger per pupil aid payments for each student – up from $654 this year to $742 in each of the next two years. That totals nearly $90 million more in overall state spending. Evers also vetoed out an $18 million program that provides free laptops for all high school freshmen.

Chart reflects figures before vetoes. All numbers will be updated once final figures are available.

The extra money comes with zero reforms, and for a broken education system with flat enrollment. In this biennium, state support to K-12 schools will reach more than $14 billion in the biennium, and DPI’s total budget spends north of $15.2 billion. Evers’ original proposal included more than $600 million to increase special education categorical aids. JFC sent $330 million more into the equalization aid formula, $97 million more for special education categorical aids, along with a litany of other changes.

Still, the finance committee rejected the vast majority of Evers’ proposed changes to the school funding formula, such as a weight for impoverished students (counting them as 1.2 pupils instead of 1.0 for funding purposes). That led Evers’ supporters to slam the education plan, calling it a “$900 million cut.” Of course, only in Madison is a $655 million increase described as a cut.

School districts affected by low revenue limits will be able to raise local property taxes to levy $9,700 per student in 2019, and $10,000 per student in 2020. Assembly Republicans fought for those changes in the last budget, though they were ultimately vetoed by Walker, who cited property tax concerns.

Lost in this debate is the fact that student enrollment has slowly declined over the years as families opt for other educational choices outside of the public education system. In the current school year, more than 853,000 children attend Wisconsin public schools, a figure that has fallen for years. At the same time, K-12 investments have increased. The state continues to spend more money to educate fewer children.

Prior to Act 10, benefits costs to districts had been increasing by 4.3 percent annually. Had that trend continued, taxpayers would be paying almost 60 percent more today.

And for all the claims Evers has made on what he believes to be the harmful effects of Walker’s Act 10, his budget does nothing to strip back those reforms. School districts have saved at least $3.2 billion on benefits plans since 2011 thanks to their newfound flexibilities. Even so, the majority of the taxpayer-funded plans are still incredibly generous, especially compared to the private sector.

Those savings are still reverberating. In March, Kenosha School District saved nearly $30 million on health care plans alone by switching providers. The district’s taxpayers will spend 41 percent less than their projections, and individual teachers will come out contributing even less toward their monthly premiums.

At 26 percent of districts, employees pay less than 12 percent toward monthly premiums on single plans. Years after Act 10’s requirement that public sector employees contribute at least 12 percent toward health care costs, just 74 percent of school districts comply with the rule for premiums. Prior to Act 10, benefits costs to districts had been increasing by 4.3 percent annually. Had that trend continued, taxpayers would be paying almost 60 percent more today.

That money adds up. In many cases, districts freed up dollars to go to the classroom by adjusting their benefits plans, Wauwatosa School District and MPS among them.

None of those savings are accounted for in state figures that show how much Walker put toward education. It is billions of dollars, previously locked down, that districts can now spend on their own priorities. Walker’s public sector collective bargaining reform legislation bent the cost curve for school and ultimately, for taxpayers. While spending on health care has exploded across the country, Wisconsin bucked the trend because of Act 10.

Why does this matter? Simply put, if school districts saved $3.2 billion on health care and retirement benefits, that money should have been directed to other education programs.

Finally, DPI’s own figures show just how little districts spend on those priorities. State figures show just 54 percent of district spending goes toward instruction. Just a slim majority of all K-12 education spending reaches the classroom.

If top-heavy overhead were reduced, the teachers doing the vast majority of meaningful work in schools could perhaps be better compensated. Instead, the many secondary and tertiary roles schools have taken on directly compete with the primary reason for schools’ existence: educating children.

FULL ANALYSIS: TRANSPORTATION

The long fight to raise Wisconsin’s gas tax was the jumping off point for the state budget’s transportation funding debate. It’s no secret that the road building lobby has been pushing for a gas tax hike for years, and given that Gov. Evers picked former road lobbyist Craig Thompson to lead the Department of Transportation, it’s not surprising that the governor included a gas tax hike in his budget proposal. That alone would have raised $484.9 million over the biennium, but Evers didn’t stop there. He also wanted to “index” the gas tax, which means it would automatically go up every year without the legislature ever voting on it again. That second increase would have raised another $41 million in the second year of the budget. Evers also included some fee increases that brought the grand total for new transportation revenue to $608 million.

Many in the Republican-led legislature have also been pushing for a gas tax hike for a long time, but Evers’ plan seemed like too much even for them. Instead the legislature chose to boost transportation revenue by $395 million solely through fee increases. Starting in October, title fees will go up $95, light and medium truck registration will go up $100, and annual automobile registration will increase $10.

This brings the Department of Transportation’s total budget up to $6.6 billion for this biennium. That includes $326.3 million in new bonding (down from $401.4 million in the last budget.) Lawmakers praised this as the lowest level of transportation bonding in nearly 20 years. Unfortunately, overall bonding in this budget is at $1.9 billion, an all-time high.

From that, the State Highway Rehabilitation Program will get $3.3 billion, a $320 million increase from last budget. The Zoo Interchange will be completed under this budget. It also enumerates two new projects: the I-41 expansion, and the I-43 expansion in Milwaukee and Ozaukee Counties. The budget also provides funding for the WI-15 (Hortonville) bypass, which has been discussed for 20 years.

Local governments will get some more help from state taxpayers to run their local transportation programs. That includes an increase to General Transportation Aids (GTA) of $66.2 million. That comes out to a 10 percent increase, an all-time high. The Local Road Improvement Fund (LRIP) increased by $90 million.

There’s also $5 million in Supplemental transportation aids specifically for towns. That section also eliminated the requirement for towns to pay for at least 15 percent of their own transportation costs. They now have to pay nothing towards their transportation expenses, and spend only state aid if they so choose.

The legislature’s budget also included “discretionary supplemental grants” for additional road improvements for $90 million. Gov. Evers vetoed that down to $75,000, and then directed the DOT to hang on to it instead of sending it to local governments.

He explained in his veto message, “I am also requesting the Department of Administration secretary not to allot these funds. While additional investment in our local transportation needs is welcome, this provision creates yet another one-time subsidy to the transportation fund and illustrates the missed opportunity to provide a sustainable funding solution that would allow this program to be an ongoing investment in local communities without using the general fund to pay for transportation projects.”

Before the veto, that discretionary supplemental aid would have meant another $32 million for counties, $35.1 million for towns, and $22.8 million for municipalities.

Gov. Evers also used his veto pen to adjust two reforms in the legislature’s budget. First, he took out a preemption for local quarry zoning ordinances. That issue drives up the cost of material for state road projects when local governments try to block quarrying operations near the construction sites. Evers recognized the complexity of the issue, which is caught between local control and state fiscal responsibility. He says there should be more public debate.

He also made an interesting change to design-build. The legislature included it in the budget as a pilot program with a lot of strings attached. Evers vetoed out the part about it being just a “pilot program” and immediately put it into effect without the strings attached.

Looking past road funding, the budget also provides a $45.2 million boost to the Harbor Assistance Program, of which $29 million is expected to benefit Mercury Marine specifically. Also, $35 million is budgeted to Amtrak’s Hiawatha Line for rail projects.

Full Analysis: Health Care

When he signed the final 2019-21 budget, Gov. Evers traded in some of his key campaign pledges — Medicaid expansion at the top of the list — for a boatload of new money offered up by the GOP. While expanding Medicaid was unquestionably off the table from day one, a sizable share of the new spending in the Republican budget went to the state’s behemoth Medical Assistance (MA) program just to keep up with the cost of current enrollment.

Simply continuing to fund MA is a sizable part of that increase, with an all-funds price tag of $917 million just in cost-to-continue funding. MA consists mainly of the massive Medicaid program. Out of that massive sum, $356.1 million comes from previous state GPR dollars to continue Medicaid as-is.

But because the Evers budget relied so heavily on a $325 million influx of “free” federal cash, the final budget’s $588 million in new GPR spending is only $27.3 million less than what Evers proposed. The final JFC budget adds 166.3 new full-time equivalent positions at DHS, 25.74 fewer than Evers wanted.

Spending Arms Race

The Republican budget, now signed into law as 2019 Wisconsin Act 9, spends $60 million more GPR on disproportionate share (DSH) payments to health care providers that treat an unusually high number of Medicaid patients, an effort to make up for the program’s abysmal reimbursement rates to doctors and hospitals. With one of his 78 vetoes, Evers raised the cap on how much each hospital can receive under this payment by $400,000.

Final funding figures for nursing homes and direct caregivers, like home health care workers, were the result of the spending arms race between Republicans and Evers. Evers’ budget proposal called for $8.7 million in fiscal year 2020 and $17.8 million the following year, amounting to a combined 2.5 percent increase in fee-for-service Medicaid reimbursement for nursing homes. Critics challenged Evers’ claim that he was providing an historic boost in funding.

GOP lawmakers responded by upping the spending ante significantly on three home and personal care related programs. They touted that their budget far exceeds Evers’ proposal, spending $47.6 million more than Evers on nursing home reimbursements, $74.3 million more on personal care reimbursements, and $37 million more on Family Care direct care payments than the bloated Evers budget.

GOP lawmakers responded by upping the spending ante significantly on three home and personal care related programs. They touted that their budget far exceeds Evers’ proposal, spending $47.6 million more than Evers on nursing home reimbursements, $74.3 million more on personal care reimbursements, and $37 million more on Family Care direct care payments than the bloated Evers budget.

Amid the health services spending bonanza was a bright spot for taxpayers. Evers’ initial proposal hiked spending by $45 million on admittedly less-traditional “health” spending, an array of nanny state programs shoehorned into the category of health care. Those would have included “non-medical services to reduce and prevent health disparities that result from economic and social determinants of health” such as “housing referral services, stress management, nutritional counseling, transportation coordination, etc.,” according to Evers’ budget-in-brief.

That proposal was an expansion of the left’s beloved cradle-to-grave set of government programs, paid for using tens of millions of precious taxpayer dollars meant for actual health care. The final budget omitted this spending.

Walker reinsurance continued

The final budget maintains Evers’ request to fund a reinsurance program first implemented by Walker, aimed at holding down premiums on the individual health insurance market in the era of Obamacare’s skyrocketing premiums.

The budget buttresses the program with $72.2 million GPR and $127.2 in federal dollars for the Office of the Commissioner of Insurance over the two years of the budget. The Walker administration, when rolling out the plan, said it would cost taxpayers $34 million GPR annually and would leverage federal dollars to cover the rest of the $200 million dollar tab.

The reinsurance program was all but forced on Walker and Republican lawmakers in the wake of rapidly increasing premiums on the individual health insurance market. Headed into 2018, premiums were expected to spike by 36 percent, while 75,000 Wisconsinites were expected to lose coverage.

Only after the costly reinsurance tourniquet was applied to the state’s bleeding market did rates stabilize, with an average 4.2 percent weighted average premium decrease in 2019.

A signal from both sides of the aisle that Obamacare has failed to hold down health insurance rates or “bend the cost curve down,” continuing the costly reinsurance program to prop up Wisconsin’s individual health insurance market was met with little controversy or debate.

Medicaid Expansion: Two Lines in the Sand

Republicans held strong in refusing to expand Medicaid, which is certain to save taxpayers a fortune down the road by keeping a lid on enrollment in a notoriously expensive and inefficient program—one that gobbled up an extra $917 million just to keep pace with current enrollment. Even without expanding Medicaid, as in past budgets, the health services budget increase was still enormous.

Evers and his liberal allies campaigned on Medicaid expansion, building his budget on all of the “free” money that is supposed to come with the commitment. Evers threatened to veto any budget that did not include his proposal. His liberal allies egged him on, urging him to outright reject the Republican spending plan when it became clear that expansion was a no-go.

Republicans responded by drawing a hard line and unequivocally refusing to expand the welfare program. Expansion, Republicans argued, would be costly to the private insurance market, pushing up premiums and limiting access and affordability. It also would expand welfare at a time of unprecedented economic growth. Besides, Republican lawmakers argued their budget substantially increases health care and medical assistance funding without tying around Wisconsin’s neck the albatross of a debt-ridden federal government that has failed to keep funding promises to states.

Once JFC pulled out the Medicaid expansion, even Democrats acknowledged Evers’ budget would collapse under its own weight. “This budget is so tightly wound around that string of Medicaid expansion that if you pull that string the whole budget unravels,” state Sen. Jon Erpenbach (D-Middleton), told his Republican colleagues on the finance committee. Erpenbach called the Medicaid expansion the “motherlode of strings that you can pull.”

Republicans pulled it as one of their first actions on the budget, giving taxpayers and fiscal conservatives a big budget victory.

Medicaid expansion has been a costly proposition for states that have accepted it. Medicaid spending in Ohio, for example, skyrocketed 35 percent in four years – from $18.9 billion to $25.7 billion between fiscal year 2013 and 2017.

In Arizona, costly visits to the emergency room have jumped more than 300 percent and providers have shifted an additional $700 million in costs onto private plans after the Medicaid expansion.

In Rhode Island, Medicaid enrollment ballooned 63 percent and state spending on the program has increased 25 percent since expansion, forcing the state to consider a new payroll tax on employers.

These are just a few examples of why Republicans fought so hard to keep Medicaid expansion out of the budget. One more: the program has already ballooned in Wisconsin.

More than 1.1 million, or about 1 in 5, Wisconsinites are on Medicaid or related programs today. And while unemployment is at record lows, MA rolls have increased significantly over the years. In 2019, just 2.6 workers support every one MA recipient. In 1998, Wisconsin had 7.2 workers for every MA recipient.

Throughout the debate, Democrats alleged that the Medicaid expansion population of some 82,000 people has no access to affordable coverage and that only through a government-run program could they find affordable coverage; Republicans pointed out that that claim is untrue.

There are already affordable health insurance plans available on the private market, made affordable thanks to generous subsidies bankrolled by taxpayers via Obamacare. In fact, Nygren pointed to one private plan in Brown County costing as low as 18 cents per month with a $50 deductible. Other plans are available around the state for just a few dollars a month.

Ultimately, the GOP budget pumps more money into a broken system and opts against pursuing innovative new options in health care like direct primary care or dental therapy. A separate direct primary care bill is currently making its way through the Legislature, but unlike a previous version of the bill, this one omits a Medicaid direct primary care pilot program that could grow into huge taxpayer savings in the future.

Evers and the Legislature both made Medicaid expansion their line in the sand, but when the liberal governor saw all the money JFC dumped into MA, the governor seemingly made peace with the idea of letting go of his top campaign promise, at least for now. The Republican budget is merely a “down payment” on his “People’s Budget” vision of spending in the future, the governor said when he signed the budget into law.

In the end, he couldn’t say no to the large influx of cash the GOP budget offered up. That new money for DHS comes with little to no reform, which is a shame.

Full Analysis: Welfare Reform

Reforming government benefits programs has been a Wisconsin hallmark for decades, dating back to the administration of Gov. Tommy Thompson. More recently, Walker built on the welfare reforms of the 1990s with his own slate of policy changes. With a pair of vetoes, Evers tries to roll some of that legacy back.

The goal of welfare reform has always been to make sure recipients of taxpayer funded benefits knew the help wasn’t free — something would be expected of them in return. That’s an especially reasonable expectation today considering our state’s robust economy and roaring job market.

Evers’ 2019-21 initial budget proposal rolled back much of that progress and attempted to reinstate the notion of a “free lunch,” bankrolled by the hard working taxpayers of Wisconsin. Evers would have struck increased work requirements for Medicaid eligibility, nominal premiums and co-pays for Medicaid recipients, eliminated a requirement that Medicaid recipients be in compliance with child support orders, repealed all drug screening requirements, and eliminated work requirements for able-bodied adults with school-aged dependents (ages six to 18).

As we note below, only two of those proposals survived after Joint Finance made quick work of the “liberal wish list” budget, as legislative Republicans described it.

Medicaid expansion was certainly the crown jewel of Evers’ efforts to expand welfare in his budget proposal. While Democrats throughout the process painted the expansion as an effort to provide health care to a population they claimed had no access to affordable care, Republicans pushed back by accurately stating what the proposal did: expand welfare.

After Joint Finance Republicans voted to strip the Medicaid expansion from Evers’ budget, the entire proposal unraveled. “Gov. Evers’ budget started and ended with Medicaid. His budget ended the day Republicans took that expansion out,” said Sen. Erpenbach.

And so ended the single largest push for welfare expansion in the Evers budget. But with the stroke of his veto pen months later, the governor was able to strike a blow for big government when he vetoed two requirements for those seeking food stamps, also known as FoodShare.

Evers vetoed a work requirement for able-bodied adults with school-aged dependents who receive FoodShare. The requirement, part of Walker’s “Wisconsin Works For Everyone” welfare reform initiative, sought to expand on the success of work requirements for able-bodied adults without dependents.

He also removed drug testing for FoodShare recipients who are able-bodied adults with no dependents, a measure intended to help move people from drug addiction and goEvers picks a strange time in Wisconsin history to reject reforms that put the onus on welfare recipients to at least try to find work. Our state’s unemployment rate stands at a near-record low of 3 percent, there are more than 100,000 jobs left unfilled, and employers everywhere are desperate for help.

And the Walker-era work requirements have been successful. The largest job training program in the state is the FoodShare Employment Training (FSET) program. FSET participants earned an average $13.64 per hour, nearly double the state minimum wage, according to the most recent data available.vernment dependence into the workforce.

Almost 31,000 FSET participants have gained employment since the state began tracking data in 2015.

Simply put, there is no excuse for an able-bodied adult who is capable of working to sit on the sidelines. Yet Evers’ budget makes it a whole lot easier to do just that.

“Because of his partial vetoes, he’s starving programs that incentivize work, undermining their implementation and skirting the law. We know people support drug testing and work requirements for welfare recipients and this budget ignores that fact,” said Assembly Speaker Robin Vos.

With his vetoes, Evers chips away at the notion that while taxpayers are generous, they expect at least a nominal effort in return for their hard-earned dollars.

And he does so at a time of unprecedented opportunity in the private sector in Wisconsin.

FULL ANALYSIS: UW SYSTEM

The UW System will see a $58 million increase in funding over the biennium, plus a continuation of the popular tuition freeze for in-state undergrads. The capital budget also includes $1 billion for building projects across the state.

Yet, following the JFC’s vote, UW System President Ray Cross said that he felt “kicked in the shins.” Not a bad swan song for the budget-busting spending at hand.

System administrators will have to first come back to JFC with a plan for how to spend $45 million of the new spending. Already baked into the budget are 2 percent raises in each year of the biennium for system employees.

But it wasn’t nearly enough for committee Democrats, who insisted the System needed more than twice that amount, proposing the $126.6 million spending increase that Evers offered in his massive $84.2 billion biennial budget plan. That dollar amount was an even bigger figure that the System had asked for, and included $50 million to backfill tuition revenue lost from the tuition freeze. Evers’ plan noted that the funds “may be used as the system sees fit, including to help struggling campuses or academic programs.”

That sounds a lot like the UW’s slush fund of hefty program revenue balances, a pot of money that legislators in the state’s CPA caucus discovered in 2013. The slush fund totaled over $1 billion, leading lawmakers to question why the UW continued raising tuition and asking for more funds when they had tucked away such sizable surplus balances.

The sentiment was summed up by then-Rep. Steve Nass (R-Whitewater), who stated that “more than 2/3 of this surplus was generated by unjustified tuition increases over the last three years. In other words, [then-UW President] President [Kevin] Reilly and the Board of Regents knowingly jacked-up tuition by 16.5 percent on Wisconsin families over three years even though the funds weren’t needed. These actions are nothing short of a betrayal of the public trust.”

The slush fund became the main impetus behind Walker’s tuition freeze and other program cuts. The system is now required to regularly report those figures and justify any large increases.

Since 2013, the System’s Program Revenue (PR) balances have increased. At the close of the 2018 fiscal year, total PR balances for the system stood at $1.3 billion, an 11.6 percent increase from 2014. However, a much larger proportion of the fund is restricted compared to 2013.

“At the time, the former UW System president was coming in talking about, ‘We’re broke.’ Meanwhile, looking at the audit reports and data, and there’s $1.2 billion sitting there,” Sen. Howard Marklein (R-Spring Green) recalled.

In its agency budget request, UW System didn’t ask for money to backfill tuition revenue, since that funding came in higher than expected this year. Documents from a UW Regents meeting show that for fiscal year 2018, the System will have $300.8 million in tuition balances. That’s 38 percent more than estimated in the 2017-18 operating budget, which predicted a $217.8 million balance.

During the budget vote, Committee Republicans also rejected a Dem omnibus package that included $45 million for “student success and attainment,” $10 million to hire more nursing program educators to deal with the state’s nursing shortage, and another $5 million for student advising.

As the nonpartisan Legislative Fiscal Bureau noted, the System could use the $45 million approved in the “block grant”-style appropriation to fund all or portions of Evers’ initiatives.

As for building projects, Republicans accepted 95 percent of Evers’ spending recommendations. The UW System will receive more than $1 billion in new spending for multi-million dollar projects across the state. The largest of these is a chemistry building at UW-Milwaukee, totaling $130 million. UW-Madison will see a veterinary medicine addition and renovation for $128 million, as well as a gymnasium replacement for $126 million. Another $176 million is spread system-wide for various utility improvements, facility renewal, and classroom renovations.

The new money comes as UW struggles with enrollment that has slowly declined since a peak in 2010. For fall 2018, north of 161,000 students are enrolled in UW System schools, including those who attend part-time. The four-year graduation rate for students who graduated in 2017 (the most recent figure available) was just 38.1 percent. As low as it is, that’s an improvement from students who graduated in 2011, when the four-year graduation rate was 28.7 percent.

The low graduation rate may be related to significant issues with remedial education. As we wrote in the K-12 section above, thousands of new UW students are required to take remedial math and English every year, based on their performance on placement exams. Those come at the steep cost of full tuition but zero credit. Unfortunately, this budget does little to address that issue along with many others, which brings us to our next section…

Full Analysis: Problems and Missed Opportunities

On issues from K-12 education, Medicaid, higher education, welfare reform to the capital budget, legislators enacted few reforms to go along with the billions more in new spending they provided. One possible reason for this missed opportunity: Evers has the most powerful line item veto in the country. The majority of the few reforms contained in this budget were predictably vetoed out by the governor.

Nevertheless, it’s crucial that both sides fight for their beliefs and make their positions known. Taxpayers deserve an honest and genuine debate about the direction of our great state. If the capital building program is clearly broken, what’s the harm in proposing a groundbreaking new strategy to fix it? Debating an idea in public is always better than agreeing to compromise behind closed doors.

Why didn’t we have a debate about the needed reform of MPS? Why didn’t we have a debate about the remedial education crisis and the fact that hundreds of Wisconsin high schools send thousands of students to the UW system unprepared to pass basic English and math tests? Why didn’t we have a debate about the need to empower parents to choose a school that’s right for their children?

Why didn’t we have a debate about the size, scope, and cost of state government?

There’s no way around it: this budget spends a lot of money, with virtually no strings attached. No attempt at reforming broken and inefficient government programs, and no attempt at eliminating antiquated or redundant government services. There are plenty of missed opportunities.

Chart reflects figures before vetoes. All numbers will be updated once final figures are available.

When Evers released his budget plan in late February, Republicans slammed the new governor for spending far more than the state could afford. Yet, in the end, Republicans backtracked on the fiscal austerity rhetoric and in many cases, ended up spending a lot more than what was necessary. With little attempt at attaching accountability measures to that spending, this budget simply pours more money into the big government abyss.

Evers had proposed increasing total government jobs by 701 full-time positions over the biennium. That would have brought the total number of all-funds state positions to 71,990.57 in 2020. JFC’s plan increased total positions by 482, up to 71,771.59 by 2020. That’s still a sizable increase. Plus, this budget gives all state employees 2 percent raises in each year of the biennium, and by constantly adding to state rolls, those types of increases will only be more expensive in the future.

In what can only be called a great disappointment for taxpayers, legislative Republicans tried to keep up with the liberals when it came to government largess. In some cases, they even outdid Evers’ original spending proposals. Prison guards, personal care workers, nursing homes, and Family Care direct care workers get considerably more funding than Evers requested.

Was all that new spending truly necessary? Will the money be spent wisely? Does government need 482 new positions? Being that the size and scope of government was hardly up for debate—only how much bigger to make it—we never really had that discussion. That’s a missed opportunity.

Taxpayers should also question the wisdom of pumping $655.4 million more GPR into the status quo educational system that fails too many children and is experiencing flat enrollment.

In this biennium, state support to K-12 schools will reach more than $14 billion, and DPI’s total budget spends north of $15.2 billion. Evers had proposed a $1.6 billion increase for the agency he headed until January, including more than $600 million to increase special education categorical aids. The final budget sends $330 million more into the equalization aid formula and $97 million more for special education categorical aids, along with a litany of other changes.

Lost in this debate is the fact that Wisconsin’s K-12 population has stayed relatively flat for many years. If we are not experiencing a huge influx of new elementary kids to educate, why do our schools need $600 million in new funds? And this $600 million increase is on top of the $600 million increase included in the 2017-2019 state budget.

Over a billion dollars in new funding to educate the same number of kids? Are we seeing any noticeable return on our increased investment? Again, lawmakers failed to have that debate this time around.

Also going virtually un-mentioned is the fact that more and more families are choosing other educational choices outside of the public education system. Choice, charter and home schooling are all growing in popularity. That’s no surprise given that statewide English proficiency sits at just 44 percent, and math proficiency at 41 percent. Yet this budget does nothing with school choice.

The K-12 educational system has continually failed many Wisconsin students, with thousands of new UW freshmen requiring remedial math or English. Those classes come with zero credit and the cost of full tuition, putting students behind before they even begin. Plus, many of these are students who were told they were doing well in school. More than half of Wisconsin’s five-star high schools sent more than 1,000 students who needed math remediation to UW.

That’s a problem for the UW institutions that need to offer remedial classes, it’s a problem for parents and students footing the bill, and it’s especially a problem for the high schools, who clearly are leaving a lot of work undone when they graduate oftentimes unprepared students. It’s yet another problem that was not discussed during the budget debate.

And when just 54 percent of our public education dollars reach the classroom, we must ask how hundreds of millions of dollars will improve student achievement? For their part, legislative Republicans acknowledged the system is broken. But they didn’t take the opportunity to couple a significant funding increase with required better outcomes and meaningful systematic reform.

The same can be said for the UW System and the millions more it received compared to the last budget. Like the K-12 system, enrollment at UW has slowly fallen over the years. With a strong economy and record-low unemployment, young people now know that the math has changed. It’s no longer a given that taking on tens of thousands of dollars in student debt will pay off in the long run, and enrollment trends reflect that.

Still, the capital budget approves over $1 billion in new funding for building projects across the UW System. Numerous campuses, like UW-Eau Claire and UW-Milwaukee, will get brand new buildings, and every campus will see millions more in improvement projects. After all these new buildings are completed, will the UW System finally stop insisting it is impoverished and in shambles?

Before the JFC vote on the capital budget, Nygren spoke passionately on how broken the system is. He lamented that taxpayers pay UW lobbyists that then lobby the state for more money. He also lambasted the fact that UW officials are the drivers of new projects, setting rates and budgets for new buildings, knowing that the Legislature usually just goes along with the plan.

Nygren is exactly right on this – but he and every other JFC Republican voted for the package. It’s refreshing to see legislators make strong arguments at the table. But it’d be more refreshing if they would actually pass the reforms they say they want.

The health care debate brought a similar tone. Republicans held strong in refusing to expand Medicaid, but they instead agreed to send $1.6 billion in all funds to DHS. Of that increase, $917 million (all funds) is the cost-to-continue price tag for the state’s massive Medical Assistance programs.

Rather than pursuing innovative reforms in taxpayer-provided health care programs like direct primary care, self-funded association health plans, limited duration health plans, and dental therapy, JFC pumped more money into the Medicaid system they acknowledge is broken.

Like so many other parts of the state budget, the new, incredibly generous funding for DHS came with little-to-no reforms attached. For taxpayers, this is frustrating and a huge missed opportunity to make Wisconsin a better place to live.

Too many politicians are content just throwing more money at these programs without addressing the fundamental causes of the problems and without making needed reforms to these programs.

FULL ANALYSIS: FISCAL POLICY – TAXES AND SPENDING OVERVIEW

As we’ve written above, this is a budget that knows how to spend. When Evers released his budget plan in late February, Republicans slammed the new governor for spending far more than the state could afford. Yet, in the end, Republicans backtracked on the fiscal austerity rhetoric and in many cases, ended up spending a lot more than what was necessary.

At times, the budget-writing process felt like a fiscal arms race, with Republicans pumping double, triple the amount of funding into this program or that agency. Don’t take our word for it. Some Republicans actually bragged about how much more spending they handed out. In the end, though, the party that controls the purse strings just couldn’t keep up with a liberal politician who has had the word ‘No’ surgically removed from his vocabulary — at least when it comes to grow-government funding requests.

At a grand total of $83.58 billion, the Republicans’ budget is undoubtedly hefty. But it still weighs in at about $2.6 billion less than Evers’ morbidly obese $86.2 billion biennial budget plan. That’s before Evers’ 78 vetoes, however – we’ll have final numbers once the nonpartisan LFB releases its comparative summary of the document.

Chart reflects figures before vetoes. All numbers will be updated once final figures are available.
Chart reflects figures before vetoes. All numbers will be updated once final figures are available.

