Wisconsin's Future - a town hall presentation

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Keeping Public Institutions Alive Wisconsin State Budget 2011-2013:

Keeping Public Institutions Alive Wisconsin State Budget 2011-2013 Racine Town Hall Meeting May 19, 2011 Jack Norman Institute for Wisconsin’s Future www.wisconsinsfuture.org

Public structures support our quality of life:

Public structures support our quality of life We understand and appreciate that what breathes life and hope and happiness into our ‘homes’ is the quality of our neighborhoods, jobs, schools, parks, services, medical care, and transportation. Wisconsin Realtors Association

Public structures pave the way for economic growth:

Public structures pave the way for economic growth Economic Development Bridges Highway system Technical training Water treatment Education

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4 Balanced taxes from different sources lead to healthy support for public structures

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Less support for public safety State revenue shortfalls for over a decade have led to cuts... Larger school classes Fewer services for seniors Reduced immunizations Less Medicaid funds for poor and elderly

State has cut revenue to communities:

6 State has cut revenue to communities Cost to maintain programs Level of state aid to schools and local services

But when there’s not enough $ coming from Madison, what choices do local leaders have? :

7 But when there ’ s not enough $ coming from Madison, what choices do local leaders have? Raise local fees and property taxes or Make deeper cuts in services Or both! Reduce services AND raise property taxes & fees!

Local blame games miss the point:

8 Local blame games miss the point Parents School Board Teachers Administrators

Madison’s revenue decisions affect us locally:

Madison’s revenue decisions affect us locally Money for Wisconsin schools and communities is based on state policies

The deficit is real, but not abnormally huge This chart shows recent general fund deficits ($ billions--adjusted for inflation):

The deficit is real, but not abnormally huge This c hart shows recent general fund deficits ($ billions--adjusted for inflation) Source: Wisconsin Legislative Fiscal Bureau Compared with other states, Wisconsin’s budget deficit is about average (when measured relative to size of state budget or economy)

Wisconsin’s deficit is years in the making Annual tax cuts drain the revenue base :

Wisconsin’s deficit is years in the making Annual tax cuts drain the revenue base “We cut taxes in the very first budget and haven’t stopped since. We cut taxes 91 times totaling $16.7 billion”. Governor Tommy G. Thompson : Jan 31, 2001 “T he budgets signed by Governor Doyle actually cut taxes by about $700 million over the next four years.” Stephen Bablitch : Secretary Wisconsin Department of Administration August 15, 2006 “Over $2 billion in tax cuts are either funded in the budget or phased-in over the next four years.” Governor Jim Doyle: Address to the State Senate on October 26, 2007

How Did We Get Into the Current Mess? Deep recession caused by the financial sector:

How Did We Get Into the Current Mess? Deep recession caused by the financial sector Big banks brought down the economy by inflating the housing market, making risky loans and betting against their own investments – with our pension money

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Federal aid prevented a full-fledged depression in America, using millions of economic sandbags to hold communities together Road Repair School Rehab Funds for DAs Food Stamps More Unemployment Insurance Tax Cuts Funds for Teachers Business Loans Buses and Trains Energy Savings Rehab River Clean Up Health Care Cash for Clunkers Farm Aid Aid for Elderly Medical Research School Loans Improve Airports Child Protection Veteran Aid $$ for Police Housing for Disabled

The federal aid is finished States fell over the funding cliff :

The federal aid is finished States fell over the funding cliff “In the 2012 fiscal year that starts in July, states will no longer have the roughly $150 billion in stimulus funds that over the past two years have been used to fill gaps in states' budgets.” The Wall Street Journal, March 30, 2011

The Governor’s only response: Cut, Cut, Cut:

