Wednesday, September 19, 2007

Piecemeal Proposals Would Delay Budget

The GOP leadership has caused a bit of a stir in the political media the past couple of days by pulling K-12 education funding and local government aids out of the budget; so far, at least two newspaper editorials have sung the praises of this move.

The Janesville Gazette takes its support the furthest, claiming: "We believe the Republican plan is a smart move, rather than a tactic from the conservative fringe."

I'm not so sure why "a smart move" and "a tactic from the conservative fringe" are the only two options for describing a piecemeal budget; in fact, as I've argued before, I'd say it's a smart move intended to further appease the conservative fringe.

A truly eye-raising part of the Janesville Gazette editorial is when it discusses a meeting the paper had last Friday with two Republican legislators, Reps. Brett Davis (R-Oregon) and Robin Vos (R-Racine).

Davis and Vos peddled the line that a piecemeal budget isn't unprecedented, citing how the 1994 transportation budget and the 1999 education budget were split off from the rest of the budget in those years.

Of course, the 1994 transportation budget was a case of the bulk of the budget being set first -- prior to July 1 even -- and just the transportation section was delayed due to a dispute over the gas tax. And, in 1999, the JFC did set a funding level for K-12 education on October 1 -- a mere two days prior to the agrement on the entire budget -- but, according to news reports, that was just setting the level, not actually passing a bill, which isn't even something the JFC could do on its own.

Why the Janesville Gazette -- as a news outlet that surely covered the budget in those years -- decided not to mention these finer points is beyond me.

But what was most off-the-mark in the editorial was the last line: "The 'Property Taxpayer Protection Act' might be the best hope to force compromise."

This line was echoed in another editorial that praised the GOP's attempt at a piecemeal budget, this one appearing in the Tomah Journal. The title of that editorial says it all: "Republican compromise should pave way for budget agreement."

This assumption is wrong on more than one front.

For starters, until the GOP states its willing to bend on its strict funding cap and "no tax increase" budget pledge, any additional funding for any one piece of the budget simply means there's less remaining for the rest of the budget.

As the LFB found, the piecemeal proposals by the GOP would require $115 million worth of cuts to the rest of the GOP budget or abandoning the "no tax increase" pledge. I'm sure Huebsch & Co. would gladly sit down and find $115 million more to cut, but the point is that by agreeing to the GOP piecemeal proposals without addressing the GOP's strict funding cap, the Dems would be effectively pinning themselves into a corner for the rest of negotiations.

And while K-12 education and local government aids are surely important -- arguably the most important aspects of the budget considering how they affect virtually the entire state directly and through property taxes -- that still doesn't mean the rest of the budget isn't important.

This leads to the second problem with assuming a piecemeal budget will kick-start the negotiation process. Once K-12 funding and local government aids are out of the way, a big chunk of the incentive for GOPers to pass a budget in a timely manner -- or even at all -- is largely out the window.

To be sure, if no new budget passes, funding simply continues at previous year levels. Although there are a few alterations that the GOP was on board with making -- such as the expansion of the state crime lab -- a zero-increase budget is largely what Republicans, particularly the fiscal conservatives, have wanted from the start.

And let's not forget that a flat-revenue budget is exactly what Mark Green ran on during his campaign for governor last year.

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5 Comments:

Anonymous John P said...

Seth:

Why are the republicans the only ones who have to comprimise here? What have the democrats dropped? Do not just blame the republicans here, at least they are trying to do something? The Democrats will not drop any of their major tax increases or HW. It takes two sides Seth.

Also, I seem to recall Jim Doyle saying he was NOT going to raise taxes. Mark Green did not lose because he ran on a flat-revenue budget. He lost because people associated him as being a Bush lackey and was in with the oil companies.

September 19, 2007  
Anonymous Anonymous said...

You've countered your own argument and exposed the Senate Dems...

Schools and locals are the only ones with hard deadlines to face, thus, no need to work quickly once these packages became law.

Funding priorities are still being met under current conditions.