For all of the spending, conservatives knew they needed to pack a powerful tax cut into the document in order to have enough Republican votes in the Senate to pass the budget to Evers’ desk. And they did.

Wisconsin has long been a high tax state. In the most recent Tax Foundation ranking of states with the highest and lowest state and local taxpayer burdens, Wisconsin checks in at sixth highest. When Gov. Scott Walker served as Wisconsin’s chief executive, Republicans cut taxes by more than $8 billion. That gives you an idea of how bad the Badger State’s taxing situation is.

The Republicans’ latest two-year budget continues the tax-cutting tradition. Conservatives came up with a $500 million-plus tax cut, bringing $91 in average income tax relief in the first year and $124 in the second. Those earning between $30,000 and $60,000 will see the biggest benefit.

This is achieved with cuts to the bottom two of four individual income tax rates. The second income tax bracket, currently at 5.84 percent, will fall to 4.93 percent in 2020. The bottom-most bracket will fall from 4.0 percent to 3.76 percent in 2020. Under the final package, the average tax filer will see more than $200 in tax relief in the next two years, with the bulk of the tax relief coming through income tax rate reductions.

Evers proposed a bigger middle-income tax relief package, but he would have gotten there by raising taxes on manufacturers and retirees. Raising taxes on anyone or any group so the government can hand out a small “credit” to a select few is morally wrong. It is divisive politics at its worst. The only way Wisconsin will ever drop in the highest-taxed rankings is if we continue to cut tax rates for everyone, not create new credits for some.

Republicans spend a lot more in their budget, but they also continue a winning tradition of returning tax dollars to the hard-working people who pay the state’s bills.

Some tax increases were included in the package, including an excise tax of 5 cents per milliliter on vapor products used for e-cigarettes. Evers had proposed extending cigarette taxes to vaping products, which would have raised $36.4 million. Instead, Republicans raised $5.5 million in taxes on the increasingly popular products.

The major question for taxpayer lies in the future: will Republicans stand up to future tax increase ideas from Evers? With the 2019-21 budget behind us, it’s hard to say. They didn’t exactly make a strong stand for fiscal conservatism this time around. For all of our sakes, let’s hope the economy keeps booming so when the $1.4 billion structural deficit comes to roost in 2021, the Legislature isn’t tempted to increase taxes to fill the gap.

July 9, 2019 | By MacIver Institute

Summary: The 2019-2021 Wisconsin State Budget

A MacIver Institue Analysis

The 2019-21 Wisconsin state budget is now law. After months of debate, numerous public hearings, countless hours making its way through committee, dozens of amendments voted on and almost 80 vetoes, Assembly Bill 56, the state budget bill, has been signed into law by Governor Tony Evers and is now 2019 Wisconsin Act 9.

There is something for everyone to love in this budget – from fiscal conservatives, far-left progressives, Republicans, taxpayers, Democrats, big-government loving special interests, lobbyists, to local governments – and something in this budget for everyone to hate.There is something for everyone to love in this budget – from fiscal conservatives, far-left progressives, Republicans, taxpayers, Democrats, big-government loving special interests, lobbyists, to local governments – and something in this budget for everyone to hate.

That makes this budget different than any other budget in recent memory. It really should come as no surprise, however, given the fact that we have divided government with Democrat Tony Evers as governor and both houses of the Legislature comfortably controlled by Republicans.

Disasters Avoided - Big Labor, The Big Loser

To fully understand how we got to this place, you have to start at the beginning when Evers introduced his budget proposal in late February.

Simply put, Evers introduced the most irresponsible and anti-taxpayer budget in recent memory.

Assembly Speaker Robin Vos (R-Rochester) described the Evers budget as a “big liberal wish list.” Looking at the expansive list of progressive policies that vastly grow the size and scope of government, it is hard to argue with that description.

From Medicaid expansion, the end of recent welfare work requirements, an unneeded increase in the state’s minimum wage, a green pipe dream to make the state carbon-free, the creation of many new government programs, an assault on proven education reform programs, the decriminalization of small amounts of marijuana, to the end of the property tax freeze — the budget wasn’t just a big liberal wish list, but a radical progressive’s best dream. As proposed, Evers’ budget would have also:

  • Hiked the gas tax and tied it to inflation, for a total gas tax increase of nearly 10 cents per gallon
  • Raised taxes on job-creating manufacturers by limiting the Manufacturing and Agriculture Tax Credit
  • Raised taxes on retirees by ending a long-term capital gains tax exemption
  • Repealed the state’s right-to-work law
  • Restored the state and local prevailing wage
  • Rolled back tax protections that have led to a property tax freeze, giving local units of government more power to raise property taxes
  • Frozen enrollment in school choice programs
  • Ended the Special Needs Scholarship Program
  • Stopped new independent charter schools from opening until 2023
  • Raised the minimum wage to $8.25 in 2020, followed by annual 75-cent increases until it reaches $10.50 in 2023, then tying it to inflation and creating a task force to study how to get to a $15 per hour minimum wage for everyone
  • Raised the minimum wage for government workers to $15 per hour in 2021
  • Spent $5 million to provide internet access for welfare recipients
  • Eliminated work requirements for able-bodied adults with school-aged dependents
  • Eliminated drug testing for most public assistance programs
  • Created a new statutory goal for a minimum broadband speed across the state
  • Tied revenue limits for school districts to inflation
  • Deferred to agency rules and guidance documents, bypassing the Legislature and broadening the powers of the administrative state
  • Created a $2 billion structural deficit while raising general fund taxes by $1.3 billion, and local property taxes by untold millions more
  • And much, much more…

Thankfully, the Republican-led Joint Finance Committee (JFC) quickly removed all of these disasters. In its first executive session on the budget, it stripped out 131 policy items and more than $1 billion in tax increases. Almost every single big-government provision – except for gas tax indexing – was pulled out in JFC’s first budget action.

As we examine the final product today, it is important that we take time to remember how bad Evers’ original budget was and give Republicans credit for removing all of this bad public policy.

Medicaid expansion would have devastated health care affordability for the average Wisconsinite, pushing up premiums and severely limiting access to care. Low-income individuals who currently have subsidized, private plans for cents on the dollar would be forced onto a government plan with less access to providers and worse health outcomes. It would also push thousands more Wisconsinites onto a system that is already struggling to stay sustainable – just 2.6 Wisconsin workers support each Medicaid recipient today. In 1998, 7.2 workers supported each recipient. As it stands, Medicaid already has a serious math problem. Pushing enrollment even higher would only make health outcomes, access, and the program’s cost worse.

If you are still not sure if Medicaid expansion is a bad idea, just look at the states that have accepted it and what a financial hardship it has been for those states. Medicaid spending in Ohio, for example, skyrocketed 35 percent in four years – from $18.9 billion to $25.7 billion between fiscal year 2013 and 2017.

In Arizona, costly visits to the emergency room have jumped more than 300 percent and providers have shifted an additional $700 million in costs onto private plans after the Medicaid expansion. In Rhode Island, Medicaid enrollment ballooned 63 percent and state spending on the program has increased 25 percent since expansion, forcing the state to consider a new payroll tax on employers.

It also would expand welfare in a time of unprecedented economic growth. The final budget delivers substantial increases in health care and medical assistance funding without using money from a debt-ridden federal government that has failed to keep funding promises to states.

Those are among the many reasons why Republicans fought so hard to keep the idea out of the budget.

It’s no secret that Big Labor targeted Gov. Walker as public enemy number one and made removing him from office its number one priority in the entire country. No one should have been surprised when Evers’ first budget proposal handsomely rewarded his Big Labor allies with a full-out assault on worker freedom and the taxpayer.

Evers proposed bringing back Big Labor’s favorite trifecta: repealing right-to-work, reinstating the prevailing wage law, and forcing large public works construction projects to use project labor agreements.

Wisconsin’s previous prevailing wage statute, which arbitrarily and unnecessarily tied wages on taxpayer-funded construction projects to inflated rates paid by unions, was repealed for local and state projects by Gov. Walker. Without interference from the government, wages are set by the market and driven by competition, saving Wisconsin taxpayers millions of dollars. Remember the case of the Grafton water tower?

Evers’ budget also would have eliminated Wisconsin’s right-to-work law. It’s called right-to-work precisely because it prohibits private-sector labor organizations from making compulsory union dues a condition of employment. Wisconsin workers have shown, en masse, that they don’t want to join unions: active membership in the National Education Association fell by 42 percent from 2013 to 2018. The percent of Wisconsin workers who belong to a union fell from 15 percent in 2008 to 8.1 percent in 2018.

Simply put, if unions provided a service that members thought was worthy, such dramatic drop-offs would not have occurred. Clearly, workers are voting with their feet and they are voting that they do not need unions.

Big Labor immediately challenged the right-to-work law in court. They lost, but their vendetta against right-to-work is now being carried by the Democrat governor.

Evers’ budget would have reinstated project labor agreements (PLAs) for public works projects. Local governments, beholden to Big Labor, use PLAs to stipulate that only union firms can bid on a project, shutting out competition and dramatically increasing the cost of projects that taxpayers pay for.

Ultimately, much of what makes the 2019-21 budget a good document is marked by what’s not in it. That is thanks to Republicans and their willingness to stand up to Big Labor and the far left. That also makes Big Labor the unquestioned big loser of the 2019-2021 state budget debate.

Finally, we would be remiss to not mention one last issue left untouched in the 2019-21 budget: Act 10. Walker’s signature 2011 reform was repeatedly slammed by the now-governor on the campaign trail and in years past. Nowhere does the budget roll back taxpayer protections created by the law, including increased contribution levels for public sector employee benefits or annual union recertification votes. For the taxpayer, that is a major disaster averted.

A Fiscal Arms Race – Making Everyone But The Taxpayer Happy

There’s no way around it: this budget spends a lot of money. When Evers released his budget plan in late February, Republicans slammed the new governor for spending far more than the state could afford. Yet, in the end, Republicans backtracked on the fiscal austerity rhetoric and in many cases, ended up spending a lot more than what was necessary.

Evers had proposed increasing total government jobs by 701 full-time positions over the biennium. That would have brought the total number of all-funds state positions to 71,990.57 in 2020. JFC’s plan increased total positions by 482, up to 71,771.59 by 2020. That’s still a sizable increase. Plus, this budget gives all state employees 2 percent raises in each year of the biennium, and by constantly adding to state rolls, those types of increases will only be more expensive in the future.

In what can only be called a great disappointment for taxpayers, legislative Republicans tried to keep up with the liberals when it came to government largess. In some cases, they even outdid Evers’ original spending proposals. Prison guards, personal care workers, nursing homes, and Family Care direct care workers get considerably more funding than Evers requested.

Taxpayers should also question the wisdom of pumping $655.4 million more GPR into the status quo educational system that fails too many children and is experiencing flat enrollment. In this biennium, state support to K-12 schools will reach more than $14 billion, and DPI’s total budget spends north of $15.2 billion. Evers had proposed a $1.6 billion increase for the agency he headed until January, including more than $600 million to increase special education categorical aids. The final budget sends $330 million more into the equalization aid formula and $97 million more for special education categorical aids, along with a litany of other changes.

Still, JFC rejected the vast majority of Evers’ proposed changes to the school funding formula, such as adding another weight for impoverished students (counting them as 1.2 pupils instead of 1.0 for funding purposes). That led Evers’ supporters to slam the education plan, calling it a “$900 million cut.”

Only in Madison and the fantasy land of the nonsensical progressive is a $655 million increase in spending described as a cut.

Lost in this debate is the fact that Wisconsin’s K-12 population has stayed relatively flat for many years. If we are not experiencing a huge influx of new elementary kids to educate, why do our schools need $600 million in new funds? And this $600 million increase is on top of the $600 million increase included in the 2017-2019 state budget. Over a billion dollars in new funding to educate the same number of kids? Are we seeing any noticeable return on our increased investment?

Also lost in this debate is the fact that more and more families are choosing other educational choices outside of the public education system. Choice, charter and home schooling are all growing in popularity. That’s no surprise given that statewide English proficiency sits at just 44 percent, and math proficiency at 41 percent.

The K-12 educational system has continually failed many Wisconsin students, with thousands of new UW freshmen requiring remedial math or English. Those classes come with zero credit and the cost of full tuition, putting students behind before they even begin. Plus, many of these are students who were told they were doing well in school. More than half of Wisconsin’s five-star high schools sent more than 1,000 students who needed math remediation to UW.

And when just 54 percent of our public education dollars reach the classroom, we must ask how hundreds of millions of dollars will improve student achievement? For their part, legislative Republicans acknowledged the system is broken. But they didn’t take the opportunity to couple a significant funding increase with required better outcomes and meaningful systematic reform.

The same can be said for the UW System and the $220 million more it received compared to the last budget. Like the K-12 system, enrollment at UW has slowly fallen over the years. With a strong economy and record-low unemployment, young people now know that the math has changed. It’s no longer a given that taking on tens of thousands of dollars in student debt will pay off in the long run, and enrollment trends reflect that.

Still, the capital budget sends over $1 billion in new funding for building projects across the UW System. Numerous campuses, like UW-Eau Claire and UW-Milwaukee, will get brand new buildings, and every campus will see millions more in improvement projects.

Before the JFC vote on the capital budget, finance Co-Chair John Nygren (R-Marinette) spoke passionately on how broken the system is. He lamented that taxpayers pay UW lobbyists that then lobby the state for more money. He also lambasted the fact that UW officials are the drivers of new projects, setting rates and budgets for new buildings, knowing that the Legislature usually just goes along with the plan.

Nygren is exactly right on this – but he and every other JFC Republican voted for the package. It’s refreshing to see legislators make strong arguments at the table. But it’d be more refreshing if they would actually pass the reforms they say they want.

The health care debate brought a similar tone. Republicans held strong in refusing to expand Medicaid, but they instead agreed to send $1.6 billion in all funds to DHS. Of that increase, $917 million (all funds) is the cost-to-continue price tag for the state’s massive Medical Assistance programs.

Rather than pursuing innovative reforms in taxpayer-provided health care programs like direct primary care, self-funded association health plans, limited duration health plans, and dental therapy, JFC pumped more money into the Medicaid system they acknowledge is broken.

Like so many other parts of the state budget, the new, incredibly generous funding for DHS came with little-to-no reforms attached. For taxpayers, this is frustrating and a huge missed opportunity to make Wisconsin a better place to live. Too many politicians are content just throwing more money at these programs without addressing the fundamental causes of the problems and without making needed reforms to these programs.

The Reform(less) Budget

As we’ve written above, on issues from K-12 education, Medicaid, higher education, welfare reform to the capital budget, legislators enacted few reforms to go along with the billions more in new spending they provided. One possible reason for this missed opportunity: Evers has the most powerful line item veto in the country. The majority of the few reforms contained in this budget were predictably vetoed out by the governor.

Nevertheless, it’s crucial that both sides fight for their beliefs and make their positions known. Taxpayers deserve an honest and genuine debate about the direction of our great state. If the capital building program is clearly broken, what’s the harm in proposing a groundbreaking new strategy to fix it? Debating an idea in public is always better than agreeing to compromise behind closed doors.

Why didn’t we have a debate about the needed reform of MPS? Why didn’t we have a debate about the remedial education crisis and the fact that hundreds of Wisconsin high schools send thousands of students to the UW system unprepared to pass basic English and math tests? Why didn’t we have a debate about the need to empower parents to choose a school that’s right for their children?

Why didn’t we have a debate about the size, scope, and cost of state government?

Apparently The Only Area That Needs Reform – Transportation

Republicans deserve kudos for including one important transportation reform in their Department of Transportation (DOT) omnibus motion: a pilot program for design-build projects. Rather than hiring a construction company after a road is designed, this active building method would bring in the construction company during the design phase. The theory is that the company can apply its practical experience to find efficiencies and cost savings that DOT engineers might otherwise miss. Evers used his veto pen to take out the part about it being a pilot program, meaning it is now officially in the DOT’s tool box.

Still, many fiscal hawks wanted more accountability for the troubled agency, giving rise to a separate transportation reform package that moved through the Legislative process in order to secure enough Republican votes in the Senate.

One reform bill proposed outside of the budget expands the number of road plans “on the shelf” so that the project pipeline can be managed more efficiently.

Another piece of legislation in the transportation reform package targets a practice that has cost taxpayers a lot of money — single-bid contracts. The bill would require the DOT to rebid projects that receive but one bid if that bid exceeds the department’s estimated cost of work by 10 percent or more. A fallback provision would allow the DOT to avoid the requirement in cases of a threat to public safety, if JFC approves.

As MacIver News Service recently reported, the state has awarded 58 single-bid contracts worth $309 million since January. DOT Secretary-Designee Craig Thompson, who spent years working on behalf of road builders and other transportation interests, now heads a state agency that refuses to release the original cost estimates, even after the contracts are awarded.

The state highway program audit in 2017 found that one-bid contracts cost the state an average of $4.5 million a year from 2006 to 2015.

The most controversial reform bill would require local governments considering implementing vehicle registration fees — or wheel taxes — to first get approval from voters through referendum. More controversially, the measure demands communities with existing wheel taxes to take the question to voters within 18 months of proposing a fee increase.

Another reform measure before the Legislature would create a Subgrade Efficiency Provision in state law, allowing contractors to use DOT-approved alternative, lower-cost materials for the under layer of road projects. The change could lead to big cost savings for the contractor and, ultimately, the taxpayer.

A related reform would require the DOT to use project materials for sources on the DOT right-of-way, rather than paying higher costs to source and transport materials from more distant locations.

While that package moved through the Legislature as its own set of bills, the Assembly also amended the budget bill on the floor in order to ensure its passage in the Senate. That amendment did away with a JFC transportation provision that would have given the committee the authority to approve the implementation of a mileage-based fee. Instead, any recommendations from a study committee would have to be included in the Department of Transportation funding request for the next budget.

Critics worried that a decision on tolling recommendations and the controversial mileage fee would ultimately be in the hands of one committee, not the full Legislature. That became a moot point, as Evers vetoed the tolling and mileage studies out of the final budget.

Implementing these reforms in the DOT became even more urgent with the passing of the state budget. The DOT received a $600 million funding boost in the new state budget, which included the enumeration of two new major projects.

A Tax Cut To Bring Fiscal Conservatives Home – Continuing The March Towards A Flatter, More Equitable Tax Structure In Wisconsin

Wisconsin has long had one of the country’s most regressive individual income tax systems. The bottom tax rate of 4 percent is among the very highest in the country for low earners. Walker made progress in flattening the tax rate to benefit every single Wisconsinite, but the lowest rates have remained particularly punitive.

The budget act, along with a separate bill championed by Sen. Dale Kooyenga (R-Brookfield) and Rep. Jessie Rodriguez (R-Oak Brook), lowers the bottom two individual income tax rates. In 2019, the bottom rate (currently 4 percent) will drop to 3.89 percent. The second rate of 5.84 percent will shift downward to 5.08 percent. In 2020, both rates will fall even further, with the lowest rate moving to 3.76 percent and the second rate to 4.93 percent.

Between both sets of changes, the average income tax decrease will be $91 in 2019 and another $124 in 2020, totaling $215 in income tax relief over the biennium for the average filer.

These changes will benefit every single taxpayer in the state, and reducing the bottom two tax brackets will help middle-class earners the most. The bulk of the tax relief, in dollars, will go toward those earning between $30,000 and $60,000 annually.

MacIver has long argued that a flat tax system is the most equitable and fairest method of taxation. While we’d prefer a flat 3 percent rate across the board, any flattening of tax rates is a substantial win that should be celebrated.

Plus, Republicans achieved those tax cuts of over $500 million without raising taxes on other people. Evers’ proposed tax cuts were not true tax cuts at all, but instead they were tax shifts. His plan would have limited the Manufacturing and Agriculture Tax Credit (MAC). That move would punish job creators driving the growth in Wisconsin’s economy. Evers would have also stripped back long-term capital gains exclusions, a change that would punish retirees and rob their nest eggs.

Not only was Evers’ plan based upon a punitive tax shift, but his middle income tax cut would not have changed the actual income tax rates, which are the heart of the issue. His plan would have given middle class earners 10 percent of their net tax liability back, or $100, whichever is greater. Buying down the income tax rates rather than tinkering with credits is a much more effective, direct way to fix Wisconsin’s income tax structure.

The Long Road Ahead

JFC’s budget leaves a $1.4 billion structural deficit for the beginning of the 2021-23 budget cycle. That’s less than Evers’ almost-$2 billion deficit, but it’s still a massive figure. Walker took heat for leaving structural deficits in his budgets, but taxpayers could rest assured that the former governor would never raise taxes to fill a budget hole.

Now? They shouldn’t be so sure. Evers’ original budget proposal would have raised taxes by close to $2 billion when considering the general fund and locals’ abilities to raise property tax levies. Our governor is clearly an eager tax-and-spend liberal, who will want to increase taxes to solve any structural deficit or budget hole. Will legislative Republicans be strong enough to just say NO to new taxes if the economy turns south?

The state went into this budget cycle with a $753 million surplus, higher than expected following months of strong economic growth. Yet the Legislature spent all that, and more, on various programs, leaving the state with a $1.4 billion structural gamble, with taxpayers on the hook.

All it would take is a single bad year for the economy, an escalation of the trade war, or any number of other crises for any future surpluses to quickly turn into deficits. And two years from now, we’ll be back in the same position, with stakeholders from every corner of the state coming to the Legislature with hats and hands out, asking for more money. As we know, it’ll never be enough. We will need to do better next time.

June 28, 2019 | By Matt Kittle

Winners And Losers In The 2019-2021 State Budget

With any state budget, you win some, you lose some.

It’s only fitting. A divided-government budget with record spending is likely to be loaded with victories and defeats to go along with all that money.

The budget passed this week by the Republican-controlled Legislature may well have produced a record number of winners and losers — some landing in both categories.

Majority Republicans in the Legislature really outdid themselves this year, with fiscal hawk Scott Walker long gone and a new sheriff in town, big-spending Democratic Gov. Tony Evers, in control of the executive branch.

At times, the budget-writing process felt like a fiscal arms race, with Republicans pumping double, triple the amount of funding into this program or that agency. Don’t take our word for it. Some Republicans actually bragged about how much more spending they handed out. In the end, though, the party that controls the purse strings just couldn’t keep up with a liberal politician who has had the word ‘No’ surgically removed from his vocabulary — at least when it comes to grow-government funding requests.

At a grand total of $83.58 billion, the Republicans’ budget is undoubtedly hefty. But it still weighs in at about $2.6 billion less than Evers’ morbidly obese $86.2 billion biennial budget plan. The governor will decide in the coming days whether he will partially veto the Republican budget document, or snuff it out all together. He could even do the politically unthinkable: Sign it as-is.

With all that money on the table, the MacIver Institute again presents our list of big winners and big losers from the biennial budget version of the Showcase Showdown.

Winner: Taxpayers

Wisconsin has long been a high tax state. In the most recent Tax Foundation ranking of states with the highest and lowest state and local taxpayer burdens, Wisconsin checks in at sixth highest. When Gov. Scott Walker served as Wisconsin’s chief executive, Republicans cut taxes by more than $8 billion. That gives you an idea of how bad the Badger State’s taxing situation is.

The Republicans’ latest two-year budget continues the tax-cutting tradition. Conservatives came up with a $500 million-plus tax cut, bringing $91 in average income tax relief in the first year and $124 in the second. Those earning between $30,000 and $60,000 would see the biggest benefit.

Evers proposed a bigger middle-income tax relief package, but he gets there by raising taxes on manufacturers and retirees. Raising taxes on anyone or any group so the government can hand out a small “credit” to a select few is morally wrong. It is divisive politics at its worst. The only way Wisconsin will ever drop in the highest-taxed rankings is if we continue to cut tax rates for everyone, not create new credits for some.

Republicans spend a lot more in their budget, but they also continue a winning tradition of returning tax dollars to the hard-working people who pay the state’s bills.

Loser: Taxpayers

So, how can the Wisconsin taxpayer be both a winner and a loser in the 2019-2021 state budget battle, you ask? Remember the significant spending increases we tipped you off to above?

Republicans went all-in, with the state’s checkbook and credit card. Their budget, contrary to what some are trying to sell, does not increase spending “only” at the rate of inflation. That Madison math doesn’t add up. It obliterates the rate of inflation — by 5 1/2 percent to nearly 10 percent.

Health care, Medical Assistance, transportation, K-12 education, University of Wisconsin System, Natural Resources, pay bumps for corrections officers, raises for DAs and rank-and-file prosecutors. The Republican budget delivers billions of dollars more in funding for just about every agency, and a lot of new programs and initiatives.

Make no mistake, taxpayers are on the hook for all of this spending, even if we suddenly find ourselves in the red. Big government advocates are never going to let up and say, I guess it is okay to cut spending this time. Big government advocates are never going to say, well you were so generous last budget you can give us the same amount or we can get by with less money this budget. Never.

The biggest problem this spending spree poses for the taxpayer will come down the road. There is no such thing as a free lunch, as our hero Milton Friedman used to say. Eventually the bill for all of this spending will come due. A slight slowdown in the economy or an escalation in the trade wars could quickly turn our $700 million+ surplus into a deficit.

The danger of unsustainable spending is that it leads to a “we have no choice but to raise taxes” manufactured crisis. When that day comes, taxpayers need to ask themselves, will these Republicans stand up to the special interests and say no? Let’s hope so.

Winner: Worker Freedom

Evers tried to pay back his Big Labor and union boss buddies for their generous campaign contributions. He failed. And his failure to kill Wisconsin’s right-to-work law, bring back Project Labor Agreements, and do away with prevailing wage reforms meant a big victory for worker freedom, and taxpayers.

Right-to-work put an end to private-sector labor organizations making compulsory union dues a condition of employment. Project Labor Agreements locked non-union contractors out of government projects, at huge cost to the free market and to the taxpayers forced to pick up the tab for significantly higher union wages. Those wages were often inflated by Wisconsin’s Great Depression-era prevailing wage laws.

The Republican-controlled Legislature repealed prevailing wage statutes over two legislative sessions. The GOP-controlled Joint Finance Committee, in re-writing Evers’ budget, dropped the governor’s gifts to Big Labor like Cardi B dumped Offset. Evers didn’t touch Act 10, Walker’s cornerstone public sector union reform law. Local governments and taxpayers statewide have seen billions of dollars in savings thanks to Act 10. Evers would smother it in a heartbeat, but he knows a lot of local governments would raise hell.

Loser: Big Labor

See above. The hope of the unions for a champagne wishes and caviar dreams budget crumbled when the Finance Committee went to work. Thank you Republicans. And organized labor isn’t likely to win too many legal battles before Wisconsin’s Supreme Court, which will retain its conservative majority thanks to the April election victory of Judge Brian Hagedorn.

While the past eight years have seen membership in public sector unions plummet, don’t shed too many tears for Big Labor. Evers and union-beholden Attorney General Josh Kaul are doing all they can administratively and legally to help out their old friends.

Winners: Bureaucrats and Educrats

Big Government is hiring. The Republican budget adds 482.04 positions total over two years, bringing Wisconsin’s army of state-related public employees to 71,771.59 positions. That’s short of Evers’ plan to add 701 positions, but it’s still a significant hiring spree. Perhaps Republican budget writers were trying to keep up with Wisconsin’s booming private sector economy, where there are more jobs than people to fill them. In the case of the state government hiring boom, it’s the taxpayer, not the company, paying the salaries. And that growing public workforce will see a decent raise — 4 percent over two years. Some will receive more.

Losers: Fiscal Conservatives and Small Government Advocates

Yeah, this was a rough one for slow-growth government conservatives. At just about every turn, the state bureaucracy got richer and bigger. Fiscal hawks were hoping to see Big Government on a diet, not standing in the buffet line for thirds at the Golden Corral.

The Republican budget does have a few shining moments of resistance. GOP lawmakers, despite mounting liberal pressure, rejected Evers’ plan to expand Medicaid. The “free” federal money not only comes with all kinds of strings and hidden costs, it draws in even more taxpayer money to fatten existing government programs and expand into new initiatives.

Losers: Parents of School-Aged Children

The Republican budget pumps $665 million more into K-12 education, pushing total funding for the Department of Public Instruction well north of $15 billion over the next two years. All that money comes with nothing in the way of accountability or ed reforms, even as the achievement gaps widen, and too many kids are trapped in failing schools, and graduates can’t pass an entry-level college math or English class.

At least Republicans fought back against Evers’ war on parental choice schools, driving out of the budget policies that would financially starve the schools to death and give the educrats all the power. Power to the people!

Winner: Gov. Tony Evers

Right about now, the Madison liberal has got to be rubbing his hands together and declaring, “Excellent,” Montgomery Burns-style. Like “The Simpsons” cartoon manifestation of avarice, Evers – or at least his far left team of advisors – got much of what he wanted with no negotiations or horse trading. The budget battle included no real debate on the size and scope of government. Evers instead set the spending bar insanely high in his budget, and Republicans raced and chased to keep up. They couldn’t. They ended up with a budget that spends a couple of billion dollars less than Evers’ blueprint, but the new governor walks away with much of the spending that he wanted. And what he wanted and will continue to want is more of your money, the taxpayer’s money, to expand government.

If he’s smart, he quickly signs the Republican budget with limited vetoes and goes home to his executive mansion to revel in his victory. “Excellent.”

Winner: Anyone Who Doesn't Want Wisconsin To Turn Into The Next Illinois

Kudos to conservatives for evicting some really awful policies from the governor’s budget. They have labored over the past eight-plus years to reduce the Badger State’s onerous tax burden and economy-killing regulations. They did so to keep Wisconsin from becoming the sinkhole state that is its neighbor to the south.

