Revenue estimates force tough choices
Vehicle fees might rise, but lawmakers won’t delay tax cuts
Madison — State GOP lawmakers won’t get any additional growth in tax money to help avoid Gov. Scott Walker’s proposed education cuts, so they are instead looking at a one-shot injection of money to keep K-12 spending flat and their past tax cuts in place.
Top Republicans signaled they could also increase vehicle registration fees to limit proposed borrowing for state roads. But legislative leaders said they wouldn’t delay the phase-in of previous tax cuts or stop expansion of private taxpayer-funded voucher schools to undo more of the $300 million in proposed cuts to the University of Wisconsin System over two years.
Walker, an all but certain presidential candidate, and legislative Republicans have said for months that a revved up economy, fueled in part by their tax cuts, would lead to more tax money than projected through June 2017 and help them mitigate the education cuts.
But the nonpartisan Legislative Fiscal Bureau projected
Wednesday that the initial tax estimates would hold and there would be no May flowers for elected officials.
Instead, Assembly Speaker Robin Vos (R-rochester) and Senate Majority Leader Scott Fitzgerald (R-juneau) each said Wednesday that they were considering providing more than $100 million in onetime money next year to keep school spending at current levels through both years of the 2015-’17 budget.
To cover the added cost, GOP lawmakers would use a related payment that Walker had wanted to make more quickly than the state usually does.
The legislators’ approach, however, wouldn’t address the fact that Walker’s budget proposal leaves a $141 million drop in school spending between the 2017 fiscal year — the second year of this upcoming budget — and 2018, the first year of the following budget.
So two years from now, the state could see a repeat of the debate that is currently tying lawmakers and schools in knots.
“For those of us who have been crossing our fingers and going to church on Sunday, it didn’t work,” Vos said of the flat tax projections. “We’ll figure a way to make it all work out in the end.”
Surplus went to tax cuts
Only one year ago, the state was looking at a $1 billion budget surplus. Republicans used that surplus to add to a series of property and income tax cuts that they have passed since 2011 and are now considering the cuts to state programs to keep the budget balanced.
Overall, the state is left where budget watchers had long expected: in a challenging spot that is worse than the 2013-’15 budget but not as bad as Walker’s first budget in 2011. The difference is that Wisconsin now is having to cut key parts of the state budget amid a slow economic expansion, rather than four years ago when the state was doing so as it came out of a deep recession.
Democrats immediately highlighted the challenges, with the party’s members on the Joint Finance Committee saying the state should avoid the proposed education cuts by accepting federal money to offset state health care spending, halting the phase-in of tax breaks for manufacturers and not expanding state money for voucher programs for private K-12 schools.
“Earth to Walker: It’s not working. We know it’s not working,” said Sen. Lena Taylor (D-milwaukee).
Walker has proposed cutting $127 million from public schools in the first year of the budget, by eliminating a perpupil spending increase they’re receiving this year.
Speaking to reporters Wednesday after a law enforcement memorial ceremony at the Milwaukee Theatre, Walker said his hope is to find other savings in the budget. But he said he now agrees with lawmakers that schools shouldn’t have a reduction in their spending next year.
“There is another $127 million or so roughly that was one-time money put in two years ago that schools built into the budgets. We want to make sure they are made whole in terms of the same funding opportunities available,” Walker said.
Waukesha School District Superintendent Todd Gray said he was initially disappointed to see the update on state revenue projections, but was then heartened by the statement of officials in the Capitol.
Chris Thiel, legislative policy manager for Milwaukee Public Schools, told the School Board late Tuesday that restoring that K-12 cut was important. But he acknowledged: “In reality, that gets us back to zero, which isn’t a fantastic thing.”
Parents and other publicschool supporters have increasingly pressured lawmakers in recent weeks to not just restore the cut, but find more money for schools to keep up with inflation costs.
Republicans were less certain Wednesday about what they would do with the proposed cuts to the state’s university system.
Rep. John Nygren (R-marinette), a co-chair of the budget-writing Joint Finance Committee, said they could probably be lowered. Fitzgerald was less optimistic.
“I’m not going to be the one to slam the door on that, but it becomes more and more difficult,” Fitzgerald said.
Asked about Tuesday’s decision by members of the Joint Finance Committee to strip a provision out of the budget giving new authority to the University of Wisconsin System, Walker said he planned to go back to the Legislature and “make the case for the authority.”
“They weren’t talking about easing up on the budget adjustment; they were talking about just taking away the authority,” Walker said. “Which I would think is the worst of all situations. Our reforms were based on giving them the authority that would give them the capacity to make up (some of the cut). They’ll face some real challenges.”
Asked about his presidential ambitions, Walker said he wanted to get a budget passed and signed into law by next month and then announce his intentions.
To reduce the record $1.3 billion in bonding for road building sought by Walker, Nygren and Sen. Alberta Darling (R-river Hills), a co-chair of the budget committee, said they were considering vehicle registration hikes of $25 to $35 a year. The current fee is $75 for automobiles and more for some light trucks.
A $25 fee increase on automobiles and light trucks would raise $204 million over two years.
Vos, Darling and Nygren said they hoped to reduce transportation bonding by about $300 million. That would put it in line with the level of borrowing lawmakers approved two years ago for the current budget.
Vos also said Wednesday that eventually he wants to allow tolling in Wisconsin — something that would require federal approval for many highways — and supported including money in the state budget to study the issue.
The details of Wednesday’s short tax memo from the Legislature’s budget office did little to dispel its pessimistic conclusion. Bob Lang, the veteran head of the fiscal bureau, said that tax revenue for this fiscal year is running behind projections by about 0.4 percentage points, or about $60 million.
That’s a modest decrease in the context of the $14.4 billion that the state expects to take in this year. Meanwhile, the national economy appears set to grow more slowly than expected over the 2015-’17 budget, Lang wrote.
Assembly Minority Leader Peter Barca (D-kenosha) told the Transportation Development Association Wednesday that the numbers show the GOP approach isn’t working.
“This is tea party budgeting,” Barca said. “And tea party budgeting is not working for Wisconsin.”