Progressive Thinking

Sen. Kathleen Vinehout examines the lack of foresight in the budget just passed by the legislature and how it relates to three major issues – education, transportation and shared revenue.

MADISON - “Policy is who pays, who doesn’t pay and where the money gets spent,” said the President of the NAACP in a recent speech.

Policy making was center stage at the State Capitol when the long delayed $76 billion two-year state budget was rushed to passage just days after a majority of lawmakers voted to give a Taiwan billionaire $3 billion in state subsidies.

Budgets are about choices. Budget writers this year chose to leave major problems for the next budget writers.

Education is the most important job state government does. For years, lawmakers on both sides of the aisle agreed the state’s school funding formula was broken.

This budget, there were enough funds to change the formula. Efforts to do so were voted down. Instead, more state dollars were spent on vouchers for unaccountable private schools.

Under this budget, private schools will receive $8,396 a year in state taxpayer money for a high school student. Public schools would receive $6,671 for the same student. These estimates are detailed in a memo from the nonpartisan Legislative Fiscal Bureau.

The total cost of an average public-school student is a little over $11,000. Most of the difference comes from local property taxes. Remember, these numbers are averages. Many of our local districts receive much less than the state average of $6,671.

Particularly hurt by the formula are small rural schools. There is a fundamental disconnect between what drives school revenue – the number of students - and what drives expenses – the cost structure. For example, if three students leave a class of 20, the district revenue is cut by 15%. But the cost of teaching a class of 17 is almost the same as teaching a class of 20.

Other problems exist. The formula assumes all children cost the same to educate. But children who are in poverty or are English Language Learners, for example, cost more to educate. Costs also vary with the size of districts.

The solution by majority lawmakers was to add money outside the broken formula instead of fixing the formula. This increases the inequity between school districts and makes fixing the problem later more difficult.

Fixing transportation was also left for the writers of the next budget. Instead of adding sustainable funding sources, budget writers cut 253 positions from the Department of Transportation (DOT). A few years ago, the former DOT Secretary added positions arguing engineering costs decrease when work is done by in-house engineers rather than by consulting firms. A recent audit by the nonpartisan Legislative Audit Bureau confirmed that conclusion.

The transportation budget was “balanced” in part by lowering inflation estimates. Which made me wonder since DOT in the past has underestimated inflation when anticipating costs.

Potholes and locals turning asphalt roads back to gravel are the result of past state budget decisions that are not fixed in this budget. In the past six years, local road aid has been underfunded. After steady increases to keep up with inflation – even during the recession – the 2011 budget cut over 9% out of county road aid. All but one of the following years saw no increase at all. This budget includes an increase, but nothing near what is needed to make up for past cuts and inflation.

An even worse pattern exists in the general funding of local government. It’s budget time for local communities. But counties and cities do not have the money to keep up with expenses. Recently, a county board chair shared that department budget requests far exceeded a miniscule increase in expected revenue.

Over the past sixteen years, there has been a 20% decrease in state dollars given to locals in what we call “shared revenue.” In the same time period Wisconsin has seen a 56% increase in the state budget. I’d say the state has not done a good job of sharing. No wonder county and city services are being cut back.

The budget has passed, but the problems in local communities have not been addressed. Roads aren’t getting repaired, people aren’t getting mental health placements, referenda are being passed to keep the lights on at local schools. A lot of heavy lifting has been passed on to whoever will be writing the next budget.

The Governor and Republicans were quick to say we can’t afford very minimal investments in Wisconsin residents, but they can’t give away our money fast enough when a billionaire shows up for a hand out.

GREEN BAY - As someone who helped Marinette Marine land the Navy LCS contract that created thousands of new jobs in Northeast Wisconsin and around the state, I am supportive of responsible efforts to create jobs regardless of which party those ideas come from.

Unfortunately, the deal negotiated by Governor Walker and Senate Republicans is short on protections and long on risks to the taxpayers of the 30th Senate District who will be forced to contribute up to $90 million as their share of nearly $3 billion in cash payments to Foxconn, a $100 billion corporation based in Taiwan and China. That’s nearly $500 for every person and $1200 for every family of four in our district.

