In This Issue:
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1. Bad to Worse
2. It's Still a Secret
3. No Manufacturers
Needed
4. Doyle's Close-Up
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Budget: From Bad to Worse
People often refer to bad legislation as "half-baked.” (Sometimes they substitute the word “baked” for a word synonymous with adult donkey.) In the case of the “stimulus” bill introduced by Governor Doyle and legislative Democrats, the “half-baked” description is way too kind. The so-called state stimulus bill /budget repair bill only fills in $183 million of the $600 million hole – kicking the remaining shortfall into the 2009-11 biennium, and it appears the only thing the bill stimulates is the Democrats appetite for higher taxes.
Despite an economy in crisis, Doyle and company used tax increases to fill a small portion of the budget hole they left last year. Like a bunch of rebellious teenagers experimenting with drugs, this budget-fix uses a new hospital tax, an 11% income tax on businesses known as “combined reporting,” and new taxes on software and online music purchases. In his budget proposal for the next biennium, Doyle's drugs of choice include a combination of old favorites like tobacco, income and capital gains taxes, and a dangerous new hallucinogen called the "Oil Company Franchise Fee." You must be high if you think the fee will stand up to a legal challenge or that it won't be passed onto consumers in the form of higher gas prices.
Last week the media rushed to applaud Doyle’s budget repair/stimulus plan for “cutting spending.” The Milwaukee Journal Sentinel’s headline read “Doyle, legislators announce spending cuts to trim deficit.” Not only did they not trim the deficit, the plan didn’t cut a penny in state spending. The paper reported Doyle “cut” $125 million, when, in fact, Doyle called for $125 million in “lapses” and “transfers” to fill in a $125 million hole in the budget. As the Wisconsin Policy Research Institute Blog explained:
This provision merely authorizes DOA Secretary Mike Morgan to pull funds out of other non-general fund pots of money to plug the budget hole. For instance, when Doyle and the Legislature pulled $1.1 billion out of the transportation fund and dumped it into the general fund, this was a “transfer.” It also has contributed to the $5.7 billion deficit we are dealing with now. Since 2001, state government has used $2.4 billion of these lapses and transfers - and they only serve to allow government to increase spending.
Doyle's “stimulus” bill actually does more of what got the state in this trouble in the first place. That's the good news. The bad news is the Governor's budget proposal for the next two years will make it even worse.
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It's Still Secret
Doyle’s “stimulus” bill also takes the unprecedented step of granting two people in state government, Representative Mark Pocan and Senator Mark Miller, the sole authority to spend billions of dollars in federal stimulus money. While the Wisconsin Constitution requires spending bills to go before the full Legislature for a vote, Democrats have decided to circumvent that provision in order to dole out billions of dollars to their supporters. Since only two people will be in charge of these dollars, most of the money will be given out without any scrutiny or public debate. It will be like the Halliburton no-bid contract on steroids.
Of course, all the groups that normally go crazy when government does things in secret won’t even bat an eye at this destruction of the public’s right to know where the money is being spent. The opportunities for corruption when two people have their hands on billions of dollars are staggering.
Naturally, the media, hoping Doyle doesn’t get mad at them for inquiring where this money is going, won’t care a bit about the lack of transparency in the process. This is the same press that dutifully reported Doyle’s talking point that his 15-person committee to spend the stimulus finds are working “for free.” On February 13, the Associated Press’ Scott Bauer reported:
The Office of Recovery and Reinvestment is headed by Gary Wolter, president and chief executive officer of Madison Gas and Electric Co. He is being assisted by Alan Fish, vice chancellor of facilities, planning and management at the University of Wisconsin-Madison.
Both Wolter and Fish are working for free, assisted by about a dozen state employees who are being reassigned from other agencies.
Oh really? You mean Wolter will decline his seven figure salary and stock options with MG&E, while Fish and the rest of the state employees turn back their paychecks and benefits to help figure out which Doyle supporters should get billions of dollars in federal funds? What a wonderful and self-less gesture --- like serving in the National Guard. Give us a break.
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No Manufacturers Needed
With unemployment numbers up, the Wisconsin Senate has decided to make it more expensive for businesses to keep workers employed. Last week, the Senate increased the state minimum wage, which will inevitably lead to higher unemployment in Wisconsin.
