Thursday, April 27, 2006

Cap on the State Isn’t Only a Cap on the State

The Milwaukee Journal-Sentinel is reporting this morning that GOP members of the Assembly may need to fall back on an amendment that only restricts state government spending in Wisconsin in order to get something passed today.

The JS article repeatedly uses the word “spending,” although every other constitutional amendment proposed this year puts a cap on revenue. Since this fallback amendment hasn’t yet been made public -- with only hours to go before the vote -- there’s no way to know for sure what it really caps.

Assembly Speaker John Gard claims that if the fallback amendment passes, it wouldn’t be perfect but it nevertheless “would be a victory.” No word yet on whether the megaphones of the far fiscal right agree with that assessment.

But it’s a joke to think that by only capping the state government it leaves local governments alone. Anyone with the slightest understanding of public finance knows that local governments in Wisconsin thrive on state aide. Counties, municipalities, and school districts all rely on it.

If state government revenue or spending is restricted, it will inevitably limit the funds available for local governments -- not to mention increase the likelihood that the state will pawn off more unfunded (or underfunded) services onto local units.

The first reaction might be that local governments will simply raise revenues through avenues like property taxes to compensate for the loss.

While that may happen to a certain extent, there are statutory caps on property taxes already in place for local governments, which makes fully compensating for decreased state aide and increased state mandates highly unlikely.

And the Republican-controlled legislature could always work to tighten those statutory caps, if desired, to include such revenue streams as fees and assessments.

In other words, by passing a constitutional cap on state revenue or spending along with a couple other statutory laws, the GOP could still get the amendment of its dreams -- or at least the dreams of the far fiscal right segment of the party.

But, of course, even if a state cap passes one session of the Assembly, there’s no guarantee it’ll make it through the more moderate State Senate, let alone through a second session of both houses.

However it works out, one thing’s for sure: Our state Assembly is getting set to vote on some amendment today that takes the bold move of writing broad and restrictive fiscal policy into the state constitution.

But as I write this post, neither I nor anyone else in the public is aware exactly what that amendment will look like. Heck, there’s a decent chance the legislature doesn’t know either.

Does that sound wrong to anyone else?

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