Illinois’ total debt for state and local retirement benefits stands at north of $200-billion — and counting. That’s a lot of Lincolns owed in the Land of Lincoln. Ultra-liberal Gov. J.B. Pritzker just signed a crippling budget bill out of balance by up to $1.3 billion, according to the Illinois Policy Institute. That’s not a shortfall, as in the difference between what government agencies want and what responsible budgeting delivers. That’s a deficit.

Illinois is bleeding people. The state, led by tax-and-spend-and-tax-and-spend-some-more liberals, saw its population shrink by more than 45,000 between July 2017 and July 2018, according to the most recent U.S. Census Bureau data. That’s like losing the city of Sheboygan in a single year.

Despite its many warts, the Republican budget does eliminate Evers’ Illinois inclinations. It stands by critical public labor reforms that have saved taxpayers significantly and kept Wisconsin’s public employee pension system at the top of the class of a very troubled defined benefit field. It cuts out extreme green initiatives that would be costly to Wisconsin’s economy for little to no return. It rejects Evers’ rejection of basic welfare reforms that require able-bodied recipients to work, get training, or at least be looking for work to receive the taxpayer-funded benefits.

In short, conservatives held the line on policies that would turn Wisconsin’s economy south.

June 25, 2019 | By Ola Lisowski

Top Five Things You Should Know About Education Funding in Wisconsin

A group of protesters led by the Wisconsin Public Education Network spent the weekend marching to Madison, calling for more education funding and rallying against the Joint Finance Committee (JFC) budget package. Today, they’ll arrive at the State Capitol after a 60-mile march from Palmyra, Wisconsin.

The group has the support of DPI State Superintendent Carolyn Stafford-Taylor, but they’ve spent all weekend spreading falsehoods about the education funding package included in the JFC budget. To have a truly honest debate, let’s cover some basic facts about education finance.

1. A $665 million increase to the Department of Public Instruction is not a cut. We know math scores are pretty low in this state, but this one comes down to plain arithmetic. DPI will receive $665 million more over current spending levels in this budget, according to the nonpartisan Legislative Fiscal Bureau. The group claims that the spending “doesn’t even keep pace with inflation,” but funding to DPI will increase by 4.6 percent from the base. The rate of inflation from 2017 to 2019 is 4.5 percent.

2. Public school enrollment is declining. State support to K-12 education has steadily increased since the recession, and student enrollment has slowly trended downward. Wisconsin taxpayers are spending more for fewer students.

3. Honest budget comparisons cannot use the stimulus-inflated funding levels in 2011 as a base year. The Wisconsin Budget Project claims that “the state provided $3.5 billion less in state aid to public schools than it would have if state aid stayed at 2011 levels.” That figure has been parroted by numerous other organizations and has appeared in material for the 60-mile march. But to use 2011 as a base year is to blatantly distort facts. That budget was padded with $3.5 billion in one-time federal stimulus dollars, and over $552 million in federal money was used to backfill state aid funding.

4. The special education reimbursement level in JFC’s budget is the same that Evers requested before running for Governor. Before he had his eyes on the East Wing, then-State Superintendent Tony Evers asked the state to reach 30 percent reimbursement for special education costs. The JFC budget does exactly that. It wasn’t until Evers ramped up his run for Governor that he doubled the ask to 60 percent.

5. Voucher students produce strong results – oftentimes stronger than their public school peers. “Unaccountable voucher schools” easily rolls off the tongue of many legislators, but the premise itself is wrong. If a family isn’t happy with a voucher school, they can vote with their feet and leave the school. That’s accountability in the form of direct action. Besides that, voucher students in all three school choice programs earned higher ACT scores than public school students on the most recent round of state tests. Despite what detractors say, dozens of studies have shown that school choice leads to positive academic and social benefits.

June 25, 2019 | By Matt Kittle and Ola Lisowski

Republican-Led Assembly Passes $83.6 Billion Budget, Dems Call It 'Crumbs'

MADISON, Wis. — When is an $83.58 billion biennial budget “table scraps?” Crumbs?

In the bizarro world of legislative liberals, of course.

The Republican-controlled Assembly on a party-line vote Tuesday passed a budget (all-funds) that is $7 billion bigger than the 2017-19 budget, set to end Sunday. The bill now heads to the Senate floor on Wednesday for debate and a vote, and then, should it pass, to Gov. Tony Evers. The Democrat has yet to say whether he’ll partially veto the bill, or strike the entire document.

Drafted and passed earlier this month by the GOP-led Joint Finance Committee (JFC), the GOP plan comes with a whopping $81.67 billion in all-funds spending, plus $1.91 billion in bonding authorization for state capital projects, for a grand total of $83.58 billion for the biennium. Evers’ tally in all-funds spending hits $83.8 billion, with another $2.44 billion in bonding — for a total of $86.2 billion.

Under the JFC plan, General Purpose Revenue (GPR) spending will increase to $36.7 billion in the biennium, increasing spending from the prior base year doubled by 6 percent or $2.1 billion, but cutting Evers’ proposal by 1.8 percent or nearly $696 million.

In total, the budget proposal pumps in $665 million more over current spending levels for K-12 education, hundreds of millions of dollars more for transportation, and a boatload of new bonding for maintenance and construction of state government buildings.

In Madison math, which uses a base year doubled method, the 2019-21 budget package spends $6.25 billion more than 2017-19’s base. But in real dollars, the new document would spend $7.1 billion, or 9.3 percent more.

Republicans say their budget funds the priorities that Evers laid out but does so without breaking the bank. Yet, their proposal comes with a $1.4 billion structural shortfall. Evers’ budget plan posts a nearly $2 billion deficit.

But it’s not enough for Democrats, who spent the better part of 10 hours of Assembly floor debate bemoaning the Republican budget for delivering what Rep. Katrina Shankland (D-Stevens Point) characterized as “just a few table scraps.” The majority’s budget stands at nearly $2.1 billion less than than the “liberal wish list” Evers rolled out four months ago.

The phrase that paid Tuesday for Dems was “missed opportunities.” Such was the main talking point of a minority party that wanted more — so much more.

The phrase that paid Tuesday for Dems was “missed opportunities.” Such was the main talking point of a minority party that wanted more — so much more.

The left’s doleful rhetoric left their colleagues on the right shaking their collective heads.

“This is the first time ever I’ve heard billions in new spending called crumbs,” Rep. Romaine Quinn (R-Barron) said.

Well, not the first time. Nancy Pelosi and the congressional left used the same kind of hyperbolic — and factually incorrect — language to describe the Trump tax cuts of 2017.

Make no mistake, this is a budget that knows how to spend. So much so that it will cost at least a couple of fiscal conservative votes in the Republican-controlled Senate, where one more defector could cost passage of the “Wisconsin Budget,” as Assembly Speaker Robin Vos (R-Rochester), calls it.

Vos calls the GOP plan a “conservative budget.” Sens. Dave Craig (R-Big Bend) and Steve Nass (R-Whitewater) disagree. So apparently do three Assembly Republicans — Janel Brandtjen, of Menomonee Falls, Rick Gundrum, of Slinger, and Timothy Ramthun, of Campbellsport — who voted against the bill.

“I simply can’t deceive the taxpayers by voting for a budget that creates a significant structural deficit, generates the largest property tax hikes in a decade, contains unsustainable levels of excessive spending and authorizes an extremely offensive new vehicle miles-driven tax on motorists starting in 2023,” Nass said in a press release last week. “This is not a conservative budget by any reasonable analysis.”

A Republican amendment to the bill perhaps offered enough sweeteners to ensure final passage.

One provision would specify that “dealers of new vehicles that are not franchised, but who are otherwise authorized to sell vehicles in the state, would not be in violation of dealer licensing laws.” In short, dealers could sell Tesla vehicles in Wisconsin, a measure reportedly aimed at Sen. Chris Kapenga. The Delafield Republican has long supported the Tesla deal. A Milwaukee Journal Sentinel story Tuesday claimed Kapenga owns Integrity Motorsports of Eagle, a retailer of Tesla parts.

At an emotional press conference Wednesday before the Senate took up the Assembly budget, Kapenga blasted the story as false. He said he owns a website, not a dealership. He said he helped his daughter build the website as a learning experience. Rebuilding Tesla vehicles is a hobby, not a business, the senator said, although he acknowledged he has sold Tesla parts to the solar industry.

Kapenga claims special interests looking to kill the Tesla bill fed the press in an “attempt to discredit myself and Tesla, which is a great company.”

“I feel like it brought my character into question,” the senator said.

While he said he agonized over how he would vote on the budget, he said Wednesday that he is now a definite “yes.” He said he arrived at his decision in large part because of the tax relief it delivers. And as a free-market advocate Kapenga said he remains committed to opening Tesla sales in Wisconsin.

Another measure would increase district attorney pay progression by nearly $3.48 million total over the biennium, and add 35 assistant district attorneys statewide, at a cost of $3.59 million in GPR. The provisions were worked in, sources say, at the request of Sen. Andre Jacque (R-De Pere), but Vos said many Republican lawmakers had sought the additions.

Towns would get $5 million more in funding, the Rural Critical Care Hospital Supplement fund would get a bump, and the Wisconsin Rapids-based Incourage Community Foundation would receive a $3 million grant for an economic and community hub.

The amendment also does away with a JFC transportation provision that would have given the committee the authority to approve the implementation of a mileage-based fee. Instead, any recommendations from a study committee would have to be included in the Department of Transportation funding request for the next budget. Critics were worried that a decision on tolling recommendations and the controversial mileage fee would ultimately be in the hands of one committee, and not the full Legislature. Vos suggested the issue was blown out of proportion by “people who thought there was a kind of mass conspiracy,” but the original JFC language was pretty clear about the committee controlling the process.

And the amendment boosts GPR funding for the Wisconsin Lottery, which will translate into another $6.18 million in combined property tax savings through the lottery and gaming tax credit. The change means the Republican budget checks in with a slightly smaller increase than Evers’ budget. A recent Legislative Fiscal Bureau report recently found the two budget proposals increased property taxes by about the same amount, within the rate of inflation.

The Republican plan spends billions of dollars over the 2017-19 budget, led and signed into law by then-Republican Gov. Scott Walker.

Democrats still cried poverty. They said Republicans didn’t adequately fund education. But the GOP plan provides $655.4 billion more in GPR over the budget base to the state Department of Public Instruction (DPI), making it the largest general fund increase in sheer dollars. All told, the two-year DPI budget spends north of $15.2 billion on K-12 education.

For Democrats, it’s not enough. They demanded the $1.59 billion increase Evers, the former DPI secretary, called for in his budget plan — and another $600 million in special education funding.

A group of public education activists wrapping up a 60-mile march to the Capitol Tuesday led the faulty narrative that the Republican budget cuts K-12 spending by nearly $1 billion. Members were eventually led out of the Assembly gallery Tuesday afternoon after many in their ranks disrupted floor debate.

Democrats demanded Republicans insert Evers’ proposal calling for 60 percent state funding of special education. They said the 30 percent increase proposed in the Republican budget was “immoral.” They failed to mention that 30 percent was the same reimbursement rate that Evers repeatedly asked for when he was DPI secretary, when he was calling Walker’s last two-year spending plan a “kid-friendly” budget.

The Republican budget includes $553 million more in all-funds transportation spending, including $106 million more in GPR. It delivers $58 million more in operational funds for the University of Wisconsin System, and nearly $1.1 billion in additional bonding authority for System projects. Democrats insisted the funding levels put Wisconsin’s public colleges and universities on a starvation diet.

The Republican plan comes with a $500 million-plus tax cut, bringing $91 in average income tax relief in the first year and $124 in the second. Those earning between $30,000 and $60,000 would see the biggest benefit. Dems point out that Evers’ middle-class tax-cut plan provides more money in tax reductions. But the governor gets there by raising taxes on manufacturers and retirees.

The Republican plan also would lower individual income tax rates for the lowest earners.

Perhaps one of the biggest selling points to the majority’s bill, according to Republicans, is what’s not in their budget proposal.

“This budget also stops some bad things. It rejects the governor’s liberal wish list, policies that took us backwards,” said Rep. Mark Born (R-Beaver Dam).

The JFC, before getting down to work on writing its own budget, stripped Evers’ budget blueprint of scores of policy measures. Most controversially, Republicans removed Evers’ plan to expand Medicaid, the lynchpin of his budget. The governor was counting on using the expansion to draw in some $1.6 billion in additional federal money.

Medicaid expansion, Republicans argued, would be costly to the private insurance market, pushing up premiums and limiting access and affordability. It also would expand welfare in a time of unprecedented economic growth.

The Republican budget also jettisoned Evers’ nearly 10-cent gas tax hike and accompanying indexing, taxation without representation. And the Joint Finance Committee took out many other policy proposals, like driver’s licenses for illegal immigrants, decriminalization of marijuana, and provisions that would roll back several years of welfare and labor reforms.

“If we weren’t here to stop this budget proposed by Gov. Evers we would be heading down this path again,” said Rep. Joe Sanfelippo (R-New Berlin), reminding his colleagues of the dire economic days of 2009-10 under Democratic leadership.

Democrats in recent days have spoken a tad more positively about the Republican budget plan. There’s more funding they say, quickly insisting Evers led Republicans to the liberal promised land of more spending and expanded government. But, again, it’s still not nearly enough.

Assembly Minority Leader Gordon Hintz (D-Oshkosh) said before the floor session began that his members would not vote for the Republican measure. Not one did.

Vos blasted Democrats for finding ways to get to “no.”

“What you are telling me is, for the next four years you are irrelevant in the process,” the speaker said in a fiery speech. “What are you for? Nothing. You’re against everything in this budget.”

Rep. John Nygren (R-Marinette), co-chair of the budget-writing committee, said Democrats could have stood up for the changes they wanted through the amendment process, but they didn’t. They had determined to vote no long before the vote, he said, and their diatribes on the Assembly floor were just so much show.

“Sounds to me like a missed opportunity,” Nygren said. “Actions do speak louder than words.”

June 20, 2019 | By Ola Lisowski

ChartSmart: Comparing Gov. Evers' Budget Proposal with Joint Finance's Package

Welcome back to ChartSmart. The Legislative Fiscal Bureau has released its summary comparing Gov. Tony Evers’ 2019-21 budget proposal with the package passed by the Joint Finance Committee (JFC) last week. The Assembly also scheduled its budget floor vote for Tuesday, June 25. Take a look at the charts below, which compare the previous 2017-19 budget (also known as the “base”) with the Evers and JFC proposals. This post will become updated as more information is available.

June 13, 2019 | By Ola Lisowski

Finance Committee Passes $536 Million Tax Cut Package, Finishing Its Work on 2019-21 Budget

Republicans on the Joint Finance Committee (JFC) voted to cut taxes by more than $530 million Thursday, finishing their work on the 2019-21 budget and passing the document out of committee. The vote follows more than a month of JFC meetings on Gov. Tony Evers’ budget proposal.

In the end, the JFC budget spends at least $1.7 billion over prior levels of spending, and bonds at least $1.88 billion more. Evers had proposed a budget totaling $84.2 billion for the biennium. That amounted to an actual dollar spending increase of $7 billion over the last budget, with more than $1.3 billion in tax, fee, and revenue increases to partially pay for the plan.

Under the Republican package, the average tax filer will see more than $200 in tax relief in the next two years, with the bulk of the tax relief coming through income tax rate reductions. The second income tax bracket, currently at 5.84 percent, will fall to 4.93 percent in 2020. The bottom-most bracket will fall from 4.0 percent to 3.76 percent in 2020.

Immediately after the budget vote, JFC passed a separate bill authored by Sen. Dale Kooyenga (R-Brookfield) and Rep. Jessie Rodriguez (R-Oak Creek). Assembly Bill 251 (AB 251) sends new revenue from remote sales tax collections (out-of-state online sales) into income tax reductions for the bottom-most rate. The budget motion and AB 251 together bring tax relief over the biennium to more than $530 million.

Currently, filers earning less than $11,230 pay a 4 percent income tax rate, one of the highest bottom-most income tax rates in the country. The next bracket applies to income up to $22,470, under current law.

Manufacturers would have seen the Manufacturing and Agriculture Tax Credit limited under Evers’ budget, raising taxes by $517 million. A long-term capital gains exclusion would have been eliminated, raising taxes on retirees by $505 million.

Both sets of tax increases are now gone, thanks to JFC Republicans. Rep. John Nygren (R-Marinette), co-chair of the Finance Committee, repeatedly highlighted the tax cut Republicans would provide for the middle-income earners, “without raising taxes on the people of the state of Wisconsin. Without raising taxes on manufacturers who are fueling our economy.”

As the committee finished its work, members on both sides of the aisle rehashed arguments for the budget as a whole. Most Democrats focused on the removal of Medicaid expansion from the budget, achieved in the first JFC session last month.

“You pull that Medicaid expansion string, the entire budget comes apart,” Sen. Jon Erpenbach (D-Middleton) said. “And it did. Gov. Evers’ budget started and ended with Medicaid. His budget ended the day Republicans took that expansion out.”

For her part, JFC co-chair Sen. Alberta Darling (R-River Hills) focused on one major question: “Are we better off right now than we were eight years ago? And the answer is a definite yes. We are better off,” Darling said. “The director of the Fiscal Bureau has said that we are getting almost $753 million more than we estimated. It shows our economy is doing well, and our tax cuts are working.”

In his closing comments, Nygren focused on the differences between the JFC budget and Evers’ proposal, asking where the governor’s budget would have taken the state.

“LFB estimated that Gov. Evers’ budget, despite all the tax increases, would leave us with a structural deficit of nearly $2 billion,” Nygren said, contrasting that with the estimated $1 billion structural deficit under the Republican-led plan.

He also acknowledged that Republicans picked up many of Evers’ proposals, spending beyond Evers’ funding levels at times.

“We probably spent more than we would have liked,” Nygren said. “That’s part of the compromise of legislating in split government.”

Nygren also noted that property taxes under Evers’ budget would increase by 3.6 percent, the largest in a decade. One provision in the Republican tax package establishes $59 million in property tax relief through the lottery tax credit. Speaking to the media before the voting session, Republican legislative leaders said they wanted to make sure property tax levels for the median home would be lower than in Evers’ package.

Some tax increases were included in the package, including an excise tax of 5 cents per milliliter on vapor products used for e-cigarettes. Evers had proposed extending cigarette taxes to vaping products, which would have raised $36.4 million. Instead, Republicans raised $5.5 million in taxes on the increasingly popular products.

Now, the question is whether the tax cuts will be enough to sway fiscal hawks in the Senate to vote for the budget as a whole. In the last month, JFC agreed to spend $500 million more on K-12 education, $484 million more on transportation(all funds), and $588 million more on health services in General Purpose Revenue (GPR). They also approved borrowing $1.88 billion for building projects across the state.

After JFC passed a transportation plan that more than doubled title fees, fiscal conservatives raised concerns that the spending increases didn’t come with nearly enough reforms to justify sending the troubled department more money. For that reason, while JFC deliberated on Thursday, the Assembly Committee on Transportation met in another part of the Capitol to pass a package of transportation reform bills. The committee passed four of six reform measures along party-lines. A bill that would require referenda for cities proposing new or expanded wheel taxes was removed from the agenda, likely to be brought back at a later date. The package is likely to be crucial to the Legislature passing the budget as a whole.

The Assembly and the Senate are expected to take up the budget in its entirety during the last week in June.

In the coming weeks, the MacIver Institute will publish a comprehensive analysis of the JFC budget. Follow us @MacIverWisc and @NewsMacIver for updates.

June 12, 2019 | By Ola Lisowski

Finance Committee Sends $1.9 Billion More to Statewide Building Projects

MADISON, Wis. — The Joint Finance Committee (JFC) came one step closer to finishing work on the 2019-21 budget Tuesday, spending $1.88 billion more on building projects. That level of spending notches a new record, exceeding the previous high of $1.7 billion under former Democratic Gov. Jim Doyle.

The party-line 12-4 vote came after three and a half hours of debate. The University of Wisconsin (UW) System will receive the largest portion of the new funding, with $1.026 billion more for buildings across the system.

Gov. Tony Evers had requested $2.5 billion in spending and borrowing in his capital budget. That package increased spending by 2.5 times over the prior budget, which authorized $1 billion in bonding

The Republican-led Building Commission rejected Evers’ proposal outright in a March vote, calling the largest-ever capital budget “unrealistic and unsustainable.”

Instead, Republicans Tuesday finalized a plan that authorizes nearly $2 billion in borrowing and spending for projects across the state. The package nearly doubles bonding over former Republican Gov. Scott Walker’s last budget, for 2017-19.

Of the $1.88 billion allocated, $1.5 billion is supported by general obligation bonding. The other $376 million comes from gifts, grants, federal money, and other existing funds.

The largest enumeration in the package is $264 million for facility maintenance and repair across all agencies. More than $248 million of that particular provision would be supported by borrowing.

Spending at the UW System comes next on the list, with $1.026 billion enumerated on 40 new projects. Of that, $857 million is supported by general obligation bonding. Evers had proposed spending $1.07 billion on UW building projects.

That means the GOP plan borrows just $45 million, or 4 percent, less than Evers’ proposal for UW. Following weeks of record-high spending packages passing out of the committee, fiscal hawks are likely to raise an eyebrow at the continued spending.

Indeed, Sen. Steve Nass (R-Whitewater) was the first to comment on the package, writing in a press release that “tonight was another win for big spending and a loss for the taxpayers. It is becoming more difficult by the day to vote in favor of the budget in two weeks.”

Republicans can only lose two votes in the Senate for the full budget to pass that chamber.

After the budget vote for the UW System several weeks ago spent less than Evers had proposed, UW System President Ray Cross said that the committee had given him a “kick in the shins.” Speaking during Tuesday’s debate, Rep. Mark Born (R-Beaver Dam) said he had spoken to Cross about the generous building package.

“I hope this helps heal your shins,” Born said he told Cross, who responded “they’re certainly feeling much better.”

Committee co-chair, Rep. John Nygren (R-Marinette) voted for the package, but said the system needs to be seriously changed.

“I want to talk candidly about the building program that we have in the State of Wisconsin. I think it’s broken. I think it’s bad for the taxpayer,” Nygren said. “We have entities that are hiring private lobbyists to lobby on behalf of building projects. It’s broken. But at the same time, I know it needs an influx of investment, and because of that I’m going to be voting for this package.”

He went on to say that university officials have long set their own budgets for projects, assuming the building commission will approve whatever the university asks for. “It’s broken,” he repeated several times, expressing his hope for reform.

While Democrats zeroed in on several projects they had hoped to see enumerated in the plan, including an expansion to Madison’s Alliant Energy Center, they were overall pleasantly surprised with spending levels in the package.

“I am very grateful that this governor is pushing you all,” Rep. Chris Taylor (D-Madison) said, thanking Evers for setting the tone for the budget debate. “This governor is pushing you, you’re following his lead, and I’m really glad to see it.”

For their part, Democrats introduced a motion that exactly followed Evers’ proposal for building projects. That would include more than $1 billion in spending and borrowing for the UW System.

The most expensive line item within the Democratic plan would have funded facility maintenance and repair. That would cost $324 million, more than $308 million of which would be borrowed. In the category of building renovations, UW-Milwaukee would receive $130 million in borrowing for a chemistry building and utility extensions. Both projects were included in the final motion, though at slightly different funding levels.

The Democratic motion was turned down on a party-line 4-12 vote after debate.

Originally, the committee was scheduled to take up a tax cut package in addition to the other agency votes, but delayed that vote until Thursday.

Speaking at an event Tuesday, Assembly Speaker Robin Vos (R-Rochester) said Republicans will release their tax plan before Thursday’s executive session. Vos said the package would more than offset revenue increases in the Department of Transportation budget. The DOT budget passed in the first week of June raises spending at DOT by $484 million.

Senate Majority Leader Scott Fitzgerald (R-Juneau) said as much the day before, telling the media that the Republican package would provide approximately $400 million in tax relief.

Republicans passed their own tax plan in January following better-than-expected revenue estimates. Evers vetoed that plan, which would have increased standard deductions by approximately 20 percent for each type of filer.

JFC is expected to complete its work on the budget Thursday morning. Legislative leaders have said that the Senate and Assembly will vote on the full budget during the last week of June, sending the document to Evers before the end of the fiscal year on June 30.

June 11, 2019 | By Ola Lisowski

ChartSmart: Taxes, Bonding, and the Building Program

Welcome back to ChartSmart. This week is likely to be the Joint Finance Committee’s last week of voting on the 2019-21 state budget. Today’s vote will include taxes, the building program, and quite a bit of state bonding. Check out the charts below to learn more. As always, make sure to follow us on @MacIverWisc and @NewsMacIver for live coverage.

June 6, 2019 | By Ola Lisowski

ChartSmart: Transportation

Today, the Joint Finance Committee is set to debate funding for the Department of Transportation (DOT). For that reason, today’s ChartSmart will take a look at road funding, the gas tax, and other relevant issues. Any questions? Feel free to drop them in the comments below. Make sure to follow us on twitter at @MacIverWisc and @NewsMacIver for live updates as the debate happens.

June 5, 2019 | By Matt Kittle

GOP-Led Finance Committee Passes Hefty Health Services Budget — With No Medicaid Expansion

MADISON, Wis. — Republicans on the Legislature’s budget-writing committee upped the ante Tuesday on health and welfare spending, proposing huge increases in a litany of government programs and initiatives.

It wasn’t nearly enough for Joint Finance Committee Democrats, who have their hearts set on making Wisconsin join the ranks of states that have taken the promised “free money” in the federal Medicaid expansion.

In the end, the Republican-controlled JFC voted 11-4 along party lines to boost overall Department of Health Services (DHS) spending by a whopping $1.63 billion (all funds) over the next two years, and to increase the Department of Children and Families biennial budget by north of $125 million.

As Republicans pointed out, their budget surpasses, in some cases doubling, Democrat Gov. Tony Evers’ budget proposal.

The GOP spending increases, including $588 million in state General Purpose Revenue (GPR) for the Department of Health Services, will certainly have some fiscal hawks thinking Finance Committee Republicans are trying to out-Evers Evers, whose biennial budget plan tips the scales at $84.2 billion – an 8 percent increase from the current two-year spending plan signed by former Gov. Scott Walker.

A look at state spending on Medicaid since 2011. Tonight’s GOP motion will spend another $588.2 million more than FY 18

JFC Republicans expanded funding for Wisconsin’s troubled nursing homes, substantially raised wages for personal care workers and added $60 million for hospitals that treat higher populations of poor patients, all without being bribed into expanding Medicaid — what many conservatives consider to be a Faustian deal.

“We have said all along expanding Medicaid wasn’t necessary based on where we were,” said Rep. John Nygren (R-Marinette), JFC co-chair. More than 1.1 million, or about 1 in 5, Wisconsinites are on Medicaid or related programs today. And while unemployment is at record lows, Medical Assistance (MA) rolls have increased significantly over the years. In 2019, just 2.6 workers support every one MA recipient. In 1998, Wisconsin had 7.2 workers for every MA recipient.

A look at MA funding and enrollment over time. Spending has outpaced inflation by almost four times since 2004

And Wisconsin is currently in tremendous economic shape. Recent projections show state tax collections over the next three years will come in $753 million higher than previously anticipated, although much of that better-than-expected revenue is thanks to changes in the federal tax code. As MacIver News Service first reported, Wisconsin has been rated among the “stronger” states in recession preparedness, according to leading credit rating firm Moody’s Investor Services.

Nygren said Republicans are using the benefits of conservative tax and regulatory reforms over the past eight years to fund budget priorities. At the same time the GOP budget retains welfare reforms such as drug testing for FSET (FoodShare Employment and Training) and mandatory FSET participation for able-bodied adults.

“We’re not expanding welfare,” Nygren said.

“I think what we’re doing is investing in people, not programs,” said Sen. Alberta Darling, committee co-chair.

Committee Democrats fumed about what they assert is Republicans’ foolish refusal to expand Medicaid — and take the hundreds of millions of dollars in federal money that come with it.

Evers’ budget plan is built on Medicaid expansion, on the $320 million or so in Medicaid payment savings and the $1.6 billion in additional federal funds the Evers administration says expansion would bring into the state’s coffers.

“The Medicaid expansion is intimately tied to the Democrat’s proposal and how it plays with federal funding,” said state Rep. Evan Goyke. The Milwaukee Democrat complained that Republicans, again, were “screwing over” his city.

Committee Democrats ratcheted up the rhetoric, accusing Republicans of moral turpitude.

“It’s a choice you are making. There is no moral high ground in your choice, on turning your back on the people’s lives you could save,” said Rep. Chris Taylor (D-Madison).

The governor insists that taking the federal Medicaid money would open up public health care to some 82,000 Wisconsinites. But Republicans point out that about half already have coverage through health insurance exchanges set up under former President Barack Obama’s cornerstone health care law. Some of the highly subsidized plans cost as little as pennies a month.

“That’s the lie of the year that has been presented before us,” Nygren said of the Evers administration’s 82,000 coverage figures.

Lost in the Medicaid expansionist rhetoric is the fact that Wisconsin has little to no coverage gap, unlike many other states.

Finance Committee Democrats attempted to bring back the Evers’ Medicaid expansion plan, which was among 130 “nonfiscal” items that JFC had previously pulled out of the budget document. Dems knew the rules. They either had to remove the expansion provision from their Health Services budget proposal or risk having the full budget motion ruled “out of order.”