Milwaukee talk radio host Mark Belling asks if anyone will stand up for business in Wisconsin, and writing for Wisconsin Policy Research Institute Deb Jordahl explains the damage being done to the manufacturing sector by the Legislature:
According to the Wisconsin Department of Workforce Development (DWD), of the 66,300 jobs lost in Wisconsin last year, 26,500 came from the manufacturing sector. That’s nearly 40 percent of all jobs lost, even though manufacturing represents only 20 percent of the workforce. Since 2000, Wisconsin has lost 121,000 of these family-supporting jobs with an average wage of $46,000 a year. That’s like taking all the people in Appleton and La Crosse and stripping away their jobs, their benefits and their futures.
But it was WMC’s successful opposition to the 7 cent per gallon tax increase, ethanol mandates, carbon emission taxes, and a $15 billion government- run health care plan that drove its legislative opponents stark raving mad. Adding to their collective ire was the fact that voters elected a conservative Attorney General and two conservative Justices to the state Supreme Court, after WMC exercised its right to educate the public about their choices. In two of the three elections, liberal group’s spending kept pace with or exceeded WMC’s, yet from the well-orchestrated outcry, from the professional ankle-biters to the University of Wisconsin’s former Chancellor, you’d have thought WMC shot their poor helpless candidate in the head at close range while he was asleep.
As state government embarks on a new era, with an estimated budget deficit of $5.4 billion and Democrats in complete control, expect to hear more from some new, kinder, gentler business groups with names like Competitive Wisconsin, Partnership for Wisconsin, Wisconsin Growth Coalition, and the Wisconsin Way. These better business partners will work to grow the number of taxpayer-funded jobs by increasing funding for K-12 and higher education, roads, rail systems, ethanol subsidies, and tons of corporate welfare in the form of training grants for labor unions, tax credits, and money to market the state so smart young people will want to move here.
What these organizations won’t do is promote a healthier business climate by reducing the tax and regulatory burdens facing our largest employers. Nor will they advocate medical or product liability reform to keep the state from becoming a haven for trial lawyers. And despite all their rhetoric about an educated workforce, they will not press politicians to reform the dismally failing Milwaukee Public School system, or promote education alternatives for low income families.
Why will these groups ignore so many issues that are vital to a healthy business and tax climate in Wisconsin? Because meeting their own very special short term interests means working against the best interests of the state.
Governor Doyle is Ready for His Close-up
With the economy tanking, it is clear people need economic relief. Little did we know, that relief would come in the form of taxpayer-subsidized haircuts.
Last session, in an attempt to get more Hollywood movies to film here in Wisconsin, Governor Doyle signed a bill that gave tax incentives for movie crews to make Wisconsin the “Hollywood of the Midwest.” The movie “Public Enemies,” starring Johnny Depp and Christian Bale, took advantage of the tax break and filmed in many of Wisconsin’s small towns. (Fortunately, Bale made it out of the state without decking anyone.)
It is only now Wisconsin residents are getting a sneak preview of what these tax benefits paid for:
Wisconsin taxpayers contributed $450,000 toward Hollywood director Michael Mann's salary when he came to the state last year to film the big-budget Johnny Depp movie "Public Enemies."
Records obtained by The Associated Press show the state's film tax credits not only covered a quarter of Mann's $1.8 million salary, they paid for a portion of his assistants' salaries, entertainment, meals and stuntmen's living expenses.
The state's tax credits even covered about $100,000 of the cost of Depp's entourage of chauffeurs, hair stylists and assistants, said Zach Brandon, executive assistant at the Wisconsin Department of Commerce.
In fact, the Wisconsin taxpayers ended up reimbursing the film crew for nearly every dollar spent during their time in the state:
When the "Public Enemies" production blew out of town last year, state taxpayers gave the movie company back almost every penny it had invested in Wisconsin, according to the state Department of Commerce.
NBC Universal received $4.6 million in incentives from state taxpayers for the Johnny Depp film about 1930s gangster John Dillinger. That eats up almost all of the estimated $5 million the film company spent in Wisconsin, according to Zach Brandon, the No. 3 official at the Commerce Department.
So Wisconsin ended up getting very little benefit from the film crew being here, other than some moms being able to squeal at seeing Johnny Depp from 100 yards away. As it turns out, most of the state’s $4.6 million investment will go to companies outside the state – making Jim Doyle the real “public enemy” here. Maybe we should send Doyle to work as a crew member on Christian Bale’s next movie.
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