Our Superficial Public Policymaking

Considering it stands virtually no chance of going anywhere, State Senator Roger Breske (D-Eland) has received a pretty good amount of press (here and here) for his plan to introduce standalone legislation to bring back the hospital assessment.

In his press release, Breske notes the oddness of including a transfer from the patient compensation fund in the budget but not the hospital assessment that would generate millions more in matching federal dollars than it would cost. It would be interesting if his legislation actually includes a provision to dump the patient fund transfer.

Granted, I don't think dumping the transfer would make the bill any more palatable to the GOP Assembly, which is interesting considering how Republicans have gone after Doyle for segregated fund transfers in the past and how much attention the right has given to medical malpractice suits when it comes to rising health care costs.

To be sure, while the patient fund has had an average annual surplus of $130 million over the past two decades, it's been pointed out that a surplus is necessary to keep premium rates down.

As the Journal Sentinel noted yesterday regarding the patient fund transfer, "pulling $200 million from the fund will mean higher premiums going forward." And, as conservatives love to point out, those types of costs on businesses just get passed along to consumers in the form of higher costs.

Yet, in spite of all of this, the GOP leadership agreed to the patient fund transfer relatively early in the negotiation process -- about a month ago, to be exact -- while absolutely refusing to budge on the hospital assessment that would generate more funds than it would require, leading some health systems to pledge to lower health care costs if it was implemented.

This is the result of the budget process becoming about a final overall figure rather than what makes the most sense for the state.

The hospital assessment fell into the $1.7 billion figure Republicans were denouncing since February, and reducing that amount became the goal, which meant that the hospital assessment had to go, especially if the politically safe cigarette tax was going to be the one big tax that was allowed to stay.

The patient fund transfer, conversely, wasn't part of the $1.7 billion, so it wasn't as big of a problem if it stayed, even if it actually does what Republicans wrongly, for the most part, claimed the hospital assessment would do -- increase health care costs.

It's amazing, and quite sad, that the word "tax" is allowed, without much or any consideration for the actual effect, to have such a hold on public policymaking in the state.

-------------

SIDE-NOTE: Just to clarify, I do think the patient fund transfer is a poor public policy choice, but that's separate from the issue of increasing funds for state health care initiatives, which is what the transfer is intended to do. Increasing those funds is a reasonable goal that is worthy of debate, but doing so through a transfer from a segregated fund -- particularly one that isn't funded by public dollars -- is unwise and should be unnecessary.

I don't mean to suggest in this post that it's the job of Republicans to reject a move like the fund transfer -- it shouldn't have been proposed in the first place -- but it is interesting to examine why the transfer wasn't given much or any resistance, while the far more sensible hospital assessment was somehow a deal breaker.

UPDATE: Check out the Recess Supervisor's excellent and interesting take on the Breske bill.

Downplaying and Dramatizing the State Budget

It looks like a budget will be passed today. Estimates are that at least 10-12 of the 52 GOP members of the Assembly will vote for it, which should be more than enough for it to pass, even though it wouldn't surprise me to see Dem Reps. Ziegelbauer and Wasserman vote against it.

In an email to rally the troops, Speaker Huebsch notes the following (emphasis mine):

The [LFB] memo shows that the bipartisan budget agreement increases all funds appropriations 6.6% over the biennium. GPR appropriations increase 6.0%. The increase is not 8%, which has been claimed by the governor and reported in the media.

As a point of reference, the US Department of Commerce recently announced that Wisconsin's per capita personal income grew at 4.6% in 2006. With the growth in all funds spending averaging 3.3% annually, the bipartisan budget agreement appropriates almost 1.3% per year below personal income growth and lives within the taxpayers' means.

Interesting admission considering GOPers typically prefer using inflation as the benchmark for determining "taxpayers' means." According to my math, this new standard of personal income growth means that Doyle's initial budget -- which called for an 8.5 percent increase over the biennium -- also would be within "taxpayers' means."

Who'd of thought that's how Huebsch felt all these months?

Also interesting is the budget coverage in the Journal Sentinel, which cranks up the drama dial in an article on "surprise" fees that made their way into the final budget agreement. Of course, if some consideration was given to services in the article -- a radical thought, to be sure -- the inclusion of the new fee increases might not be such a surprise.

As the JS editorial board astutely noted over the weekend regarding the budget agreement, "questions remain, including how the state will pay for transportation projects that even many Republicans agree are crucial to economic development...."

Ending the automatic gas tax increase last year and axing the oil tax from the budget left a hole in the transportation fund. Fees were a natural place to look to fill it considering how they allow Huebsch & Co. to hide behind the argument that fees go to support "specific services," regardless of the fact that it's a bit of a stretch to claim the actual cost to title a car will truly increase by 86 percent in the coming biennium.

It's beyond me why Huebsch can't just own up to the fact that money is needed for the transportation fund and, call it taxes or call it fees, it's gotta come from somewhere if you want the services.

And while the JS was happy to rile up readers about "surprise" fees on the front page of the main section, those who turned to the front page of the Metro section were treated to an article on how the budget shortchanges local governments, which puts police and fire services at risk.

Is it really too much to ask that the concept of funding and services get put together in the same article on the budget?

Rallies and Real Budget Progress

I'm glad the Recess Supervisor wrote this post and the Brawler wrote this post because together they, more or less, cover my thoughts on the dueling rallies held at the Capitol yesterday.

