Wisconsin’s State Budget: What Does it Mean to Me? Prepared by Senator Kathleen Vinehout June 12, 2015 The State Budget Affects Our The Budget is a Decision About Our A Few Budget Highlights… Really big numbers… A million seconds =11 days A billion seconds = 32 years 3 This Budget: $4.3 Billion UP in Spending Increase Over 6 Years – UP $9 Billion in Spending 80 70 $ in billions 60 50 40 2007-2009 2009-2011 2011-2013 2013-2015 2015-2017 Budget Years Sources: Comparative Summary of Governor and JFC Budget Recommendations, table 1, Legislative Fiscal Bureau, June 2013; Comparative Summary of Budget Recommendations — 2011 Act 32 (and 2011 Acts 10, 13, and 27) table 1, Legislative Fiscal Bureau, 2011; Comparative Summary of Budget Recommendations (2009 Act 28) table 1, Legislative Fiscal Bureau, 2009; Summary of Budget Provisions 2007 WI Act 20 table 1, Legislative Fiscal Bureau, 2007; Summary of Governor's Budget Recommendations, February 2015. 4 State Tax Revenue is Growing 18 16 14 12 10 Tax Revenue ($ in billions) 8 6 4 2 0 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Fiscal Year Ends 08 09 10 11 12 13 14 15* 16* 17* *Estimated Source: Comparative Summary Comparative Summary of Provisions, Table 8 (2013 Act 20) Legislative Fiscal Bureau letter to JFC Co-Chairs, January 2014; Legislative Fiscal Bureau General Fund Revenue and Expenditure Projections January 2015. Wisconsin Taxpayers Alliance. Focus Newsletter, 2015 No. 4; Legislative Fiscal Bureau letter to JFC Co-Chairs, January 2014; Legislative Fiscal Bureau General Fund Revenue and Expenditure Projections January 2015. 5 Spending Increases, but So Does Debt 16 14 12 10 $ in billions Republican Governor 8 Democratic Governor 6 4 2 0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Calendar Year Legislative Fiscal Bureau Memo, January 2015. 6 Not Paying Debt Bills is Kicking the Can Down the Road (Debt Restructured by Legislative Session) $600 $500 $400 $ in millions $300 $200 $100 $0 2001-03 2003-05 2005-07 2007-09 2009-11 2011-13 2013-15 McCallum Doyle Doyle Doyle Doyle Walker Walker Source: Legislative Fiscal Bureau Memo, May 2012; Legislative Fiscal Bureau Memo, February 2015. 7 Major Changes to the University of Wisconsin UW becomes independent authority. $300M in cuts affect all campuses. Statutorily required shared governance, tenure, whistle blower, other legal protections are removed. Bioenergy Initiative, Environmental Education Board & many other programs are eliminated. State still oversees all state financed building projects. 8 Tough Times for K-12 Education No increase in state aid next school year. Percent of state budget going to schools sinks to 20 year low. Child poverty more than doubled in 10 years. WI lost more than 3,000 educators between 2009 & 2012. 9 Borrowing to Pay for Safe Roads and Bridges Spending outpacing transportation revenue from gas tax & registration fees. Governor borrows $1.3 billion to fund roads & bridges. Debt costs grow to almost 25% of transportation budget by 2017. 10 This Budget… Cuts UW Cuts K-12 Public Schools Uses Debt to Fund Transportation Not paying Debt Spending $4 Billion MORE What’s going on? 11 Budget for 2015-17 Begins with $800 Million in the Hole 400 16 14 200 12 0 10 Tax Revenue $ in billions 6 Surplus/Deficit -200 Spending $ in millions 8 -400 4 -600 2 Tax Revenue -800 0 Fiscal Year Sources: Comparative Summary of Provisions, Table 8 (2013 Act 20) Legislative Fiscal Bureau letter to JFC Co-Chairs, January 2014; Legislative Fiscal Bureau General Fund Revenue and Expenditure Projections January 2015. Wisconsin Taxpayers Alliance. Focus Newsletter, 2015 No. 4 12 Tax Changes from Last Budget Cost Us an Estimated $648 Million (Single Head of Household Filing in Tax Year 2013) 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Former Rate New Law Sources: Summary of Governor’s Budget Recommendations, Legislative Fiscal Bureau, March 2013; State of Wisconsin Biennial Budget, 2013-15. 