Nygren gave Taylor and her fellow Democrats three opportunities to remove the controversial budget item. Taylor would have none of it.

“We are not out of order, we believe you and your colleagues are out of order,” the Madison Democrat said. The DHS budget proposal went down without debate.

Despite the Democrats’ frustration over Republican intransigence on the Medicaid issue, the budget passed by the majority gives Evers and liberals in general much of what they wanted — in some cases more. The spending plan:

  • Increases funding for nursing homes by $30 million General Purpose Revenue over the biennium, a combined 7.4 percent increase in nursing home reimbursement rates. That’s lower than the $83 million advocates had sought, but significantly higher than the 2.5 percent increase Evers’ budget offered.
  • Increases funding for personal care workers by $37 million GPR over the biennium. That means an hourly wage hike from $16.73 to $18.24 for an industry struggling to find and retain caregivers, Republicans said.
  • Adds $23.5 million more in GPR for Children and Family Aids funding.
  • Provides nearly $10 million in additional GPR funding for Rural Critical Care Supplement program.
  • Offers a significant uptick in childcare funding commitments.

The Republican budget includes $917.4 million in MA Cost-to-Continue funding, about $356 million of that in GPR funds. Medicaid makes up the vast majority of the MA program.

Tuesday’s Finance Committee vote could spell doom for a timely state budget. Evers has threatened to veto any budget that does not include the Medicaid expansion. The governor earlier this year said he would “fight like hell” for it.

The committee will again meet on Thursday at 1pm to debate transportation funding.

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June 3, 2019 | By Ola Lisowski and Chris Rochester

Before the Vote: What to Know About Health Care and Welfare Reform in the 2019-2021 Budget

Wisconsin’s powerful budget-writing committee will be taking up agency budgets for the Department of Health Services (DHS) and Department of Children and Families (DCF) on Tuesday. Before the Joint Finance Committee (JFC) dives into specifics, it’s a good opportunity to remind taxpayers what exactly Gov. Tony Evers proposed in his 2019-21 budget for these crucial issue areas

Health Care

The cornerstone of Evers’ budget proposal is Medicaid expansion, an issue that was key to his gubernatorial campaign. However, in its first motion for the 2019-21 cycle, the Republican-led JFC pulled that provision out of the budget as a non-fiscal policy item. During Tuesday’s debate, expect the issue to be front and center, despite the fact that whatever omnibus motion Republicans pass will not include Medicaid expansion

Evers’ proposed spending plan allocates $13.3 billion all-funds spending in 2020 and $13.9 billion all-funds in 2021 to DHS. The 2021 funding level is a $1.6 billion, or 8.5 percent increase, over the 2019 adjusted base budget in all-funds.

The massive increase is a sharp deviation from the trend during the administration of former Gov. Scott Walker, a Republican. The 2019 adjusted base spending for the second year of the governor’s final DHS budget is actually $293 million less than Walker’s recommendation, meaning spending came in lower than expected. While Walker’s budgets consistently increased spending on DHS—which administers the massive Medical Assistance program, including Medicaid—the size of the spending increases had been going down budget after budget.

From state coffers, or general purpose revenue (GPR), the Evers budget proposes spending just over $4 billion GPR on DHS in 2020, a 0.9 percent hike; but it spends $4.3 billion in 2021, a 6.3 percent increase.

In total, over two years, Evers’ budget spends $27.2 billion all-funds, and $8.4 billion in GPR, on DHS. That’s an 11.5 percent increase over the $24.4 billion all funds, and a 6.3 percent increase over the $7.9 billion GPR, allocated in the last budget. It also adds 192.04 full-time equivalent positions over two years.

Evers’ budget accepts the federal Medicaid expansion under Obamacare while significantly increasing spending on a wide range of programs. The Medicaid expansion has been a costly proposition for states that accepted it. Medicaid spending in Ohio, for example, skyrocketed 35 percent in four years – from $18.9 billion to $25.7 billion between fiscal year 2013 and 2017. Other states have had similar experiences with out-of-control enrollment and costs to taxpayers.

The federal dollars that follow a Medicaid expansion are anything but “free money,” as advocates persistently claim.

In Minnesota, individual market premiums increased 50-67 percent after Medicaid expansion, forcing the state to implement a reinsurance program costing taxpayers at least $800 million so far.

Hardly a role model to emulate, Minnesota’s embrace of “free” federal Medicaid money is actually a case study in failure. In 2017, after Obamacare’s implementation and Minnesota Gov. Mark Dayton’s decision to expand Medicaid, the state found itself at risk of losing all the insurers on its individual market. On the brink of collapse, state bureaucrats allowed insurers to increase premiums by a staggering 50-67 percent.

While lower-income Minnesotans didn’t feel the pinch because of federal subsidies for the poor, the state’s middle class was due to take a financial beating. That’s why state lawmakers were forced to implement the costly reinsurance program, which to date has cost state taxpayers north of $830 million — on top of the taxes they already pay to prop up Obamacare.

Health care costs have been used as a political bludgeon, with rampant distorted claims about costs. Then-candidate Tony Evers claimed that Wisconsinites pay 50 percent more for health coverage than Minnesotans, a claim rated as “Mostly False” by Politifact. Evers was only looking at a small slice of the population – those on the so-called Second Lowest Cost Silver Plan (SLCSP) on the individual market.

But the majority of people get their coverage through their employers. In Wisconsin, 3,191,800 individuals get their coverage through their workplace, or 57 percent of the population, the same proportion as in Minnesota.

And contrary to the rhetoric, costs are virtually the same. The average annual premium in 2017 in Wisconsin was $5,868 for an individual and $18,785 for a family; in Minnesota it was $5,832 and $18,507, respectively. Employee contributions to the cost of their plans were virtually identical between the two states.

By accepting the Medicaid expansion as Minnesota did prior to the near-implosion of its individual health insurance market, Evers’ plan travels a dangerous path for taxpayers.

Despite these and many other stark cautionary tales, the Evers budget proposes expanding Medicaid eligibility to everyone earning between 0-138 percent of the federal poverty level. In 2019, that income level is $34,638 for a family of four, making 82,000 more people eligible for the program. However, 92 percent of the population is already insured—the vast majority of them through employer-based insurance.

And for those not covered by their employers, subsidized plans are available for as low as 15 cents per month for those in the Medicaid expansion income range, so the 82,000 newly eligible for government assistance already have access to low-cost insurance.

That means many people who join the program would be moving backward, from self-sufficiency to dependence on government health care.

The budget asserts that expanding Medicaid will save $325 million in GPR across the biennium because of the federal government’s enhanced 90 percent match versus traditional Medicaid, a tenuous stream of dollars from a federal government already drowning in $22 trillion in debt. As with traditional Medicaid and its notoriously low reimbursement rates, the federal government is likely to back off that enhanced match in the future and leave state taxpayers holding the very expensive bag. Nonetheless, Evers’ budget proposal accepts and then immediately spends the $325 million—plus a lot more—on increased payments to health care providers and other new spending.

In all, the budget directs $580 million in additional dollars back to health care providers catering to Medicaid patients through the BadgerCare Plus program.

The budget spends $365 million more on reimbursement payments to hospitals serving Medicaid patients through five different, more traditional reimbursement avenues. That includes $142 million more in payments to hospitals handling a larger number of Medicaid patients than most; $100 million more for payments to acute care and critical access hospitals; $20 million more for payments to pediatric hospitals; and $1.2 million more for rural hospitals.

The proposal also hikes spending on considerably less-traditional “health” spending. It spends $45 million more for “non-medical services to reduce and prevent health disparities that result from economic and social determinants of health” such as “housing referral services, stress management, nutritional counseling, transportation coordination, etc.” It’s a significant expansion of the left’s beloved cradle-to-grave set of government programs, paid for using $45 million of precious tax dollars meant for actual health care

The budget builds off Walker’s reinsurance program, aimed at holding down premiums on the individual health insurance market in the era of Obamacare’s skyrocketing premiums. The continuation of this Walker-era program is a not-so-subtle admission that Obamacare has failed spectacularly to “bend the cost curve down,” and that failure is costing Wisconsin taxpayers dearly. The budget buttresses the program with $200 million in all funds spending for the Office of the Commissioner of Insurance in the second year of the budget, $34 million of that GPR.

The spending plan includes an effort to lower prescription drug prices, in large part through government mandates. It proposes requiring drug companies to justify price increases, disclose proprietary information like production and marketing costs, and requires the OCI to post the information in the name of transparency. It also requires pharmacy benefit managers to register with the state and “disclose price concessions they receive from drug companies” and calls for importing generic drugs from abroad to Wisconsin.

The budget makes an effort to expand access to dental care, an area in which Wisconsin lags the nation. It spends a lot of money to do so—$43 million. The plan implements a dental therapy license in Wisconsin to increase the dental professional workforce, a market-driven option MacIver summarized in a policy brief last year, but Evers’ proposal also comes along with a hefty price tag. It spends $1.5 million to subsidize educational institutions that add a dental therapy program, with the goal to “put Wisconsin on the cutting edge of this emerging career field…” In addition to expanding spending to the tune of tens of millions of dollars for dental care under BadgerCare Plus and Medicaid, the budget also increases spending on a series of programs aimed at in-need populations and at grants for dentists who practice in rural areas or provide care to the disabled.

In addition, the proposal includes a variety of provisions aimed at behavioral and mental health care and substance abuse treatment; it spends $69 million more for reimbursement rate increases for Medicaid recipients seeking mental and behavioral health care.

Welfare Reform

DHS runs programs such as FoodShare and FoodShare Employment and Training (FSET) as well as the behemoth Medical Assistance program that includes BadgerCare.

DCF runs programs like Wisconsin Works, a job training program for low-income parents and pregnant women. All-funds spending at the agency would increase by $213 million to $2.83 billion, an 8.1 percent increase. In terms of state dollars alone, the agency would spend $957 million GPR over the biennium, an increase of $27 million or 2.9 percent. Positions at DCF increase by just two full-time equivalents over the biennium, to 988.16 total government jobs at the agency.

Welfare reforms enacted under Walker also attempted to nudge people off government health care and into private plans offered through employers.

But a series of critical Medicaid reforms enacted under Walker are also repealed wholesale by Evers’ budget, despite protections enacted during December’s extraordinary session.

Among the reforms struck by Evers’ budget are work requirements for Medicaid eligibility. Walker increased from 20 to 30 hours a week the time that able-bodied adults (ages 19 to 49) without children must be working, training for work, or looking for work to receive BadgerCare health insurance. That’s the federal maximum, as even Democrats in Congress recognize that 30 hours is not too much to ask for. Evers’ budget rolls that back.

The work requirements largely mirror those for FoodShare benefits and expand on the mantra that people seeking expensive help from their fellow Wisconsinites should be expected to make an effort to be self-sufficient.

Walker had also sought the federal government’s permission to charge a small amount of money for Medicaid benefits for a subset of those below the poverty level. The nominal premiums of $8 for households earning from 51-100 percent of the federal poverty level would give recipients at least a small financial stake in their own benefits and are a step toward reducing the “benefits cliff” that strikes people who climb the economic ladder but are faced with losing generous benefits. Evers’ budget strikes that reform.

The budget also goes easy on child support scofflaws—it eliminates a requirement that Medicaid recipients be in compliance with child support orders. JFC pulled that item out as non-fiscal policy in early May.

It also eliminates minor co-pays for non-emergency medical services, and Medicaid Health Savings Accounts are eliminated entirely. Both were enacted with the intent of injecting consumer choice into government health care by forcing recipients to shop around for providers. That, in turn, sought to put a crimp on providers who offered poorer quality services at inflated prices. Those ideas were pulled by JFC, as well.

Walker made welfare reform a focus of his administration, especially as the economy improved and made it easier for people on this program to achieve self-sufficiency.

In April 2015, certain able-bodied individuals had to begin satisfying work and drug screening requirements to receive FoodShare, colloquially known as food stamps. Individuals who did not comply with work requirements for three months in a 36-month period become ineligible for those benefits. Individuals would have to work, receive job training, or a combination of both for an average of 80 hours per month to retain benefits.

In short, they would have to make an effort to earn what the taxpayers of Wisconsin were generously providing them.

The largest job training program in the state is the FoodShare Employment Training (FSET) program. Wisconsin’s DHS has regularly reported on average FSET wages and weekly hours, both of which have increased consistently. FSET participants earned an average $13.64 per hour, nearly double the state minimum wage, according to the most recent data available.

Almost 31,000 FSET participants have gained employment since the state began tracking data in 2015.

Originally, able-bodied adults with no dependents were the only individuals required to work or participate in job training for a total of 80 hours per month. That pool later expanded to able-bodied adults with school-aged dependents (ages six to 18).

Evers’ plan strips back some of the work requirements for FoodShare participants. Able-bodied individuals with school-aged dependents would no longer have to satisfy work requirements; only those without any dependents will still have to comply.

While Evers rolls back the vast majority of welfare reforms made under the Walker administration, keeping work requirements for able-bodied adults without dependents could be considered a casual nod to the success of those reforms. Still, the remaining requirements are a far cry from the robust employment training prioritized under Walker.

In addition, all drug screening requirements are repealed under the proposal. And like in his Medicaid proposal, Evers’ plan also repeals the requirement that individuals be in compliance with child support orders in order to receive FoodShare benefits.

May 28, 2019 | By Matt Kittle

Republicans Reject Dem's Poverty Act For UW System

In a performance worthy of Hugo’s Les Miserables, Democrats on the Legislature’s powerful budget-writing committee on Tuesday cried poverty for a University of Wisconsin System with a total budget of $6.37 billion.

The Republican-controlled Joint Finance Committee, on a 12-4 party-line vote, approved some $58 million in additional spending for Wisconsin’s public colleges and universities

But it wasn’t nearly enough for committee Democrats, who insisted the System needed more than twice that amount, the $126.6 million spending increase that Democratic Gov. Tony Evers has proposed in his massive $84.2 billion biennial budget plan — a plan gradually being re-written by the conservative majority.

The committee also boosted spending for the Department of Natural Resources and approved pay increases for public defenders, assistant district attorneys and county prosecutors, but, again, not enough to sate the seemingly insatiable spending appetite of JFC Democrats.

Sen. Jon Erpenbach (D-Middleton) argued that the poor University of Wisconsin System has “weathered the difficult financial times that the Legislature and the previous governor (Republican Scott Walker) put them in.” More than $1 billion in cuts from those fiscal conservatives, Erpenbach and his fellow Democrats on the committee cried. And now, just a measly $58 million increase, much of which — $45 million — would be money System administrators could collect in supplemental appropriations, if they come back to the JFC with a plan of how they will spend the state taxpayer money.

Missing in the sad song and dance is the fact that the System has been made whole and then some through the reforms the Republican-controlled Legislature and Walker put in place after inheriting a $3.6 billion budget shortfall from their Democratic predecessors.

Committee co-chair, Rep. John Nygren, noted that between 2012 and 2017, the System saved approximately $750 million in pension costs thanks to Act 10, which, among other changes, requires public employees to contribute to their state pensions. It also raised health insurance contribution levels to at least 12 percent, saving the System another $250 million, the Marinette Republican said.

“Do your math, that’s about $1 billion. It basically eats up all of the cuts you talked about over the years,” Nygren said. “And that doesn’t take into account increases to the the budget that have happened over the years as well.” The last biennial budget alone included an increase of $36 million. Walker’s budget plan originally included a $100 million bump.

UW’s total budget, including the state’s portion, has increased by $770 million, or nearly 14 percent, since 2011.

Nygren reminded his colleagues that the committee was once represented by several accountants. They liked to remind him that “there’s income and expenses.”

“I think Democrats and Republicans might look at those two sides of the ledger a little differently,” he said. “Our perspective is from income, how can we give more back to the people who pay the bills here, the taxpayer. I think your perspective might be how we can spend more of the money that taxpayers in Wisconsin have.”

“The expense side, I would suggest, is one you don’t take a look at, how we can reduce the costs of government,” Nygren added.

Those same accountants a few years back discovered the System had stowed away about $650 million in unrestricted Program Revenue balances, a “slush fund,” if you will. The full balance, including “strings attached” funds, topped $1 billion.

Sen. Howard Marklein, was a member of the CPA Caucus at the time. The Spring Green Republican served on the budget-writing committee then, and does so today.

“At the time, the former UW System president was coming in talking about, ‘We’re broke.’ Meanwhile, looking at the audit reports and data, and there’s $1.2 billion sitting there,” Marklein recalled. More galling was the fact that System officials continued to come hat in hand, even after increasing tuition on in-state students by 5.6 percent or more each year for a decade before the slush fund was discovered in 2013.

Last year, the System’s unrestricted Program Revenue balances were north of $900 million, with total balances of $1.323 billion.

“We have a responsibility, I have a responsibility to the taxpayers. It’s the taxpayers’ money, I want to be able to let the taxpayers know they’re getting value for their money.”

JFC members agree the six-year-old freeze on in-state tuition should remain in place, but Evers’ budget calls for backfilling the lost revenue, holding the System harmless over the next two years. Evers wants $50 million for that initiative. The GOP-led committee said no.

System President Ray Cross, said such paltry funding won’t do.

“Today’s vote was a missed opportunity and shortsighted. The UW System is the best investment the state can make to develop its workforce and attract and retain talent,” Cross said in a statement.

“But one person’s investment is sometimes another person’s tax-and-spending,” Stroebel said. “We also have a whole lot of other budget priorities here, too.”

Evers’ overall budget would add 701 government positions from all funding sources. A sizable portion of those jobs — 219.84 new full-time positions — would be added to the System’s payroll.

Committee Republicans also rejected a Dem omnibus package that included $45 million for “student success and attainment,” $10 million to hire more nursing program educators to deal with the state’s nursing shortage, and another $5 million for student advising.

As the nonpartisan Legislative Fiscal Bureau noted, the System could use the $45 million approved in the “block grant”-style appropriation to fund all or portions of Evers’ initiatives.

Committee Democrats blasted Republicans for not fully funding Evers’ plan to launch a Bureau of Natural Resources Science, and the five scientists the governor sought to staff it at a cost of $718,500 over the biennium.

Instead, the committee voted on party lines to add two DNR researchers charged with tracking water pollution. Democrats, as they have in recent years, accused the majority of turning their backs on science, cutting DNR jobs and easing up on environmental regulations. Erpenbach said he could “hear the earth breathing.”

“You don’t seem to care about clean drinking water,” Rep. Chris Tayler (D-Madison) told her Republican colleagues on the committee

Republicans called the accusations ridiculous. Democrats and Republicans alike want clean drinking water, said Sen. Tom Tiffany (R-Minoqua). The difference, he added, is making sure that “freelancing” scientists aren’t interjecting radical environmental politics into DNR policy.

The finance committee also approved an omnibus package that, among other pay hikes, raised public defender hourly fees from $40 to $70.

“I am pleased with today’s action by the Joint Committee on Finance,” said Wisconsin Supreme Court Chief Justice Patience Roggensack. “It contains elements, that if adopted by the Legislature and the governor, will strengthen and support Wisconsin’s justice system.”

May 28, 2019 | By Ola Lisowski

ChartSmart: University of Wisconsin System

Welcome to ChartSmart! Later this afternoon, the Joint Finance Committee will be voting on the UW System’s 2019-21 budget. For that reason, today’s edition of ChartSmart will focus on the University of Wisconsin (UW) System. From total enrollment, to funding, to program revenue levels, we’ve got it all right here.

May 23, 2019 | By Ola Lisowski

Joint Finance Committee Increases K-12 Spending by $500 Million

The Republican-controlled Joint Finance Committee (JFC) passed its K-12 education budget Thursday, spending $500 million more than current levels. The 2019-21 Department of Public Instruction (DPI) budget will spend $12.3 billion on school aids, a 4.3 percent increase from the base. The previous budget, Gov. Scott Walker’s last while in office, spent $11.8 billion. The 11-4 vote came after two and a half hours of debate.

The generous Republican plan is possible without the $1.3 billion in tax hikes proposed by Evers’ original budget thanks to years of fiscal discipline and higher-than-expected revenue forecasts that have come as a result. JFC previously stripped $1 billion in tax hikes from Evers’ budget.

Throughout the debate, Democrats continually referred to the spending hike as a cut, with Rep. Chris Taylor (D-Madison) calling it more “cut, gut, boom, bust budgeting.”

When unveiling their plan on Wednesday, Assembly Republicans said they didn’t want to raise taxes to increase spending in the classroom. The previous budget, for 2017-19, added more than $630 million to prior levels of funding. That spending increase was achieved while maintaining a property tax freeze and without raising other taxes.

“This budget shows that, clearly, we can live within our means and build on last session’s historic investments,” Speaker Robin Vos (R-Rochester) said Wednesday. He emphasized that in this economy, Republicans will not agree to raise the income tax, sales tax, or expand welfare.

Of the $500 million increase, approximately $330 million will go to generalized aid for schools. That funding will flow through the equalization aid formula, which benefits property-poor districts in the state, like Milwaukee Public Schools (MPS). Former Republican Gov. Scott Walker favored per-pupil funding in the form of categorical aid that was distributed equally among all school districts.

Instead, the Republican-led JFC approved $97 million in special education increases. In the first year of the budget, districts will have a 26 percent reimbursement rate for those services. That figure will increase to 30 percent in the second year.

In a press conference before the vote, JFC Co-Chair, Rep. John Nygren (R-Marinette), said that the spending level was “more realistic” and that in case of an economic downturn in the future, school districts wouldn’t see drops in funding levels.

Democrats slammed the budget motion, especially the changes to special education aids put forth by Republicans. Sen. Jon Erpenbach (D-Middleton) called the changes “baloney” and derided Republicans for cutting funding from the governor’s proposal. But Republicans pointed back to levels requested by Evers before he began running for governor.

“When Gov. Evers was (Department of Public Instruction) Superintendent Evers, he proposed 30 percent reimbursement,” said Sen. Luther Olsen (R-Ripon). “We will get to 30 percent reimbursement today.”

Olsen, chair of the Senate Education Committee, went on to say that the 30 percent figure is the highest that Evers had ever proposed during his time as state superintendent. In his 2017-19 agency budget request for the Department of Public Instruction (DPI), as superintendent Evers asked for $87 million total for special education aids.

The final budget signed by Walker did not include an increase for special education aids. At the time, Evers called it a “pro-kid” budget.

Two years later, when preparing for his gubernatorial run, Evers brought his request for special education aids up to the $600 million-plus figure his fellow Democrats praised. That shift led GOP leaders to call the proposal “political” and “not realistic.”

Rep. Mark Born (R-Beaver Dam) pushed back on the idea that the massive spending increases are actually “cuts” as Democrats claimed.

“This motion invests more in a lot of areas – a half billion dollars more,” Born said. “Why that’s a ‘cut’ only makes sense in the bubble of government. That doesn’t make sense to my constituents.”

Republicans also slammed the contention that education had been underfunded during the Walker years. Nygren reminded JFC members that the only time Walker cut funding to education was in his first year, facing a $3.6 billion state budget shortfall.

The current budget, for 2017-19, added more than $630 million to the previous levels of funding.

While rarely mentioned during the debate, the JFC omnibus motion also included numerous provisions proposed by Evers. One of those is an increase to the low revenue adjustment, which Assembly Republicans had previously pushed for. That change will allow certain districts to raise property taxes to fund schools.

The low revenue adjustment will increase to $9,700 per pupil in the first year, and $10,000 per pupil in the second year.

Another provision the GOP motion picked up from Evers’ budget was an increase to per pupil funding across the board. Schools will receive $200 more per pupil in the first year, and $204 more in the second year. Three-fourths of the increase will be paid through a revenue limit adjustment, and the rest will come through per-pupil categorical aid.

The motion doubles the amount of money spent on two different types of mental health grants, bringing those line items to $12.5 million more. It spends $2 million on a rural teacher talent pilot program, and adds $1.6 million more to high cost transportation grants.

JFC will be back in on Tuesday, May 28, to vote on agency budgets for the University of Wisconsin System and Department of Natural Resources, among others.

May 23, 2019 | By Ola Lisowski

ChartSmart: K-12 Education Budget Basics, Student Achievement

Welcome back to ChartSmart! Today, the Joint Finance Committee will be voting on K-12 education in the 2019-21 budget. Let’s take a look at some graphics relating to K-12 education in Wisconsin. We’ve already covered spending, so now we’ll examine achievement across the state. Questions? Let us know in the comments below.

May 22, 2019 | By Ola Lisowski

What Gov. Tony Evers Got Wrong in His K-12 Education Proposal

Gov. Tony Evers – once educator, then bureaucrat, and now Wisconsin’s governor – has dedicated his life to public education. His gubernatorial campaign largely centered on the question of equity and progress in K-12 education. Yet his 2019-21 budget proposal, up for a Thursday vote in the state’s Joint Finance Committee (JFC), would have turned back the clock on the very values he claims to hold dear.

Change to base in chart above uses base year doubled method. $1.6 billion figure in text uses actual dollar increase compared to prior budget total.

What Evers Proposed on Choice

As proposed, Evers’ budget would have added $1.6 billion over current funding to the Department of Public Instruction (DPI), the department he led until January. DPI would receive more than $15.83 billion over the biennium. That’s on top of the record-high increases in the last budget, which added over $630 million more.

While many conservatives and moderates balked at the sheer sum of money in question, the governor’s numerous attacks on school choice access were of particular concern.

Thanks to JFC, all of Evers’ proposals on school choice have already been stripped out of the budget document. Many of his changes to the school finance formula, like the elimination of property tax credits, are also gone. The powerful budget-writing committee will vote on what’s left for DPI on Thursday.

Still, it’s crucial to remember where we started this process, and what an unaltered Evers budget would have looked like.

Evers’ proposal would have frozen enrollment in the state’s popular school choice programs – the Milwaukee Parental Choice Program (MPCP), the Racine Parental Choice Program (RPCP), and the statewide Wisconsin Parental Choice Program (WPCP).

Today, more than 38,000 students are enrolled in private schools thanks to those three programs, an 89 percent increase from the 2010-11 school year. Students can only participate in the parental choice programs if their family incomes are below certain limits. In Milwaukee and Racine, families can earn up to 300 percent of the federal poverty level to qualify. For a family of four, that amounts to $75,300 for the 2019-20 school year. Outside of those two cities, the limit is 220 percent of the poverty level, or $55,220 for a family of four.

If families exceed the cap, their options are to either attend public schools or pay out-of-pocket for a private school education. Wealthy families already have the power to choose educational options for themselves. Until school choice, poor families didn’t. Evers would have turned back the clock on educational access for the most disadvantaged among us.

The programs aren’t just popular. They’re successful, too. Mountains of research nationwide have shown the academic, social, and fiscal benefits of school choice programs, including a robust study published Monday by the Cato Institute and Reason Foundation.

That study examined cost-effectiveness of private schools in the choice programs, and independent charter schools, compared to traditional public schools in the 2017-18 school year. Private and independent charter schools tend to be more cost-effective than district-run public schools in the state overall and in the majority of cities. In layman’s terms – the programs do more with less. In Milwaukee, private schools are 50 percent more cost-effective. Racine’s private schools are 75 percent more cost-effective.

Raw test scores show the powerful academic impact of school choice as well. Participating students consistently post better academic outcomes than their public school peers, including on the most recent ACT Exams in 2018. The most recent DPI report cards also show this impact. Of the 17 schools at Milwaukee Public Schools (MPS) that received five stars on 2018 report cards, 10 are private choice and four are charters. Just three traditional public schools at MPS received five stars in 2018.

While the governor flipped back and forth on how he’d treat vouchers while on the campaign trail, he came out swinging with his budget document. He claimed that freezing enrollment wouldn’t affect current students, but ignored the impact on their younger siblings and the fact that school doors would almost certainly shutter had his idea become law.

It’s also important to note what Evers wouldn’t have changed. His budget made no similar changes to public school open enrollment, the state’s largest form of school choice. That program, utilized by nearly 61,000 young people, lets students attend public schools outside of their own districts. You rarely hear complaints about open enrollment from the very vocal opposition to choice and charter. That’s because their many complaints are about politics, not policy.

A separate portion of Evers’ budget proposal would add more than $600 million for special education initiatives. No doubt, the most vulnerable of our population need extra help, and that’s certainly true in the classroom.

But Evers also would have ended the Special Needs Scholarship Program (SNSP) after the current school year, with no new students allowed to participate beginning in 2020-21. That program lets students with special needs attend the private school of their choice with a scholarship from the state. While Evers would have opened the door for more children in the public schools, he would have shut that door on students who already know the system doesn’t work for them at all. That’s a shame, and it’s far from the equity he so often speaks about.

His budget also would have barred independent charter schools authorizers from starting new charter schools until 2023. Those authorizers include any UW System chancellor, the city of Milwaukee’s common council, any tech college board, the Waukesha County executive, tribal authorities, and the UW System’s Office of Educational Opportunity. Under Evers’ proposal no new schools could be authorized by any body other than a school district until 2023.

He would have closed the door on tens of thousands of economically disadvantaged children who have left public schools in pursuit of a better option. Thanks to Republicans on JFC, none of these ideas are in the budget document anymore, though there will certainly be plenty of debate on them during Thursday’s executive session.

What Evers Proposed on the School Funding Formula

Evers has long pushed a rewrite of the state’s education finance mechanism. To be sure – it’s a broken, ineffective, overly complicated system. But his idea for fixing it would have stripped away crucial property tax controls, almost certainly ending the property tax freeze. Again, much of what he proposed was pulled out by JFC, but not all of it.