It was unfortunate to see some of the pro-services contingent use profanity in their chants and one-on-one confrontations with the no-tax increase crowd. There's no excuse for that. But while profanity is certainly less civil, it isn't any more ridiculous or unproductive than the "we pay your salaries" line coming from the no-tax increase side.

Yeah, taxes and fees are used to compensate public workers (along with private workers doing business with the public sector), but that compensation doesn't come as a result of public benevolence, it comes because the workers provide a public service. If you don't like paying for the compensation, then call for cuts to the services (and be specific, preferably), don't hang it over the heads of the people who were offered a job to provide those services.

Meanwhile, the real budget news of yesterday is that discussions of a compromise took some small, but important, steps forward.

Assembly Democratic Leader Jim Kreuser said that making HSAs state tax free is on the table if the GOP supports the hospital assessment, while Rep. Phil Montgomery (R-Ashwaubenon) called together a session with Speaker Huebsch and "a handful of Assembly Republicans who want to find middle ground," a meeting that Huebsch, unfortunately, pooh-poohed as "routine."

Based on what took place on the Capitol steps yesterday and in press releases for the past nine months, though, there doesn't seem to be anything that's routine about genuine intra-caucus meetings aimed at seeking out a middle ground.

SIDE-NOTE: "[A] handful of Assembly Republicans who want to find a middle ground"...what are the others out to find?

UPDATE: Looks like Grumps and I are on the same page regarding the "we pay your salaries" line.

State Budget: What's Next?

As expected, the GOP Assembly shot down the compromise budget. A couple of Dems helped out, including my own representative Sheldon Wasserman.

So, what's next?

According to today's Wisconsin State Journal, "Huebsch said it remains unlikely he could ever accept a hospital tax because he fears it would drive up health-care costs in the long run."

I truly can't figure out the logic behind that claim. But since it doesn't look like Huebsch is going to budge, and the fact is he's the GOP's leader in the Assembly, it's time to start looking at what it would mean to drop the hospital assessment and lower the cigarette tax by 50 cents.

The impact would be on health care initiatives, of course, but the Dems need to ask the LFB for a specific analysis of what would be lost and they need to share that widely with the public.

This may sound trivial, but it would represent a significant shift in the Dem game plan. So far the Dem emphasis appears to be on the effects of not passing a budget. Not a bad line, but it doesn't quite stand up to the "protect the taxpayers" line coming from the GOP.

After all, no budget can be easily framed as a result of the partisan split in the legislature rather than the actions of one particular side of the aisle.

By putting an emphasis on services lost, without abandoning the focus on the need to get a budget passed, the Dems can help remind the public that fiscal policy isn't just a one-sided equation.

Once that view is established, a new budget should be drafted without the hospital assessment and with the lowered cigarette tax. That budget could then go on record as the budget that cut health care initiatives, rather than the one that "protected taxpayers," which is the way the GOP would surely like to frame it.

It's time to get something done, and the Dems have enough votes on the record to demonstrate to voters that they were in favor of passing the health care initiatives but couldn't due to the partisan split in the legislature, which is something that only can be addressed at election time.

The Fight for the Few

It's looking like Speaker Huebsch probably has the votes he needs in the Assembly to shoot down the compromise budget bill, but I'm sure the governor's office is going to be leaning pretty heavily on some Assembly Republicans over the next few days.

The Daily Cardinal highlights Rep. J.A. Hines (R-Oxford) and Rep. Brett Davis (R-Oregon) as two possible GOP votes for the compromise budget, although it seems likely that the Dems will lose at least one vote in Bob Ziegelbauer (D-Manitowoc). Sheldon Wasserman (D-Milwaukee) is the other Dem who signed a no-tax increase pledge, but he has already indicated a willingness to at least vote for the cigarette tax.

That means the governor would still need to flip 1-2 more Republican votes in addition to Hines and Davis, if those two are, in fact, flippable themselves.

Importantly for the governor, the compromise bill is getting some positive press around the state. By rejecting it, the Assembly Republicans risk getting viewed as obstructionists. To counteract that view, the GOP will scream "taxes!" as loud as possible, and the Dems will counter with the other side of the equation -- i.e., what those taxes will fund -- and the fact that not all taxes are created equal in the public eye.

To be sure, increasing the cigarette tax and imposing a hospital assessment to leverage more federal dollars for Medicaid just isn't the same -- for most people, anyway -- as boosting the income tax or the general sales tax.

At the end of the day, if the compromise bill does go down in the Assembly, it's surely going to energize the fiscal conservative base that'll show up for the Americans for Prosperity rally at the Capitol on Wednesday.

But I'm just not so sure the general public is going to look at it with as much excitement and adoration.

The GOP Tightrope Walk Is Getting Shaky

I just don't understand this position:

Huebsch's offer did not include a hospital tax proposed by Doyle. Democrats had hoped Republicans would go along with it after the Wisconsin Hospital Association dropped its opposition last week.

"The hospital tax is just not on the table," Huebsch said. "It's one where we just don't agree with the policy."

The new tax would generate additional federal aid that would fund increased Medicaid reimbursement rates to hospitals. They would receive a net increase of $285 million, most of which would go to Milwaukee-area hospitals.

But Huebsch said the proposed hospital tax was "counterintuitive" because it would be passed on to regular people at a time when everyone wants to reduce health care costs.

