In This Issue:
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1. Deficit Deja Vu
2. Double Tsunami
3. Jumping Ship
4. Guilt by Association
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Deficit Déjà Vu
 Last week, Governor Jim Doyle announced that Wisconsin would be facing a $3 billion deficit in the next biennium, if the economy continues its current trend downward. Of course, Doyle announcing that his previous budget is out of balance is like the leaves turning orange and falling off the trees – it happens on a regular basis.
What Doyle doesn't mention is that the budget he signed into law last November had a structural deficit of almost $1.7 billion. So the economy may be less to blame for the shortfall than Doyle. For years, Wisconsin has operated with virtually zero budget reserves or rainy day fund, while other states average between 5 and 10 percent of general fund expenditures for an event like Wisconsin may soon face.
In April of this year, Doyle and the Legislature had a chance to balance the state’s books and put it on solid fiscal ground. Instead, they passed a budget “repair” bill that actually made the structural deficit worse. The bill utilized budget accounting tricks like delaying school aid payments, raiding state segregated funds, and using debt to finance ongoing expenditures.
Naturally, Democrats have already indicated a willingness to raise taxes in the next budget to make up the difference. In the previous budget, Assembly Republicans were able to stave off tax increases on gas and hospitals, which would have hit working people directly in their (front) pockets. Make not mistake about it. The liberals are getting ready to dust off these tax hikes for the next budget and if conservatives lose their narrow majority in the Assembly these budget busters are almost certain to pass .
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Charlie Sykes: A Double Tsunami
 From the Wisconsin Policy Research Institute
Brace yourself.
Wisconsin is facing a double tsunami: one fiscal, one political. And we’re not really prepared for either.
The fiscal tsunami warnings week out this went when Governor Doyle said that the weakening economy could blow a $3 billion hole in a state budget already held together with spit, twine and smoke and mirrors.(Recall that just in May, the state “closed” its $527 million budget deficit by a series of fiscal gimmicks including borrowing more money for transportation.)
Senator Bob Jauch (D-Poplar) was quick to grasp for an historical analogy. According to the Milwaukee Journal Sentinel Jauch “compared the new budget crisis to 1983, when a recession caused a major drop in state tax collections.”
“Then,” recalled the paper,” former Democratic Gov. Tony Earl and legislators were forced to raise the sales tax from 4 cents on every dollar to 5 cents.”
The key word there is “forced,” because, apparently spending cuts were simply inconceivable for Wisconsin pols.
But the historical note is significant for another reason: in 1983, Democrats not only controlled the governorship, but all the Assembly and Senate. Which brings us to the next tsunami.
Since 1986, when Tommy Thompson was elected governor, Republicans have had a seat at the table, most of the time with divided government. For 12 years the GOP held the governor’s chair and at times one or both legislative houses. Since 2002, Democrats have controlled the governorship, but the GOP has held onto at least one chamber of the legislature. As a result tax and spending issues always required compromise.
Republicans, for example, were able to block an $18 billion tax increase for Healthy Wisconsin only because of the tiny Assembly majority. School choice in Milwaukee has also dodged bullets from allies of the teachers union because of the Assembly veto.
That may be about to change. The Republican Assembly majority hangs by a slender thread, a mere three votes (two, if you take out the somewhat unreliable Jeff Wood, who is running as an independent.) You have to go pretty far back, before the Scott Jensen era to find evidence of a more lackluster Republican legislative campaign. (Quick: name a single state GOP theme this year.)
If Democrats score the sort of big win some polls seem to forecast, Democrats could easily take control of the lower house. That would install a liberal activist like Fred Kessler or perhaps Jon Richards as speaker and render minority Republicans all but completely impotent.
But wait, it gets worse. The push-pull of a deteriorating state budget and an incoming Obama administration could result in the premature departure of Doyle from the governorship for an appointed gig – perhaps an ambassadorship, or cabinet position. (Both Patrick Lucey and Thompson resigned to accept presidential appointments.)
That would install the accidental Barbara Lawton as acting governor. Unlike the usually pragmatic Doyle, Lawton is a true believer, an acolyte of Ed Garvey and hero of the “progressive” wing of the Democratic Party. Where Doyle might conceivably have acted as a moderating influence on the fire-breathers in the legislature, Lawton can be counted on to hand out kerosene.
And that brings us back to the fiscal tsunami. Faced with a massive budget shortfall, Wisconsin may also be faced by the most aggressively liberal statehouse in a generation, with long term consequences.
Steep new federal taxes on businesses and incomes at the federal level will have a multiplier effect if state and local taxes are also raised, creating an even greater incentive for the flight of capital from the state.
So, yeah, it can get worse.
Jumping Ship
 Healthy Wisconsin was supposed to be the centerpiece of the 2008 election. That’s why Democrats, public employee unions and other liberal special interests banded together last year to advocate for the $15 billion government run health care plan. They promoted the plan at public forums statewide and organized a campaign to get advisory referenda in support of government guaranteed healthcare on the ballot in 20 Wisconsin communities.
Healthy Wisconsin passed the Democratic State Senate on a strict party line vote last year, but as details of the plan came to light, State Senators in swing districts started backing away from the plan which was ultimately stripped from the budget by the Republican Assembly.
Both the Wisconsin Legislative Fiscal Bureau and The Wisconsin Legislative Council issued memoranda stating that the plan would cover illegal immigrants. People who do not work or live in Wisconsin would also qualify for coverage in many cases.
In recent weeks, candidates who previously expressed support for Healthy Wisconsin are now jumping off the bandwagon like rats from a sinking ship. As their opponents and independent issue groups educate the public about their support for the plan, these candidates have engaged in an all out effort to deny facts, destroy evidence, and discredit their critics. To that end, candidates have gone as far as to remove or alter information posted on their campaign websites, complained bitterly to the mainstream media about untrue attack ads, and tried to intimidate television and radio stations into pulling advertising from the airwaves.
See some recent examples of Assembly Democrats distancing themselves from the plan here.
It’s quite obvious Assembly candidates are jumping off the Healthy Wisconsin bandwagon in the final weeks of the election. The real question is why Assembly leaders ever allowed them to get on board in the first place. Perhaps this is why the Democrats’ buddies on the Government Accountability Board are looking to silence political speech – telling the truth about candidates’ positions on Healthy Wisconsin hurts the cause of a Democratic majority in the Assembly. Maybe issue advocacy really does affect, um, issues.
Guilty by Association
 Governor Doyle took time out of his busy schedule this week to complain that Republican State Senator Dan Kapanke produced a campaign mailer which included a picture of the two men at a press conference addressing the flooding in Western Wisconsin. Doyle did not object to mugging for the television cameras in all his bi-partisan glory this summer, but is now complaining about being photographed at the event, because it suggests that he’s endorsing Kapanke for re-election.
Perhaps Republicans legislators should ask Doyle to take his picture off the state map since they distribute those to constituents too. Republicans wouldn’t want their constituents thinking they approve of Doyle’s mismanagement of the state budget and the tens of millions of dollars he’s blown on computer projects that never materialized.
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