13 Tax Refunds if You Owe Nothing? Manufacturing & Ag companies pay nearly 0% by 2016. (estimated cost of over $500 million over 2 year budget) New refundable Business Development credit = $9.75 million. Existing Refundable Enterprise Zone credits = est. $91.8 million this budget. Expanded Enterprise Zone Tax Credits costs $168M 2017-2027. = 14 Business Tax Credits Are Growing (Estimated by Calendar Year) 260 240 220 200 180 $ in Millions 160 140 Calendar Year Types of Business Tax Credits 2006 17 2008 22 2010 30 2012 38 2014 39 120 100 80 60 06 15 08 10 12 Sources: Department of Revenue; Tax Exemption Devices, 2007-09; 2009-11; 2011-13; 2013-15. 14 16* *Estimates include MATC estimates from LFB, Info Paper # 6 Business Tax Credits, January 2015. All other Credits held at 2014 level. BIG TICKET ITEMS BUDGET BUYS… $220M Bucks Stadium costs between $320 & $490 M in interest to state tax payers over 20-30 years. $662 M new state spending in Health $55 M in business revolving loan fund. Wisconsin Economic Development Corporation (WEDC) becomes Forward WI Development Authority Nearly a 50% increase in Administration ($401 M new state spending). Governor transfers at least 79 positions related to purchasing, finance, budgeting & IT (computers) into Department of Administration. 16 Wisconsin Citizens Losing Their Voice • Natural Resources Board becomes advisory only. • Ag & Consumer Protection Board becomes advisory only. • Wisconsin Public Television and Public Radio lose state funding and all its Wisconsin legal existence. • Judicial Commission, that oversees, investigates and prosecutes misconduct of judges (including 5 non-lawyer citizens) moves to the Supreme Court. The Chief Justice raises serious concerns about the independence of the Commission. • Judicial Council is eliminated. This commission helps save courts money by getting folks to work better together. Includes citizen members. 17 Budgets are About Choices t. - ?iull' ME I r? if?: I I- 'r I Let?s take a look at some of the choices the Governor is Education Choices are About Our Future Child Poverty Doubled in 10 years Child Poverty Doubles (FRL) 2001: 21% 2012: 43% In Arcadia over 60% primary & middle school students are eligible for free & reduced lunch. Source: Department of Public Instruction, March 2015 In many rural districts over half of students are eligible for free & reduced lunch (FRL). 20 Big Changes in Education Budget • • • • • • • Cuts to public school funding next year. No increase in revenue limit to schools. Rural schools-some new sparsity & transportation money but not nearly enough to offset cuts. Remove cap on private voucher program. New students must be from public school or not enrolled in school or now enrolled in private ‘voucher’ school or is enrolling in grade: K, 1st or 9th grade. Money for statewide private school subsidy comes from student’s public school. K-8 private school payments $7,210; High school payments $7,856. New Independent Charter Board; est. +500 new 21 students at $8,075 per student. Fast Growing Private School & Independent Charter School Spending 300 250 200 $ in millions 150 100 50 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13* 14* 15* Fiscal Year End Source: Legislative Fiscal Bureau Memo April 2015. *Estimated 22 Public School Spending Without Private School Subsidies and Independent Charter Schools 5400 5300 5200 5100 Making Schools “Whole” 5000 4900 $ in millions 4800 4700 4600 4500 4400 4300 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-17* School Year Source: Legislative Fiscal Bureau Memo April 2015; Wisconsin Budget Project . *Statewide voucher $$ comes out of public school aid 23 Since Gov. Doyle’s Last Budget (Spending and Revenue Compared to FY 2009-11) 16 $13.8 Billion 14 12 10 Cumulative Increase in Revenue $ in Millions 8 6 4 2 0 -2 -4 Cumulative State Cuts to Schools $1.7 Billion 24 What Kind of UW do We Want? Green Bay, Oshkosh, Madison, MKE, Superior, Platteville & Eau Claire all offering early retirement options to reduce staff & faculty. University search committees are having a hard time filling positions. Budget cuts all funds for Minnesota Wisconsin Tuition Reciprocity. Program is ‘optional’ to UW. ? 