His original document would have eliminated the School Levy Tax Credit and the First Dollar Credit. Together, both credits total more than a billion dollars of property tax relief. Evers would have instead sent that funding through the equalization aid.

The majority of K-12 dollars flow through equalization aid, also known as general aid, which exists to even out funding disparities in local property taxes. Property-poor districts such as MPS receive disproportionately high amounts of equalization aid. Forms of aid like the school levy tax credit and the first dollar credit are considered categorical aid, and are distributed equally across school districts. JFC struck that change.

Other changes included an increase in the revenue limit adjustment by $200 in the first year and another $204 in the second year, with future increases indexed to inflation. The plan also increases the low revenue adjustment from $9,100 under current law to $9,700 in 2020 and $10,000 in 2021. That will allow school districts across the state to levy millions more in local property taxes. Both of those issues remain in the budget and will be huge points of debate on Thursday.

Another big aspect of Evers’ plan remains, though this one is more symbolic than anything else. Evers would restore the two-thirds funding promise, which commits the state to covering two-thirds of all school expenditures, with the rest covered by locals. That idea was originally put into law by Republican Tommy Thompson and stripped by Democrat Jim Doyle. In recent years, former Gov. Scott Walker slowly increased the state share of spending as the state’s fiscal picture improved. In the current budget year, 2018-19, the state covers 65.4 percent of school funding, a hair shy of two-thirds.

Republicans on JFC also maintained Evers’ proposals for poverty aid. Under that plan, Evers would have eliminated the $16.8 million high poverty aid program and reallocated the funding into the general school aid formula. Any economically disadvantaged pupil would be counted as 1.2 full time students instead of 1.0, building in more funding for any school with impoverished students.

Other changes to public school finance include a number of grant increases for target areas. Student mental health needs would be funded by more than $63 million for in-school pupil services, staff training, and other related initiatives. A new Urban Excellence Initiative would spend more than $15 million on closing achievement gaps in the state’s five largest public school districts. Rural schools would get more help, too, with a reworking of sparsity aid. Republicans are likely to act on all of those proposals.

The Plan that Doubled Down on a Lie

Apart from all of Evers’ proposals, much of the debate has been predicated on falsehoods, starting with the idea that public education was underfunded for years under Walker. They continue with the claim that school choice does not and has never shown positive results.

The data disagree with both points. As we’ve written before, Walker’s first budget cut agency funding across the board. Those cuts were made even bigger by the fact that his predecessor’s budget had been built on one-time federal stimulus funding.

But there’s also rarely a mention of the long-declining enrollment in public schools. In the current school year, more than 853,000 children attend Wisconsin public schools, a figure that has fallen for years. At the same time, K-12 investments have grown. The state continues to spend more money to educate fewer children.

And for all the claims Evers has made on what he believes to be the harmful effects of Walker’s Act 10, his budget does nothing to strip back those reforms. School districts have saved at least $3.2 billion on benefits plans since 2011 thanks to their newfound flexibilities. Even so, the majority of the taxpayer-funded plans are still incredibly generous, especially compared to the private sector.

Those savings are still reverberating. In March, Kenosha School District saved nearly $30 million on health care plans alone by switching providers. The district’s taxpayers will spend 41 percent less than their projections, and individual teachers will come out contributing even less toward their monthly premiums.

At 26 percent of districts, employees pay less than 12 percent toward monthly premiums on single plans. Years after Act 10’s requirement that public sector employees contribute at least 12 percent toward health care costs, just 74 percent of school districts comply with the rule for premiums. Prior to Act 10, benefits costs to districts had been increasing by 4.3 percent annually. Had that trend continued, taxpayers would be paying almost 60 percent more today.

That money adds up. In many cases, districts freed up dollars to go to the classroom by adjusting their benefits plans, Wauwatosa School District and MPS among them.

None of those savings are accounted for in state figures that show how much Walker put toward education. It is billions of dollars, previously locked down, that districts can now spend on their own priorities. Walker’s public sector collective bargaining reform legislation bent the cost curve for school and ultimately, for taxpayers. While spending on health care has exploded across the country, Wisconsin bucked the trend because of Act 10.

Why does this matter? Simply put, if school districts saved $3.2 billion on health care and retirement benefits, that money should have been directed to other education programs.

Finally, DPI’s own figures show just how little districts spend on those priorities. State figures show just 54 percent of district spending goes toward instruction. Just a slim majority of all K-12 education spending reaches the classroom.

If top-heavy overhead were reduced, the teachers doing the vast majority of meaningful work in schools could perhaps be better compensated. Instead, the many secondary and tertiary roles schools have taken on directly compete with the primary reason for schools’ existence: educating children.

Act 10 gave districts the tools to save money, and the flexibility to put it where it’s needed.

Still, a broken system will always demand more money. On Thursday, Democrats are likely to argue that Evers is simply attempting to fix eight years of Walker reforms. Republicans aren’t likely to go along with all $1.6 billion in new spending for schools, though they will certainly make new investments. But it’s important to remember where we were, and how far we’ve come.

Evers would turn the dial back – not only for taxpayers, but for the students who need help the most. School choice supporters can likely rest easy now that the worst of his budget is gone, but it’s a debate that is always worth revisiting.

May 8, 2019 | By Ola Lisowski

As Finance Begins to Vote: What You Need to Know About Wisconsin’s 2019-21 State Budget

This week, the Joint Finance Committee (JFC) is back to the State Capitol to kick off the first executive session on the 2019-21 biennial budget.

Since Gov. Tony Evers introduced his budget back in late February, the budget-writing committee held agency briefings and then toured the state to hear from the public. Now, it’s finally time to begin voting. Let’s take this opportunity to refresh your memory on the contents of the budget.

Every budget cycle, the Legislative Fiscal Bureau (LFB) produces a list of purely non-fiscal policy items, and it’s up to the budget chairs whether or not they want to pull them out. LFB’s list contained 70 items for consideration. Those items will be tossed. This is standard procedure – the very same budget chairs, Sen. Alberta Darling (R-River Hills) and Rep. John Nygren (R-Marinette) also tossed dozens of non-fiscal provisions from the last budget, when Gov. Scott Walker, a Republican, was in the East Wing.

This time, the chairs went further than LFB by doubling the list of pulled items to more than 130 provisions. Among those are some of the most controversial items in the entire document, including acceptance of federal Medicaid dollars and tax increases on manufacturers and retirees.

At Thursday’s executive session, the first thing the committee will do will be to formally vote to pull those items, which include more than $1 billion in tax increases. Expect a long debate on that before they move to other budget matters, including:

  • Educational Communications Board
  • Medical College of Wisconsin
  • Historical Society
  • Governor
  • Lieutenant Governor
  • Program Supplements
  • Ethics Commission
  • Investment Board
  • Employment Relations Commission
  • Administration — Division of Gaming
  • Health Services — Care and Treatment Services
  • Shared Revenue and Tax Relief — Direct Aid Payments
  • Shared Revenue and Tax Relief — Forestry Mill Rate
  • Transportation — State Patrol
  • Revenue — Department-wide

As the budget committee begins to make its way through the behemoth spending document, let’s review the issues that you, the taxpayer, need to know about. Even without some of the more controversial provisions that will be stripped from the document, Evers’ proposal would still spend billions more than current spending levels.

The Basics

Evers’ budget proposal would increase spending by 7.6 percent or $2.7 billion over current spending levels, to $38.3 billion in general purpose revenue (GPR). Considering all funds, the document would spend $84.2 billion over two years, $7 billion in actual dollars more than Walker’s last budget. Using base year doubled math, the funding increase is $6.87 billion.

The proposal would increase total all funds positions to nearly 71,991 in the second year, a 701-position increase of government jobs from all funding sources. GPR positions would increase to 35,670 by the second year in the biennium, a position increase of 391 from current levels.

It also makes income taxes more progressive by targeting more income tax relief on lower tax brackets, while increasing income taxes for higher earners.

Taxes in the general fund would increase by a total of $1.64 billion over the biennium. General tax cuts, including a new middle-class tax credit and expansion of other already-existing credits, total $951.4 million. That means in all, the net tax increase to Wisconsin taxpayers would be $688.7 million over the next two years. However, those are just taxes at the state level. This budget would increase local taxes and fees in a variety of other ways, such as removal of property tax controls, which will push this total much higher.

The most curious omission in Evers’ budget is an apparent lack of reference to Walker’s signature 2011 reform, Act 10, which was repeatedly slammed by Evers on the campaign trail and in years past. Nowhere does the budget seek to roll back taxpayer protections created by the law, including increased contribution levels for public sector employee benefits or annual union recertification votes.

Tax Increases, Tax Cuts

Evers’ budget proposal introduces myriad tax hikes to at least partly pay for massive spending increases. First on the docket is a tax increase introduced by his office several weeks ago — a partial rollback of the Manufacturing and Agriculture Tax Credit (MAC). That change would limit the job credit for manufacturers to the first $300,000 of qualified income. The move would raise $516.7 million in tax revenue over the biennium by raising taxes on those manufacturers.

According to one recent analysis by the Tax Foundation, nearly 70 percent of Wisconsin manufacturing firms pay the individual income tax rate instead of the corporate tax rate. Since those companies are organized as pass-through businesses, all of their business income is taxed as individual income.

In other words, a manufacturer who earns $300,000 or more may appear to be part of Wisconsin’s upper-echelon of earners — but all of that business-owner’s equipment and inventory is included in the figure. As Darling said on the Senate floor, “You know a farmer is dealing with a budget that might be 1, 3, 5 or 6 million dollars. They’re not taking that money home. Those are just the expenses they have to deal with.”

Another change would increase the long-term capital gains tax. Under current law, long-term capital investment gains are taxed at a 5.355 percent rate. The budget proposal removes part of an existing exclusion, so that those gains are taxed at the top individual income tax rate of 7.65 percent for certain earners. Individuals earning less than $100,000 and married-joint filers earning less than $150,000 would keep paying the capital gains tax at the 5.355 percent rate, while earners above them would move to 7.65 percent.

If a retiree cashes in a stock they’ve held for years, those earnings will again be taxed, this time at the highest rate available. That move punishes taxpayers who are successful or preparing for retirement, to the tune of $505.1 million more in taxes.

This is where JFC’s move to strip certain policy items from the budget comes in: both the tax hikes on manufacturers and on certain capital gains will be pulled out of the budget. The budget committee will also toss the proposed repeal of the private school tuition deduction, and proposed restructuring of both the earned income tax credit and homestead tax credits.

Tax items that remain in the budget include a proposed 10 percent tax cut on the middle class, taxes on e-cigarettes and vaping products, and taxes on brown cigars. The budget chairs will also keep the creation of first-time home buyer savings accounts, and a new medical care insurance deduction for self-employed persons. The state will also begin collecting sales taxes on online purchases, and that money will go toward lowering the bottom-most individual income tax rate.

Late in his campaign, Evers announced plans for a 10 percent tax cut on the middle class. The administration is proposing a tax credit called the Family and Individual Reinvestment (FAIR) credit. Individuals earning below $80,000 and married-joint filers earning below $125,000 will receive a tax credit of 10 percent of their net tax liability or $100, whichever is greater. The credit phases out at $100,000 for single earners and $150,000 for married-joint filers. That provision remains in the budget today.

In addition to all the ways Evers’ budget would raise taxes at the state level, his plan proposes allowing local governments to increase property taxes in several different ways. When combined into individual tax bills, property owners could be in for a real shock next year. Many of those provisions have been pulled out by JFC.

First, Evers would have eliminated the school levy tax credit and the first dollar tax credit. Those credits would provide about $2 billion in property tax relief over the next two years without the change. School districts would also be able to hold referendums whenever they want, doing away with several important controls on property taxes at the state level. Both of those changes are nixed by the budget chairs.

Next, Evers would adjust revenue caps for municipalities, counties, and tech school districts. Currently, they can only increase their levy by their percentage of net new construction from the previous year. The budget proposal would set a minimum increase of 2 percent. Most communities currently have less than 1 percent growth each year, and the state average for 2018 was 1.62 percent. As a result of this change, 85 percent of Wisconsin communities would see the municipal, county and tech college portions of their property tax bills grow at a faster rate year after year than they do now.

The plan would also increase property taxes on big businesses, by allowing municipalities to base property taxes on the basis of that business’ total income rather than the value of a given property. Individuals who own homes aren’t charged property taxes based on their income — they’re charged based on the value of their home or land. This shift would fundamentally change how property taxation is calculated in Wisconsin. Both this change and the revenue cap adjustments for municipalities, counties, and tech school districts are tossed out by the budget committee.

Finally, local governments would be allowed to raise fees without having to lower their tax levies in exchange. This means local governments could start charging residents for things like garbage pickup and recycling without having to lower property taxes. In other words, if you’re not paying for things like garbage pickup right now, chances are you will be. In a surprising move, this change was left in by JFC.

One final note on taxes: apart from the minor shift on income taxes described above, Evers’ budget does not raise the general sales, corporate, or individual income tax rates. For all the tax increases tucked into other parts of the budget, the governor stayed away from a Doyle-style ramping up of individual income tax rates. Consider us pleasantly surprised on this front.

Health Care

Perhaps the most important item that the budget committee tossed out with non-fiscal policy items was the acceptance of federal Medicaid dollars. Expect that to be a big part of the discussion during the first executive session.

Evers’ budget would have accepted the federal Medicaid expansion under Obamacare while significantly increasing spending on a wide range of programs. The Medicaid expansion has been a costly proposition for states that accepted it. Medicaid spending in Ohio, for example, skyrocketed 35 percent in four years – from $18.9 billion to $25.7 billion between fiscal year 2013 and 2017. And in Minnesota, premiums increased 50-67 percent, forcing the state to implement a reinsurance program costing taxpayers at least $800 million so far. The federal dollars that follow a Medicaid expansion are anything but “free money,” as advocates persistently claim.

Premiums headed into 2017 were expected to increase by a staggering 50-67 percent, as opposed to Wisconsin’s 16 percent hike. As a result, Minnesota was forced to come up with $300 million to bail out 123,000 struggling Minnesotans who did not qualify for federal Obamacare subsidies.

The bloodletting of Minnesota taxpayers didn’t stop there. The following year, the Minnesota legislature spent an additional $542 million to establish a reinsurance program to hold down costs.

Despite these and many other stark cautionary tales, Evers proposed expanding Medicaid eligibility to everyone earning between 100 – 138 percent of the federal poverty level. In 2019, that income level is $34,638 for a family of four, making 82,000 more people eligible for the program. However, about half of the 82,000 people who would become eligible for Medicaid already have employer-provided coverage. The rest, those who earn between $13,000 and $17,000, qualify for plans on the Obamacare exchanges with premium costs as low as 18 cents a month. The annual deductible for those people is just $50.

That means many people who join the program would be moving backward, from self-sufficiency to dependence on government health care.

When tens of thousands of impoverished Wisconsinites can get health insurance for just 18 cents per month, it’s a clear sign that the state doesn’t need to go further or put future budgets at risk.

The budget asserts that expanding Medicaid will save $325 million in GPR across the biennium because of the federal government’s enhanced 90 percent match versus traditional Medicaid, a tenuous stream of dollars from a federal government already drowning in $22 trillion in debt. As with traditional Medicaid and its notoriously low reimbursement rates, the federal government is likely to back off that enhanced match in the future and leave state taxpayers holding the very expensive bag. Nonetheless, Evers’ budget proposal accepts and then immediately spends the $325 million—plus a lot more—on increased payments to health care providers and other new spending.

The federal government has a history of reneging on fiscal promises for states – just look at Children’s Health Insurance Program (CHIP) reimbursement rates.

In that instance, states built their budgets on promised federal dollars. Federal funding for CHIP expired in late 2017, and states were left picking up the slack by putting in more state dollars or cutting coverage. When the federal government backed out of paying what it promised, more than 452,000 Texans were affected when the state had to begin phasing out the program.

Accepting money from the federal government is a serious risk, as dozens of states learned with CHIP dollars. If Wisconsin does the same with Medicaid dollars, we risk much more than we can gain.

The budget spends $365 million more on reimbursement payments to hospitals serving Medicaid patients through five different, more traditional reimbursement avenues. That includes $142 million more in payments to hospitals handling a larger number of Medicaid patients than most; $100 million more for payments to acute care and critical access hospitals; $20 million more for payments to pediatric hospitals; and $1.2 million more for rural hospitals. All of those changes stay in the budget.

The budget builds off Gov. Walker’s reinsurance program, aimed at holding down premiums on the individual health insurance market in the era of Obamacare’s skyrocketing premiums. The continuation of this Walker-era program is a not-so-subtle admission that Obamacare has failed spectacularly to “bend the cost curve down,” and that failure is costing Wisconsin taxpayers dearly. The budget buttresses the program with $200 million in all funds spending for the Office of the Commissioner of Insurance in the second year of the budget. While the Walker administration, when he rolled out the plan, said it would cost taxpayers $34 million out of state coffers, Evers’ plan hikes the OCI budget by more than $72 million in the second year of the budget in state spending, or GPR — and by more than $200 million in all funds in the budget’s second year — to “fully fund” the program. That change also stayed.

Transportation

The Department of Transportation (DOT) gets a $627 million boost in the governor’s budget, bringing the total up to $6.63 billion from last budget’s $6 billion.

The plan calls for increasing the gas tax immediately by 8 cents, bringing it up to 40.9 cents, and producing an additional $264 million for the state. It would go up another one cent as a result of indexing starting in April 2020. Many lawmakers like indexing because it’s an automatic tax; it rigs transportation tax revenue to automatically increase without forcing legislators to actually cast a vote on the hike. In essence, it’s taxation without representation. Wisconsin would be the fifth state in the country to tie its gas tax to the consumer price index.

Evers also wants to increase vehicle registration fees by $10 for a total of $85 annually, create a new hybrid vehicle fee of $75 per car, and hike heavy truck fees by 27 percent. He claims these increases will be offset by eliminating the minimum markup on fuel. The minimum markup law is a Depression-era relic that sets a price floor on numerous products, including prescription drugs and gasoline. The minimum markup on products other than gas is maintained in Evers’ proposal.

Of any agency budget, DOT’s was kept the most intact by the finance committee. Both the gas tax increase and indexing are left in the budget. However, the change to the minimum markup law was pulled out.

The budget proposal would cut funding to major highway projects by $5.5 million, and to the highway “mega projects” category by $203.7 million. Most of Evers’ attention in the state highway program goes to the state highway rehabilitation program, which he increases by $225.7 million over the 2017-19 budget.

His main priority with road funding is on increasing road aids to local governments. Most local transportation aid comes in the form of general transportation aids (GTA) and is disbursed according to the calendar year as opposed to the fiscal year, which runs July to June. This year, the state will distribute $348,639,300 to municipal governments and $111,093,800 to county governments. Evers wants to boost that by 10 percent. That comes out to $383,503,200 for municipalities and $122,203,200 for counties next year. He also wants to increase the mileage aid to $2,628 per mile.

The transportation budget includes $338 million in additional bonding authority for transportation over the current budget.

Evers’ budget would do away with the “Fed-Swap” law, which requires DOT to consolidate federal funding into as few major highway projects as possible. The axed reform saves money by limiting the number of projects subject to the more stringent and costly federal requirements, including prevailing wage. The budget committee’s changes to the bill include pulling out Evers’ change to Fed-Swap.

Big Labor

Evers’ first budget handsomely rewards his Big Labor allies, and is a full-on assault on worker freedom. JFC took massive swipes at this particular section of the budget. Big Labor was perhaps the biggest loser in all of JFC’s changes, with Evers’ proposals for right-to-work, prevailing wage, and project labor agreements all stripped out. Many of these provisions are part of welfare reform, which we’ll cover in more detail later in this piece.

What Evers planned to do is bring back forced union dues, reinstate artificial wage floors that cost taxpayers big, and force the return of union exclusivity contracts.

Before JFC’s changes, the budget restored the prevailing wage law for state and local public works projects. Evers asserts bringing back the Great Depression-era relic “ensures that workers are not underpaid relative to other workers performing similar in the area.”

His budget plan permits the project labor agreements for public works projects that the former governor signed out of existence in 2017.

PLAs stipulate that only union firms can bid on a project, and many units of government required them — shutting out non-union shops.

The Republican-led reform law prohibits a government from requiring a PLA as a condition to bid on a taxpayer-funded project — a big win for the free market and the taxpayers who benefit from increased competition. Democrats have argued the law is yet another attack on unions and that it limits local control.

The governor’s budget plan also gets rid of a reform law aimed that ends the patchwork of employment laws statewide. Evers’ provision would repeal preemption of costly local government ordinances on family and medical leave, wage claims, employee benefits, hours of work and overtime, and solicitation of prospective employees’ salary histories. The preemption reforms require such employment regulations to be governed by uniform statewide policy, not created through the whims of local governments, at business and taxpayer expense.

JFC’s changes pulled out Evers’ proposals regarding the prevailing wage, right to work, and PLAs.

K-12 Education

Property tax levels are largely driven by spending in schools — another issue area where this proposal would spend vastly more.

Evers’ budget proposal for K-12 education largely mirrors the budget request submitted last fall by the Department of Public Instruction (DPI), when he was the head of that agency. The total changes would increase DPI spending by nearly $1.6 billion over the biennium, more than the DPI budget request. It’s also more than twice the dollar amount of the last budget’s increase to K-12 education. That bill upped spending by more than $630 million in the biennium, the highest dollar amount in history at the time.

The majority of K-12 dollars flow through equalization aid, also known as general aid, which exists to even out funding disparities in local property taxes. Property-poor districts such as Milwaukee Public Schools (MPS) receive disproportionately high amounts of equalization aid. Forms of aid like the school levy tax credit and the first dollar credit are considered categorical aid, and are distributed equally across school districts.

Under Evers’ plan, the school finance formula would significantly change, and billions more dollars would flow through equalization aid. The school levy tax credit and first dollar credit would be eliminated in the first year, with that funding instead moving to general aid. That move alone is likely to increase property taxes, since money that is now used to offset local property taxes will instead flow directly to schools. The plan includes a hold harmless provision so that no district will receive less in state funding than current law.

Limits on school district referenda implemented in recent years would be done away with. School districts would no longer be limited in the number of referenda they may hold in a calendar year, another measure certain to increase property taxes across the state.

JFC changes delete Evers’ proposal to eliminate those property tax credits as well as his proposals on school district referenda. The hold harmless provision is maintained, as is the additional funding weight for economically disadvantaged students.

Other changes to K-12 funding include an increase in the revenue limit adjustment by $200 in the first year and $204 in the second year, with future increases indexed to inflation. The plan also increases the low revenue adjustment from $9,100 under current law to $9,700 in 2020 and $10,000 in 2021. That’ll allow school districts across the state to levy millions more in local property taxes. Assembly Republicans have pushed to increase the low revenue adjustment in recent years, including during the previous budget debate. The Assembly Republican plan in 2017-19 would have increased the low revenue adjustment by much less than Evers’ plan, and would have allowed local property taxes to increase by up to $92.7 million statewide. Evers’ plan, of course, goes much further than that, signaling even bigger property tax increases down the road. Those changes, as well as a more than half a billion dollar investment in special needs reimbursements, are kept in the budget.

The budget would also spend more than $600 million on students with special needs, while limiting many of those students’ options. The majority of the hike would go toward increasing the state reimbursement level for special education costs by $606 million over the biennium. The high-cost special education program would be made sum sufficient, and special education transition readiness grants would increase from $1,000 per pupil to $1,500 per pupil, increasing spending by more than $7 million on those grants.

While students with special needs who attend public schools are rewarded in the proposal, students in the Special Needs Scholarship Program (SNSP) would be shut out of their educational options. That program, established in the 2015-17 budget, allows students with special needs to attend private schools with scholarships from the state. No new students could join the program after the 2019-20 school year.

All of the provisions that limit educational choice, including the changes to SNSP, independent charter schools, and choice enrollment, are eliminated by JFC. Other additional regulations, such as different accreditation rules and licensure requirements, are also tossed.

Evers had proposed massive rollbacks to educational choice include freezing enrollment in the popular private school choice programs in Milwaukee, Racine, and statewide. Total seats available would freeze after the next school year. Students could join the programs when others graduate or otherwise leave. An estimated 38,187 students across the state participate in the three programs, with nearly three-quarters in Milwaukee.

The number of independent charter schools would freeze under the proposal, with a ban on authorizations of new schools by entities other than public school districts until 2023. Under current law, any chancellors of the UW System, the City of Milwaukee’s common council, tribal authorities, any technical college district board, the Waukesha County Executive, and the UW-System Office of Educational Opportunity can authorize independent charter schools.

Choice and charter programs have been remarkably successful in Wisconsin, showing strong proficiency rates despite higher levels of student poverty. Of the 17 MPS schools receiving five stars on the most recent state report cards, 10 are in the private choice program, four others are charter schools, and just three are traditional public schools. On the other end of the scale, 50 MPS schools received one star in 2018, or “failing to meet expectations” designations. Ten of those schools are in the private choice program, while three are charters and 37 are traditional public schools.

University of Wisconsin System

Evers’ budget proposal for the UW System would continue the popular tuition freeze for in-state undergraduate students. The UW System would see a boost in funding to the tune of $175 million over the biennium.

Almost all of Evers’ proposed UW budget is kept by the budget committee, including the tuition freeze, employee raises, and changes to performance-based funding for UW institutions.

Spending increases at the UW System include $10 million for fellowships and loan forgiveness for certain nursing candidates who commit to teaching in the system for three years after graduating. Student support services for the UW Colleges would see $5 million, and 20 more employees would be hired for UW-Extension county-based representatives. Need-based grants for Wisconsin students attending the UW System, tech colleges, private universities or tribal colleges would be funded by $17.3 million in GPR.

The proposal sets up a study committee to examine creating a state-run student loan refinancing authority. The committee is charged with making recommendations by late 2020, for inclusion in the 2021-23 state budget. JFC pulled that proposal, calling it a non-fiscal policy item.

The committee also pulled out one provision that would give undocumented students in-state tuition. Students who are citizens of other countries but who graduated from a Wisconsin high school, lived in Wisconsin for three continuous years before high school, or have applied for a permanent resident visa would qualify for in-state tuition under the original Evers plan.

All told, Evers’ budget spends $5.9 million more than the UW System requested in last fall’s agency budget request, and creates 219.84 new full time positions.

The Wisconsin Technical College System would also receive a funding increase of 7 percent in each year, totaling $18 million over the biennium.

The budget proposal eliminates the Early College Credit Program, which allows high school students to take university classes under a cost-sharing agreement. Students can earn high school credit, college credit, or sometimes both. Instead, the budget requires that the UW System implement a program to provide tuition-free classes for high school students. The budget gives similar treatment to a program that lets high school students take classes at tech colleges, instead requiring the tech colleges to provide them for free. JFC chose to leave in that provision.

Welfare Reform

Other than the Medicaid-related changes, welfare reform is the issue area where the finance committee pulled out the most policy items. Every single Evers proposal for unemployment insurance and equal rights was stripped out by JFC.

The budget would have rolled back some of Walker’s reforms to the state welfare systems. Able-bodied adults with dependents aged six to 18 would no longer need to satisfy work requirements in order to receive FoodShare. Drug testing for most public assistance programs is eliminated. Evers’ budget includes $5.3 million to help welfare recipients in the Wisconsin Works (W-2) program “access affordable Internet.” Those changes are now gone.

It’s another big-government initiative, that looks a lot like the city of Madison’s failed broadband-for-all pilot program for low-income neighborhoods. Evers’ $5.3 million seems all the more excessive given that free Internet access is as close as the local library, neighborhood school, or any number of retailers and restaurants.

Childless able-bodied adults would still be required to satisfy job requirements in order to get FoodShare. That became compulsory in April 2015.

A different budget provision also stripped by JFC would create a statewide broadband goal for all businesses and homes.

Minimum wage for state employees would increase to $15 per hour in 2021. For everyone else, the state minimum wage would increase to $8.25 in 2020, followed by 75-cent increases annually until 2023. Once the minimum hourly wage reaches $10.50 in 2023, it would become indexed to inflation. The governor’s budget proposal also creates a task force to study how to get the state to a $15 per hour minimum wage. Those changes are also axed by JFC.

Most state employees would see a wage increase of 2 percent in each year of the biennium, totaling $82.1 million in GPR. Another $12.1 million would be provided for targeted increases to certain state employees.

Wisconsin would make a statutory goal for all electricity produced in the state to be completely carbon-free by 2050. That’s pulled right out of the Green New Deal, which argues that the entire world should become carbon-free by 2050. As temperatures dipped below freezing in much of the state this weekend, a similar move enacted today would mean death by frost. Thirty years changes a lot, but it seems likely that Wisconsin will still be a cold northern state by 2050. That particular idea was pulled by the finance committee.

Other Evers proposals would repeal the changes in law the Legislature passed during December’s Extraordinary Session, including the ability of the Attorney General settle cases without the approval of the Legislature. The Legislature would no longer be able to intervene in lawsuits as a matter of right. Both of those changes are now stripped out.

All the Rest

As with any budget, there are always a few items that go mostly unnoticed. They may not be the biggest whoppers, but they do leave us scratching our heads. JFC pulled out all of the following items.

One provision would have created a government-run “private” retirement system. It would be similar to a pension that anyone in the state could join, creating yet another duplicitous new government program. This is one area where the wealth of private options that work for millions of people should make it clear that the state does not need to step in – but big government advocates seemingly just can’t help themselves.