Huebsch's argument is what's counterintuitive; that is, if you understand how health care costs operate, and I have little doubt Huebsch is privy to the notion of cost-shifting and the hidden health care tax stemming, in part, from poor Medicaid reimbursement levels. And I'm sure he understands that Medicaid works on a matching system with the federal government, so the more the state puts in the more the federal government puts in.

Connecting these dots to see how the hospital assessment will increase overall funding for Medicaid and, as a result, help reduce the hidden health care tax for people with private insurance isn't a complicated or convoluted venture, and it's certainly not counterintuitive.

So what's the deal?

I'd say it's pretty clear something is getting to Huebsch, who took a lot of flak after reports surfaced that he included the $1.25 cigarette tax in an offer a couple of weeks back.

And with the rally organized by Americans for Prosperity just a week away, I don't see Huebsch making any other meaningful proposals toward a compromise budget in the near future; unless, that is, he wants his name to be the one that's screamed alongside Doyle's on the steps of the Capitol.

That's what makes Doyle's call for a special session on Monday, two days before the rally, such a shrewd political move. It clearly pits the two forces in Huebsch's political life -- the general public and the fiscal conservatives with the microphones (figuratively and, next Wednesday, literally) -- against each other.

The call for a special session has already made a media splash, and it will continue to do so through next week, which will raise the public awareness of the budget even more. This forces Huebsch's hand rather than allowing him to bide time in fruitless closed-door negotiations until after the AFP rally.

As the Recess Supervisor points out, the special session effectively neutralizes any momentum the GOP had after passing its piecemeal bills on K-12 funding and shared revenue last month, and it places the spotlight back on the GOP as the side that's holding up a budget compromise.

Assuming, that is, Huebsch doesn't relent and bring the governor's new budget proposal to the Assembly floor on Monday. Although he's indicated he'd abide by the call for a special session, actually bringing the bill to the floor for a vote would risk watching the 47 Dems grab the few Republican votes needed to actually pass it.

And, if that happens, Huebsch better not find himself anywhere near the Capitol building on Wednesday.

The New Hospital Assessment Is Much Improved

The big news on the budget this morning is the Wisconsin Hospital Association withdrawing its opposition to the hospital assessment that would be aimed at leveraging federal dollars to help increase the Medicaid reimbursement rates hospitals receive.

The Journal Sentinel covers it here, although the Wisconsin State Journal provides a bit more informative of an article here.

I expressed concern about the hospital assessment when it was initially proposed back in February, and that concern was tied to the fact that the plan relied on federal dollars that aren't the most stable; even a slight regulatory change in how the federal money can be spent could tank the entire equation.

That's what makes this new agreement a really good one. Rather than making the assessment permanent, the budget bill would have it expire after the biennium. This alleviates the concern about relying on federal dollars over the long haul.

At the same time, it does require that another potentially contentious debate take place in two years over where to get the money to continue the increased reimbursement rates. And considering the new agreement calls for a fixed assessment rather than a percentage tax on hospital revenue, it's almost certain that more money will be required to sustain the same reimbursement level as health care costs continue to rise.

Of course, a big piece of the puzzle that's still missing is GOP support. According to the WSJ, Speaker Huebsch declined to comment on the new plan yesterday.

An aide to Rep. Steve Nass -- who doesn't have a position in the GOP leadership -- did, however, express opposition to the new assessment plan and display a general lack of understanding about how health care costs operate. According to the aide, the new agreement "doesn't change the equation in that the assessment is still going to be paid by anyone who goes to those hospitals."

Actually, the assessment would very much change the equation, which right now has everything to do with the fact that a significant chunk of health care costs are derived from cost-shifting. Part of that cost-shifting is as result of the uninsured, and part of it is a result of low Medicaid reimbursement rates (Medicare rates are low, too, but not as low as Medicaid).

Here's a chart (page 13) that helps to explain the situation:

(Click for larger view.)

By increasing the reimbursement rates for Medicaid patients, the hospital assessment would be able to pull down the rates paid by the privately insured. In fact, Children's Hospital -- which treats a large number of Medicaid patients as the only pediatric hospital in the Milwaukee area -- has already pledged to decrease health care costs for patients with private insurance if the assessment passes.

Of course, not every hospital would come out in the black. According to the WSJ article:

There would still be winners and losers under the plan, with about 50 Wisconsin hospitals receiving more money under the plan, 23 receiving less, and 72 remaining unaffected, according to figures provided by the Doyle administration. [WHA spokesperson Eric] Borgerding said the number of losers was actually lower, however, since about half of the losing hospitals were part of a hospital network that was an overall winner under the plan.

It's important to note, however, that even those 10-12 hospitals who would see a loss have the advantage of serving a smaller percentage of Medicaid patients, which means their privately insured patients aren't faced with the same cost-shifting that other privately insured patients face.

In other words, there are winners and losers involved in doing nothing, too.

In the end, if Huebsch and the rest of the GOP leadership do still oppose the assessment plan now that even the WHA has stepped out of the way, it'd be really interesting to see the justification. With the practical concerns absent from this new agreement, as evidenced by the WHA removing its opposition, any arguments remaining would have little to stand on aside from ideological purity.

Huebsch Needs Dem Votes...Lots of Them

A Journal Sentinel article this morning on the budget talks highlighted an interesting point.