25 Choices About Health Care are Community Choices Big Changes to Senior, Disabled & Adult BadgerCare Programs SeniorCare enrollees to sign up for MC Part D. Family Care run likely by insurance co. “Include, Respect, I self-direct” (IRIS) folded in to FC?? Adult* BadgerCare limited to 2 years w/ drug testing & new premiums. 27 Changes to Family Care & IRIS Affect Lives of Elders & Disabled Aging & Disability Resource Centers (ADRCs) Managed Care Organizations (Western WI Cares or Continuous) Providers deliver services (home care, personal care workers, medical transportation ??? 28 IRIS Eliminated. Family Care Likely Run by For-Pro?t Insurance Co. Medicaid Budget: Coverage Levels Off but Spending Continues to Increase 1,200,000 10 9 1,000,000 8 7 800,000 Total # of people 6 $ in billions 5 600,000 4 400,000 3 2 200,000 1 0 0 Total Expenditures Total MA Enrollment Sources: Summary of Governor’s Budget Recommendations, Legislative Fiscal Bureau, March 2013; March 2015. *estimated 30 Private Companies Getting Paid to Administer Medicaid 220 200 180 160 140 Total $ in millions 120 100 80 60 40 02 03 04 05 06 07 08 09 10 11 12 13 14 15* 16* 17* Fiscal Year Ends Sources: Legislative Fiscal Bureau Memo, April 2013; April 2015. *estimated 31 Preserving our Natural Resources is About Our Community • • Recycling grants to Counties cut by $4M. Budget eliminates $2M in grants to nonprofit conservation groups. Budget reduces water pollution abatement & nonpoint source grants by $3.5 million. Budget shuts down Stewardship purchases. 32 Natural Resources Budget Affects Health of People & Environment • Scientists help communities, small businesses keep water & air safe and clean. Loss of 66 positions including educators & scientists. 57 DNR employees received pink slips on Earth Day. “We believe going forward that science should drive decisions at the Department of Natural Resources, but that we do it on an as-needed basis, so when an issue comes up that requires a report, we can contract for that as opposed to have a component of that agency that just does reports whether they’re needed or not.” Gov. Walker 4/22/15 Earth Day 33 Are State Parks at Risk? $12.8M General Fund cut to parks. Budget requires GPS mapping to accurately ID park boundaries. Sale of state assets in no-bid contracts (FY 2013-15 budget). Last budget also required DNR to sell 10,000 acres of state land by July 2017. 34 Transportation choices are community choices Big Transportation Spending Focuses on Southeast Wisconsin Zoo Interchange: $623M in this budget; 1.7B total project. Milwaukee Hoan Bridge: $10M. Stillwater Bridge: $20M. Freight rail line purchases & improvements: $43 million. Same funding as the last budget for town and county roads ~$2,202 per mile; (increased in 2015). Total Debt Service from General Fund for Transportation= $229.95 million 36 Budget Widens Gap Between Transportation Revenue and Spending. Borrows $1.3 Billion & Raids Other Funds to Close Spending Gap. • • • • • For almost a decade, gas tax revenue has been flat or dropping. In 10 yrs. overall efficiency of cars & light trucks is expected to increase by 23%. Wisconsin registered 10 times the number of hybrids and electric cars in 2014 as in 2005. First time registration fee in WI is $75 and $411 in MN. In 1995, 6.5% of Transp. dollars went to paying off debt. By end of budget estimated 25% of $$ will be used to make debt payments. 37 Secretary of DOT Proposed Changes to Fix Transportation Budget. Governor Denied Requests: Federal Uncertainty: • National highway Fund continues on a path to insolvency. • Some funding set to expire the end of May 2015. • Currently 40% of total highway funds are federal monies. • Increase fuel tax by about $28 a year on a midsize sedan. • Increase diesel fuel tax by about $.10 a gallon. • Add a hybrid and electric car annual registration fee. • Begin a $10 per car load user fee for rail roads using statewide rail lines. • Wisconsin now owns 534 miles of freight rail lines, is acquiring 69 more and has significant ownership in another 114 miles. (717 miles at end of budget.) 