Evers also proposed creating a first-time homebuyer savings account, similar to a health savings account, that would allow first-time buyers to set aside money tax-free.

Several government reforms were stripped, including automatic voter registration run by DOT, and a new model for redistricting and drawing legislative maps. Evers’ team calls that the “Fair Maps Plan,” claiming that the current maps give Republicans a political advantage.

Numerous energy-related provisions were taken out by the budget chairs, including spending money from Volkswagen settlement funds on the creation of charging stations for electric vehicles. That’d be similar to the government paying gas station owners to build new gas pumps. Instead, Evers would have the government take over another responsibility.

Other expensive energy initiatives include an unlimited electricity tax. Currently, the state’s Public Service Commission requires utility companies to spend 1.2 percent of annual revenues to fund energy efficiency and renewable energy programs. By law, the PSC can’t require utilities to spend any more than that. Evers’ budget would eliminate that 1.2 percent cap, opening the door for massive utilities increases. JFC stripped that item out as policy.

One energy-related provision that’s still in the budget is $2 million in one-time funding to the Washington Island Electric Cooperative. That money would replace a cable that brings electricity to Washington Island. Providing replacement cables is a direct function of what co-ops are supposed to do, but in this case, they might just get away with fleecing taxpayers statewide for local infrastructure improvements.

Ultimately, the JFC chairs made the budget a much, much more conservative spending document. The vast majority of deeply concerning items will no longer be in the budget, with the greatest exception being indexing of the gas tax.

Joint Finance is also starting from the base budget, meaning that any new Evers provisions must be added in with a majority vote. Tomorrow, get ready for a long re-hash on the budget in its entirety before the committee dives into votes. Luckily, you’ve now got a re-set on the document as a whole – and that’s exactly why we’re here. As always, follow @NewsMacIver and @MacIverWisc for live updates.

Bill Osmulski, M.D. Kittle, and Chris Rochester contributed.

April 24, 2019 | By Ola Lisowski

ChartSmart: K-12 Education Funding in the Biennial Budget

Welcome back to ChartSmart!

In today’s edition, we’ll be taking a look at K-12 public education in the state of Wisconsin. Today, we’re focusing on the budget – what’s in it, how much it spends, and how much past budgets have spent. Future editions will examine how well students fare on a variety of achievement metrics.

Curious about anything not listed here? Let us know in the comments below. As always, get the latest budget news at @MacIverWisc and @NewsMacIver.

April 8, 2019 | By Ola Lisowski

ChartSmart: 2019-2021 Budget Basics

Welcome back to ChartSmart!

Over the next few weeks, the Joint Finance Committee will tour the state hosting public hearings on the 2019-21 biennial budget proposal. As always, we’ll be there to keep the public and the hardworking taxpayers informed.

As the budget season begins moving along in full force, today, we’re taking a look at basics like overall spending, borrowing, and government positions. We’ll review what the biggest agencies are, and the amount by which their spending has grown since the last budget.

In the weeks and months to come, we’ll continue publishing our ChartSmart series and begin honing in on specific topics. What would you like to know about the budget? Let us know in the comments below, or on our social media channels. Make sure to follow @MacIverWisc and @NewsMacIver to stay up-to-date on the latest news.

March 27, 2019 | By Ola Lisowski

Our Wisconsin: Budget

Welcome back to Our Wisconsin!

Budget season is officially in full swing. The nonpartisan Legislative Fiscal Bureau (LFB) has completed its thorough analysis of the massive 2019-21 biennial budget. For that reason, we’re coming back to the series Our Wisconsin to release a budget scorecard fully updated with the latest figures you need to know.

Many of the figures in the LFB analysis are different than those in the document published by the Evers administration. Most significantly, total spending in Evers’ budget is more than $710 million higher than the document released by his office last month. In total, his budget proposal spends $84.2 billion over the biennium.

Covering the state budget process is why the MacIver Institute exists. We serve our readers, the taxpayers, by providing in-depth and timely analysis of this massive spending document. Few outlets cover the biennial budget as closely as we do. Even fewer look at the document from a free-market perspective.

Since the budget release on Feb. 28, we’ve published tens of thousands of words analyzing the budget as a whole, followed by deep dives on issues like K-12 education, transportation, health care, higher education, and welfare. In the months to come, watch for our coverage on just about every component of the budget.

The first column of our scorecard focuses on the 2011-13 budget and the second column looks at 2017-19, a direct comparison between Walker’s first budget and his last. The newly-added third column shows spending, bonding, and other important budget metrics in Evers’ first budget proposal. It’s important to note that the bonding rows also include bonding in the capital budget, which funds building projects across the state.

While the cries of austerity and budget cuts have echoed for years, the reality is clear. Wisconsin increased its state spending past inflation by billions of dollars during Walker’s tenure. More people are employed by the state of Wisconsin, and more money is spent every year. During Walker’s tenure, the state borrowed less, and set aside more money for a rainy day.

Evers’ budget ramps up state spending at a much faster rate. Spending increases by more than $7.7 billion in actual dollars. It cuts bonding in the biennial budget, but would add billions more in the capital budget, a separate budget document specific to state building projects.

It’s also important to note the illusion that is Madison Math. As we wrote in our first budget analysis, the budget uses a form of trickery called “base year doubled.” Under that method, the new base for the next budget is simply double the second year in the prior budget. In reality, base year doubled is a sleight of hand trick that guarantees the constant growth of government spending. In this case, the 2017-19 budget spent $76.5 billion actual dollars, but the base year doubled is $77.3 billion. Using base year doubled math provides an automatic incentive to spend more.

In actual dollars, spending increases by more than $7.7 billion since the last budget cycle. But using base year doubled, the increase is $6.4 billion. That’s the official figure used by the state.

In this scorecard, we show actual figures for overall spending. However, we use base year doubled for percent and dollar increases over the prior budget, since those are the figures published by the LFB and are considered the standard for state accounting.

We hope our scorecards will keep the debate and conversation grounded in reality. We hope our scorecards will help you cut through the fog of hyperbole and rhetoric. We hope these scorecards help you decide for yourself: What is the true state of our great state?

Don’t take Evers’ word for it, or any other politician for that matter. Don’t let the media tell you what you should think. Decide for yourself.

Forward, Wisconsin.

March 26, 2019 | By Chris Rochester and Ola Lisowski

Analysis: Evers Budget Unravels Key Welfare Reforms

Reforming government benefits programs has been a Wisconsin hallmark for decades, dating back to the administration of Gov. Tommy Thompson. More recently, Gov. Scott Walker built on the welfare reforms of the 1990s with his own slate of policy changes.

The goal all along was to make sure recipients of taxpayer funded benefits knew the help wasn’t free — something would be expected of them in return. That’s an especially reasonable expectation today considering our state’s robust economy and roaring job market.

Gov. Tony Evers’ 2019-21 biennial budget proposal rolls back much of that progress and attempts to reinstate the notion of a “free lunch,” bankrolled by the hard working taxpayers of Wisconsin. Whether it’s minimal work requirements for those on food stamps, tiny contributions for those on government healthcare, or basic work-search expectations for those on unemployment, Evers’ budget opens the treasury door to those who have little interest in working.

Evers picks a strange time in Wisconsin history to roll back reforms that put the onus on welfare recipients to at least try to find work. Our state’s unemployment rate stands at a near-record low of 3 percent, there are more than 100,000 jobs left unfilled, and employers everywhere are desperate for help.

Simply put, there is no excuse for an able-bodied adult who is capable of working to sit on the sidelines. Yet Evers’ budget makes it a whole lot easier to do just that.

Unlike other single-issue analysis pieces on Evers’ budget document that MacIver has published over the past month, welfare reform crosses many agency boundaries. That makes the basics on spending, total positions, and borrowing a bit more complex, as these programs are run by numerous government agencies, including the Department of Health Services (DHS), the Department of Children and Families (DCF), the Department of Workforce Development (DWD), and others.

As we wrote in our health care analysis, total spending at DHS, all funds, totals $27.2 billion under the Evers plan. That’s an 11.5 percent or $2.8 billion increase over current spending. Overall government positions in that agency would increase by 192.04 positions total. The budget would spend $8.4 billion in general purpose revenue (GPR), a 6.4 percent increase over the $7.9 billion GPR spent in the current budget. DHS runs programs such as FoodShare and FoodShare Employment and Training (FSET) as well as the behemoth Medical Assistance program that includes BadgerCare.

DCF runs programs like Wisconsin Works, a job training program for low-income parents and pregnant women. All funds spending at the agency would increase by $213 million to $2.83 billion, an 8.1 percent increase. In terms of state dollars alone, the agency would spend $957 million GPR over the biennium, an increase of $27 million or 2.9 percent. Positions at DCF increase by just two full-time equivalents over the biennium, to 988.16 total government jobs at the agency.

DWD runs programs such as unemployment insurance (UI), colloquially known as unemployment benefits. The agency also maintains the Job Center of Wisconsin, which helps employees and employers connect. Under Evers’ plan, all funds spending at DWD would decrease by $20.5 million or 2.9 percent, to $690.5 million overall. Positions at the agency increase by 33.5, to 1,642.55 total in 2021. GPR spending falls to $80.3 million, a decrease of more than $12 million or 13.4 percent. DWD is one of the few agencies that would see a funding decrease under Evers’ plan.

Medicaid eligibility reforms stripped

Welfare reforms enacted under Walker also attempted to nudge people off government health care and into private plans offered through employers.

But a series of critical Medicaid reforms enacted under Walker are also repealed wholesale by Evers’ budget, despite protections enacted during December’s extraordinary session.

Among the reforms struck by Evers’ budget are work requirements for Medicaid eligibility. Walker increased from 20 to 30 hours a week the time that able-bodied adults (ages 19 to 49) without children must be working, training for work, or looking for work to receive BadgerCare health insurance. That’s the federal maximum, as even Democrats in Congress recognize that 30 hours is not too much to ask for. Evers’ budget rolls that back.

The work requirements largely mirror those for FoodShare benefits and expand on the mantra that people seeking expensive help from their fellow Wisconsinites should be expected to make an effort to be self-sufficient.

Walker had also sought the federal government’s permission to charge a small amount of money for Medicaid benefits for a subset of those below the poverty level. The nominal premiums of $8 for households earning from 51-100 percent of the federal poverty level would give recipients at least a small financial stake in their own benefits and are a step toward reducing the “benefits cliff” that strikes people who climb the economic ladder but are faced with losing generous benefits. Evers’ budget strikes that reform.

The budget also goes easy on child support scofflaws—it eliminates a requirement that Medicaid recipients be in compliance with child support orders.

It also eliminates minor co-pays for non-emergency medical services, and Medicaid Health Savings Accounts are eliminated entirely. Both were enacted with the intent of injecting consumer choice into government health care by forcing recipients to shop around for providers. That, in turn, sought to put a crimp on providers who offered poorer quality services at inflated prices.

FoodShare reforms axed

Walker made welfare reform a focus of his administration, especially as the economy improved and made it easier for people on this program to achieve self-sufficiency.

In April 2015, certain able-bodied individuals had to begin satisfying work and drug screening requirements to receive FoodShare, colloquially known as food stamps. Individuals who did not comply with work requirements for three months in a 36-month period become ineligible for those benefits. Individuals would have to work, receive job training, or a combination of both for an average of 80 hours per month to retain benefits.

In short, they would have to make an effort to earn what the taxpayers of Wisconsin were generously providing them.

The largest job training program in the state is the FoodShare Employment Training (FSET) program. Wisconsin’s Department of Health Services (DHS) has regularly reported on average FSET wages and weekly hours, both of which have increased consistently. FSET participants earned an average $13.64 per hour, nearly double the state minimum wage, according to the most recent data available.

Almost 31,000 FSET participants have gained employment since the state began tracking data in 2015.

Originally, able-bodied adults with no dependents were the only individuals required to work or participate in job training for a total of 80 hours per month. That pool later expanded to able-bodied adults with school-aged dependents (ages six to 18).

Evers’ plan strips back some of the work requirements for FoodShare participants. Able-bodied individuals with school-aged dependents will no longer have to satisfy work requirements; only those without any dependents will still have to comply.

While Evers rolls back the vast majority of welfare reforms made under the Walker administration, keeping work requirements for able-bodied adults without dependants could be considered a casual nod to the success of those reforms. Still, the remaining requirements are a far cry from the robust employment training prioritized under Walker.

In addition, all drug screening requirements are repealed under the proposal. And like in his Medicaid proposal, Evers’ plan also repeals the requirement that individuals be in compliance with child support orders in order to receive FoodShare benefits.

Easier to stay unemployed

A hallmark of Walker’s welfare reform initiatives was to encourage people to find gainful employment and drop off the rolls of government assistance. That not only helped lower costs to taxpayers, Walker and allies argued, but to add to the dignity of people previously dependent on their neighbors. The ultimate goal was to help individuals find a lifelong career that helps them become self-sufficient.

One of the more controversial proposals in Evers’ budget plan would strip back taxpayer protections for unemployment insurance (UI) benefits, making it easier to receive those dollars.

Under current law, individuals must wait seven days before qualifying for UI benefits. The waiting period allows state workers to vet the validity of joblessness claims, one protection against fraud. Evers’ plan does away with the waiting period.

Individuals would no longer be required to pass a drug test to receive the benefits, and some job search requirements would be rolled back. It would also increase the maximum rate for UI benefits to $406 per week, from a current maximum of $370.

The state unemployment rate has stayed at 3.0 percent for 11 months. UI benefits claims are also at historic lows. But for many, Evers’ budget makes it more comfortable to stay out of the labor force than to find a job.

The most recent data available show 44,487 Wisconsinites claimed unemployment benefits for the week of March 2, 2019. For the same week in 2009, at the height of the recession, 186,219 Wisconsinites claimed benefits. That’s a remarkable decline in those out of work.

Overall unemployment claims peaked in early 2010 and have steadily fallen since then, with annual peaks occurring every January.

By eliminating welfare reforms for everything from food stamps to unemployment and BadgerCare, Evers’ budget completely reverses the Walker-era ethic of moving people from government dependence to independence.

Instead, his budget attempts to get rid of the notion that while taxpayers are generous, they expect at least a nominal effort in return for their hard-earned dollars.

And it does so at a time of unprecedented opportunity in the private sector in Wisconsin.

March 26, 2019 | By Ola Lisowski and Chris Rochester

Analysis: Evers Budget Unravels Key Welfare Reforms

Reforming government benefits programs has been a Wisconsin hallmark for decades, dating back to the administration of Gov. Tommy Thompson. More recently, Gov. Scott Walker built on the welfare reforms of the 1990s with his own slate of policy changes.

The goal all along was to make sure recipients of taxpayer funded benefits knew the help wasn’t free — something would be expected of them in return. That’s an especially reasonable expectation today considering our state’s robust economy and roaring job market.

Gov. Tony Evers’ 2019-21 biennial budget proposal rolls back much of that progress and attempts to reinstate the notion of a “free lunch,” bankrolled by the hard working taxpayers of Wisconsin. Whether it’s minimal work requirements for those on food stamps, tiny contributions for those on government healthcare, or basic work-search expectations for those on unemployment, Evers’ budget opens the treasury door to those who have little interest in working.

Evers picks a strange time in Wisconsin history to roll back reforms that put the onus on welfare recipients to at least try to find work. Our state’s unemployment rate stands at a near-record low of 3 percent, there are more than 100,000 jobs left unfilled, and employers everywhere are desperate for help.

Simply put, there is no excuse for an able-bodied adult who is capable of working to sit on the sidelines. Yet Evers’ budget makes it a whole lot easier to do just that.

Unlike other single-issue analysis pieces on Evers’ budget document that MacIver has published over the past month, welfare reform crosses many agency boundaries. That makes the basics on spending, total positions, and borrowing a bit more complex, as these programs are run by numerous government agencies, including the Department of Health Services (DHS), the Department of Children and Families (DCF), the Department of Workforce Development (DWD), and others.

As we wrote in our health care analysis, total spending at DHS, all funds, totals $27.2 billion under the Evers plan. That’s an 11.5 percent or $2.8 billion increase over current spending. Overall government positions in that agency would increase by 192.04 positions total. The budget would spend $8.4 billion in general purpose revenue (GPR), a 6.4 percent increase over the $7.9 billion GPR spent in the current budget. DHS runs programs such as FoodShare and FoodShare Employment and Training (FSET) as well as the behemoth Medical Assistance program that includes BadgerCare.

DCF runs programs like Wisconsin Works, a job training program for low-income parents and pregnant women. All funds spending at the agency would increase by $213 million to $2.83 billion, an 8.1 percent increase. In terms of state dollars alone, the agency would spend $957 million GPR over the biennium, an increase of $27 million or 2.9 percent. Positions at DCF increase by just two full-time equivalents over the biennium, to 988.16 total government jobs at the agency.

DWD runs programs such as unemployment insurance (UI), colloquially known as unemployment benefits. The agency also maintains the Job Center of Wisconsin, which helps employees and employers connect. Under Evers’ plan, all funds spending at DWD would decrease by $20.5 million or 2.9 percent, to $690.5 million overall. Positions at the agency increase by 33.5, to 1,642.55 total in 2021. GPR spending falls to $80.3 million, a decrease of more than $12 million or 13.4 percent. DWD is one of the few agencies that would see a funding decrease under Evers’ plan.

Medicaid eligibility reforms stripped

Welfare reforms enacted under Walker also attempted to nudge people off government health care and into private plans offered through employers.

But a series of critical Medicaid reforms enacted under Walker are also repealed wholesale by Evers’ budget, despite protections enacted during December’s extraordinary session.

Among the reforms struck by Evers’ budget are work requirements for Medicaid eligibility. Walker increased from 20 to 30 hours a week the time that able-bodied adults (ages 19 to 49) without children must be working, training for work, or looking for work to receive BadgerCare health insurance. That’s the federal maximum, as even Democrats in Congress recognize that 30 hours is not too much to ask for. Evers’ budget rolls that back.

The work requirements largely mirror those for FoodShare benefits and expand on the mantra that people seeking expensive help from their fellow Wisconsinites should be expected to make an effort to be self-sufficient

Walker had also sought the federal government’s permission to charge a small amount of money for Medicaid benefits for a subset of those below the poverty level. The nominal premiums of $8 for households earning from 51-100 percent of the federal poverty level would give recipients at least a small financial stake in their own benefits and are a step toward reducing the “benefits cliff” that strikes people who climb the economic ladder but are faced with losing generous benefits. Evers’ budget strikes that reform.

The budget also goes easy on child support scofflaws—it eliminates a requirement that Medicaid recipients be in compliance with child support orders.

It also eliminates minor co-pays for non-emergency medical services, and Medicaid Health Savings Accounts are eliminated entirely. Both were enacted with the intent of injecting consumer choice into government health care by forcing recipients to shop around for providers. That, in turn, sought to put a crimp on providers who offered poorer quality services at inflated prices.

FoodShare reforms axed

Walker made welfare reform a focus of his administration, especially as the economy improved and made it easier for people on this program to achieve self-sufficiency.

In April 2015, certain able-bodied individuals had to begin satisfying work and drug screening requirements to receive FoodShare, colloquially known as food stamps. Individuals who did not comply with work requirements for three months in a 36-month period become ineligible for those benefits. Individuals would have to work, receive job training, or a combination of both for an average of 80 hours per month to retain benefits.

In short, they would have to make an effort to earn what the taxpayers of Wisconsin were generously providing them.

The largest job training program in the state is the FoodShare Employment Training (FSET) program. Wisconsin’s Department of Health Services (DHS) has regularly reported on average FSET wages and weekly hours, both of which have increased consistently. FSET participants earned an average $13.64 per hour, nearly double the state minimum wage, according to the most recent data available.

Almost 31,000 FSET participants have gained employment since the state began tracking data in 2015.

Originally, able-bodied adults with no dependents were the only individuals required to work or participate in job training for a total of 80 hours per month. That pool later expanded to able-bodied adults with school-aged dependents (ages six to 18).

Evers’ plan strips back some of the work requirements for FoodShare participants. Able-bodied individuals with school-aged dependents will no longer have to satisfy work requirements; only those without any dependents will still have to comply.

While Evers rolls back the vast majority of welfare reforms made under the Walker administration, keeping work requirements for able-bodied adults without dependants could be considered a casual nod to the success of those reforms. Still, the remaining requirements are a far cry from the robust employment training prioritized under Walker.

In addition, all drug screening requirements are repealed under the proposal. And like in his Medicaid proposal, Evers’ plan also repeals the requirement that individuals be in compliance with child support orders in order to receive FoodShare benefits.

Easier to stay unemployed

A hallmark of Walker’s welfare reform initiatives was to encourage people to find gainful employment and drop off the rolls of government assistance. That not only helped lower costs to taxpayers, Walker and allies argued, but to add to the dignity of people previously dependent on their neighbors. The ultimate goal was to help individuals find a lifelong career that helps them become self-sufficient.

One of the more controversial proposals in Evers’ budget plan would strip back taxpayer protections for unemployment insurance (UI) benefits, making it easier to receive those dollars.

Under current law, individuals must wait seven days before qualifying for UI benefits. The waiting period allows state workers to vet the validity of joblessness claims, one protection against fraud. Evers’ plan does away with the waiting period.

Individuals would no longer be required to pass a drug test to receive the benefits, and some job search requirements would be rolled back. It would also increase the maximum rate for UI benefits to $406 per week, from a current maximum of $370.

The state unemployment rate has stayed at 3.0 percent for 11 months. UI benefits claims are also at historic lows. But for many, Evers’ budget makes it more comfortable to stay out of the labor force than to find a job.

The most recent data available show 44,487 Wisconsinites claimed unemployment benefits for the week of March 2, 2019. For the same week in 2009, at the height of the recession, 186,219 Wisconsinites claimed benefits. That’s a remarkable decline in those out of work.

Overall unemployment claims peaked in early 2010 and have steadily fallen since then, with annual peaks occurring every January.

By eliminating welfare reforms for everything from food stamps to unemployment and BadgerCare, Evers’ budget completely reverses the Walker-era ethic of moving people from government dependence to independence.

Instead, his budget attempts to get rid of the notion that while taxpayers are generous, they expect at least a nominal effort in return for their hard-earned dollars.

And it does so at a time of unprecedented opportunity in the private sector in Wisconsin.

March 18, 2019 | By Ola Lisowski

Analysis: Evers Budget Extends UW Tuition Freeze, Hikes Spending

Gov. Tony Evers’ biennial budget proposal for 2019-21 puts a big emphasis on education. As the former Superintendent of the state Department of Public Instruction (DPI), it’s a natural fit. As we wrote last week, the new governor’s budget would spend at least $1.5 billion more on K-12 schools. How much would he spend on higher education? That’s what we’ll break down today.

Overall, the plan proposes $175 million more for the UW System across the biennium, for a total of $12.76 billion, all funds. That’s a 2.8 percent increase from current spending. Total positions at the UW would increase by 240.84 full-time equivalents, a 0.67 percent increase. The 36,293.16 positions at the UW will make up half of all state-funded jobs.

Across Evers’ entire budget plan, positions would increase by 701 full-time equivalents. Just over one-third of those new jobs will be at the UW System.

Looking at only general purpose revenue (GPR), the largest fund of state tax dollars, spending at UW will increase by $69 million under Evers’ plan. That’s a 6.2 percent increase, bringing total GPR spending at UW to $2.36 billion across the biennium.

Continuing the tuition freeze, increasing spending despite healthy balances

The cornerstone of Evers’ budget plan for colleges and universities is a continuation of former Gov. Scott Walker’s tuition freeze for in-state undergraduate students across the University of Wisconsin System. That move has saved students and families thousands of dollars in college tuition and loan costs since the freeze began in 2013.

Continuing the tuition freeze is one of the most taxpayer-friendly initiatives in the entire budget proposal. The governor deserves kudos for continuing the popular measure. In the years before the freeze, tuition had steadily increased year after year. At UW-Madison, for example, resident undergraduate tuition jumped from $6,678 in 2008-09 to $9,273 in 2012-13, a 39 percent increase in actual dollars.

Student loan debt has exploded in recent years, and one good way to control those costs is by limiting their growth in the first place. For even more of an impact, the administration should consider implementing more pathways for three-year degrees, as Walker had proposed in the last budget.

Evers has argued that while the tuition freeze under Walker was a good idea, it left the UW with a budget hole. For that reason, his proposal would send $50.4 million in GPR to cover lost tuition revenue. The governor’s Budget in Brief notes that the funds “may be used as the system sees fit, including to help struggling campuses or academic programs.”

That sounds a lot like the UW’s slush fund of hefty program revenue balances, a pot of money that legislators in the state’s CPA caucus discovered in 2013. The slush fund totaled over $1 billion, leading lawmakers to question why the UW continued raising tuition and asking for more funds when they had tucked away such sizable surplus balances.

The sentiment was summed up by then-Rep. Steve Nass (R-Whitewater), who stated that “more than 2/3 of this surplus was generated by unjustified tuition increases over the last three years. In other words, [then-UW President] President [Kevin] Reilly and the Board of Regents knowingly jacked-up tuition by 16.5 percent on Wisconsin families over three years even though the funds weren’t needed. These actions are nothing short of a betrayal of the public trust.”

The slush fund became the main impetus behind Walker’s tuition freeze and other program cuts. The system is now required to regularly report those figures and justify any large increases.

Since 2013, the System’s Program Revenue (PR) balances have continued to grow. At the close of the 2018 fiscal year, total PR balances for the system stood at $1.3 billion, an 11.6 percent increase from 2014.

However, funds have shifted to the restricted fund away from the unrestricted fund. The restricted fund is made up mostly of gifts, funds, and contracts. The largest portion of the unrestricted fund is tuition, followed by auxiliary operations.

Nearly twice as much money is in the restricted fund today compared to 2014 ($417 million now, vs. $212 million then.) In 2014, 82 percent of all PR balances were unrestricted. Today, 69 percent are unrestricted.

With such hefty balances, it’s important to ask why the UW System will see a sizable $175 million increase in the biennium – and whether that increase is truly justified.

Walking away from performance-based funding to spend on other initiatives

Alongside the tuition freeze, Walker’s last UW System budget had prioritized performance-based funding. Those measures create goals for the institutions, like graduation rates or job attainment. UW schools then receive more or less from a portion of state dollars based on their performance on the metrics.

Private companies understand these incentives well. Performance-based funding is, in government speak, a regular business environment. Public entities will never be as efficient as private entities because they simply don’t have the same incentives built in. Nevertheless, Evers’ plan walks that initiative back, calling performance-based funding “ineffective.”

While the system had requested $82.5 million more for performance-based funding, instead, the money goes to other Evers priorities. The move effectively wipes away an initiative which has only just begun. While the tech college system has operated under performance-based metrics for years, the UW System has had just two years to implement the plan. Without letting the system have much time to work out the kinks of the process, Evers’ plan takes away the very opportunity.

The priorities to which Evers redirects the money include $45 million in GPR for building initiatives, $26.3 million GPR for faculty pay increases, $50.4 million for the tuition freeze, $4 million for supporting student services at UW Colleges, $10 million for nurse educators, and $2.5 million for county-based representatives through the UW-Extension. Compared to Evers’ plan for K-12 schools, this approach sets larger amounts of money to fewer individual projects.

The proposal puts $17.3 million into need-based Wisconsin grants. Students could use that grant at any UW System institution, tech college, private nonprofit universities, or tribal colleges.

The Technical College System also receives $18 million in each year of the budget, a 7 percent annual increase.

One controversial measure extends in-state tuition to undocumented Wisconsin residents in the UW System and the Wisconsin Technical College System. Those individuals must have graduated from a Wisconsin high school, have a high school equivalency degree, and have continuously lived in Wisconsin for three years after beginning high school. They must show proof of having filed for a visa or proof that they will file as soon as they are eligible.

In all, Evers’ proposal spends $5.9 million more at UW than the agency itself had requested.

Studying a refinancing authority

Tipping his hat to the Democratic Caucus, Evers sets up a committee to study the creation of a state-run refinancing authority. Wisconsin Democrats have long pushed for their “higher ed, lower debt” package, which includes a government-run refinancing authority specific to the student loan industry.

Walker had long resisted setting up such an authority, arguing that private business already allows students to refinance their loans. He’s right. UW Credit Union (UWCU) has expanded membership eligibility multiple times in recent years. Individuals can now become UWCU members if they’re a Wisconsin resident who attended any accredited university nationwide.

Today, students who aren’t even Wisconsin residents can refinance their debt through UWCU. They simply need some connection to the state, like being an immediate relative of a UWCU member.

Under Evers’ plan, the study committee is tasked with forming a plan by late 2020 for inclusion in the 2021-23 budget.

Millions in building projects

Large portions of the plan for the UW System weren’t included within the biennial budget. That’s because the state’s facilities are funded in the capital budget, released shortly after Evers’ original budget proposal. Read our initial coverage on the capital budget here. The capital budget would increase state bonding to $2.5 billion, more than double the previous budget. New bonding approaches nearly $2 billion.

Of that, approximately half would go to the UW System. Evers’ capital budget recommends spending $1.1 billion on building projects across the system. The vast majority – $899 million – would be borrowed. Charitable gifts account for $99 million of spending, $71.6 million is cash, and $5 million is building trust funds.