It's been known that eventually it would happen, but now that Speaker Huebsch has agreed to at least increase the cigarette tax, it effectively neutralizes the 24 Assembly legislators who signed "no-tax increase" pledges, assuming none of them go back on their word.

Twenty-two of those legislators are from the right side of the aisle, which puts the number of GOPers able to vote for a budget compromise at 30 and the number of Dems at 45.

That means Huebsch needs at least 20 Dem votes to pass a budget compromise, and Assembly Democratic Leader Jim Krueser had the perfect response. According to the JS, Krueser said he could deliver those needed votes, but "that the more votes Huebsch needs, the more the budget would have to reflect Democratic initiatives."

It's not too unlikely that Huebsch could lose a few more GOP votes with his agreement on the medical malpractice fund transfer, or any other agreements he might make in the coming weeks, which could bring the total vote tally needed pretty close to an even split between Repubs and Dems in the Assembly.

Considering the Dems will be providing all of the needed votes in the Senate, at least 40 percent of the needed votes in the Assembly (and maybe more), and the governor's signature on a budget compromise, what do you suppose that should mean for the priorities of that budget?

It's becoming pretty apparent why Huebsch and the other GOP leaders cringed when those pledges were making the rounds last spring.

UPDATE (9/29): From today's JS:

Twenty-five Assembly Republicans have signed pledges saying they would not vote for tax increases, though two of them - Rep. J.A. "Doc" Hines (R-Oxford) and Rep. Eugene Hahn (R-Cambria) - said Friday they could tolerate a budget that raised the cigarette tax. Seven others said they would not. The remainder could not be reached or said they would have to see the overall package.

Two said they would vote for increased taxes, and others said they'd consider it? I'm just not following the political logic on this. Why would you sign a pledge to do something in an attempt to curry political favor, and then announce your willingness to go back on your word less than 6 months later?

Oh, well, it's their re-election...

But this does change the equation a bit by at least giving Huebsch a few more willing GOP legislators to work with when trying to pull together a vote on a compromise budget.

More on the Milwaukee-Madison Divide

The Journal Sentinel is running another story this morning on the economic divide between Milwaukee and Madison.

At the center of it, once again, is UW-Madison. As an example of how the Madison economy has grown since the 2001 recession, the article notes:

The local GDP data was compiled by the Bureau of Economic Analysis based on information from individual business establishments.

When they were gathered in 2001, Virent Energy Systems Inc., Madison, contributed nothing because it did not exist.

It was started in 2002 to work on making fuels and chemicals from sugars, using technology developed at the University of Wisconsin-Madison, said Eric Apfelbach, president and chief executive officer. By 2005, it had 18 employees and added half a million dollars in sales to Madison's GDP. Now, it employs 60, has sales of about $4 million and just raised $21 million in venture capital.

"All that money comes into town from out of town and pays for salaries and contractors and leases," Apfelbach said. "These high-tech start-ups that can raise venture capital are really economic multipliers."

It was essentially the same story that the JS ran last December, except that one was based on a Wisconsin Taxpayer Alliance report on the growing income disparities between Milwaukee and Madison.

According to that article:

Madison has some "built-in advantages," such as the major research center of the University of Wisconsin-Madison and that it's the state capital, said Ryan Parsons, a research associate for the Wisconsin Taxpayers Alliance.

"But I think what Milwaukee needs to do if it wants to regain some of that balance that was lost in the last 50 years is more of a focus on education and retaining good college graduates," Parsons said. "One of the reasons Madison has such an edge over Milwaukee is having people who can fill high-tech science research jobs. A lot of that work force is missing from a city like Milwaukee."

When commenting on this article back in December, I concluded that reports like this "need to be kept in mind come budget time."

So here we are with a similar report that's released in the midst of budget talks, and part of what's on the table in those talks is the UW System's Growth Agenda, which includes provisions for both expanding the number of graduates and funneling money into the development of research capacities at UW-Milwaukee and the other campuses.

In spite of all the public squawking politicians on both sides engaged in regarding the differences over K-12 education in the budget, it's really higher education where the true budget differences exist. To be sure, the biggest difference between the Dem budget and the GOP budget on K-12 education is where the money should be spent.

In terms of higher education, on the other hand, the two sides are closer to $100 million apart on how much should be funded in the first place, including around $10 million that was dedicated specifically to enhancing the research proposals focusing on engineering and biotechnology made by Chancellor Santiago for UW-Milwaukee.

Part of the problem is how the two sides are discussing the funding issue. On the GOP side, funding is discussed as if it's just aimed at an operating budget to keep the UW System afloat. The talk is about what the UW System needs.

And that fits with the Assembly budget proposal for the UW. As the Dems have rightly pointed out, the $62 million increase for the UW budget that the GOP has proposed would only leave around $6 million in truly new funding outside of what is needed to pay off bonds and increased utility bills.

But, the thing is -- and the reports outlined above support this -- the funding for the UW System doesn't stop with the UW System. Funding for the UW System isn't just paying for stuff, it's also investing in a state resource that has a proven track record of driving and, just as importantly, transforming the economy in this state.

And attacking these investments as nothing more than money grabs isn't providing any real "protection" for the taxpayers, particularly in the long run.

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.

A Piecemeal Budget Avoids the Big Picture

A few thoughts on the GOP proposal to split funding for K-12 schools, tech colleges, and shared revenue from the rest of the budget.

