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Robert M. La Follette
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Public affairs experts share thoughts on Wisconsin budget, policy

The public policy implications of Wisconsin's budget legislation were explored at a La Follette School forum. Three La Follette School faculty members joined a political scientist, an alum practitioner and the university’s director of state relations in commenting.

The public policy experts discussed the two-year budget that covers July 1, 2011, through June 30, 2013, and the immediate budget bill to close an anticipated $137 million deficit for the current fiscal year. The “budget repair bill” would take away most collective bargain rights from public employees and require them to pay more toward their pensions and health insurance coverage. The bill also includes measures to reduce legislative oversight of Medicaid.

Moderated by associate director Don Moynihan, the February 25 forum featured comments from:

Lightbourn, a 1976 alum of La Follette School precursor the Center for the Study of Public Policy and Administration, noted how public opinion polling conducted in November by the Wisconsin Policy Research Institute found that 58 percent of independent Wisconsin voters agreed with the statement that Wisconsin’s government was too big and tried to do too much to serve the state’s residents. In contrast, 62 percent of voters who identified as Republican and 25 percent of Democrats agreed with the statement. That same poll illustrated how little people know about the state budget process, Lightbourn added. Only 21 percent knew that the state’s largest budget item is support for kindergarten-through-12th-grade schools.

Lightbourn acknowledged that the decisions policymakers are faced with are difficult. Speaking with 20 years of state employment, including service as the secretary of the Wisconsin Department of Administration under two governors, Lightbourn said “An honest budget requires hard decisions to be made.”

Nelson shared an observation Lightbourn made to him when Nelson was starting his career: “A good rule is to never give up power,” Nelson said. The discussions about budgets and collective bargaining rights are about power, Nelson said, and everyone is figuring out how to deal with change as the power shifts. “It won’t be for just these few weeks,” he said. “It will be protracted beyond the budget discussions.”

The budget proposal on collective bargaining would affect teachers’ wages, noted Witte, a political scientist and education policy expert. The bill would eliminate the stepped pay salary grid unions and districts use when negotiating contracts, leaving only the base wage on the bargaining table. He suggested that the prohibitions against collective bargaining should be modified so local districts have some flexibility. Witte also supported Wisconsin senator Dale Schultz’s proposal to sunset the collective bargaining limits. Doing so would give the state two years to rewrite the municipal employee relations act and approach the policy questions in a reasonable way, Witte said.

“Elections have consequences,” emphasized Canon, a political scientist. Democrats won in 2008 and Republicans won in 2010. Both have had to recognize the consequences of losing political power. “The people who win should be able to dictate policy,” he said.

In Wisconsin’s political arena, people must think about what is really being debated – policy or economics, Canon said. The debate about collective bargaining is more centrally about the policy dispute concerning the future of public employee unions than the economic issue of balancing the budget (given that unions have already conceded the economic issues).

The governor is on shaky ground when he claims an electoral mandate to eliminate collective bargaining for public employees, Canon said. During the campaign Walker did signal cuts in benefits and greater contributions to pensions for public employees. “We saw that one coming,” Canon said, “but on collective bargaining, no.”

Indeed, exit polls show that 26 percent of Wisconsin voters had a union member in their household and 37 percent of those voters chose Walker in November, Canon said. “He wouldn’t have won the election if he had campaigned on eliminating collective bargaining.”

The deficit for the current fiscal year is smaller than many previous biennial budgets, said Reschovsky, a public finance and tax policy expert. Union concessions to pay 12 percent of health insurance and 5.8 percent of wages toward pensions would produce $30 million in this fiscal year. Several ways exist to close the remaining $100 million gap, Reschovsky said, beyond the delay of repaying state debt as governor Scott Walker has proposed in his budget repair bill.

Addressing the 2011-2013 budget gap is more difficult, said Reschovsky, adding that Walker’s estimate is a tad high at $3.6 billion, but close enough for the sake of discussion. The deficit is about 12 percent of the state’s budget. The governor’s strategy is to not increase taxes and to not rely on one-time fixes such as transferring funds or delaying spending. “The result is that closing the gap has to come entirely on the spending side,” Reschovsky said. “As state aid to schools and local governments make up about half of the state budget, we can expect big cuts in these areas,”

Reschovsky noted that two-thirds of the budget gap is due to the recession, which caused a large drop in state tax revenue in absolute dollars in the last three years. One-third is a structural problem he attributes to programs established in the 1990s without tax increases to pay for them.

The recession also means that government expenses are up, even as revenues decline, as more people need help through unemployment insurance, food stamps and health insurance, said Smeeding, director of the Institute for Research on Poverty.

Wisconsin will have a difficult time reducing its unemployment rate, given that manufacturing has been declining for 20 years. “It will be hard to regenerate jobs,” Smeeding said, “therefore I think we’re going to be in trouble for a while.”

Wisconsin’s BadgerCare program that provides health insurance for the state’s low-income residents is one of the best plans in the United States, Smeeding noted. “Wisconsin covers the second largest number of uninsured children in the country. All of that is at risk.”

Observers suggest that thousands of poor people in Wisconsin could lose their state-provided health insurance as the governor and his administration revamp Wisconsin’s Medicaid programs.

“These are important decisions and shouldn’t be taken lightly,” Smeeding said. “We do have to look at budgets and beware of expenses. We have to do something about controlling health care costs at the federal and state levels.”

Smeeding expects poverty to worsen in Wisconsin. Federal assistance softened the recession’s impact through food stamps, unemployment insurance, and the temporary reduction in the Federal Insurance Contributions Act tax workers contribute toward Social Security and Medicare. “All that goes away next year,” Smeeding said. “When federal aid ends, we will see tough times in the state. Wisconsin poverty is up, but poverty increased less than it would have without government programs.”

— posted February 27, 2011; updated February 28, 2011