Renovations are spread across the state. Numerous initiatives, like classroom renovations and general utility improvements, are system-wide. Others, such as a chemistry building at UW-Milwaukee for $129.5 million, or $83 million for a science center at UW-La Crosse are specific to each campus. Milwaukee’s proposed chemistry building is the most expensive single project for UW included in the governor’s plan. All of that project is funded by borrowing.

Not counting system-wide measures, about $401 million would go to UW-Madison for building projects. That includes funds from all sources, including gifts. UW-Milwaukee would see over $178 million for projects.

The governor’s capital budget turned down millions of dollars worth of proposals from the UW System alone. The system had requested $1.9 billion in spending, including $1.7 billion in borrowing. Evers’ recommendation drops those figures by nearly half.

Budget work will continue in earnest when the Legislative Fiscal Bureau has completed its work on a nonpartisan fiscal analysis, expected later this month. After that, the Joint Finance Committee will hear from each agency, before traveling around the state to hear from the public. As always, MacIver will be there every step of the way.

March 15, 2019 | By Chris Rochester

Analysis: Gov. Tony Evers’ Big-Spending Health Care Budget Expands Government, Hammers Private Sector

A health care budget in an age of spiraling costs should be a litany of ideas for reducing health care costs, empowering the market, and protecting the taxpayer from open-ended commitments. But Gov. Tony Evers’ 2019-21 budget proposal instead blows the lid off government’s involvement in health care.

Evers’ budget drastically increases spending on a wide range of health initiatives, accepts the Medicaid expansion albatross, and increases government control over the health insurance sector.

The spending plan allocates $13.3 billion all-funds spending in 2020 and $13.9 billion all-funds in 2021 to the Department of Health Services (DHS). The 2021 funding level is a $1.6 billion, or 8.5 percent increase, over the 2019 adjusted base budget in all-funds.

The massive increase is a sharp deviation from the trend during Gov. Scott Walker’s administration. The 2019 adjusted base spending for the second year of Walker’s final DHS budget is actually $293 million less than Walker’s recommendation, meaning spending came in lower than expected. While Walker’s budgets consistently increased spending on DHS—which administers the massive Medical Assistance program, including Medicaid—the size of the spending increases had been going down budget after budget.

From state coffers, or general purpose revenue (GPR), the Evers budget proposes spending just over $4 billion GPR on DHS in 2020, a 0.9 percent hike; but it spends $4.3 billion in 2021, a 6.3 percent increase.

In total, over two years, Evers’ budget spends $27.2 billion all-funds, and $8.4 billion in GPR, on DHS. That’s an 11.5 percent increase over the $24.4 billion all funds, and a 6.3 percent increase over the $7.9 billion GPR, allocated in the last budget. It also adds 192.04 full-time equivalent positions over two years.

Evers’ budget also increases the budget of the Office of the Commissioner of Insurance (OCI) by $200 million, mainly to fund a reinsurance program implemented during Walker’s tenure as an effort to hold down the cost of individual market insurance premiums, increases precipitated by Obamacare’s regulations.

While the new governor’s budget exclaims Wisconsin faces a “human crisis” requiring a massive public-sector intervention to provide government health insurance, the numbers don’t back that up. In fact, Wisconsin has the 9th lowest rate of uninsured in the country, with 92 percent overall having insurance. Since 2010, the percentage of uninsured has dropped by more than 4 percent despite the state rejecting the costly federal Medicaid expansion under Obamacare.

Medicaid expansion

Evers’ budget accepts the federal Medicaid expansion under Obamacare while significantly increasing spending on a wide range of programs.

The document proposes expanding Medicaid eligibility to everyone earning between 0 percent to 138 percent of the federal poverty level. In 2019, that income level is $34,638 for a family of four. The change would make 82,000 more Wisconsinites eligible for the program.

It’s important to note that while the number of people who become eligible for the program increases, that does not mean the newly eligible are without insurance now. With 92 percent of the population already insured—most of them through employer-based insurance—it’s likely a sizable share of those 82,000 newly eligible for government assistance already have insurance through their employers.

In short, the proposal seeks to encourage people to leave their private plans and seek increased dependence on a government program with poor health outcomes.

The budget asserts that expanding Medicaid will save $325 million in GPR across the biennium because of the federal government’s enhanced 90 percent match versus traditional Medicaid. The federal government, already $22 trillion in debt, is almost certain to go back on that 90 percent promise in the not-so-distant future. Nonetheless, Evers’ budget proposal immediately spends the money—plus a lot more—on increased reimbursement rates for health care providers and other new spending.

In all, the budget directs $580 million back to health care providers catering to Medicaid patients through the BadgerCare Plus program.

The budget spends $365 million more on reimbursement payments to hospitals serving Medicaid patients through five different, traditional reimbursement avenues. That includes $142 million more in payments to hospitals handling a larger number of Medicaid patients than most, a category of reimbursement called disproportionate share payments.

The spending plan also directs $100 million more for payments to acute care and critical access hospitals; $20 million more for payments to pediatric hospitals; and $1.2 million more for rural hospitals.

The Medicaid expansion is a cornerstone of Evers’ health care proposals. The plan spends all new federal dollars plus hundreds of millions more to greatly expand government’s role in health care.

Walker reinsurance continued

The budget maintains Walker’s reinsurance program, aimed at holding down premiums on the individual health insurance market in the era of Obamacare’s skyrocketing premiums.

The budget buttresses the program with $200 million in all-funds spending for the Office of the Commissioner of Insurance in the second year of the budget. The Walker administration, when rolling out the plan, said it would cost taxpayers $34 million GPR. Evers’ plan hikes the OCI budget by more than $72 million in the second year of the budget in GPR—and by more than $200 million in all-funds in the budget’s second year—to “fully fund” the program.

The reinsurance program was all but forced on Walker and Republican lawmakers in the wake of rapidly increasing premiums on the individual health insurance market. Headed into 2018, premiums were expected to spike by 36 percent, while 75,000 Wisconsinites were expected to lose coverage.

Only after the costly reinsurance tourniquet was applied to the state’s bleeding market did rates stabilize, with an average 4.2 percent weighted average premium decrease in 2019.

One cause of Obamacare’s price spiral was that health insurers fled the state to avoid massive losses. Anthem, Aetna, UnitedHealth, and Humana – four of the five largest health insurers in the country – as well as Molina and Health Tradition, all left Wisconsin’s market during the past few years. Molina returned only after the reinsurance program was implemented.

That left only one insurer in 11 Wisconsin counties, seven clustered in the northeastern part of the state where more than 581,000 people live. That insurer was Common Ground, a nonprofit insurance company established as part of Obamacare that has received more than $107 million in taxpayer supported loans since 2012.

In 2017, with a monopoly in those seven northeastern counties, Common Ground increased its individual insurance plan premiums by an astonishing 62.67 percent.

Ironically, Obamacare co-ops like Common Ground were established with the purported goal of increasing competition and reducing costs. It’s yet another glaring example of the myriad broken promises and lies of Obamacare, its apologists, and its expensive co-ops.

Common Ground, the Obamacare experience, and the costly reinsurance program are more warnings to taxpayers about the danger of government involvement in health care.

An eye to the Minnesota failure

Walker’s reinsurance plan was largely modeled on a similar but much more costly plan implemented in Minnesota in a last-ditch effort to spare the Gopher State’s middle class from catastrophic premium hikes in the wake of the state’s Obamacare expansion.

Hardly a role model to emulate, Minnesota’s embrace of “free” federal Medicaid money is actually a case study in failure that has cost taxpayers there nearly a billion dollars. In 2017, after Obamacare’s implementation and Minnesota Gov. Mark Dayton’s decision to expand Medicaid, the state found itself at risk of losing all the insurers on its individual market. On the brink of collapse, state bureaucrats allowed insurers to increase premiums by a staggering 50-67 percent.

While lower-income Minnesotans didn’t feel the pinch because of federal subsidies for the poor, the state’s middle class was due to take a financial beating. That’s why state lawmakers were forced to implement the costly reinsurance program, which to date has cost state taxpayers north of $830 million — on top of the taxes they already pay to prop up Obamacare.

Health care costs have been used as a political bludgeon, with rampant distorted claims about costs. Then-candidate Tony Evers claimed that Wisconsinites pay 50 percent more for health coverage than Minnesotans, a claim rated as “Mostly False” by Politifact. Evers was only looking at a small slice of the population – those on the so-called Second Lowest Cost Silver Plan (SLCSP) on the individual market.

But the majority of people get their coverage through their employers. In Wisconsin, 3,191,800 individuals get their coverage through their workplace, or 57 percent of the population, the same proportion as in Minnesota.

And contrary to the rhetoric, costs are virtually the same. The average annual premium in 2017 in Wisconsin was $5,868 for an individual and $18,785 for a family; in Minnesota it was $5,832 and $18,507, respectively. Employee contributions to the cost of their plans were virtually identical between the two states.

By accepting the Medicaid expansion as Minnesota did prior to the near-implosion of its individual health insurance market, Evers’ plan travels a dangerous path for taxpayers.

Medicaid eligibility reforms stripped

A series of critical Medicaid reforms enacted under Walker are also repealed wholesale by Evers’ budget, despite protections enacted during December’s extraordinary session.

Work requirements and health risk assessments for childless adults seeking Medicaid are struck. Walker increased from 20 to 30 hours a week the time that able-bodied adults (ages 19 to 49) without children must be working, training for work, or looking for work to receive BadgerCare health insurance. That’s the federal maximum, as even Democrats in Congress recognize that 30 hours is not too much to ask for. Evers’ budget rolls that back.

Nominal premiums of $8 for households earning from 51-100 percent of the federal poverty level are struck; requirements that recipients be in compliance with child support orders are struck; copays for non-emergency medical services are struck; and Medicaid Health Savings Accounts are eliminated entirely.

By eliminating welfare reforms for Medicaid and expanding eligibility, Evers’ budget completely reverses the Walker ethic of moving people from government dependence to independence.

Cradle-to-grave expansion

The proposal also hikes spending on considerably less-traditional “health” spending, an array of nanny state programs shoehorned into the category of health care. It spends $45 million more for “non-medical services to reduce and prevent health disparities that result from economic and social determinants of health” such as “housing referral services, stress management, nutritional counseling, transportation coordination, etc.”

It’s a significant expansion of the left’s beloved cradle-to-grave set of government programs, paid for using tens of millions of precious taxpayer dollars meant for actual health care.

Mixed bag on dental care

The budget implements a promising new model for expanding the pool of health care professionals, important because Wisconsin lags the nation in dental care access. According to the U.S. Department of Health and Human Services, there are 138 dental health professional shortage areas in the state of Wisconsin. A MacIver Institute policy brief explores problems with dental care access and outcomes here.

Evers’ budget takes steps to address these problems, but it spends a lot of taxpayer money along the way—$43 million.

While it implements a dental therapy license in Wisconsin to increase the dental professional workforce, the proposal comes with a hefty price tag. It spends $1.5 million to subsidize educational institutions who add a dental therapy program, with the goal to “put Wisconsin on the cutting edge of this emerging career field…”

In addition to expanding spending to the tune of tens of millions of dollars for dental care under BadgerCare Plus and Medicaid, the budget also increases spending on a series of programs aimed at in-need populations and at grants for dentists who practice in rural areas or provide care to the disabled.

Everscare?

Throughout the campaign, enacting protections for people with pre-existing conditions was a political football. In one of its last actions in the December extraordinary session, the GOP-controlled Legislature passed a bill essentially replicating Obamacare’s regulations on pre-existing conditions. But Democrats argued that the bill didn’t go far enough and should essentially re-create Obamacare and all of its onerous regulations at the state level.

Evers’ budget does that.

The budget imports three key buckets of Obamacare regulations widely blamed for spiraling prices and decreased choice to Wisconsin:

  • Community rating: the budget forbids health benefit plans, whether on the individual or small employer market, from setting premium rates based on any factor other than whether it’s a family or individual plan, which region of the state the plan is offered in, age, and tobacco use;
  • Guaranteed issue: the budget requires every individual health plan and group health plan to accept everyone who applies for coverage regardless of sexual orientation, gender identity, or the presence of a pre-existing condition;
  • Essential health benefits: the proposal requires health insurance plans known as disability insurance policies and self-insured governmental plans to offer a certain set of benefits to be determined by the OCI;
  • In addition, the proposal forbids annual or lifetime benefit caps.

The budget directs the newly empowered Office of the Commissioner of Insurance to draft plans to implement all these regulations.

Drug cost initiative

The spending plan includes an effort to lower prescription drug prices, in large part through government mandates

It proposes requiring drug companies to justify price increases, disclose proprietary information like production and marketing costs, and requires the OCI to post the information in the name of transparency.

The budget also requires pharmacy benefit managers to register with the state and “disclose price concessions they receive from drug companies” and calls for importing generic drugs from abroad to Wisconsin.

In addition, the budget includes a variety of provisions aimed at behavioral and mental health care and substance abuse treatment; it spends $69 million more for reimbursement rate increases for Medicaid recipients seeking mental and behavioral health care.

Our preliminary budget analysis, along with our deeper look into its transportation and K-12 education components revealed a budget rife with overtures to—and money for—a massive number of liberal initiatives and interests. That pattern holds true in nearly all of Evers’ health care proposals, a wish list for the big government left.

The Joint Finance Committee will begin its work parsing through the document next month. As always, MacIver will be here with in-depth analysis and coverage.

March 5, 2019 | By MacIver Institute

Analysis: What You Need to Know About Gov. Tony Evers’ First Biennial Budget

Gov. Tony Evers introduced his 2019-21 biennial budget proposal Thursday night. The sweeping document would spend $83.5 billion over two years, at least $7 billion more than former Gov. Scott Walker’s last budget.

The proposal has been described by Speaker Robin Vos as a “big liberal wish list.” Looking at the expansive list of progressive policies that vastly grow the size and scope of government, it is hard to argue with that description. From Medicaid expansion, the end of recent welfare work requirements, an unneeded increase in the state’s minimum wage, a green pipe dream to make the state carbon free, the creation of many new government programs, an assault on proven education reform programs, the decriminalization of small amounts of marijuana, to the end of the property tax freeze — this budget is full of liberal dreams. These changes, and many more that we will detail later, will be paid for with a slew of tax increases and hundreds of millions of dollars in new bonding.

While we sift through the thousands of pages of the budget document line by line, we thought it would be helpful to produce a preliminary analysis of the Governor’s budget based off the Budget In Brief produced by the Department of Administration. As the name implies, the BIB is not comprehensive and we won’t know what the total picture of this budget looks like until our exhaustive examination is complete.

Gov. Evers’ budget seeks to undo many of the reforms championed by Walker’s administration, including repealing right-to-work, restoring the state and local prevailing wage, and rolling back numerous tax protections that have led to a property tax freeze in recent years. The document claims that the property tax bill for the median value home will grow under the rate of inflation, but allowing local units of government more power to raise property taxes will most certainly negate that.

First, let’s go through the basics of spending, borrowing, and overall government positions.

The Basics

In total, the budget proposal includes a flurry of provisions that would increase property tax bills across the state. It makes income taxes more progressive by targeting more income tax relief on lower tax brackets, while increasing income taxes for higher earners. How about spending, positions, and borrowing?

General purpose revenue (GPR) spending would increase by 7.6 percent, to $38.3 billion in the proposal, $2.7 billion more than current spending.

The budget proposal would increase total all funds positions to nearly 71,991 in the second year, a 701-position increase of government jobs from all funding sources from the current budget. GPR positions would increase to 35,670 by the second year in the biennium, a position increase of 391 from current levels.

Taxes in the general fund would increase by a total $1.64 billion over the biennium. Tax cuts in that fund, including a brand new middle-class tax credit and expansion of other already-existing credits, total $951.4 million. That means in all, the net tax increase to Wisconsin taxpayers would be $688.7 million over the next two years. However, many other tax increases such as the proposed gas tax hike and removal of property tax controls will push this total much higher.

The budget uses a form of trickery called “base year doubled.” Under that method, the new base for the next budget is simply double the second year in the prior budget. In reality, base year doubled is a slight of hand trick that guarantees the constant growth of government spending.

Let’s pretend that the government spends $200 total in one budget. The first year of the budget spends $50, and the second year spends $150. You might think that the base for the next budget is $200, since that is what we spent. It’s not. The base is instead the second year doubled, in this case $300.When setting up assumptions for the next budget, it looks like we just spent more than we did, and so of course we have to spend even more. Anything less than $300 now looks like a cut, even though that’s already $100 more in overall spending. Assumptions casually shift, inflating the base cycle after cycle and fleecing taxpayers time after time. Most of the time, governments back-load more of their spending in the second year, as this document does. That means next budget, the base will be even more inflated.

We see that play out with calculations for this budget. The 2017-19 budget is counted as $77.3 billion. However, actual dollars spent paint a different picture. If total actual spending in the two previous fiscal years is added together, the total comes to $76.4 billion. In that light, the actual dollar spending increase in Evers’ budget comes to over $7 billion. Using the base year doubled method is standard, but it’s also one way that automatic growth of government is built into the state budgeting process.

The document analyzed in this piece is called the “Budget In Brief” and does not include the statutory, legal language that would eventually become law if approved by the Legislature. That’s why some dollar figures, such as overall bonding, are unclear.

Note: this image shows final figures from the Legislative Fiscal Bureau’s nonpartisan analysis.

However, the full budget document, which we are still examining line-by-line, shows that the budget proposal would increase borrowing by more than $440 million in the biennium. That includes borrowing for a number of conservation projects as well as roads.

The Governor’s capital budget adds another $2.5 billion in bonding. That recommendation is more than double the average borrowing amount, $1.157 billion, from 2011 through 2019. We wrote about the capital budget in detail here.

Other provisions may not be highlighted within the Budget In Brief but will become clear in the weeks and months to come. The most curious among these is an apparent lack of reference to Walker’s signature 2011 reform, Act 10, which was repeatedly slammed by the now-Governor on the campaign trail and in years past. Nowhere does the Budget In Brief seek to roll back taxpayer protections created by the law, including increased contribution levels for public sector employee benefits or annual union recertification votes.

The Legislative Fiscal Bureau has begun its work translating the Budget In Brief to a more formal analysis, which will be published by the end of the month. After that, the Joint Finance Committee will get to work parsing through the document, agency by agency.

*April Editors’ Update: LFB has now published its fiscal analysis of the document. Major charts in this piece have been updated to reflect that work. See more with ChartSmart here.*

Tax Increases, Tax Cuts

Evers’ budget proposal introduces myriad tax hikes to at least partly pay for massive spending increases. First on the docket is a tax increase introduced by his office several weeks ago — a partial rollback of the Manufacturing and Agriculture Tax Credit (MAC). That change would limit the job credit for manufacturers to the first $300,000 of qualified income. The move would raise $516.7 million in tax revenue over the biennium by raising taxes on those manufacturers.

According to one recent analysis by the Tax Foundation, nearly 70 percent of Wisconsin manufacturing firms pay the individual income tax rate instead of the corporate tax rate. Since those companies are organized as pass-through businesses, all of their business income is taxed as individual income.

In other words, a manufacturer who earns $300,000 or more may appear to be part of Wisconsin’s upper-echelon of earners — but all of that business-owner’s equipment and inventory is included in the figure. As Joint Finance Committee co-chair Sen. Alberta Darling (R-River Hills) recently said on the Senate floor, “You know a farmer is dealing with a budget that might be 1, 3, 5 or 6 million dollars. They’re not taking that money home. Those are just the expenses they have to deal with.”

Another change would increase the long-term capital gains tax. Under current law, long-term capital investment gains are taxed at a 5.355 percent rate. The budget proposal removes part of an existing exclusion, so that those gains are taxed at the top individual income tax rate of 7.65 percent for certain earners. Individuals earning less than $100,000 and married-joint filers earning less than $150,000 would keep paying the capital gains tax at the 5.355 percent rate, while earners above them would move to 7.65 percent.

If a retiree cashes in a stock they’ve held for years, those earnings will again be taxed, this time at the highest rate available. That move punishes taxpayers who are successful or preparing for retirement to the tune of $505.1 million more in taxes.

Evers’ budget plan includes changes to align Wisconsin to federal law under the 2017 Tax Cuts and Jobs Act. The state would close nearly all divergences with federal law, raising tax collections by $362.4 million.

Two dozen new auditors would be hired by the Department of Revenue, alongside 12 compliance-related positions. Those new hires would be charged with collecting any taxes already owed but not yet collected by the state, raising an estimated $36.4 million over the biennium.

The proposal would also extend the cigarette tax to e-cigarettes and related vapor products, arguing that the new technology amounts to a substitute that should be taxed the same way. That change would raise taxes by $34.7 million over the biennium. “Cigarillos,” or little brown cigars, are targeted in a similar manner, with a proposed tax increase on the brown cigarettes of $6.8 million.

Other tax increases include a change to the taxation of out-of-state broadcasters, who would see $29.5 million more in taxes over current levels. The deduction for private school tuition would also be eliminated, raising $24.2 million for the state in the biennium.

Late in his campaign, Evers announced plans for a 10 percent tax cut on the middle class. On Thursday, the public saw specifics for the new tax credit for the first time. The administration is proposing a tax credit called the Family and Individual Reinvestment (FAIR) credit. Individuals earning below $80,000 and married-joint filers earning below $125,000 will receive a tax credit of 10 percent of their net tax liability or $100, whichever is greater. The credit phases out at $100,000 for single earners and $150,000 for married-joint filers.

That amounts to $833.5 million in income tax cuts over the biennium. The average recipient of the credit would see an annual income tax cut of $217, while the median family of four could receive more than $500 annually.

Another new tax credit would be created for child and dependent care, beginning in the second year of the budget. That credit would be 50 percent of the same credit available federally. The same year, the tax deduction for child care would be eliminated. That change adds up to $10 million in tax cuts annually.

Other tax cuts targeted at low- and middle-class earners are expansions on already-existing programs. The Earned Income Tax Credit (EITC) would be expanded so that filers with one dependent child could claim up to 11 percent of the federal credit, up from 4 percent. Filers with two dependent children could increase their EITC credit to 14 percent, up from 11 percent. Those changes amount to $53.1 million in tax cuts.

Eligibility for the Homestead Tax Credit (HTC) would be increased to $30,000 in household income in the second year of the biennium, and the credit would become indexed to inflation that year. Approximately 160,000 new filers would be eligible for the tax credit, while more than 100,000 current filers would receive larger credits, totaling $38.9 million in tax reductions. Only seniors, those with disabilities, and those on earned income may claim the HTC.

Individuals who qualify for the EITC or HTC are income-limited, so the majority of the funding for the credits comes from other taxpayers.

Evers’ budget would also change tax cuts already in law. During December’s Extraordinary Session, lawmakers passed across-the-board income tax rate reductions using funds from online sales tax collections, following a recent U.S. Supreme Court decision. The budget proposal officially requires the state to begin collecting those funds, raising $93.9 million in the biennium.

Thursday’s proposal would focus the income tax rate reductions passed in December solely on the bottom-most income tax bracket. Currently, the lowest tax rate is 4.0 percent for single earners making up to $11,230 and married-joint earners making up to $14,980. The change that lawmakers passed in December would split the reductions across tax brackets.

Wisconsin’s marginal tax rate system means that every taxpayer’s first earned dollars, up to the cutoff ($11,230 or $14,980), is taxed at the same rate. For that reason, everyone paying taxes in the state would benefit at least slightly from the measure. However, the Budget In Brief document does not state the proposed rate for this particular change.

One final note on taxes: apart from the minor shift on income taxes described above, Evers’ budget does not raise the general sales, corporate, or individual income tax rates. For all the tax increases tucked into other parts of the budget, the Governor stayed away from a Doyle-style ramping up of individual income tax rates. Consider us pleasantly surprised on this front.

Health Care

Evers’ budget accepts the federal Medicaid expansion under Obamacare while significantly increasing spending on a wide range of programs. The Medicaid expansion has been a costly proposition for states that accepted it. Medicaid spending in Ohio, for example, skyrocketed 35 percent in four years – from $18.9 billion to $25.7 billion between fiscal year 2013 and 2017. And in Minnesota, premiums increased 50-67 percent, forcing the state to implement a reinsurance program costing taxpayers at least $800 million so far. The federal dollars that follow a Medicaid expansion are anything but “free money,” as advocates persistently claim.

Despite these and many other stark cautionary tales, the Evers budget proposes expanding Medicaid eligibility to everyone earning between 0-138 percent of the federal poverty level. In 2019, that income level is $34,638 for a family of four, making 82,000 more people eligible for the program. However, with 92 percent of the population already insured—the vast majority of them through employer-based insurance — it’s likely a sizable share of those 82,000 newly eligible for government assistance already have insurance through their employers. That means many people who join the program would be moving backward, from self-sufficiency to dependence on government health care.

The budget asserts that expanding Medicaid will save $325 million in GPR across the biennium because of the federal government’s enhanced 90 percent match versus traditional Medicaid, a tenuous stream of dollars from a federal government already drowning in $22 trillion in debt. As with traditional Medicaid and its notoriously low reimbursement rates, the federal government is likely to back off that enhanced match in the future and leave state taxpayers holding the very expensive bag. Nonetheless, Evers’ budget proposal accepts and then immediately spends the $325 million—plus a lot more—on increased payments to health care providers and other new spending.

In all, the budget directs $580 million in additional dollars back to health care providers catering to Medicaid patients through the BadgerCare Plus program.

The budget spends $365 million more on reimbursement payments to hospitals serving Medicaid patients through five different, more traditional reimbursement avenues. That includes $142 million more in payments to hospitals handling a larger number of Medicaid patients than most; $100 million more for payments to acute care and critical access hospitals; $20 million more for payments to pediatric hospitals; and $1.2 million more for rural hospitals.

The proposal also hikes spending on considerably less-traditional “health” spending. It spends $45 million more for “non-medical services to reduce and prevent health disparities that result from economic and social determinants of health” such as “housing referral services, stress management, nutritional counseling, transportation coordination, etc.” It’s a significant expansion of the left’s beloved cradle-to-grave set of government programs, paid for using $45 million of precious tax dollars meant for actual health care.

The budget builds off Gov. Walker’s reinsurance program, aimed at holding down premiums on the individual health insurance market in the era of Obamacare’s skyrocketing premiums. The continuation of this Walker-era program is a not-so-subtle admission that Obamacare has failed spectacularly to “bend the cost curve down,” and that failure is costing Wisconsin taxpayers dearly. The budget buttresses the program with $200 million in all funds spending for the Office of the Commissioner of Insurance in the second year of the budget. While the Walker administration, when he rolled out the plan, said it would cost taxpayers $34 million out of state coffers, Evers’ plan hikes the OCI budget by more than $72 million in the second year of the budget in state spending, or GPR — and by more than $200 million in all funds in the budget’s second year — to “fully fund” the program.

The spending plan includes an effort to lower prescription drug prices, in large part through government mandates. It proposes requiring drug companies to justify price increases, disclose proprietary information like production and marketing costs, and requires the OCI to post the information in the name of transparency. It also requires pharmacy benefit managers to register with the state and “disclose price concessions they receive from drug companies” and calls for importing generic drugs from abroad to Wisconsin.

The budget makes an effort to expand access to dental care, an area in which Wisconsin lags the nation. It spends a lot of money to do so—$43 million. The plan implements a dental therapy license in Wisconsin to increase the dental professional workforce, a market-driven option MacIver summarized in a policy brief last year, but Evers’ proposal also comes along with a hefty price tag. It spends $1.5 million to subsidize educational institutions that add a dental therapy program, with the goal to “put Wisconsin on the cutting edge of this emerging career field…” In addition to expanding spending to the tune of tens of millions of dollars for dental care under BadgerCare Plus and Medicaid, the budget also increases spending on a series of programs aimed at in-need populations and at grants for dentists who practice in rural areas or provide care to the disabled.

A series of critical Medicaid reforms enacted under Gov. Walker are also repealed wholesale by Evers’ budget, despite protections enacted during December’s extraordinary session. Work requirements and health risk assessments for childless adults seeking Medicaid are struck. Walker increased from 20 to 30 hours a week the time that able-bodied adults (ages 19 to 49) without children must be working, training for work, or looking for work to receive BadgerCare health insurance. That’s the federal maximum, as even Democrats in Congress recognize that 30 hours is not too much to ask for. Evers’ budget rolls that back.

Nominal premiums of $8 for households earning from 51-100 percent of the federal poverty level are struck; requirements that recipients be in compliance with child support orders are struck; copays for non-emergency medical services are struck; and Medicaid Health Savings Accounts are eliminated entirely.

In addition, the proposal includes a variety of provisions aimed at behavioral and mental health care and substance abuse treatment; it spends $69 million more for reimbursement rate increases for Medicaid recipients seeking mental and behavioral health care.

In all, the budget proposes to increase the Department of Health Services’ (DHS) budget by $36.7 million in 2020 and $255.7 million in 2021, GPR. The Office of the Commissioner of Insurance (OCI), charged with implementing the reinsurance program, is held steady in 2020, but receives a $72.3 million GPR bump in 2021.

Overall spending is significantly higher, especially with federal Medicaid dollars in the mix. In 2020, all funds DHS spending jumps more than $1 billion (an 8.5 percent increase), and more than half a billion dollars more in 2021. The all funds OCI budget jumps $200 million in 2021 to keep the Walker reinsurance program in place.

The Long-Anticipated Gas Tax Increase

The Department of Transportation gets a $627 million boost in the governor’s budget, bringing the total up to $6.63 billion from last budget’s $6 billion.