For starters, it's probably the best option Republicans have politically-speaking. Once those parts of the budget are out of the way, thereby neutralizing much of the general public's concern over the budget, the GOP wouldn't have any trouble holding firm to most of its other demands to please its fiscal conservative base.

That said, it would be foolish for the Dems to go along with it, which explains why both Doyle and the Senate leadership have already rejected the idea outright.

But even beyond making sense in political terms, rejecting the idea also makes sense in policy terms.

To be sure, from the beginning of budget talks -- even before the conference committee took up deliberations -- the GOP has demanded a "no tax-increase" budget with a strict cap on total funding. Until that stance is addressed, there is simply no way the Dems can know what they're agreeing to on any individual piece of the budget.

Take the K-12 budget as an example. While total K-12 funding was about the same under the Dem budgets -- the governor's and the Senate's -- and the GOP budget to start, there was a significant difference in where the money was being spent. The Dem budgets put about $85 million more into general school aids, while the GOP budget put $100 million more into the school levy credit. You can read more about the differences in those choices here.

But the standalone proposal that the GOP is putting forward now includes the general school aid amount proposed by the Dems and the school levy credit amount proposed by Republicans. There are some cuts to categorical funds in the new GOP proposal, such as (unfortunately) a grant to help develop more K-4 programs in the state, but a funding difference still exists.

So unless the GOP has also announced a willingness to bend on it's "no tax-increase" policy and strict funding cap, it means that the extra funding is going to need to come out of somewhere else; yet, "somewhere else" is nowhere to be seen.

In other words, while the GOP may be mostly agreeing to the Dem proposal on K-12 funding -- as Speaker Huebsch has stressed for the media in recent days -- unless they're also bending on their strict stances on overall funding, it just means they're going to agree to even less down the line.

And therein lies the difficulty with piecemeal budgets, which is why state budgets -- at least in Wisconsin -- simply don't get passed that way (the feds have the comfort of same year deficit spending).

In fact, the last time it happened, according to LFB chief Bob Lang, was in 1995, and that was a case where the vast majority of the budget was passed on June 30, and just the transportation budget was held back due to some disputes over the gas tax.

That's notably different than the current situation where the proposal is to pass a few sections of the budget first -- in mid-September, no less -- and leave the rest for...well, whenever.

UPDATE: The LFB finds that 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.

Time to Pull Healthy Wisconsin from the Budget

The budget impasse is starting to make an appearance in the media -- see here and here -- as the summer comes to a close and schools begin to start-up. And the distinct flavor of the media coverage is shared guilt between Dems and GOPers for the stalling.

This is notably different than the way conference committee deliberations started off. After the Assembly released its budget in July, media accounts -- see here and here -- held that an impasse was likely because of how distant the Assembly budget was from the other three versions released up to that point (the Senate version was different in terms of total spending, but that difference was entirely due to the Healthy Wisconsin proposal).

From a political perspective, recent media accounts suggest that the Dems have largely lost that upperhand when it comes to focusing blame for an impasse on the GOP.

That being the case, the Dems need to find some way to jump start negotiations and regain some form of an upperhand -- not only because it will benefit them politically, but also because it's just time to get something accomplished with the budget.

And as much as I want to see fundamental health care reform get passed in Wisconsin, everyone has always known that 2007 isn't the year it's going to happen, which means it's time to pull Healthy Wisconsin from the budget.

Adding the proposal to the budget -- although certainly questionable in terms of timing -- has encouraged this state to both heighten and broaden the discussion of health care reform in important and positive ways. But that aim has run its course, and a plan like Healthy Wisconsin could now serve as much good in terms of raising awareness and furthering discussions as a standalone bill as it does in the budget.

If Healthy Wisconsin is pulled from the budget, the Dems could use the move as leverage to retain BadgerCare Plus, which is a solid short-term plan, along with a variety of other proposals included in the JFC budget and the governor's budget as well as focus public pressure on the GOP to also move to the middle with its positions.

The turn from restless to impatient is clearly coming in the media coverage of the budget, and just as it's in the best interest of the state to get something accomplished, it's in the best interest of the Dems to be ahead of the curve rather than being pulled under it.

The Budget is Halfway Done!

Or, to put it more accurately, it's not even close to being finished.

Assembly Speaker Mike Huebsch has been going out of his way at conference committee hearings to stress for the media in the room that 571 items have been agreed upon, which must mean serious progress has been made. Of course, those 571 uncontroversial items represent only 2 percent of the budget in terms of total dollars.

This suggests, to me, a couple of things.

First, the Dems went into conference committee deliberations with a much stronger hand than the GOP. The Assembly budget took a whooping in the press not only because of its positions, but also because of how drastically it differed from the budget that came out of the JFC.

A GOPer might respond that the JFC hearings were skewed to favor the Dems since a split vote sided with Doyle's budget. That's true, but that's also fair considering Dems control two out of the three budget pieces.

And, the fact is, Huebsch & Co. on the conference committee wouldn't even agree to the hundreds of proposals that passed the JFC with support from at least half of the GOP delegation, which is a clear testament to how far the Assembly budget strayed from the little progress that was made during the JFC portion of the process.

Plus, the bottom line for the point is that the public perception -- I happen to think it's accurate -- is that if the budget is delayed, it's the Assembly that's delaying it because of its outlandish budget positions, which is why Huebsch is so focused on stressing glass-is-half-full lines that don't really add up to significant progress.

