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Wednesday, July 7, 2010

Fact-Checking Scott Walker

The perpetual candidate’s campaign claims don’t match reality

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Milwaukee County Executive Scott Walker has been continuously campaigning for governor for the past six years. So how do his campaign claims live up to the reality of his time in office? Here’s a look at some of his biggest claims:

Claim: Walker “introduced eight consecutive budgets without an increase to the property tax levy from the previous year.”

Reality: It’s a carefully worded statement, but “sneaky and misleading,” said Anna Landmark, research director of One Wisconsin Now (OWN).

On the face of it, Walker’s statement makes it sound like he hasn’t raised property taxes since proposing his first budget.

But that’s not the whole story, of course.

Here’s how it works: Walker will introduce an unrealistically stringent budget each autumn. The county board then has no choice but to add spending and tax increases to keep up with inflation and other increased costs of doing business. Walker will veto the changes, and the board will override the veto. Then Walker will use that budget as the base line for his next year’s budget.

And, voila! Walker can say that he hasn’t increased taxes and spending because the board has made the tough decisions.

So how much have property taxes increased during Walker’s reign? OWN crunched the numbers and found that Walker’s proposed budgets from 2003 to 2010 raised property taxes about 17%, while he’s increased spending 35%, more than Gov. Jim Doyle did during the same period. What’s more, fees on licenses, permits, fines and forfeitures have increased a whopping 129% during Walker’s tenure.

“There is the world that exists, in which he has made these increases, and then there’s this fantasy world of the campaign he’s running,” said OWN’s executive director, Scot Ross.

Another problem, of course, is the lengths to which Walker must go to not increase taxes while trying to come up with a budget. Walker failed utterly when he introduced his 2010 budget with a $32 million hole in it that was to be magically filled through $32 million of wage and benefit concessions during union contract negotiations. But Walker’s labor negotiator had never proposed these concessions to the unions. That budget still hasn’t been resolved and probably won’t be by the time voters cast their ballots this fall. In the meantime, Walker has forced many union workers to take 22 unpaid furlough days in 2010, furloughs that are wreaking havoc in places like the Milwaukee County Mental Health Complex and the Milwaukee County Zoo. It’s likely that the cost of the furloughs in these critical 24/7 operations will outstrip what has been saved.

Claim: Walker says that as governor he wants to decrease taxes on employers, property owners, wealthy investors and retirees.

Reality: This makes for a great sound bite on the Republican campaign trail, but Walker’s tax proposals would blow a $5 billion hole in the state budget, according to research conducted by OWN.

First off, Walker would inherit a $2.3 billion deficit. Then he wants to slash the income tax for the top 1% of earners, which would cost the state $287 million over the biennium. He also wants to reopen the “Las Vegas loophole” to reward Wisconsin companies that set up phony offices in states without a corporate income tax to avoid paying Wisconsin state taxes. That move would set the state back about $375 million. Then he wants to roll back the capital gains tax paid by the state’s wealthiest people. Cost to the state over two years: $243 million. Walker also wants to phase out taxes on retirement income—regardless of the retiree’s wealth—which would cost the state a whopping $920 million over the course of two years. And Walker’s latest gimmick is to put the sales tax from new cars into the transportation fund, which would take more than $1 billion out of the state’s general fund.

Total cost to the state: $5.125 billion during Walker’s first two years in office.

Although Walker is constantly campaigning, he’s been pretty silent about how he’d make up for these cuts. His only proposal thus far is to require state employees to contribute to their pensions. But that would generate a mere $185 million—$4.94 billion short of what he’s slashing from the state budget and handing to the state’s wealthiest residents.

Claim: Walker plans to add 250,000 jobs during his first term as governor.

Reality: Interesting, because the county’s unemployment rate has increased while Walker’s been in office. This promise means reducing the state’s unemployment rate to virtually zero. Walker offers no details on how he’d create jobs beyond cutting taxes and improving education, and it’s hard to improve education with less revenues.

As county executive, Walker has cut 20% of the county’s workforce. Many of those jobs have vanished, while others were outsourced to private companies based out of state, such as the multinational corporation Wackenhut/G4S, which took over some of the county’s security services.

Then there’s last week’s Bucyrus International dust-up, which has now been resolved. Bucyrus CEO Tim Sullivan, a political conservative, commended the Obama administration, Sen. Herb Kohl, Gov. Jim Doyle and Milwaukee Mayor Tom Barrett for engaging in an “all-nighter” to resolve the dispute between the South Milwaukee manufacturer and the Export-Import Bank. And how did Walker handle the threat to a major corporation within Milwaukee County? By taking out a full-page ad in a Racine paper to whine about the situation on the day Obama visited that city.

Claim: Walker is the one candidate who can help Harley-Davidson.

Reality: Walker has tried at every turn to seem “cool” by being a big Harley supporter. His latest gimmick is to promise to help Harley by reviving the Las Vegas loophole (otherwise known as repealing the combined reporting law), which Walker (not Harley) claims is costing the motorcycle manufacturer $22 million in taxes.

The problem, though, is that it just isn’t true. Combined reporting hasn’t caused Harley’s troubles and, what’s more, the state’s new tax policies are helping its bottom line. The new corporate tax policies benefit Wisconsin-based manufacturers. “If the change [to corporate tax policies for Wisconsin-based manufacturers] had not been made and Harley had continued to pay taxes at its 2005 rate, then in 2008 its income tax bill would have been $16 million instead of $1 million,” concluded a study by the Institute for Wisconsin’s Future.

Claim: Walker “invested over $199 million in renovations and improvements to General Mitchell International Airport without increasing the property tax levy.”

Reality: Of course the airport didn’t use the property tax for its improvements. “The airport doesn’t rely on the property tax,” explained Milwaukee County Supervisor Chris Larson, because it uses fees paid by airlines and passengers.

Claim: Walker “implemented a pension obligation plan to save Milwaukee County taxpayers $237 million.”

Reality: Voters in Milwaukee County rejected issuing bonds to cover pension payments in a 2005 referendum. But Walker succeeded in getting almost $400 million in these bonds approved by the county board and state last year. While “bonds” may sound safe in theory, in reality they’re actually kind of risky. The idea is to invest the $400 million from the bond sales in hopes of receiving an interest rate that is higher than what the county pays on the bonds. This is like refinancing your house and investing the money in volatile tech stocks, and hoping that you’ll turn a consistent profit.

Back in 2008, the Public Policy Forum looked at Walker’s plan and was worried: “In light of the existing turmoil in the nation’s financial markets, it is highly questionable whether [pension obligation bonds] could and should be issued in this calendar year [2009], and whether the existing plan would have the desired impact in light of an almost certain dramatic increase in the unfunded liability due to investment losses.” Guess what? Walker did in fact implement them in 2009, a year full of financial turmoil.

And the $237 million saved? Walker campaign spokeswoman Jill Bader explained that the savings are spread out over 35 years.

What’s more, Walker failed to clean up the pension system he’d inherited. In fact, the Journal Sentinel won a Pulitzer in 2008 for its reporting on how a $50 million loophole still existed in the plan five years after Walker was voted into office.

Claim: “From 2002 through 2010, Scott and Tonette Walker have given back over $370,000 of his salary to the county.”

Reality: Walker likes to brag that he returns a portion of his salary to the county to show that he’s frugal. But in 2004, a campaign rival noted that despite Walker’s claims of returning some salary, he was still drawing his pension and benefits on his full salary.