38 Choices About Agriculture Affect Our Communities Budget Cuts Affect Ag Research & Ag Safety • • • • • Citizen DATCP Board loses policy making power. Citizen Natural Resources Board with farmer member loses policy making power. Discovery Farms funding cuts. Ag research lost with elimination of Fertilizer Research Council. Cuts to Extension include elimination of Ag Safety & Health Center. 40 Cuts to Courts Means High Judge Turnover; Corrections has Aging Facilities & Aging Inmates WI has 1,000 inmates 60 years or older • Wisconsin lost almost a third of its judges over 2008-2013. Budget establishes a judicial compensation commission. • DOC eliminates third shift tower guards saving $6M & 60 staff. • Budget creates court block grants. Shortfall in payments made up by counties. • WI was just selected by National Institute of Corrections for grant to expand effective justice strategies. 41 Local Government Struggles to Do More With Less Counties have fewer dollars to protect health & safety but the same responsibilities. Local Property Insurance Fund, which saves $$ for 924 local governments, is eliminated in this budget. Requires counties or cities to take over property assessment (no funding). Levy limits unchanged; shared revenue the same. 42 Senator Vinehout?s Alternative Budget 2015-2 hoices Priorities Alternative Budget: General Fund Changes No New Bucks Stadium (interest) ($2,800,000) No New WEDC Loan Fund ($55,000,000) $2,000 Freeze Tax Spending on Private and Independent Charter Schools ($71,682,300) $1,750 Fully Expand Medicaid ($345,100,000) $1,500 Surplus $1,250 $1,000 Return Income Tax Brackets to before Last Budget ($647,900,000) $1,054,815,100 $750 $ Millions $500 $250 Tax Credits and Deductions* ($884,100,000) Spending Priorities $951,767,200.00 $0 ($250) Available Revenue $2,097,882,300.00 Public Schools ($595,181,300) Nursing Home Workers ($31,125,000) ($500) ($750) University of Wisconsin ($278,686,500) Treatment Courts ($20,212,000) SeniorCare ($15,594,000) IRIS and FamilyCare ($6,000,000) ($1,000) Public Radio & TV ($4,968,400) 44 *No New Refundable Business Tax Credits ($12,500,000) No Deduction for Private School Tuition ($60,000,000) No Refundable Business Development Tax Credits ($91,300,000) No School Levy Tax Credit Increase ($211,200,000), Repeal Manufacturing and Ag Tax Credits ($509,100,000) Public School Items Supt. Evers Requested I Fund But Governor Did Not. Fair Funding for Schools Special Education categorical aid Science, Tech, Math & Engineering Center & Grants Bilingual-Bicultural Education Digital Learning Grants School Breakfast Aid Gifted & Talented Grants Transportation $ (Spec. programs)* Tribal Language Revitalization Grants School Safety & Violence Prevention 45 Changes in Health Save Money & Save Lives Provide BadgerCare for those who make 133% of federal poverty level ($15,000 yr. or $20,600 a couple) this saves $345 million & covers + 81,000 people Expand Family Care statewide (saves $6M) Stop move of FC & IRIS to private insurance Restore SeniorCare (anticipate a 1% enrollment inc.) Invest $27 million in court programs to reduce drug & alcohol abuse & treat mental illness Provide nursing homes a 2.5% rate increase to improve wages and nursing care. 46 Restore Voice of Farmer in Ag Policy & $$ for Research Restore Citizen DATCP Board Restore Discovery Farm Research Funding Dairy remains a top driver in Wisconsin’s competitiveness, output growth & gross product industry output. Restore Agricultural Safety & Health Center and Grants (through UW Extension) Restore Fertilizer Research Council 47 Invest in Our Children’s Future Restore UW Funding Restore MN WI Tuition Reciprocity Restore UW & Extension Research Fund Science Technology, Engineering & Math Center & Grants Compared to 8 competing states & the US as a whole, Wisconsin’s manufacturers are lagging in 3 key success areas: skilled workforce, technology & innovation advancement and globalization strategy. Invest in Gifted & Talented Education 48 Fix Fiscal Problems Create 2% Reserve Fund of $620 Million. Double balance going forward to FY17-19 budget. Cut Generally Accepted Accounting Principles (GAAP) gap in Half. Remove Transportation Fund raid on General Fund. 49 What’s In? What’s Out? Expand BadgerCare. Fix School Funding. Restore Ag, WPR, DNR, UW & SeniorCare cuts Keep IRIS & FamilyCare Raise to personal care workers. Set aside over $600 m in reserves No new or expanded private school subsidies. No raid on DNR to pay for grants to big companies. No free ride to a few manufacturing companies. No privatization of FamilyCare Keep income tax rates same as before last budget. No state funding for Bucks stadium End Budget with $1+ Billion surplus! 