Unexpected state surplus could fix budget myopia

For Wisconsin politicians, August was Christmas. The Legislative Reference Bureau has just released a new budget projection for 2021-23, and it showed an astounding $1.7 billion in new surplus dollars.

Thanks to a booming economic recovery, tax revenues rolled in to top the earlier projection of $4.3 billion in surplus. The initial bonanza enabled Republican legislators and Gov. Evers to come to a compromise collection of tax cuts of $3.4 billion.

Their bipartisan compromise will direct the income tax cut to the tax brackets below the top one for the richest taxpayers. That amounts to a redistribution from the most prosperous state residents to the middle class and on down.

Note: Wisconsin already had a very progressive schedule of tax rates. The bottom 60% of taxpayers at the state and federal combined levels pay no taxes. Repeat; zero.

It’s unlikely that the Republican legislators and the Democratic governor will want to go deeper than the already deep tax cuts for 2021-2023. It’s no surprise, though, that there are plenty of places to put the windfall dollars.

Some will undoubtedly be directed into the state’s “rainy day fund” – the prudent reserve against the inevitable down years for tax revenues. The delta variant could be such a shock on the economy. The reserve is already at a high point of $1.5 billion.

Beyond that, our political leaders could do some make-up calls for important economic stimulus proposals that dropped to the cutting room floor in the just-passed budget. Examples:

  • Expansion of the engineering schools at both UW-Madison and UW-Milwaukee got chopped from the UW System budget submitted by interim UW President Tommy Thompson. He was decidedly not happy about the short-sightedness of the budgeteers; he knows that engineers are people who drive existing companies forward and launch job creating start-ups. They reinvent the lagging Wisconsin economy. Note: every UW engineering graduate gets quickly scooped up for good paying jobs, and they are still in short supply.
  • The same goes for the graduates in health care disciplines at UW Milwaukee. Again, these are good high-pay jobs in a sector that accounts for 20% of Wisconsin jobs. Despite growing enrollment, Gov. Evers’ staff side-lined the expansion of a health care campus at UWM where the old Columbia Hospital used to be. It got whacked from the biennial budget without explanation. It never got to a vote in the Joint Finance Committee. It was a bi-partisan deletion.
  • Also on the cutting floor – for no good reason – was a program to mentor struggling students for a bachelor’s degree. Moon Shot could be brought back to life with $10 million from the unexpected surplus.
  • The protection of the Great Lakes took a major hit in the short-sighted budget compromise. The governor and Republican legislators chopped the creative proposal for a multi-campus initiative called the Fresh Water Collaborative. With a hub at UWM, water scientists across the UW campuses would attack glaring issues facing the world’s largest trove of fresh water. We need to know a lot more about the rising water levels and floods of recent years. We need to figure out a solution to the quagga mussels that line the floor of the Great Lakes and destroy invaluable fish food chains. How do we tackle phosphorous runoff from farms? Who is going to do that work if not the University of Wisconsin? The collaborative got meager funding of $2.5 million in the approved budget. Thompson had asked for $12.5 million. An added $10 million is an easy fix given the windfall of taxpayer dollars. You know what the taxpayers would say: spend the money on our precious Great Lakes. They would support a new Great Lakes research ship to replace UWM’s ageing vessel. Half the $20 million for the new “Maggi Sue” has already been donated.

There is clearly no shortage of initiatives across the state to improve the prosperity, economic equity and quality of life in Wisconsin through measures that didn’t make the 2021-2023 budget.

Many others will be lined up for their pet projects and some might call the deleted projects pork. I call them good investments in the future of the state. Tax cuts aren’t the end-all, be-all for a healthy state.

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