Identified as one of nine states most similar to California in terms of budget crisis
Rep. Robin Vos
Recognizing that while California may be in a league all its own when it comes to the severity of the fiscal crisis it faced when developing its budget earlier this year, The Pew Center on the States still sought to identify other states that closely resemble California in terms of the severity of budgetary crisis. The report, released last week, and entitled Beyond California: States in Fiscal Peril, identified Wisconsin as one of nine “states to watch”.
In the executive summary, researchers write:
“To most, Wisconsin does not seem to have the same problems managing its money as California, its dairy rival. But the recession has hit Wisconsin harder than most state governments, especially when it comes to lost tax revenues and the size of the hole in its budget. On top of that, unemployment is climbing as the state’s largest sector – manufacturing – sputters. Wisconsin’s history of budget shortfalls and pattern of borrowing frequently to cover operating expenses, among other measures, made it poorly positioned to weather the most recent severe economic downturn.”
The report takes an in-depth look at each state and reports on major occurrences that lead to fiscal peril, but says the “key takeaways”, or common threads, that lead to the most severe problems were:
Unbalanced Economies: In other words, an over-reliance on a single industry. In Wisconsin, that would be manufacturing. In Michigan, the auto industry.
Revenues and Expenditures out of Alignment: This has been the case in Wisconsin for a number of years and was only magnified as the economy underwent a major downturn. This lends credence to what many of us have been saying for years: “Wisconsin’s problem isn’t that we tax too little, it’s that we spend too much.”
Limited Ability to Act: This particular thread may not be so common in Wisconsin. Some states, according to Pew, find themselves in a bind when they have provisions that limit them to raise revenue. Some states found themselves subject to revenue caps, mandatory referenda before raising taxes, or preprogrammed Medicaid and education spending. I would argue that these are not bad things after seeing how easy it was for Wisconsin’s Democrats – absent the spending controls mentioned above – to simply raise taxes by $5 billion this year.
Putting Off Tough Decisions: This includes delaying payments for programs into the next biennium, borrowing heavily as a temporary band-aid, or simply using accounting gimmicks for the appearance of a balanced book.
On a scale of 1 to 30, with 30 being the worst (California’s score), Wisconsin was given a score of 22, tying Illnois for 9th worst fiscal mess in the country. In the in-depth analysis, writers cite Wisconsin’s huge unemployment rate and loss of 140,000 jobs, its penchant for shifting money around (borrowing over $1 billion from the transportation fund in past years, for example), and failing to put money aside before the recession hit, as the biggest contributors to Wisconsin’s fiscal peril.
The report quotes UW Madison applied economics professor, Andrew Reschovsky, who says, “The budget would have fallen short even without the national economic crisis”.
Mordecai Lee, former Democratic state legislator, and well known government affairs professor at UW Milwaukee added: “It’s practically a textbook case of how not to engage in fiscal policy and budget making. Structurally, we are around the corner of becoming like California…In the next cycle we will be like California.”
Scary news, to be sure. So you might ask: “How did the administration react to this news?” Click here to read their press release and a short commentary on the release written by the MacIver Institute.
Basically, the Department of Administration refuses to even acknowledge there is a problem, paints a rosier unemployment picture than is accurate, and points to the inane talking point they’ve been hanging on to since July, which is that they finished the budget on time for the first time in 32 years. (I’m really sure unemployed Wisconsinites everywhere take enormous comfort in that particular fact).
As a result of this response, the Pew Center issued this release the next day, defending its assertion that Wisconsin is in serious fiscal peril.
While this is terribly unsettling news, I’m glad that an independent research group is finally supporting what Republicans have said all along: Wisconsin might have been able to better weather the recessionary storm had Governor Doyle not used the last six years in office to drive the state into financial ruin, and set it up for a fiscal crisis comparable to that of California.
Wisconsin Makes Another Top Ten List
By The Racine News TeamIdentified as one of nine states most similar to California in terms of budget crisis
Rep. Robin Vos
Recognizing that while California may be in a league all its own when it comes to the severity of the fiscal crisis it faced when developing its budget earlier this year, The Pew Center on the States still sought to identify other states that closely resemble California in terms of the severity of budgetary crisis. The report, released last week, and entitled Beyond California: States in Fiscal Peril, identified Wisconsin as one of nine “states to watch”.
In the executive summary, researchers write:
“To most, Wisconsin does not seem to have the same problems managing its money as California, its dairy rival. But the recession has hit Wisconsin harder than most state governments, especially when it comes to lost tax revenues and the size of the hole in its budget. On top of that, unemployment is climbing as the state’s largest sector – manufacturing – sputters. Wisconsin’s history of budget shortfalls and pattern of borrowing frequently to cover operating expenses, among other measures, made it poorly positioned to weather the most recent severe economic downturn.”
The report takes an in-depth look at each state and reports on major occurrences that lead to fiscal peril, but says the “key takeaways”, or common threads, that lead to the most severe problems were:
Unbalanced Economies: In other words, an over-reliance on a single industry. In Wisconsin, that would be manufacturing. In Michigan, the auto industry.
Revenues and Expenditures out of Alignment: This has been the case in Wisconsin for a number of years and was only magnified as the economy underwent a major downturn. This lends credence to what many of us have been saying for years: “Wisconsin’s problem isn’t that we tax too little, it’s that we spend too much.”
Limited Ability to Act: This particular thread may not be so common in Wisconsin. Some states, according to Pew, find themselves in a bind when they have provisions that limit them to raise revenue. Some states found themselves subject to revenue caps, mandatory referenda before raising taxes, or preprogrammed Medicaid and education spending. I would argue that these are not bad things after seeing how easy it was for Wisconsin’s Democrats – absent the spending controls mentioned above – to simply raise taxes by $5 billion this year.
Putting Off Tough Decisions: This includes delaying payments for programs into the next biennium, borrowing heavily as a temporary band-aid, or simply using accounting gimmicks for the appearance of a balanced book.
On a scale of 1 to 30, with 30 being the worst (California’s score), Wisconsin was given a score of 22, tying Illnois for 9th worst fiscal mess in the country. In the in-depth analysis, writers cite Wisconsin’s huge unemployment rate and loss of 140,000 jobs, its penchant for shifting money around (borrowing over $1 billion from the transportation fund in past years, for example), and failing to put money aside before the recession hit, as the biggest contributors to Wisconsin’s fiscal peril.
The report quotes UW Madison applied economics professor, Andrew Reschovsky, who says, “The budget would have fallen short even without the national economic crisis”.
Mordecai Lee, former Democratic state legislator, and well known government affairs professor at UW Milwaukee added: “It’s practically a textbook case of how not to engage in fiscal policy and budget making. Structurally, we are around the corner of becoming like California…In the next cycle we will be like California.”
Scary news, to be sure. So you might ask: “How did the administration react to this news?” Click here to read their press release and a short commentary on the release written by the MacIver Institute.
Basically, the Department of Administration refuses to even acknowledge there is a problem, paints a rosier unemployment picture than is accurate, and points to the inane talking point they’ve been hanging on to since July, which is that they finished the budget on time for the first time in 32 years. (I’m really sure unemployed Wisconsinites everywhere take enormous comfort in that particular fact).
As a result of this response, the Pew Center issued this release the next day, defending its assertion that Wisconsin is in serious fiscal peril.
While this is terribly unsettling news, I’m glad that an independent research group is finally supporting what Republicans have said all along: Wisconsin might have been able to better weather the recessionary storm had Governor Doyle not used the last six years in office to drive the state into financial ruin, and set it up for a fiscal crisis comparable to that of California.
State Representative Robin Vos
Posted @ 1:00 p.m.