Who Will Pay for Scott Walker's Cuts? Hint: It's not the wealthy
Wisconsin is broke, Gov. Scott Walker has claimed, and it's time to balance the budget.
In order to close an estimated $3.6 billion deficit, Walker, the son of a Baptist minister, is asking only Wisconsin's middle-class and lower-income residents to make the sacrifices. If you send your child to a public school or one of Wisconsin's universities, you will feel this budget squeeze. If you are a teacher or other public employee, you will feel this budget squeeze. If you are a lower-income resident in Wisconsin, you will face an even more difficult battle.
It makes little sense to cut state spending during an economic downturn. Services provided by the government—such as subsidized health care, public education, job training and public sector employment—are needed to help Wisconsinites during a recession and to ensure that workers have money to spend at local businesses.
Conversely, cutting salaries and safety net services will cause the economy to shrink, since fewer people will be able to afford anything more than the bare basics and the state will be able to collect less income and sales taxes. An estimate by the Institute for Wisconsin's Future found that the effects of the wage and benefits concessions agreed to by the state's public sector unions will put more than 9,000 private sector jobs at risk.
But that's not the only reason why Walker's budget repair bill and proposed 2011-2012 budget—which cuts $4.2 billion in spending—is so alarming.
Combing through the details of Walker's proposals, there's little sense of shared sacrifice, the notion that everyone should contribute what they can to the common good. Those who can contribute more should be asked to do more.
But Walker is only asking some of us to make sacrifices. In one of the most regressive budgets ever introduced in this state, Walker is giving wealthy investors and business owners tax cuts, while the rest of Wisconsin residents will be faced with cuts in salaries and services. Even worse, Walker is limiting local control over property taxes, so that communities that want to increase funding for schools, fire and police services and garbage collection will be unable to do so—unless a costly and time-consuming referendum is held.
"This is not what Wisconsin is all about," Assembly Minority Leader Peter Barca (D-Kenosha) said at a community meeting on Saturday at the Parklawn Assembly of God. "It's almost like there's a battle for the soul of the state."
Slashed Services and Tax Increases for the Working Poor
Here's how Walker's budget will impact the state's most vulnerable residents:
- With more than $800 million in reduced state aid, public-school children will shoulder nearly one-fifth of the cuts Walker is making. Milwaukee Public Schools will be hit especially hard. (For details, see "Is This the End of Milwaukee Public Schools?" on page 10.)
- Students in the Wisconsin Technical College System will see funding reduced by $71.6 million over the two-year cycle.
- Wisconsinites on BadgerCare and other Medicaid programs are especially
vulnerable. Walker's exact plans for health care aren't entirely clear. One of
his proposed reforms would allow his politically appointed secretary of the
Department of Health Services to be able to make sweeping changes to Medicaid
programs under permanent "emergency rules." With "emergency rules," the
secretary's changes would not have to be approved by the full state
Legislature, but rather would only need the support of nine of the 16
legislators on the Joint Finance Committee. Even though this is potentially
unconstitutional, the state Assembly passed this item in the stalled budget
Some of Walker's reforms are clearly stated in his proposed 2011-2012 budget.
Walker would eliminate BadgerCare coverage for those who earn more than 133% of the federal poverty level, or $24,352 for a family of three. That would save the state about $90 million over two years.
It's difficult to imagine how a family at that income level would be able to purchase insurance in the open market, but that's Walker's plan for 55,000 Wisconsinites who would lose BadgerCare coverage. Since these families will likely go without health insurance, they will end up going to hospital emergency rooms, which cost several times as much as an office visit. The hospital will then write off these costs as "charity care" and pass on the real costs to those with insurance, which in turn raises the cost of health insurance for everyone in Wisconsin.
- Walker is eliminating, outright, funding for family planning services
for men and women between the ages of 15 and 44 who earn less than 200% of the
federal poverty level ($21,700 for a single person). Services include access to
contraception; cervical, prostate and breast cancer screenings; and sexually
transmitted infection (STI) screenings.
Leaving these health issues untreated will undoubtedly create more health problems and significant costs down the line, thanks to increased rates of STIs and pregnancies and the increased cost of treating cancer diagnosed later, rather than sooner.
- Most of the 91,000 individuals who are enrolled in SeniorCare for their prescription drug coverage will now be forced to enroll in Medicare Part D, a federal program that is more expensive and difficult for seniors to navigate.
- The Earned Income Tax Credit, a program championed by Republicans like Wisconsin Congressman Tom Petri, provides subsidies to keep the working poor in private sector jobs. Walker will slash the amount slated for this program by $41.3 million, thereby handing low-wage workers a $41.3 million tax increase over the biennium.
- Walker will change the way that the homestead tax credit is calculated so that $8.1 million is cut over the two-year budget. This will amount to a tax increase for more than 247,000 homeowners and renters in Wisconsin with a household income of less than $24,680.
- Employees in the Wisconsin Works (W-2) program would receive $20 less per month—$653 a month for those in a community service job or $608 for those in a transitional job—to provide a lesson about the value of work, according to Walker's budget.
- Walker is cutting funding for transit by 10%—about $7 million for the Milwaukee County Transit System (MCTS)—and moving its funding source from the state transportation fund, which is a segregated account supported by the gas tax and used for transportation expenses, to the general purpose account, where transit will have to compete for money with other state programs. In addition, by eliminating collective bargaining rights for transit workers, Walker is jeopardizing $46.6 million in federal funding for transit systems around the state. MCTS would likely be exempt from that federal aid cut, but the effect of Walker's general cut on transit would be devastating for the system. Look for pricier tickets, route eliminations and the end of the system as a reliable service throughout the county.
Perks for Investors, Road Builders and Tourists
But the news isn't bad for everyone, since Walker managed to provide some tax relief and increased funding for certain Wisconsinites:
- Walker is increasing funding for Department of Tourism marketing by more than $5 million to paint a rosy picture of life in Wisconsin.
- Walker is eliminating the income eligibility limits for the Milwaukee Parental Choice Program, so children of wealthy parents will be able to use tax dollars to pay for tuition at private or religious schools.
- Walker wants to spin off the University of Wisconsin-Madison from the rest of the UW System. That would allow UW-Madison to hike tuition and fees, making a college education even less affordable for the average student and his or her family. Shockingly, Walker is even looking into allowing UW-Milwaukee to do the same.
- Capital gains taxes are eliminated for long-term investors in Wisconsin businesses.
- During the special session on job creation, Walker and the Republican majority in the state Legislature handed out $140 million in business tax breaks that even businesspeople argue will do little to nothing to create jobs.
- At the same time as Walker is slashing funds for buses, he's increasing funding for highways by $410.5 million, a 14.7% increase, to $5.7 billion. These moves, in combination with his refusal of $810 million in federal funding for high-speed rail, will ensure that Wisconsinites depend on cars and freeways for generations to come.