That increase will be funded with an eight cent gas tax up front, raising $264 million, plus another one cent increase as a result of indexing starting in April 2020. Many lawmakers like indexing because it’s an automatic tax; it increases transportation tax revenue without forcing legislators to actually cast a vote on the hike. In essence, taxation without representation. Evers also wants to increase vehicle registration fees by $10, heavy truck fees by 27 percent, and create a new hybrid vehicle fee. He claims these increases will be offset by eliminating the minimum markup on fuel. The minimum markup law is a Depression-era relic that sets a price floor on numerous products, including prescription drugs and gasoline. The minimum markup on products other than gas is maintained in Evers’ proposal.

The budget proposal would cut funding to major highway projects by $5.5 million, and to the highway “mega projects” category by $203.7 million. Most of Evers’ attention in the state highway program goes to the state highway rehabilitation program, which he increases by $225.7 million over the 2017-19 budget.

His main priority with road funding is on increasing road aids to local governments. Most local transportation aid comes in the form of general transportation aids (GTA) and is disbursed according to the calendar year as opposed to the fiscal year, which runs July to June. This year, the state will distribute $348,639,300 to municipal governments and $111,093,800 to county governments. Evers wants to boost that by 10 percent. That comes out to $383,503,200 for municipalities and $122,203,200 for counties next year. He also wants to increase the mileage aid to $2,628 per mile.

The transportation budget includes $338 million in additional bonding authority for transportation over the current budget.

Evers’ budget would do away with the “Fed-Swap” law, which requires DOT to consolidate federal funding into as few major highway projects as possible. The axed reform saves money by limiting the number of projects subject to the more stringent and costly federal requirements, including prevailing wage.

The budget would allow the DOT and DNR to use eminent domain to build bike paths and sidewalks.

The End of the Property Tax Freeze

In addition to all the ways Evers’ budget would raise taxes at the state level, his plan would also allow local governments to increase property taxes in several different ways. When combined into individual tax bills, property owners could be in for a real shock next year.

First, Evers would eliminate the school levy tax credit and the first dollar tax credit. Those credits would provide about $2 billion in property tax relief over the next two years without the change. School districts would also be able to hold referendums whenever they want, doing away with several important controls on property taxes at the state level.

Next, Evers would adjust revenue caps for municipalities, counties, and tech school districts. Currently, they can only increase their levy by their percentage of net new construction from the previous year. The budget proposal would set a minimum increase of 2 percent. Most communities currently have less than 1 percent growth each year, and the state average for 2018 was 1.62 percent. As a result of this change, 85 percent of Wisconsin communities would see the municipal, county and tech college portions of their property tax bills grow at a faster rate year after year than they do now.

On top of all that, local governments could exceed those higher caps to fund emergency dispatch centers and establish mass transit routes to neighboring communities.

The plan would also increase property taxes on big businesses, by allowing municipalities to base property taxes on the basis of that business’ total income rather than the value of a given property. Individuals who own homes aren’t charged property taxes based on their income — they’re charged based on the value of their home or land. This shift would fundamentally change how property taxation is calculated in Wisconsin.

Finally, local governments would be allowed to raise fees without having to lower their tax levies in exchange. This means local governments could start charging residents for things like garbage pickup and recycling without having to lower property taxes. In other words, if you’re not paying for things like garbage pickup right now, chances are you will be.

Big Labor

Evers’ first budget handsomely rewards his Big Labor allies, and is a full-on assault on worker freedom.

“The budget reverses many changes made over the past eight years that have weakened the state’s tradition of championing workers, collective bargaining and local control,” the budget documents states.

What Evers plans to do is bring back forced union dues, reinstate artificial wage floors that cost taxpayers big, and force the return of union exclusivity contracts.

The budget restores the prevailing wage law for state and local public works projects. Evers asserts bringing back the Great Depression-era relic “ensures that workers are not underpaid relative to other workers performing similar in the area.”

Wisconsin’s previous prevailing wage statute, which tied wages on taxpayer-funded construction projects to inflated rates paid by unions, was repealed for local projects in the 2015-17 state budget in a compromise. Walker subsequently signed legislation that repealed the union-led, artificial wages for state projects. The changes allow markets to set wage rates for local construction projects, saving taxpayers from well-documented cost overruns.

Evers’ budget also would eliminate what the document describes as Wisconsin “so-called” right-to-work law. It’s called right-to-work precisely because it prohibits private-sector labor organizations from making compulsory union dues a condition of employment. In 2015, Wisconsin became the 25th right-to-work state in the nation when Walker signed the worker freedom legislation into law. Big Labor immediately challenged the law in court, and lost. With Evers, organized labor is found, and their vendetta against right-to-work is now being carried out by the Democratic governor.

In more payback for unions, Evers is pouncing on another Walker-era victory. His budget plan permits the project labor agreements for public works projects that the former governor signed out of existence in 2017.

PLAs stipulate that only union firms can bid on a project, and many units of government required them — shutting out non-union shops.

The Republican-led reform law prohibits a government from requiring a PLA as a condition to bid on a taxpayer-funded project — a big win for the free market and the taxpayers who benefit from increased competition. Democrats have argued the law is yet another attack on unions and that it limits local control.

Curiously, no mention of Walker’s signature reform, Act 10, is made in the Budget In Brief document. Despite continuous attacks on the campaign trail and earlier, Evers’ document does not appear to make changes to reforms such as increased benefits contributions for public employees, or union recertification votes. However, it’s possible that such changes are included in the document’s legal language but not the brief. Still, for a governor who campaigned on championing collective bargaining and undoing years of conservative reforms, one would think changes to Act 10 would be front and center.

The governor’s budget plan also gets rid of a reform law aimed that ends the patchwork of employment laws statewide. Evers’ provision would repeal preemption of costly local government ordinances on family and medical leave, wage claims, employee benefits, hours of work and overtime, and solicitation of prospective employees’ salary histories. The preemption reforms require such employment regulations to be governed by uniform statewide policy, not created through the whims of local governments, at business and taxpayer expense.

K-12 Education

Property tax levels are largely driven by spending in schools — another issue area where this proposal would spend vastly more.

Evers’ budget proposal for K-12 education largely mirrors the budget request submitted last fall by the Department of Public Instruction (DPI), when he was the head of that agency. The total changes would increase DPI spending by nearly $1.6 billion over the biennium, more than the DPI budget request. It’s also more than twice the dollar amount of the last budget’s increase to K-12 education. That bill upped spending by more than $630 million in the biennium, the highest dollar amount in history at the time.

The majority of K-12 dollars flow through equalization aid, also known as general aid, which exists to even out funding disparities in local property taxes. Property-poor districts such as Milwaukee Public Schools (MPS) receive disproportionately high amounts of equalization aid. Forms of aid like the school levy tax credit and the first dollar credit are considered categorical aid, and are distributed equally across school districts.

Under Evers’ plan, the school finance formula would significantly change, and billions more dollars would flow through equalization aid. The school levy tax credit and first dollar credit would be eliminated in the first year, with that funding instead moving to general aid. That move alone is likely to increase property taxes, since money that is now used to offset local property taxes will instead flow directly to schools. The plan includes a hold harmless provision so that no district will receive less in state funding than current law.

Limits on school district referenda implemented in recent years would be done away with. School districts would no longer be limited in the number of referenda they may hold in a calendar year, another measure certain to increase property taxes across the state.

Other changes to K-12 funding include an increase in the revenue limit adjustment by $200 in the first year and $204 in the second year, with future increases indexed to inflation. The plan also increases the low revenue adjustment from $9,100 under current law to $9,700 in 2020 and $10,000 in 2021. That’ll allow school districts across the state to levy millions more in local property taxes. Assembly Republicans have pushed to increase the low revenue adjustment in recent years, including during the previous budget debate. The Assembly Republican plan in 2017-19 would have increased the low revenue adjustment by much less than Evers’ plan, and would have allowed local property taxes to increase by up to $92.7 million statewide. Evers’ plan, of course, goes much further than that, signaling even bigger property tax increases down the road.

The budget would also spend more than $600 million on students with special needs, while also limiting many of those students’ options. The majority of the hike would go toward increasing the state reimbursement level for special education costs by $606 million over the biennium. The high-cost special education program would be made sum sufficient, and special education transition readiness grants would increase from $1,000 per pupil to $1,500 per pupil, increasing spending by more than $7 million on those grants.

While students with special needs who attend public schools are rewarded in the proposal, students in the Special Needs Scholarship Program (SNSP) would be shut out of their educational options. That program, established in the 2015-17 budget, allows students with special needs to attend private schools with scholarships from the state. No new students could join the program after the 2019-20 school year.

Currently, 662 students participate in the program, more than triple the enrollment just two years ago when the SNSP first began. A 2019 audit by the nonpartisan Legislative Audit Bureau (LAB) showed that parents reported strong satisfaction with the program, including improved behavior from their children and more positive relationships with peers compared to their experiences in public schools. In the audit, one respondent is quoted, saying that SNSP “has made it financially possible for my child to receive the appropriate, individualized education to which he was entitled but not receiving in his public schools.”

Other rollbacks to educational choice include freezing enrollment in the popular private school choice programs in Milwaukee, Racine, and statewide. Total seats available would freeze after the next school year. Students could join the programs when others graduate or otherwise leave. An estimated 38,187 students across the state participate in the three programs, with nearly three-quarters in Milwaukee.

The programs exist to allow impoverished students go to the schools of their choice using vouchers from the state. Students earn higher ACT and Forward Exam scores than their public school peers, and families report higher levels of satisfaction compared to public school. The vouchers are worth less than average aid to public schools. Another budget provision would require individual property tax bills to include the total figure spent on vouchers.

The Milwaukee Parental Choice Program (MPCP) is the country’s oldest voucher program, and the student enrollment cap was lifted in 2011. Since then, participation has steadily grown, making it the largest choice program in the state. Nearly 29,000 students are enrolled in the MPCP today.

The number of independent charter schools would freeze under the proposal, with a ban on authorizations of new schools by entities other than public school districts until 2023. Under current law, any chancellors of the UW System, the City of Milwaukee’s common council, tribal authorities, any technical college district board, the Waukesha County Executive, and the UW-System Office of Educational Opportunity can authorize independent charter schools.

Already-existing charter schools would be allowed to continue operating and adding new students. In the current school year, 8,450 students attend independent charter schools.

The best-rated school at MPS is a charter school, though it was authorized by MPS itself. Milwaukee Excellence received 94.3 out of 100 points on the 2018 report cards, with math proficiency double that of the district average.

Choice and charter programs have been remarkably successful in Wisconsin, showing strong proficiency rates despite higher levels of student poverty. Of the 17 MPS schools receiving five stars on the most recent state report cards, 10 are in the private choice program, four others are charter schools, and just three are traditional public schools. On the other end of the scale, 50 MPS schools received one star in 2018, or “failing to meet expectations” designations. Ten of those schools are in the private choice program, while three are charters and 37 are traditional public schools.

According to the budget document, students currently participating in choice programs would not be affected by proposed changes. However, the ban on adding new seats or students will almost certainly lead to school closures.

Public school open enrollment, the state’s most popular form of school choice, is not targeted by the budget proposal. That long-standing program allows students to move to other public schools if they so choose.

Other changes to public school finance include a number of grant increases for target areas. Student mental health needs would be funded by more than $63 million for in-school pupil services, staff training, and other related initiatives. A new Urban Excellence Initiative would spend more than $15 million on closing achievement gaps in the state’s five largest public school districts. Teachers would be required to have 45 minutes or a single class period in planning time every day, whichever is greater.

The budget proposal includes myriad of other, comparatively smaller initiatives that nevertheless total millions of dollars in spending, including the recommendations of the Blue Ribbon Commission on School Funding. A future MacIver analysis will examine this budget proposal’s K-12 education spending in closer detail.

University of Wisconsin System

Evers’ budget proposal for the UW System would continue the popular tuition freeze for in-state undergraduate students. The UW System would see a boost in funding to the tune of $175 million over the biennium.

Spending increases at the UW System include $10 million for fellowships and loan forgiveness for certain nursing candidates who commit to teaching in the system for three years after graduating. Student support services for the UW Colleges would see $5 million, and 20 more employees would be hired for UW-Extension county-based representatives. Need-based grants for Wisconsin students attending the UW System, tech colleges, private universities or tribal colleges would be funded by $17.3 million in GPR.

The proposal sets up a study committee to examine creating a state-run student loan refinancing authority. The committee is charged with making recommendations by late 2020, for inclusion in the 2021-23 state budget.

Students who are citizens of other countries but who graduated from a Wisconsin high school, lived in Wisconsin for three continuous years before high school, or have applied for a permanent resident visa would qualify for in-state tuition.

All told, Evers’ budget spends $5.9 million more than the UW System requested in last fall’s agency budget request, and creates 219.84 new full time positions.

The Wisconsin Technical College System would also receive a funding increase of 7 percent in each year, totaling $18 million over the biennium.

The budget proposal eliminates the Early College Credit Program, which allows high school students to take university classes under a cost-sharing agreement. Students can earn high school credit, college credit, or sometimes both. Instead, the budget requires that the UW System implement a program to provide tuition-free classes for high school students. The budget gives similar treatment to a program that lets high school students take classes at tech colleges, instead requiring the tech colleges to provide them for free.

Welfare and Other Government Reforms

The budget rolls back some of Walker’s reforms to the state’s welfare systems. Able-bodied adults with dependents aged six to 18 would no longer need to satisfy work requirements in order to receive FoodShare. Drug testing for most public assistance programs is eliminated.

However, in a nod to the success of the Walker administration’s changes, childless able-bodied adults would still be required to satisfy job requirements in order to get FoodShare. That became compulsory in April 2015.

Evers’ budget includes $5.3 million to help welfare recipients in the Wisconsin Works (W-2) program “access affordable Internet.”

“On behalf of these families, the Department of Children and Families will work with W-2 agencies to reimburse the appropriate Internet service providers on a monthly basis,” the budget document states.

It’s another big-government initiative, that looks a lot like the city of Madison’s failed broadband-for-all pilot program for low-income neighborhoods. Evers’ $5.3 million seems all the more excessive given that free Internet access is as close as the local library, neighborhood school, or any number of retailers and restaurants.

Minimum wage for state employees would increase to $15 per hour in 2021. For everyone else, the state minimum wage would increase to $8.25 in 2020, followed by 75-cent increases annually until 2023. Once the minimum hourly wage reaches $10.50 in 2023, it would become indexed to inflation. The governor’s budget proposal also creates a task force to study how to get the state to a $15 per hour minimum wage.

Most state employees would see a wage increase of 2 percent in each year of the biennium, totaling $82.1 million in GPR. Another $12.1 million would be provided for targeted increases to certain state employees.

Wisconsin would make a statutory goal for all electricity produced in the state to be completely carbon-free by 2050. That’s pulled right out of the Green New Deal, which argues that the entire world should become carbon-free by 2050. As temperatures dipped below freezing in much of the state this weekend, a similar move enacted today would mean death by frost. Thirty years changes a lot, but it seems likely that Wisconsin will still be a cold northern state by 2050.

Other changes would limit the changes in law the Legislature passed during December’s Extraordinary Session, including the ability of the Attorney General settle cases without the approval of the Legislature. The Legislature would no longer be able to intervene in lawsuits as a matter of right.

Vast criminal justice and health-related reforms would decriminalize medical marijuana, while legalizing small amounts of recreational marijuana and expunging drug offenses under a certain amount. Seventeen-year-old offenders would also be moved from the adult justice system to the juvenile justice system. That includes violent and repeat offenders, a proposal much more expansive than other ideas floated in the past.

The MacIver Institute released a report in 2016 studying the fiscal effects and feasibility of returning only non-violent, first time 17-year-old offenders to the juvenile system. Since young people are less likely to reoffend and return to prison if originally processed through the juvenile system, the state is likely to see savings in reduced recidivism. The Governor’s plan would also give $5 million to counties, who oversee the juvenile system.

The state would vastly expand its spending on broadband grant programs, spending $78.6 million in the biennium through the Public Service Commission. It would create a new statutory goal for minimum broadband speed across the state, and spends $5.3 million on internet access for welfare recipients.

The budget plan strips a number of key government reforms codified in state law by Walker and the Republican-led Legislature.

The Governor restores administrative language that gives deference to state bureaucrats’ interpretations of law. Republican reforms prohibited the practice of state courts simply accepting agency conclusions of the law. So did the state Supreme Court, which recently affirmed so in northern Wisconsin property rights case.

“We have ended our practice of deferring to administrative agencies’ conclusions of the law,” Justice Rebecca Dallet wrote for the majority in cementing the court’s position change first declared in a decision last June. Interpreting the law, under Wisconsin’s constitution, is the judicial branch’s domain, not the executive branch’s.

And Evers rolls back legislative reforms on agency use of so-called guidance documents used by bureaucrats to set policies. Critics of the practice say agencies use the documents to bypass legislative oversight and review. The same problems occurred during the Obama administration, when agencies stopped creating rules and instead issued “guidance.”

Evers’ office will soon introduce a capital budget bill that will include recommendations for spending and borrowing for state buildings. The Budget In Brief also commits to at least $75 million in bonding in the capital budget for energy conservation programs.

All told, the budget document sets forth a wildly different view of government compared to the administration of the last eight years. The proposal creates many new government offices, programs, and credits, while increasing taxes on certain earners and hiking state borrowing by $448 million. It would eliminate hallmark reforms such as the right-to-work, bring back the state prevailing wage, and accept federal Medicaid dollars for expansion.

Since its release, Republican lawmakers have largely rebuffed the document, calling it a “liberal wish list.” The real work will begin when LFB releases its nonpartisan analysis later this month. Afterward, agencies will appear before the Joint Finance Committee to discuss their budgets and allow JFC to learn more. Then, finance will parse through the massive spending document, agency by agency, before it passes onto the full Legislature.

Evers has already indicated that he would be open to vetoing the entire budget if Republicans strip out too many of his reforms.

Taxpayers, hold onto your hats. It’s about to be a bumpy spring and summer. As always, MacIver will be here every step of the way. Look forward to more detailed analyses of individual budget sections in the days and weeks to come.

March 1, 2019 | By Matt Kittle

Evers' $83.5 Billion Budget Grows Government, Raises Taxes

MADISON, Wis. — Gov. Tony Evers on Thursday rolled out his first budget proposal, a hefty two-year plan that increases spending a whopping $7 billion and dramatically expands the size and scope of Wisconsin’s government to pursue a litany of liberal initiatives.

Republican leadership quickly panned the Democrat’s proposal, calling it nothing more than a “liberal tax-and-spend wish list” and vowing to start over and build their own budget in Joint Finance Committee.

In a joint session of the Legislature Thursday evening, Evers said his $83.49 billion biennial budget blueprint puts “people first.”

“It’s about creating a Wisconsin that works for everyone, a Wisconsin for us,” he said. “This isn’t the Tony Evers budget, the Democratic budget, the Speaker’s budget, or the Republican budget — this is the people’s budget. And it’s one we crafted together.”

Republican leaders countered that Evers’ budget appeared to be crafted almost exclusively by liberal, grow-government interests, a spending plan that pushes everything from legalization of medical and recreational marijuana to driver’s licenses and IDs for illegal immigrants.

The governor wants to expand Medicaid, he wants to pump $1.4 billion in new spending into K-12 education, he wants higher pay for teachers, $150 million more for the University of Wisconsin System, an “unprecedented” $600 million increase in special education spending, $600 million more for transportation (with the help of an 8-cent increase on each gallon of gas), $200 million more in additional funds for the troubled juvenile justice system, $70 million in bonding to address water quality in what Evers has declared as the “Year of Clean Drinking Water.”

He wants more government workers — hundreds more. In the second year of Evers’ budget, the state government workforce would rise to 71,990 employees, an increase of 701 positions from the current budget. The lion’s share of the new jobs would be on the UW System payroll, and Evers would add nearly 100 corrections positions, according to the budget document.

How would Evers — Wisconsin’s taxpayers, really — pay for it all? Taxes. Billions of dollars in new and expanded tax revenue.

Tax Increases

The governor would tax capital gains, manufacturers, out-of-state broadcasters, e-cigarettes and cigarillos. He would eliminate the deduction for private school tuition under the school choice program. He would bring Wisconsin into greater conformity with the changes in 2017’s federal tax reforms, hitting more businesses and individual taxpayers. And he would hire more tax auditors — 24 — and tax compliance officers — 12 — to go after delinquent taxpayers.

The governor’s budget estimates that raising the tax rate on e-cigarettes and vapor products to the full rate imposed on cigarettes would generate $34.7 million over the life of the two-year budget. Wisconsin currently has the 12th highest cigarette tax in the nation, at $2.52 a pack, according to the Tax Foundation.

Evers’ tax-and-spend plan includes raising the capital gains tax on high income earners from the current effective rate of 5.355 percent to the 7.65 percent top income tax rate. His administration estimates doing so would raise $285.1 million in new revenue in the first year, $220 million in the second year.

Tax Relief

He didn’t mention it Thursday evening, but Evers’ budget plan includes his middle-income tax-cut proposal. The governor last month vetoed a Republican tax-cut plan paid for by the projected $1.8 billion in new revenue over the next two years. Evers called the Republican bill unsustainable. His tax relief package would be financed in part by raising taxes on some manufacturers by limiting the popular Manufacturing and Agricultural tax credit implemented during Republican Gov. Scott Walker’s tenure.

Capping the tax credit would generate about $517 million over the biennium to help pay for the $834 million tax cut-plan, according to the budget document.

Evers’ spending plan pledges about $1 billion in total tax relief, but a sizable chunk of that has to be paid for by other revenue sources.

The governor wants to increase the Earned Income Tax Credit for low- to moderate-income working individuals. Varying rate increases for individuals and families would cost the state coffers more than $53 million over the biennium, according to the budget document.

And Evers would restore indexing on the Homestead Credit, expanding eligibility to approximately 160,000 new filers while enhancing it for over 100,000 current claimants. That would cost about $39 million in the second year of the budget.

Gas Tax Hike

The governor’s budget plan calls for an 8-cent per gallon gas tax hike, the return of indexing and fee increases to boost transportation revenue by $300 million a year.

“Everyone is going to have to give a little to make this work. That’s compromise,” the Democrat said.

Evers seeks significantly more funding for a Department of Transportation that, as MacIver News Service first reported Thursday, has failed to comply with several provisions in a state law written in the aftermath of a bombshell audit of a troubled government agency that wasted billions of taxpayer dollars.

Evers says the gas-tax hike would be greatly offset by a repeal of Wisconsin’s minimum markup law, at least in the area of motor fuel. The law, crafted during the Great Depression, artificially raises the price of certain products. It sets a government-mandated price floor causing Wisconsin consumers to pay more — in some cases, a lot more, as MacIver News Service has extensively reported. State Sen. Dave Craig (R-Town of Big Bend) earlier this year urged the governor to repeal the entire minimum markup law, which Craig said has “far surpassed its life expectancy.”

School Funding

Evers’ budget means property tax increases, a burden his predecessor, Walker, and the Republican-controlled Legislature lowered on average over the past eight years.

“It’s the largest property tax increase in nearly a decade,” Assembly Speaker Robin Vos said of Evers’ plan.

The governor said the people of Wisconsin have spoken, and they want the state to “fully fund our public schools.” Evers laments that “more than 1 million Wisconsinites have raised their own property taxes to support local schools in their communities.” They did so, of course, through the mechanism of referendum that offers school districts the ability to set their own priorities and not make taxpayers elsewhere pick up an ever-increasing portion of the tab.

Evers’ budget plan calls for a return to the state picking up two-thirds of K-12 funding, something Republicans have said they are open to. The governor wants $1.4 billion in additional spending for Wisconsin schools, more than double the historic dollar increase in the last Walker budget.

He wants to pump more money into public education, particularly the state’s long-failing schools, while he looks to punish Wisconsin’s school choice program. Evers’ budget plan freezes enrollment in Wisconsin’s popular school voucher program and stalls the expansion of independent charter schools — clearly payback to loyal teachers’ unions that helped get the former Department of Public Instruction superintendent elected governor.

Scores of School Choice proponents, including students, rallied in the Capitol rotunda before Evers’ budget address.

Evers’ budget calls for raising teacher salaries, asserting that Wisconsin educators are paid less than the national average. But as MacIver News Service first reported in January, Wisconsin schools spend almost half their revenue on overhead, with only 54 percent actually going toward classroom instruction.

He maintains the tuition freeze on UW System tuition that Republicans put in place several years ago.

“But our universities shouldn’t have to sacrifice affordability for quality education. So, we’re not just going to freeze tuition, we’re also going to fund that freeze,” the governor said. Higher ed gets a $150 million boost in Evers’ budget plan.

Medicaid Money

As expected, Evers’ budget would expand Medicaid in Wisconsin. In raising the income eligibility rate to well above the poverty line, taking the Obamacare money would expand state-funded health care to 82,000 more Wisconsinites, Evers asserts.

“And because we’re accepting these federal dollars, we have the opportunity to invest in programs that improve health care access and affordability across our state,” the governor said.

It also means that Wisconsin will be on the hook for 10 percent of the “free” federal money, taxpayers across the country in general will have to pay for Wisconsin’s Medicaid expansion, and the government funding will feed a failing federal health care law that has pushed premiums sky high and depleted the health insurance marketplace.

“That means if you like your health care, you may be able to keep it, but it’s going to cost you a whole lot more,” said Assembly Majority Leader Jim Steineke (R-Kaukauna).

In calling for Medicaid expansion, Evers referred to a Maquette Law School poll that found 62 percent of respondents are in favor of taking the federal money. He did not, however, note that, according to the same poll, a majority of respondents do not like the idea of a hike in gas taxes and fees.

Liberal Initiatives

Evers’ budget plan includes a multitude of social welfare changes.

It rolls back some of the state welfare work requirements that Walker and Republicans put in place over the past eight years. It calls for removing 17-year-olds from the adult criminal justice system (Wisconsin is one of the few states with such a law), and puts the Badger State on the path to legalizing medical marijuana as it decriminalizes possession and sale of 25 grams or less of weed.

In another nod to his liberal base, Evers announced an initiative that will allow illegal immigrants to receive driver’s licenses and ID cards.

“This makes our roads and our communities safer, and helps strengthen our economy and Wisconsin families,” the governor said.

Evers also wants to bring back the costly prevailing wage law and kill Wisconsin’s right-to-work law, which ended forced union dues for private sector workers.

Senate Majority Leader Scott Fitzgerald (R-Juneau) called the governor’s spending plan a “1,000-page press release, not a budget.” He said Evers missed an opportunity to work with the Republican majority to create a “real and family-supporting” budget.

“This budget is a liberal tax-and-spend wish list,” Vos said, adding that the billions of dollars in budget increases are tantamount to raising the tax burden by $1,000 for “every man, woman, and child in this state.”

In a joint statement, state Sen. Alberta Darling (R-River Hills) and Rep. John Nyrgren (R-Marinette), co-chairs of the Legislature’s powerful budget-writing committee, said the governor is spending the state’s record surplus and more — much more.

“Governor Evers is digging another hole that Republicans will have to fill,” the lawmakers said, referring to the fiscal mess Walker and the GOP-controlled Legislature inherited from the last Democratic governor, Jim Doyle, in 2011. “We can’t afford Tony Evers’ budget.”

Republicans say they are willing to work with the governor to produce a reasonable budget, but Evers’ massive budget proposal appears dead on arrival.

Republican leadership said they will begin from base, building a budget that Vos believes the GOP-controlled Legislature will pass by July 1, the beginning of the new fiscal year. Of course, Evers has one of the most powerful veto pens in the nation. But if he vetoes the Legislature’s budget plan, state government will continue to operate under current spending levels. And the governor’s veto authority doesn’t grant him the power to add, only to subtract.

February 28, 2019 | By Ola Lisowski

Our Wisconsin Budget

Welcome back to Our Wisconsin!

Tonight, Gov. Tony Evers will introduce his first biennial budget. This spending document is the only bill Wisconsin is constitutionally required to pass each session. For us, the next few months will be all about the state’s spending plan for 2019-21. For that reason, today we’re releasing the last in our series “Our Wisconsin,” focusing on the budget.

Every other December, state agencies release their budget requests. Think of these as wish lists of sorts for each department. When the governor releases his budget several weeks later, the real work begins. For a new governor like Evers, it’s the first opportunity to lay out a real plan for the state and to display priorities. The document affects every publicly funded program in the state.

Covering the state budget process is why the MacIver Institute exists. We serve our readers, the taxpayers, by providing in-depth and timely analysis of this massive spending document. In the months to come, watch for our coverage on just about every component of the budget. Few outlets cover the biennial budget as closely as we do. Even fewer look at the document from a free-market perspective.

The first column of our scorecard focuses on the 2011-13 budget and the second column looks at 2017-19, a direct comparison between Gov. Scott Walker’s first budget and his last. While the cries of austerity and budget cuts have echoed for years, the reality is clear. Wisconsin increased its state spending past inflation by billions of dollars during Walker’s tenure. More people are employed by the state of Wisconsin, and more money is spent every year. At the same time, the state has borrowed less, and set aside more money for a rainy day.

We hope our scorecards will keep the debate and conversation grounded in reality. We hope our scorecards will help you cut through the fog of hyperbole and rhetoric. We hope these scorecards help you decide for yourself: What is the true state of our great state?

Don’t take Evers’ word for it, or any other politician for that matter. Don’t let the media tell you what you should think. Decide for yourself.

Forward, Wisconsin.

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