The second thing these lines suggest is that the GOP isn't in all that much of a hurry to pass the budget. On the surface, this point may not seem to fit with the last, but it becomes clearer when you think of it in terms of two constituencies the GOP is trying to juggle.

On the last point -- the point of progress -- the GOP is aiming to pacify the feelings of the public at large. On the second point -- the point of putting up a fight -- the GOP is aiming to please the demands of its base, specifically the fire-breathing fiscal conservative base that resides most heavily in the SE part of the state.

The longer the GOP can hold out on the budget, the happier the base will be that it's sticking to its zero-tax-increase pledge. But, of course, it's a tightrope walk since the GOP doesn't want to simultaneously give the appearance that it's stalling progress.

This is largely the same tightrope walk that Mark Green tried to navigate in last year's gubernatorial election, and it was surely a big reason he wasn't able to craft a central message that could drive his campaign (of course, it didn't help that the Doyle campaign drove home the "Green is extreme" message perfectly, which prevented Green from making effective pleas to the public at large while simultaneously exciting the base).

I'd be surprised to see the GOP Assembly succeed where Green failed, especially since time is quickly running out. As Rep. Jeff Fitzgerald (R-Horicon) has said on more than one occasion about the budget, "I've got all summer. This is the only thing we have to pass."

Although the last day of summer is officially September 22, most tend to associate it with Labor Day weekend, which gives the conference committee three short weeks -- and meeting 1-2 times per week means they're really short -- to work something out before the kids go back to school and more folks start paying attention to what the heck is taking so long at the Capitol.

The GOP's School Funding Shell Game

***UPDATED BELOW***

When the GOP budget was being debated on the Assembly floor earlier this week, Rep. Sondy Pope-Roberts (D-Madison) commented on the cuts to K-12 education in the budget, and Rep. Brett Davis (R-Oregon) responded that the GOP proposal includes $464 million in new money for schools while Governor Doyle's budget only includes $448 million.

Really? Well, it depends on how you define "money for schools."

According to a LFB memo released yesterday, it's true that the GOP budget spends $16.3 million more in what's typically defined as "support of K-12 education." But, at the same time, the GOP budget would actually send $83.7 million less to schools than the governor's budget.

The issue is that state support of K-12 education comes in four ways:

1. General school aids
2. Categorical aids
3. School levy tax credits
4. State residential schools

The GOP budget and Doyle's budget spend the same on state residential schools and virtually the same on categorical aids (the GOP budget spends $1.6 million more). On general school aids, however, Doyle's budget spends $85.4 million more than the GOP budget, while on school levy tax credits, the GOP budget spends $100 million more than Doyle's budget.

That all washes out into a $16.3 million lead for the GOP budget; but, the thing is, school levy tax credits aren't actually spent on the schools. These are payments made to municipalities based upon a formula that considers (see page 33) a municipality's three-year school levy average in relation to the average statewide municipal three-year school levy average.

The municipalities then pass this credit on directly to their property taxpayers; none of it goes to the school districts. So the $100 million more that the GOP budget spends on the school levy tax credit than Doyle's budget is really a property tax cut, not an increase for the schools.

And that's fine; in fact, I'm sure most property taxpayers would cheer it on the surface. Except it's not funding for schools, as Rep. Davis and other conservatives have made out, and the fact is the bulk of that $100 million is coming on the back of $83.7 million less in overall state aid to schools.

It seems the GOP wants to have its cake and eat it, too, on this one. But, as with trying to eat a cake twice, you just can't take credit for cutting costs and improving on the services that those costs would've funded.

UPDATE (7/16): I was wrong. The shifting of funds from general aids to the school levy credit in the GOP budget wasn't an attempt to short K-12 education as a whole. Based upon my understanding now, the effect actually will be to short property-poor districts and benefit property-rich districts based upon the way the levy credit is dolled out in relation to the distribution formula for equalization aid.

Check out the comments for more.

Scott Walker's Measured Take on the Budget

I was wondering how Milwaukee County Executive Scott Walker was going to respond to the shared revenue and other county aid cuts in the Assembly GOP budget. Here it is, in its entirety:

Both the Assembly and Senate versions of the state budget have items that are good and bad for Milwaukee County. Now, I want to encourage the members of the Conference Committee to do more for local governments than just create a committee on mandates. We need relief from state mandates or the resources to meet them during the next two years, specifically in areas like juvenile justice and mass transit.

I can't blame Walker for the ambiguity or brevity. Milwaukee County arguably has more riding on this budget than any county in the state due to its tenuous fiscal position, and it isn't difficult to see that the budget passed by Walker's own party would only add to the problems.

The "do more for local governments than just create a committee on mandates" line is the only explicit shot at the GOP budget, but the lack of details about what's good and what's bad about each version speaks volumes.

If Walker wasn't a GOPer with aspirations for running the party from the governor's mansion someday, you have to imagine he'd have a little more to say about decisions that could either help float or help sink the county he's running today.

Assembly GOP Budget: Mission Accomplished

If I can pass a budget in the Assembly that has no tax increases, I will certainly go to the conference table and show them how we can do it.
- Assembly Speaker Mike Huebsch

Our focus was to make sure Wisconsin had a no-tax budget; we met that goal.
- Assistant Assembly Majority Leader Mark Gundrum

Well, the state GOP now has its show budget. It's one Republicans can trundle out to the fire-breathing fiscal conservatives as a sign of good faith. But the bulk of it isn't going to stick.

