Download - Well, Toto? Oz- consin or Wis -consin?
Sheboygan Co. Chamber ▪ 05.03.2013
Sheboygan Co. Chamber ▪ 05.03.2013
Well, Toto?Oz- consin or Wis -
consin?
Where the heck are we?Where the heck are we?So, if this ain’t Kansas, Toto . . .
Assessing Wisconsin’s fiscal condition & direction
?
Sheboygan Co. Chamber ▪ 05.03.2013
Budgetary choices Forward . . . or Back to Oz?
1 Backdrop: DC and state economy
2 Recap: State finances ‘til now
3 The new state budget
4 Budget sticking points
5 Hard questions with future consequences
WISTAX: 80+ years of research & education
Overview: State finances at crossroads
OZ?
WI?IL?!
Sheboygan Co. Chamber ▪ 05.03.2013
“. . . a growing level of federal debt would also increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget . . . the abrupt rise in interest rates would reflect investors fears that the government would renege on the terms of its existing debt or . . . boost inflation.” ─ CBO 7.10
199
149
10178
54
37
0
50
100
150
200
250
300
1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 2023 2028 2033 2038 2043
'05 '13 '31 '37
CBO 6.12
US Debt Held by Public as % GDPAlt. Scenario: Most Likely Given Past Cong. Action CBO: 6.12
Background: DC — No help? Future hurt?1
Sheboygan Co. Chamber ▪ 05.03.2013
2001 Rk 2011 Rk % Chg. Rk
US $35,857 $48,079 34.1%
DE 54,841 1 72,486 1 32.2% 33
IL 38,998 8 52,119 12 33.6% 31IA 32,095 33 48,652 22 51.6% 6MI 33,774 23 39,008 40 15.5% 50MN 38,934 9 52,707 11 35.4% 24
WI 33,946 22 44,613 29 31.4% 35
MS 23,685 50 32,839 50 38.6% 18ND 29,927 39 58,965 7 97.0% 1
State
State GDP per capita & chg.
2.9
2.2
3.0
2.2
0
1
2
3
Wis. US Wis. US"Births" "Deaths"
Background: State economy (= taxes)
Sheboygan Co. Chamber ▪ 05.03.2013
-6%
-4%
-2%
0%
2%
4%
6%
1984 1988 1992 1996 2000 2004 2008 2012
US
WI US/WI
US
% Mo'ly Job Chg. WI Job Growth Tracks/Diverges From US
87 mo: 100% 124 mo: 35% 102 mo: 27%
Wis > US ?
Trend: Wis & US
And jobs? The whole story
Sheboygan Co. Chamber ▪ 05.03.2013
‘Bipartisan’ rhetoric: Jobs!
Silly, partisan job number games
The (R) rhetoric: Credit and lure
The (D) rhetoric: Programs create jobs
Another (persuasive) viewStartups and young companies dominate net job creation in the United States – and have done so for the last 30 years . . . Ewing Marion Kauffman Foundation (2010)
Digression: Job rhetoric
Sheboygan Co. Chamber ▪ 05.03.2013
0
2
4
6
8
02 03 04 05 06 07 08 09 10 11
4.3
5.8
9.3
5.9
s
s
WI
US
Cum. Population Growth: 2002 - 119.3
5.9
Young people: workforce, new families,
cons. goods
Underlying trends — changing population
Sheboygan Co. Chamber ▪ 05.03.2013
New firms in ‘96:
WI US Alivein ’06 44% 34%
Alivein ’10 36% 27%
Firm creation rates: 1992-2009
Rate RankUnited States 5.4
Alaska 7.4 1
Illinois 5.3 25Indiana 4.5 43Iowa 4.2 48Michigan 5.8 17Minnesota 5.5 23Wisconsin 4.5 42
Connecticut 4.0 50 * Less new seasonal firms = 49th
New as Pct. of All
Lack of new firms – another key
Sheboygan Co. Chamber ▪ 05.03.2013
1990s-2010: Boom, splurge, crash, deny
Delay, delay: Dig a hole, file a hole, dig . . .
Tricks, transfers, gimmicks, borrowing 2011-13: Inherited deficit, big Medicaid
hole;Cut everything, add $1b+ to Medicaid
Now: No ‘deficit carryover’, surpluses 2013-15? Budget crossroads, return to
Oz?
2 State finance recap: The ‘Oz’ decades
?
