JOHN NICHOLS articulately dismantles the fiscal case for Walkers budget "repair" bill
Wisconsin’s Legislative Fiscal Bureau was created in 1968 by a Republican governor, Warren Knowles, and a Republican-controlled state legislature.
The purpose was to establish a nonpartisan agency that would provide honest fiscal analysis and information for Wisconsin Legislators. Across more than four decades, the bureau has done just that, earning the respect of legislators from both parties, including a young Scott Walker, who frequently cited the bureau when he served in the state Assembly.
Less than a month ago, a Fiscal Bureau memo reported that the state had a $121.4 million surplus through the remainder of the current fiscal year.
That is a fact that is now under attack by Governor Walker, whom the conservative publication Human Events refers to as the “new hero” of the Republican right. Walker argues that—as Republicans and Democrats have acknowledged for some time—the state’s fiscal house is not in order and that unsettled issues relating to a payment due Minnesota after the canceling of a tax agreement, as well as rising healthcare and prison costs, could well create a shortfall before the end of the year.
So it is possible that Wisconsin might need a budget repair bill of the sort Walker has proposed before the fiscal year is finished, as it has in many years.
But Wisconsin has not reached the statutory trigger—roughly $188 million—that would demand a repair bill.
So why is Governor Walker rushing to act now? Why is he doing so with a bill that massively extends his own authority over cabinet agencies while creating new positions to be filled by his political cronies? And why is he claiming that it is necessary to take away the collective bargaining rights of state, county, municipal and education unions in order to address the issue?
The governor says that he is doing so because trend lines point to more serious shortfalls in the future. His concerns about those trends are broadly shared, even by the state’s public employee unions, which have agreed to dramatic concessions in order to help avert fiscal problems in the future. The governor anticipates a $3.6 billion deficit in the next fiscal year, while indepedent observers say it might be closer to $3.1 billion. That sounds pretty bad, until you recognize that the previous governor, Democrat Jim Doyle, had to deal with a $5.94 billion budget deficit.
Doyle proved that it is possible to deal with a serious shortfall without breaking unions or restructuring state government.
But Walker says the state’s financial woes are now so serious that he must go after the unions and dramatically increase his power to appoint cronies to top positions.
What we cannot figure out is this: Why, if the state is in so much trouble, did Walker engineer the enactment of roughly $140 million in new tax breaks for multinational corporations, which the legislature passed in January? Why did he rush to reject federal transportation funding that other states—states with similar or worse fiscal challenges—have rushed to collect? Why, in the very week that he was pushing his budget repair bill, did the governor reject federal broadband development money that Wisconsin’s rural counties have been seeking for years?
The answer to all of these questions is that the governor has made his budget decisions not with an eye toward fiscal responsibility but with an eye toward rewarding his political benefactors. Out-of-state corporations, road-building interests that did not want competition from high-speed rail, telecommunications corporations that want to cash in on the demand for broadband all benefitted from the decisions made by the governor in January. Now, in February, the governor says that Wisconsin needs to end collective bargaining for public employees and teachers and alter the way in which the state operates on multiple levels in order to address a fiscal “crisis.”
The whole argument is absurd—so absurd that state Representative Mark Pocan, a Madison Democrat who formerly co-chaired the legislature’s powerful Joint Finance Committee, accuses the governor of “spinning his fake budget crisis.”
Pocan bluntly declares: “The need for a budget ‘repair’ bill is manufactured so that Governor Scott Walker can bring in a ‘Trojan Horse’ of bad conservative ideas promoted nationally by the far right. The non-partisan Legislative Fiscal Bureau said no statutory trigger was met to require a repair bill.”
Too harsh? Not at all.
Consider the governor’s incredible inconsistency.
On the one hand, the governor says the tax breaks for corporations that he engineered in January will not be fully implemented until the next fiscal year. So, he says, no one should accuse him of ginning up a crisis to achieve political ends. Yet, on the other hand, he says that he must act now—via this budget repair bill—to address not just a small shortfall of the moment but the challenges the state will face in, you guessed it, the next fiscal year.
Several legislators and public-interest groups suggested in the early days of the budget fight that the tax breaks the legislature enacted in January were making matters worse in the current fiscal year. The governor disagreed, arguing that the tax breaks are not an issue at this point. It’s reasonable to accept the governor’s point with regard to the timeline and note it here because of the importance of clarity in these debates. But the analysis can’t stop there, since budgeting is a bit more complex than the governor chooses to acknowledge.
As Nicholas Johnson, vice president for state fiscal policy with the Center on Budget and Policy Priorities noted in a memo to the Washington Post: “In a technical sense, the tax cuts didn’t create the current-year shortfalls that in turn are creating the specific opening for the ‘budget repair bill.’ However, it is true that the tax cuts are worsening the state’s overall budget picture, and it is the state’s overall budget picture—not the current-year picture alone—that the [governor] is using to justify going after the workers.”
Debates about budgeting and fiscal years are often complex. Lots of heads are spinning at this point. More importantly, Governor Walker, his aides and the media echo chamber, are spinning. It is easy to get confused.
So let’s get down to the basics:
1. The Fiscal Bureau reported in January that Wisconsin had a $121.4 surplus through the end of the fiscal year.
2. The state has an unresolved tax dispute with Minnesota and faces some potential spikes in healthcare and prison costs that could require a budget repair bill. But the state has not reached the trigger point where such a bill would be necessary.
3. When the trigger point is reached, the wise counsel of the legislature’s senior member, state Senator Fred Risser, D-Madison, is well taken: “This is not a crisis. We’ve done budget repair bills before. We’ve always been able to sort these things out.”
Risser is absolutely right. He is right, as well, when he says, “We now know this struggle is not about the money. Public employee unions have offered many concessions to help solve the state’s fiscal crisis. When those efforts at compromise were ignored, it became clear that Governor Walker and his allies are part of a national agenda, fueled by big-money conservative groups, to destroy the unions at all costs.”
That’s the bottom line: this is not about the money. This is not a fiscal crisis. This is a political crisis. And Governor Walker has the power to resolve it by refocusing on fiscal issues, as opposed to pursuing the political goal of breaking state-employee and teacher unions.