Monday, February 20, 2006

Tuition, Energy Costs, and the Revenue Restrictions Amendment

There were two good articles in the Journal-Sentinel yesterday that indirectly related to the revenue restrictions amendment, or Bride of TABOR, proposed by conservative state Republicans just over a week ago.

The first is an article that discusses how rising tuition rates, combined with federal freezes in financial aid options such as Pell Grants, have largely kept low income students out of the UW System. The key question to ask is why tuition rates have risen so sharply in recent years. The answer is really unsurprising, but nonetheless an important one to pay attention to in light of the recent revenue restrictions amendment debate.

Here is what the article had to say about the why question:

“After the Legislature cut its funding by $250 million, the UW System increased tuition by 18% in 2003 and 16% in 2004. The system has received a shrinking portion of the overall state budget in recent years as the Legislature has increased spending for other priorities, such as prisons and highways.”

It’s very clear that as revenue allotments to the university decrease, tuition increases. In his analysis of the revenue restrictions amendment, UW-Madison economist Andrew Reschovsky predicted that if the amendment was enacted in 1985, “in 2005 tuition would have to increase by about $200 million to make up for the reduced UW System appropriations, an increase equal to 25 percent of actual tuition revenue in 2005.”

While conservative critics will undoubtedly quibble about the exactness of Reschovsky’s numbers, they can’t deny the fact that UW System appropriations would decrease under the revenue restrictions amendment—thus causing tuition to rise significantly higher than it is today, keeping out even more students and saddling a good portion of the rest with even higher amounts of debt after graduation.

The second article that indirectly deals with the revenue restrictions amendment looks at rising energy costs faced by local governmental units across the state this winter. Even with the mild winter (until this past weekend, anyway), schools and municipal governments are strapped with energy costs that are projected to increase as much as 40-50% over last year. Right now the increased costs are up around 31%, but energy company officials aren’t ruling out a spike as the heating season continues over the next couple months.

There are two points that are interesting about this article in relation to the revenue restrictions amendment. The obvious one is that these rising energy costs are far outpacing the rise in inflation and population growth, which are the rates at which governments are expected to limit themselves under the amendment. And energy costs are just one of a number of costs to governmental units that are not reflected in the inflation rate (health care jumps out as another big one).

The less obvious point from the JS article is the steps that are being taken by every single local governmental unit mentioned in the article to keep their energy costs down. In Milwaukee County buildings turned on the heat later in the year than usual and are keeping less-used rooms at colder temperatures than the heavy traffic ones. The Waukesha School District used 27% less gas this January than last January (due to higher costs, the 2006 bill for the month was still $20,000 more than the one in 2005). The Cedarburg School District drops its temperatures at night and doesn’t start to heat them up until later in the morning than in previous years.

So contrary to the view that governments will spend, spend, spend whenever they get the chance, these governments are seeking out ways to save money on energy costs and undoubtedly other costs, too. My entire, albeit short, career has been spent in the public sector, and in each place I’ve worked—whether in Minnesota or in Wisconsin—there has been an emphasis on reducing costs whenever possible.

Granted, the local governments highlighted in the JS article and the public sector jobs I’ve had are all under tight budget constraints even without the revenue restrictions amendment—but that’s exactly the point. There isn’t a need for such a drastic constitutional amendment because governments in our state do not engage in out-of-control spending. We shouldn’t give all or even any governments a blank check—which is why we don’t. Of course there is some excess and waste in some areas, but the same is true for any private sector operation on the scale of our governmental units. What’s more, we already have processes in place that work to spot and remedy these instances of excess and waste in the public sector.

The fact is the revenue restrictions amendment is not going to make life in Wisconsin any cheaper for most citizens and it’s only going to make government do less, not work more efficiently.

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