Sure, a handful of Republicans in the Assembly will hold out for a budget like this one, but enough will ultimately side with a budget that looks far more like what came out of the JFC last month.

All in all, the Assembly budget doesn't include much that wasn't expected. When you need to cut $1 billion to meet a self-imposed goal, not many stones are going to be left unturned.

Working from the budget that passed out of the JFC, the GOP cut K-12 funding by $85 million, the UW budget by over $100 million, shared revenues to local governments by $58 million, county circuit court support by $19 million, county youth aid by $27 million, low income child care subsidies by $52 million, Family Care for the elderly by $61 million, and those are just some of the big ones.

Dozens of other areas have tens of thousands to millions cut from their funding, such as $8 million from public radio and television, $1.2 million from the state's child abuse prevention program, $3 million in grants to community health centers, and $3.2 million from the school breakfast program.

And there are policy items galore, ranging from altering state laws on self-defense to pushing abstinence-only education to naming a major stretch of US Hwy 14 after Ronald Reagan.

I could go on and on.

But, of course, none of this is worth getting worked up about, although it is an interesting glimpse into what the actual budget could've looked like if Mark Green was elected last November and the GOP would've held onto the Senate.

Nevertheless, in the end, the Dems will drop a couple of big ticket items such as the Healthy Wisconsin plan and perhaps the oil company assessment, and the GOP leadership will back away from the vast majority of their proposed cuts.

And, once the ink is finally dry, we can all sit back and watch some football. Let's just hope it's not the playoffs.

UPDATE: Righty Jo Egelhoff of FoxPolitics.net on the long-term impact of the Assembly budget:

The Assembly budget ends in 2009 with a paltry surplus of $5.6M – including $0.00 proposed for what is currently a required $65M rainy day fund. Compare that to the Senate budget, ending 2009 $180.7M in the black, including a rainy day fund of $130 million.

The Fiscal Bureau is still massaging the numbers a bit, but the structural deficit in the Assembly budget is over $900 million! $900 million that’s directed to be spent in this biennial budget, but to be paid in July, 2009, a brand new budget year. What a mess. The structural deficits projected in the Governor’s, JFC and Senate budgets were bad enough – but “just” in the $700M range.

It isn't difficult to picture the GOP leadership crawling to the finish line when crafting this budget. After scrapping together enough cuts to reach the bottom of the $1 billion crater required for a no-tax-increase budget, there just wasn't anything left to dice up for a healthier long-term outlook.

Why No GOP Budget?

Initially, Assembly Republicans were scheduled to release their version of the budget today. But late last week, after the close of the "working groups" that members broke into to discuss the budget, a decision was made to postpone the release until next week.

Hmm. Maybe I'm just reading into it, but I keep coming back to something the Recess Supervisor wrote about a week and a half ago (emphasis mine):

Word is the informal target for the Assembly Republican working groups looking for budget cuts is around $800 million - $1 billion. The Governor's budget rang in at just over $58 billion (excluding bond revenue), which means that the fierce fiscal hawks of the Assembly are trying to come up with a whopping 1.5% in cuts - and so far, they're mostly failing. There are some working groups in the Assembly that feel they shouldn't have to cut anything, some members have resigned from their working groups in protest, and still others have reportedly offered - get this - spending motions. Tuesday's closed caucus should be a real hoot.

I'm not sure where the "word" was coming from, but, if accurate -- and the delay seems to support it -- it sounds to me like Assembly Republicans are engaged in an intense reenactment of their TABOR battles from last spring.

I hope they're able to finish in time for parade duty tomorrow.

Health Care Reform in the Budget

It appears the Senate Dems are getting set to include fundamental health care reform in the version of the state budget they pass in the coming weeks.

The GOP is attacking this move because it won't guarantee public hearings on the plan. On the surface, Republicans have a point. Something as significant as health care reform deserves to go under public scrutiny (real public scrutiny, not the conveniently-orchestrated stuff). Republicans clearly aren't interested in repeating another situation like we had with the Milwaukee school voucher program where a major public policy was passed through the budget without a single public hearing.

But, on the other hand, the Dems spent the entire spring bringing their three health care reform plans before the public in countless cities and towns throughout the state, and the plan that's going to be in the budget is an amalgamation of those plans and the input lawmakers received from the public hearings on them.

Plus, the Dems freely admit that fundamental health care reform is not going to be a part of the final budget that gets signed by the governor. It's not like they're going to stall the budget until they get their way; I mean, who does that?

Fundamental health care reform is going to need to wait until the Dems control the Assembly, the Senate, and the Governor's office. Before then, it doesn't matter if the bill is a standalone or part of the budget, it's just not going to pass.

Including the reform plan in the budget does, however, have one important difference than simply introducing it as a standalone bill: media coverage.

The media -- at least the political media -- is going to be all over the budget for the next few months, especially considering how contentious the talks will be between the Democratic Senate and the Republican Assembly. Tossing fundamental health care reform into the mix is sure to bring it a decent amount of press, as opposed to the cricket chirps that accompanied all three standalone measures the Dems introduced during the last legislative session.

In the end, though, this is just a set-up year. Next year the task will be to leverage the lack of health care reform -- among other points -- in the election. And, if all goes well, fundamental health care reform will be in a position to make it all of the way through the next budget process (with its own public hearings, of course).