50 A State is a Community of DF COMMUNITIES What Kind of Community do We Want to Create? Let Your Voice Be Heard! SOUND IF YOU VOTE YOU LOSE THE RIGHT TO COMPLAIN THANK YOU TO SENATOR VINEHOUT’S TEAM! oPaige Humphrey, Legislative Aide & Slide Editor oLinda Kleinschmidt, Chief of Staff oBen Larson, Legis Aide, Constituent Service oBeau Stafford, Legis Aide, Policy Development 53 To Reach Sen. Vinehout: Senator Vinehout 877-763-6636 (toll free) Sen.Vinehout@legis.wisconsin.gov State Capitol Room 108 South P.O. Box 7882 Madison, WI 53707 Your Opinion Counts! 54 APPENDICES: Spending, Revenue Debt Budget 101: Odd Terminology General Purpose Revenue (GPR): Money collected from state taxpayers to be used for any purpose. Ex: school aids Program Revenue (PR): Money credited to a specific account to finance a particular program. Ex: tuition, inspection fees Segregated Revenue (SEG): Money by law must held distinct- or segregated- and may only be used for this purpose. Ex: motor fuel tax for transportation Federal Revenue (FED): Money received by the state from a federal agency for a specific program. Ex: Medicaid matching money Bond Revenue (BR): Money received by state from the issuance of bonds (debt) and deposited for specific purposes. Ex: state buildings, transportation 56 Unlike some states, Wisconsin’s budget includes money from several sources: General Fund (taxes) Program Revenue (fees) Federal Money (U.S. Government) Segregated Funds (gas tax) 57 Where Does Money Come From? All Funds Segregated Revenue 12% General Fund Excise 4% Corporate 7% Public Utility 2% Other 2% Program Revenue 11% General Purpose Revenue 48% Federal Revenue 29% Sales 32% Sources: State of WI Budget in Brief, February 2013; Preliminary 2012-13 General Fund Tax Collections, Legislative Fiscal Bureau, August 2013. Summary of Governor's Budget Recommendations, February 2015. Income 52% 58 Where Does Money Go? All Funds General Funds** Corrections 3% All Other Programs 16% Debt Service 4% Health Care 31% All Other Programs 13% Local Government 14% Local Government7% Transportation 9%* K-12 Education 18% Corrections 7% K-12 Education 34% Health Care 22% UW System 16% UW System 6% **Excludes property tax relief *excludes bonding Source: Summary of Governor's Budget Recommendations, February 2015. 59 Total Budgeted Spending: Health Grows Rapidly as Education Spending Slows 25 Health 20 Education UW System 15 $ in billions Transportation Shared Revenue and Tax Relief 10 Corrections All Other Programs 5 0 2001-03 2003-05 2005-07 2007-09 2009-11 2011-13 2013-15 2015-2017 Biennial Budget Sources: All Fund Appropriations by Agency, Legislative Fiscal Bureau, 2001-15; Summary of Governor's Budget Recommendations, February 2015. . 60 General Fund Spending 25 20 Health UW System 15 Education Shared Revenue and Tax Relief Corrections $ in billions 10 All Other Programs 5 0 2001-03 2003-05 2005-07 2007-09 2009-11 2011-13 2013-15 2015-17 Biennial Budget Source: Summary of General Fund Appropriations by Agency, Legislative Fiscal Bureau, August 2013; Summary of Governor's Budget Recommendations, February 2015. . 61 New Borrowing Increases $1.5B • • • • • • • • • 62 Big SE WI Road Projects $1,011m Hwy rehabilitation $242.4m Bucks Stadium $220m Freight train rail buying & improvement $43m Major interstate bridge construction $30m High-cost state hwy bridges $16.8m Natural Resources (dams, nonpoint source pollution, & toxic clean-up) $21m Safe water loan program $7.5m Soil and water conservation $7m Total: 1,555,713,600 Summary of Governor's Budget Recommendations, February 2015