The Governor’s only response: Cut, Cut, Cut What is lost to communities in proposed budget? K-12 schools $ 834 million UW system $ 250 million Local government $ 139 million Technical colleges $ 72 million Corrections $ 53 million Low-income tax relief $ 49 million Medicaid $ 500 million Large cuts of undetermined size from Family Care, Badger Care, Senior Care, Food Share, W-2, Wisconsin Shares, YoungStar (services for low-income, seniors, children, people with disabilities, child care) Source: Wisconsin Department of Administration, budget documents, Legislative Fiscal Bureau

Wisconsin 2011-2013 Budget Summary:

Average cut of $826 per child could mean 7,000 teachers lose their jobs – crowded classes and closed schools. Wisconsin 2011-2013 Budget Summary Bad for public schools: Bad for transit $49 million less aid for local transit – a 10% cut Loss of up to $44 million in federal transport aid Cuts in local road maintenance Cuts to special needs transit

Wisconsin 2011-2013 Budget Summary:

Local communities are cut by $139 million in 2012 Wisconsin 2011-2013 Budget Summary Less road maintenance? Fewer funds for human services? Less money for public safety? Fewer garbage pick-ups? Less park maintenance?

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Wisconsin 2012-2013 Budget Summary Punishing lower-income workers, c hildren and families Cut in low-income wage support Higher costs, longer wait lists, fewer opportunities for child care, health care, assistance for seniors and people with disabilities Less access to job training

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Wisconsin 2011-2013 Budget Summary Healthcare $500 million cut to Medicaid Reductions in: Funding for long term, in-home care for the elderly and disabled SeniorCare prescription drug benefits Healthcare for children and families

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Wisconsin 2011-2013 Budget Summary Public sector workers Higher costs for health insurance and pensions will cut most workers’ take home pay by an average of $2,700. This cut will mean their families spend less – hurting merchants. This will cost Wisconsin businesses $1 billion in economic activity and a loss of 9,000 retail and production jobs in community companies .

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These cuts are not necessary !! The solution, then, isn’t found just by cutting Let’s talk about a balanced approach to state fiscal planning - adding REVENUE to prevent cuts The cause of our financial problems is not so much growth in spending as weakness in revenue

Wisconsin taxes are moderate:

Wisconsin taxes are moderate Fiscal Fact : Wisconsin taxes are average in the United States and have been flat for years . Sales tax is lowest in the region.

Wisconsin governments are frugal spenders:

Wisconsin governments are frugal spenders Fiscal Fact: Public sector employment in Wisconsin, relative to population, is eighth lowest in the US. Fiscal Fact: Wisconsin spends below the national average on state and local government costs per person. Wisconsin Council on Children and Families

Public calls for shared sacrifice by wealthy :

Public calls for shared sacrifice by wealthy People in Wisconsin support increased revenue: 69% prefer higher taxes to balance the budget (Franklin Center for Government and Public Integrity Survey) 63% favor higher taxes on t he wealthy (Wisconsin Policy Research Institute) Nationally, majority want higher taxes on the wealthy Voters by a margin of 2-to-1 support raising taxes on incomes above $250,000 ( McClatchy Newspapers; Marist Poll) NBC/Wall St. Journal Poll Washington Post/ABC News Poll USA Today/Gallup Poll 60 minutes/Vanity Fair Poll All these polls find over 60% support for higher taxes on the wealthy .

Slide 25:

There are ways to raise revenue to protect communities STATE REVENUE OPTIONS Taxing investment profits generates $50 million a year Higher tax on incomes over $300,000 raises $125 million Extend sales tax to personal, business and professional services to raise $731 million Boost sales tax by one penny to raise $870 million Restore the estate tax to its former level to add over $100 million annually.

Slide 26:

Will higher taxes hurt state job growth? Tax Status Median private sector job growth 2001-10 10 States with the highest business taxes/economy size + 3% 10 States with the lowest business taxes/economy size -2% 10 States with the highest business taxes on new investment 0% 10 States with the lowest business taxes on new investment -2%

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Citizen Thinking We built America’s middle class by choices we made through the years. We cannot abandon public institutions earlier generations worked so hard to build. Citizen Thinking

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