GOP to Force a Mark Green Budget

A little over a year ago, while campaigning for governor, Mark Green made a pledge to freeze state spending levels in the '07-'09 budget if he was elected.

Many observers didn't put much stock in Green's pledge considering he also pledged to decrease revenues through tax cuts and increase costs through some new programming, most of which was never detailed. All-in-all, the Journal Sentinel estimated that Green would've needed to cut state operations by over $1 billion to make all of his pledges work.

But even though Green lost the November election by around 160,000 votes, it looks like his campaign promise for a frozen state budget might come true, at least for awhile. Assembly Speaker Mike Huebsch (R-West Salem) has been making the media rounds to tell everyone about the possibility of a budget impasse over new tax revenues in the budget that made it out of the JFC last week.

I tend to agree with the Recess Supervisor that stalling the budget process is going to create significant PR problems for the state GOP. Those on the right side of the blogosphere will almost certainly celebrate the move, but they're also the ones who enthusiastically supported TABOR and Mark Green's candidacy.

Although much of the state surely doesn't like the idea of tax increases, they also won't like the idea of risking important public services on the grounds of maintaining ideological purity. For most people, there's a balance that needs to be made between what they pay and what the public gets back in return. This is a balance that's completely ignored by one-sided arguments for either increased services regardless of cost or -- the avenue the GOP is heading down -- one-sided arguments for tax freezes regardless of services.

But, then again, Huebsch really isn't talking about a true freeze, certainly not in the way that Green talked about a freeze that wouldn't even touch normal revenue growth.

Huebsch has raised the prospect of passing a budget for some big ticket items, like schools, while holding back the rest, and he's suggested that while the Assembly budget will include no tax increases, fee increases -- which amount to a little over $270 million in the governor's budget -- are still very much on the table (much to the chagrin of the fiscal conservative base).

Nevertheless, it's still going to be a tightrope walk for the GOP leadership. Even setting schools aside, there are still a number of other issues ranging from child care subsidies for low income families to GPS tracking of sex offenders to health coverage for all children through BadgerCare Plus to expansion of the state crime lab, among many more, that will remain stagnant until a budget passes and become jeopardized unless a budget passes that includes adequate funding.

And, even more than that, what's probably most detrimental to the GOP heading into this confrontation is that it will be perceived as fighting for ideology above all else.

The language will be populist -- "The taxpayers can't afford it" -- but the overriding perception still will be that Republicans are standing in the way of funding necessary and popular services since the GOP formula for what the taxpayers can "afford" doesn't ever actually consider the "it" portion of that ambiguous tag line.

School Voucher Funding: The Circus is in Town

UPDATED BELOW

Last winter, Milwaukee Mayor Tom Barrett proposed increasing state funding for new voucher students so that Milwaukee taxpayers would pay the same amount for those new voucher students as they do for MPS students.

At the time, the governor and Republican legislative leaders agreed with Barrett in principle, but said that the funding fix would need to wait until the 2007-2009 biennial budget.

Fast-forward to this winter, Governor Doyle included in his '07-'09 budget proposal the exact funding fix that Mayor Barrett asked for last year. However, now Mayor Barrett and other leaders in Milwaukee feel that plan doesn't go far enough and want the funding fix to apply to all voucher students, not just new ones, a decision that's helped to split the Dem position on the issue and create a space for the GOP to play it like a political fiddle.

Republicans on the JFC let out word that they were prepared to support the plan to have the fix apply to all voucher students, but they didn't want to actually make the motion during budget deliberations. Dem legislator Pedro Colon was expected to raise it, but he didn't because JFC co-chair Russ Decker (D-Weston) told him that doing so would cost Milwaukee other funding proposals.

As a result, the Doyle proposal made it through the JFC intact. However, some predictions are that Doyle's proposal may get axed in conference committee, possibly because outstate Dem legislators, like Decker, aren't too fond of the voucher program to start, while Republicans -- who do support the voucher program -- don't really care if Milwaukee residents need to pay more for it.

To be sure, while Republicans on the JFC pledged to support the more expensive (for the state, that is) proposal to fix the funding flaw for all voucher students, they also all voted against the less expensive proposal by Doyle to only have the fix apply to new voucher students.

Why? Well, in the end, Republicans are more than happy to feed a situation that has the Dems fighting amongst themselves to the point that the voucher funding comes out of the budget in the same form that it went into it: inequitably. And the Dems, apparently, are more than happy to go along with it.

Oh, and to top it all off, some expect that those other Milwaukee funding proposals -- the ones Colon was trying to protect in the JFC budget deliberations by not proposing the funding fix for all voucher students -- may get cut, anyway, in conference committee.

Too bad the Ringling Brothers already have the copyright on that "Greatest Show on Earth" line.

UPDATE: I received a note from Mayor Barrett's office today clarifying that the mayor's position always has been that fixing the funding flaw for new voucher students was a minimum fix.

This is a distinction worth noting because it suggests Barrett's position didn't change, exactly, but rather he viewed his proposal last winter as a start to correcting the funding flaw, which is a position backed by comments Barrett makes in this Journal Sentinel article.

That said, the effect of the situation is still the same -- the GOP is gladly exploiting a rift in the Dem position on fixing the funding flaw. It's just that the rift is more a result of proximity to Milwaukee than political shifting, as I made out in the post.