The Governor and Republicans are quick to say we can’t afford to make very minimal investments to help the nearly 1 million Wisconsin residents refinance their student loans at lower rates or help nearly 1.5 million private workers save for retirement. But no sooner does a billionaire show up with their hand out, they can’t give away our money fast enough.

The Governor used to say that the people know better how to spend their money than the government does. Except when it comes to giving one of the wealthiest people on Earth a few billion dollars of other people’s money. Never mind that $500 or $1200 for a family could go a long way to helping them make ends meet, or help pay for technical college or job training. When it comes to helping average folks or rich billionaires we now know who the Governor and Republicans truly care about.

Make no mistake, this is the largest taxpayer giveaway in U.S. history. And despite the claims of supporters, it comes with very few guarantees that Foxconn will uphold their end of the agreement. In fact, Foxconn thinks so little of the people of our state that they couldn’t even bother to show up at one of the two public hearings on this deal to answer questions, ensure they will be accountable to the taxpayers, or even just say thank you.

P.T. Barnum must be laughing.

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State Senator Dave Hansen (D - Green Bay) released this statement Tuesday on the passage of the Foxconn deal in the Senate.

Independent analysis reveals 14,000 jobs deficit for existing corporate tax credits and loans is greater than the direct job creation claim for the Foxconn deal. A full 60% of WEDC-supported corporations have failed to meet job creation goals.

STATEWIDE - On a media call Monday, Citizen Action of Wisconsin, State Rep. Amanda Stuck, and State Rep. Jonathan Brostoff released a new analysis of Wisconsin Economic Development Corporation (WEDC) data showing that the troubled economic development agency has an extremely poor record of holding corporate recipients accountable for their jobs promises. The analysis, which comes from the agency’s own self-published data, provides additional evidence that WEDC is completely unqualified to manage the gigantic Foxconn deal, which would be by far the largest job creation tax credit program ever issued by an American state. Audio of the call can be found here.

The Citizen Action of Wisconsin analysis examines job creation tax credits issued by WEDC three years ago and longer to allow time for corporate recipients to execute the hiring plans they submitted to WEDC. The analysis finds a large gap between “Actual Job Creation” (the jobs companies actually reported creating) and “Planned Job Creation” (the jobs that were promised in return for tax credits).

Key Findings

• Of the 337 WEDC awardees with established job creation goals at least 3 years old, 60% (203 awardees) failed to meet their goals. (company list available on our website)

• Of the 203 awardees that have not met their job creation promises, the difference between their actual job creation as reported by WEDC and their goals are 14,744 jobs. This means the WEDC job creation gap is larger than the total number of direct jobs being proposed by Foxconn in the best case scenarios (13,000 jobs).

• The numbers would be even worse if WEDC kept net job creation numbers, because it is well documented that many WEDC recipients have outsourced other jobs while taking state tax credits.

• WEDC has a very poor record of taking back tax credits when corporate recipients fail to fulfill their job creation promises. WEDC has only sought to claw back $9.9 million from 24 companies, less than 12% of companies who have not met their job creation goals after 3 years. WEDC does not report how much of this money has been successfully recovered.

• The 203 companies that still have not hit their jobs goal in at least 3 years have already received $94.8 million in verified tax credits from WEDC, with another $158 million awarded but not yet dispersed.

“The Walker Administration's abysmal record of holding corporations accountable for their job creation promises makes the Foxconn deal a scandal waiting to happen,” said Robert Kraig, Executive Director of Citizen Action of Wisconsin. “Any Senator or Representative that is thinking of voting for the Foxconn deal this week should think long and hard about whether they want to be held accountable for potentially the biggest economic scandal in Wisconsin history.”