Sheboygan Co. Chamber ▪ 05.03.2013
-10
-5
0
5
10
1990 1995 2000 2005 2010 2015
Avg.=6.8%
Avg.=5.0%
1.8
3.3
3.1
Notes:1. Tax cut carried over2. New LFB rev. est’s
3 New budget: Revenue growth? (GPR)
Sheboygan Co. Chamber ▪ 05.03.2013
3.2% 3.0%
0.6%1.3%
4.0%
5.9%
-5.8%
3.3%
$15,257
$14,297
$13,579
$12,744
$13,526
$12,727
8,000
10,000
12,000
14,000
16,000
06 07 08 09 10 11 12 13e 14b 15b
-8%
0%
8%
16%
24%
Annual Pct. Chg.
GPR Spending ($ Mill.)
New budget: Spending growth (GPR)
Sheboygan Co. Chamber ▪ 05.03.2013
Programs w/ Largest Increases, One/Both YearsOver ’13 Base ($m) for Tot. Biennium (14+15 vs. 13)
Total = $731.7 m
Big 2 = $717.6m !
Net incr.
All increases
New spending in few places
Sheboygan Co. Chamber ▪ 05.03.2013
108.1
487.7
70.9$49.2
-$2,150-2,645
-2,056
-2,995
-1,500
-1,000
-500
0
500
06 07 08 09 10 11 12 13e 14b 15b
-4,500
-3,000
-1,500
0
1,500GPR Surplus(left axis)
FY ends
% Spdg 0.4% 0.6% 3.4% 0.7%
GAAP Deficit(right axis)
Budget bottom line: Surplus? Deficit?
Sheboygan Co. Chamber ▪ 05.03.2013
11.4
13.613.0
12.110.1
5.8
0
4
8
12
'02 '04 '06 '08 '10 '12
7
State DebtCAFR (through 6/12)$ Billions
’13-’15 proposed
2013-15 Gov. Proposals
$1.03b in budget ($0.99b transpt’n)
$1.15b in capital bud.
= $2.15b total
$16+ bill?
Budget sticking points: Debt4
Sheboygan Co. Chamber ▪ 05.03.2013
None +!
’15e
$326e
Return of the ‘structural deficit’?
Budget sticking points: Ozian imbalance?
Sheboygan Co. Chamber ▪ 05.03.2013
-0.7
4
-1.0
8
-1.1
7
-1.1
3
-1.2
2
-1.1
3
-0.9
2
-1.4
7
-1.2
7 -0.9
1
-0.8
3
-1.2
1
-1.4
8
-2.2
4 -1.9
3
-2.1
2
-2.1
5
-2.4
4
-2.5
0
-2.7
1
-2.9
4
-2.9
9
-2.2
1
-$4.0
-$3.0
-$2.0
-$1.0
$0.0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Gen
. Fu
nd D
efic
it in
$ B
illio
ns (
GA
AP
)
$16
bill. ?
-2.0
6
-2.3
6
-2.6
4
G.A.A.P?
13 14 15
Pending/Proposed
Sticking pointZ, Oz II: GAAP deficits?
Sheboygan Co. Chamber ▪ 05.03.2013
About $343m, two years
How? Lowest marg’l rates Critique: Too small? Too large—reserves?
Prop. tax? Top 7.75 rate?
Missed opportunity? ▪ Cash as ‘political grease’ ▪ Tax law as regulation
Broader base/cut rates
Assembly CPA changes?
Budget sticking points: Tax cut?
Sheboygan Co. Chamber ▪ 05.03.2013
Budget sticking points: School finance
Largest part of state budget, 35% - 45% of GPR Overall, largest source of revenue for K-12 Evolution: Big bucks, little bucks, fewer bucks Political geography
▪49 sch. dists. rev. now < ’03 ▪2/3rds in R sen dists.
Sheboygan Co. Chamber ▪ 05.03.2013
Decades of the fiscal revolving doorCareer politics = short-term thinking= GAAP deficits, low bond ratings= Painful cuts and tax increases, little or no
strategic planning
Coming questions and choices: ▪ Delayed vs. instant gratification (up spending, cut taxes?) ▪ Long-term fund integrity vs. addiction to transfers ▪ Pay-as-you-go vs. return to increased borrowing ▪ Fundamental reform vs. tinkering:
Income tax, transportat’n, higher ed. finance
5 Choices: Wis- or Oz- consin?
Sheboygan Co. Chamber ▪ 05.03.2013
Wisconsin Taxpayers Alliance80 years of nonpartisan policy research and citizen
education
Questions? Jokes? Critique?
Are we gonna get a brain?
www.wistax.orgwww.wistax.org
Z zz zzz z z z z