Dem obstinence to piecemealing simply exposes their own knowledge (and by extension, tactic) of using schools and locals as bargaining chips at the budget table.

From here on out, the Dems will be forced to justify all that the state does and their tax increases to fund those programs. Should be interesting...

September 19, 2007  
Blogger Seth Zlotocha said...

John P,

I agree the Dems need to negotiate, which is why I've advocated on this blog dropping Healthy WI from the budget. And, for the record, the Dems have made a number of offers that have included Assembly positions. The WisPolitics Budget Blog has them documented.

As for Doyle, he pledged not to increase income taxes, which he isn't doing. There isn't a statement out there from Doyle saying that he wouldn't increase any taxes in the 07-09 budget (the Doyle quote conservatives were tossing around earlier this year came from the 2003 State of the State address and was in reference to the 03-05 budget, two beinniums ago).

And, you're right, Green didn't lose the election because of his flat budget pledge; but that wasn't my point in bringing it up. My point is that a flat budget -- or largely flat budget, if you take out increases for K-12 education -- is something the GOP wouldn't mind, hence, their lack of motivation to continue seriously negotiating after the piecemeal proposals are passed.

Anon,

K-12 education and local government aids aren't the only pieces of the budget with firm deadlines -- they're just the biggest and, as a result, generate the most attention (i.e., political heat). Higher ed financial aid is another issue that's time-sensitive, just to provide an example, but obviously financial aid for the 4,700 college students currently waiting in limbo doesn't provide as much play for the media as property taxes for every homeowner in the state. Funding for Wisconsin Shares -- the child care subsidy program -- is yet another example.

September 19, 2007  
Anonymous John P said...

Seth:

You are right, he did say he would not raise taxes in 2003, however, he did not say in 2006 that he was going to raise taxes, or go against what he said in 2003. Now it is foolish to think that taxes should never be raised, but a $1.7 billion increase? I do not use the HW tax increase, because it should, if it works as advertised eliminate insurance premiums.

In my opinion, the problem is that the people being elected (on both sides), our ideologically too far to the right and left, and therefore cannot agree on major issues. I would rather see moderate republicans and moderate democrats being elected. Maybe then we could get good policy and budget enacted. This is what happens when special interest groups get too involved in elections.

September 19, 2007  
Blogger Seth Zlotocha said...

I agree we're better off with mostly moderates being elected, particularly considering that Wisconsin, as a whole, is a pretty moderate state.

The thing is, though, Governor Doyle is a moderate Democrat. It's problematic to just throw out $1.7 billion and call it a day. For starters, that's for the entire biennium. Secondly, the vast majority of that increase comes from three places: 1) the hospital assessment, 2) the cigarette tax, and 3) the oil assessment.

The hospital assessment is intended to generate additional federal revenues, which it pretty clearly will, at least in the short term. I have some concerns about it long term, and I know that's something we've discussed before, but the intended goal is still to generate more revenue, thereby increasing Medicaid reimbursement rates and, as a result, decreasing private insurance costs -- which at least one hospital system has said it would do if the assessment passed.

The cigarette tax is intended to help pay for expenses that result from tobacco-related ailments. As Republicans point out, the revenue from this tax should decrease over time as fewer people smoke due to the added costs, but that's really the point. After all, as fewer people smoke -- particularly lower income people who often rely on the state for their health care bills and who studies have shown to be more likely to quit smoking due to cost -- the state will be saddled with fewer payments for tobacco-related ailments.

The oil assessment is the one where I think Doyle reaches. Requiring combined reporting makes more sense, although funding for the transportation fund needs to come from somewhere now that the indexing of the gas tax has been eliminated.

When you subtract those three taxes from the $1.7 billion figure, you’re left with $463 million for the biennium. That’s significant, but I’d argue it’s also in the range of “moderate,” just as the reasoning behind cigarette tax and the hospital assessment are in that moderate range, while the oil assessment -- although arguably a stretch politically -- is largely replacing a mandatory tax increase that ended last spring. So, when you look a little more closely, I don’t think it puts Doyle on the fringe.

September 19, 2007  

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