As both data sets used in this analysis are self-reported by WEDC itself, they indicate the best-case scenario for job creation. The Legislative Audit Bureau found in May that all of WEDC’s job creation claims should be treated as suspect because the agency has failed to implement basic verification procedures. Given the continued refusal to implement basic accountability procedures, it is highly likely that WEDC’s performance record is much worse. The Legislative Audit Bureau concluded that WEDC does “not contractually require grant and loan recipients to submit information sufficiently detailed to allow it to determine the extent to which jobs were actually created or retained.” In addition, the Audit Bureau found that “WEDC did not collect sufficiently detailed information from tax credit recipients about their existing employees. Collecting such information will help WEDC determine in future years the extent to which recipients actually created or retained contractually required jobs. WEDC also did not comply with statutes because it did not annually verify jobs-related information submitted by recipients on the extent to which contractually required results were achieved.”

“Given WEDC’s record of scandal, the Foxconn deal does not make sense even if you believe in extreme corporate welfare,”said State Representative Jonathan Brostoff (D-Milwaukee).

“I have been told by WEDC when trying to help my constituents that the agency has no way of verifying with the Department of Revenue which companies have claimed job creation tax credits or how much they’ve recovered from those that don’t follow through on their commitments,” said State Representative Amanda Stuck (D-Appleton). “We have no guarantees that we will get the public’s money back from Foxconn if they do not follow through on their promises. I want to know that we have a system in place to protect our state.”

TABLE 1: Select companies receiving WEDC awards 3 years ago or more

The full analysis can be viewed here

Late night secret dealings. No notice to local elected officials. No local powers to say “no”. Sen. Kathleen Vinehout writes about a last-minute, late-night budget motion to take away local powers to oversee sand mines and quarries in Wisconsin.

MADISON - A last-minute budget amendment has folks in Western Wisconsin very worried.

Locals have spent seven years negotiating with large sand mines to reach agreements that allow neighbors and mines to co-exist. In some cases, locals decided certain sensitive and tourist areas needed protection from mines.

All the careful negotiations appear poised to go out the window in a strangely evolving budget deal that seems to affect quarries – or, as we often know them, gravel pits.

First, in full disclosure, my farm is located next door to a quarry. My neighbor crushes rock for construction projects. The details I provide here will personally affect my family.

Late Tuesday night last week, the public and minority members of the budget writing committee got their first look at a transportation deal. The deal was to break the impasse that’s stymied budget passage for four months. Buried in the amendment was language that stopped all local oversight of quarries using sand, rock and gravel for road projects.

The next morning, I received several calls from local government officials who wanted to know if the budget writing committee had taken away local powers to oversee sand mines and quarries. Locals worried details were never made public until after supper, when most folks were getting their little ones off to bed, and voted on the same night, when most had gone to bed.

At first, no one seemed to know the origin of the idea to remove any oversight of quarries by locals. Why take away local powers related to gravel pits? There are hundreds of gravel pits across Wisconsin. Some are idle, some are large, some are very small. But they are everywhere.

The budget amendment was comprehensive and dealt with many of the issues written in previous attempts to take away local oversight of sand mines. The proposal would stop locals from requiring a quarry to get a zoning permit, including a site that has not previously been developed as a mining pit. Locals could not set limits on explosives or other types of blasting, on noise, the number of trucks leaving a mining pit, and the hours of mining operation. The proposed law forbids locals from setting air or water standards, or putting any type of restrictions related to monitoring air quality or water quality or quantity.

I’ve heard from local elected leaders and citizens all across western Wisconsin who do not like lawmakers taking away any local powers. And they certainly did not like this.

But when this proposal became public I also heard from interest groups that the plan DID NOT GO FAR ENOUGH in taking away local control.

In what must be the strangest “up” is “down” memo I’ve ever seen, Wisconsin Manufacturers and Commerce (WMC) and others asked lawmakers to get rid of the quarry provisions because they did not go far enough.

Remember, this amendment is taking away local powers, not rewriting state laws adding more local powers.

WMC wrote, “…there is no getting around the fact that the Republican-controlled Legislature will have granted expanded environmental regulatory powers to municipalities… This Legislature has done so much to turn our state around. Now is not the time to begin turning that progress back by deciding which Wisconsin industries can be subject to significant regulatory overreach by local governments.”

A local county official had a very different description of what the late-night budget motion did.

“It comes within a 16th of an inch of including sand mines to say nothing of how it takes away our local control. They will be blasting and crushing rock all night, all summer long. Why don’t they trust local officials? Who is going to take the complaints we get? Somebody went to a lot of trouble to write this amendment if all they wanted to limit were quarries.”

