Amendment about Revenue, Not Taxes

The Baraboo News Republic is among many local newspapers in Wisconsin to cover the revenue restrictions amendment over the past few weeks. The paper, however, seems to miss a key point about the amendment, which was prosposed by conservative Wisconsin state Republicans in early February.

According to the article, "As proposed Feb. 14, this amendment to the state constitution would limit increases in state and municipal taxes, restricting hikes to a complicated formula based upon the rate of inflation, personal income growth, population increases and new construction."

This is simply not true. The revenue restrictions amendment restricts revenue, not taxes, which is why the title given to it by Republicans--the "Taxpayer Protection Amendment"--is not accurate. But based upon the article by the News Republic and some other media outlets, the Republican name seems to be creating some confusion about the amendment, which I have no doubt was the intent.

Under the amendment, governmental units could actually raise taxes beyond the rate of inflation plus population growth as long as total revenue only increased at those rates.

According to the amendment:

"'Revenue' means all moneys received from taxes, fees, licenses, permits, assessments, fines, and forfeitures imposed by the state or a local governmental unit, lottery proceeds net of prizes, tribal gaming proceeds, and all moneys received from bonds, but not including moneys generated from municipal economic development bonds, from the refinancing of bonds, or from short−term cash flow borrowing."

So with a few small exceptions, all revenue generated for governmental units will be subject to restrictions under the proposed amendment. While not included directly, even federal dollars provided to the state would be adversely affected.

For example, the biggest generator of federal dollars for the state is the Medicaid program, which works on a matching system. In other words, the federal government will contibute dollar amounts based upon how much the state pays into the program. In the 2003-2005 biennium, federal dollars for Medicaid brought in a grand total of over $5 billion in funding for people in the state. If state revenue is restricted and fewer state dollars are able to go into programs like Medicaid, contributions from the federal government will decrease, as well. With the costs of health care continuing to rise, this is a potentially disastrous situation for the over 800,000 Wisconsinites (and counting) who rely upon Medicaid.

Moving forward, anti-amendment advocates need to keep an eye on conservatives who are trying to make this debate about taxes. If the amendment makes it to a statewide referendum next year, which isn't exactly likely, the conservative proponents will do all they can to push the message that this amendment is about taxes, which is just not the case. The debate needs to be focused on revenue, which is what the amendment restricts.

Side-Note: The Baraboo News Republic article includes an interesting comment on the amendment by state Senator Luther Olsen (R-Ripon). According to article, Olsen claimed the amendment is "too vague to take a stance on." Apparently the 2500-word amendment doesn't explain itself enough. I wonder if Sen. Olsen was one of the legislators who wanted Legislative Fiscal Bureau Director Robert Lang to write down his explanation of the amendment at the invitation-only legislative hearing a couple weeks ago.