Before Gov. Scott Walker can run for president, he’s got to tie up some loose ends here in Wisconsin—like a $2.2 billion budget hole that was created as a result of his highly political policy decisions and various tax cuts for the very wealthy. These policy choices are favored by the right-wing billionaires who will be instrumental in the Republican presidential primaries but are devastating for the average Wisconsin taxpayer.
According to new figures from the Department of Administration (DOA), state agency heads have made requests for $2.2 billion more than the state is expected to take in during the 2015-2017 two-year budget. Walker will consider those requests in the proposed budget he’ll submit in early 2015.
Walker and his DOA Secretary Mike Huebsch are downplaying the projected deficit, saying that agency requests are never completely granted in any budget submitted by the governor. Huebsch also noted that the requests “do not normally include any funds for prospective increases for debt service, fuel and utilities, state employee compensation and fringe benefits, or University of Wisconsin faculty pay adjustments,” so the $2.2 billion estimate could change.
But if these projections hold firm, Walker’s deficit would only be topped by the $2.9 billion deficit left by former Gov. Scott McCallum in 2003 and the $2.5 billion former Gov. Jim Doyle left in 2011 during the depths of the Great Recession. Walker’s $2.2 billion deficit, conversely, was created as the state and the country recovered from that same recession.
But that’s not the way Huebsch explains it in the budget memo he released last week. The problem, he alleges, is due to President Barack Obama.
“The challenges of fiscal year 2014-15 are largely a result of adverse federal tax law changes commonly referred to as the federal fiscal cliff, which impacted many states,” Huebsch wrote. “This led to tax planning distortions that were a consequence of both the 3.8 percent surcharge on investment income included in the Affordable Care Act and the expiration of capital gains tax reductions, both of which took effect in 2013.”
Huebsch was referring to a new tax on investment income affecting high-income earners, which was passed as part of Obamacare. It only affects those earning more than $200,000, and it’s only applied to their investment income. In addition, in early 2013 President Obama ended just a fraction of the tax cuts enacted by President George W. Bush; like the Obamacare taxes, the president’s tax changes primarily affect very high earners.
|
|
Jobs, Tax Cuts and Health Care
But was Walker’s $2.2 billion deficit really brought on by Obama’s taxes on high earners? Walker himself did plenty to contribute to it:
■ Sluggish Job Growth: Walker’s Wisconsin hasn’t rebounded from the Great Recession as well as other states have. We’ve consistently ranked in the lower third of all states and dead last in the Midwest in job growth. According to the latest figures from the Center on Wisconsin Strategy (COWS), the state is still 15,300 jobs short of our pre-recession workforce. Huebsch acknowledges the state’s sluggish job growth in his memo, but he doesn’t note that while Wisconsin’s recovery is lagging, back in June the country as a whole recovered the jobs that it shed during the recession.
■ Tax Cut Fever: According to data from the nonpartisan Legislative Fiscal Bureau (LFB), Walker and Republican legislators cut taxes 43 times, shrinking state revenues by $1.9 billion from 2012-2015. Walker’s income tax cuts went to the state’s highest earners. Huebsch noted that tax collections are up despite the tax cuts, but it could be argued that they’d be more robust if Walker hadn’t slashed taxes, especially on the state’s wealthiest residents.
■“Reforming” Medicaid: Walker famously rejected federal money to expand Medicaid fully under Obamacare. Instead, he reorganized the state’s Medicaid program, BadgerCare, at a higher cost to state taxpayers. State taxpayers footed more than $200 million in additional costs in this budget, and they’re predicted to pay out another $315 million in the next two years.