Somebody indeed. A few hours later, I learned sand mines were included in the amendment, as late as Sunday evening of Labor Day weekend.

Late night secret dealings. No notice to local elected officials. No local powers to say “no”. An “up” is “down” memo. The public left out in the cold.

The vote is “no”!

Wisconsin was one of the first states to enact a Living Wage law in 1913, at first only for women and minors over age 17. Opponents fought the law in the courts and the legislature, and the Governor and Legislative majority repealed the very definition of “living wage” by the 1980s. The federal minimum wage law replaced it, but has not kept up with the cost of living since 1968.

MADISON - “For an adult with a family who has to pay for food, clothing, and a place to live, and be able to pay for a car, the minimum wage is clearly not high enough,” wrote Bethany of Eleva-Strum High School.

Wisconsin was one of the first states to enact a Living Wage. The law gave authority for determining a living wage to an Industrial Commission made up of a balance of employers, employees and the public. The year was 1913.

Two years earlier, people attending a national conference of the National Consumers’ League in Milwaukee called for a minimum wage. Advocates made a minimum wage the top issue.

Following the conference, Wisconsinites called on leaders to create a state minimum wage.

The next year, UW Professor John Connors wrote the first minimum wage bill. Progressive lawmakers introduced two bills. But neither bill was signed into law.

Massachusetts has the distinct honor for passing the first minimum wage law in 1912.

In 1913, Wisconsin joined seven other states, including Minnesota and Oregon, to pass state minimum wage laws. But not until 1919 did workers see the result in better wages.

Opponents challenged an Oregon law, similar to Wisconsin’s, in court. A tie vote in the United States Supreme Court eventually cleared the way for action.

The first Wisconsin minimum wage was only for women and minors over age 17. Men were not included in state minimum wage laws until 1975 law when lawmakers first used the term “employees”.

The first wage was set at twenty-two cents an hour. Advocates challenged this wage, asking the commission to make the pay “more commensurate with a proper living standard”. A few years later the minimum wage was increased to a quarter an hour.

Again, action of the courts interfered with people’s ability to make a living wage. In 1923, the US Supreme Court declared all minimum wage laws unconstitutional. The action was a set-back for all living wage advocates. Wisconsin reacted by passing an “oppressive” wage law protecting women and minors from very low wages.

By 1937, the Supreme Court reversed its decision clearing the way for Wisconsin’s original law to again take effect. The next year President Roosevelt signed a law setting the first federal minimum wage at twenty-five cents an hour.

Wisconsin kept its own living wage. Even so, inequalities continued for women, and worse for rural women. For example, in 1956, the federal minimum was a dollar an hour. The state wage for women and minors was seventy cents in an urban area and fifty cents for women and minors who worked in a small town or rural area.

The Industrial Commission regularly reconsidered a living wage. The Commission authorized studies of the cost of living and made many adjustments. The last “living wage” study was done in 1967. The study recommended Wisconsin use the federal Consumer Price Index (CPI). The state then set a policy to revise minimum wages every other year using the CPI. As near as I can tell by reading state historical documents, this approach continued through the 1970s.

But by the 1980s, the minimum wage was no longer a living wage. And in the last budget, the Governor and Legislative majority repealed the very definition of “living wage” and the law allowing an employee to file a complaint if he or she felt unfairly compensated.

If the minimum wage kept up with inflation since 1968 workers would now be paid $11.17 an hour. According to a recent report of the Economic Policy Institute (EPI), in 2016, $7.25, the current minimum wage, buys ten percent less than when it was last raised in 2009 and one-quarter less its value in 1968.

According to EPI, raising the minimum wage to $15 in 2024 would undo the erosion that began in the 1980s. Several members of Congress have introduced a bill to raise the minimum wage in eight steps to $15 by 2024.

Yes, Bethany, the minimum wage is clearly not enough. For a hundred years, Wisconsinites traveled a long journey to keep a minimum living wage. Now is it’s our turn to take up the struggle and advocate for our neighbors and friends.