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Wednesday, May 25, 2011

The Wisconsin Values Budget

Asking the wealthy and corporations to pay their fair share

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“We're broke,” Gov. Scott Walker has told the state repeatedly as a way to justify his draconian budget, which guts public education and transit and raises taxes on the poor while cutting taxes for the wealthy and profitable businesses.

But “we're broke” isn't totally true, since the state Legislative Fiscal Bureau found that Wisconsin will have an extra $636 million to work with during this budget cycle, thanks to Democrats' careful budgeting and tax policies during the past legislative session. The $3.6 billion deficit isn't even as bad as the deficit then-Gov. Doyle faced during the depths of the Great Recession.

Gutting public resources and boosting the fortunes of the wealthy isn't Walker's only option, either.

Last week, a broad coalition of statewide groups offered its Wisconsin Values Budget, which balances the needs of the state with residents' and big corporations' ability to give.

“We know there are better options,” Ken Taylor, executive director of the Wisconsin Council on Children and Families (WCCF), said when the alternative budget was released last week.

A More Balanced Budget

Budgets are about priorities and values, Taylor said, and Walker's budget shows just where his priorities lie.

To close a reported $3.6 billion structural deficit in this budget cycle, Walker is asking that wealthy state residents and profitable corporations make no extra sacrifices to increase the state's revenue and prevent some of the worst cuts from being enacted. In fact, Walker is offering $400 million in tax breaks for the wealthy, corporations, road-builders and voucher schools.

In contrast, Walker is asking the middle class and low-income residents to contribute more.

Walker is cutting $2.48 billion in spending that largely funds programs for state workers, students and the vulnerable. Walker has proposed cutting more than $800 million from public K-12 education, $250 million from the University of Wisconsin System and $72 million from the technical college system. Slashed, too, are funds for programs that serve low-income residents, including $500 million from Medicaid programs, $45 million from Wisconsin Shares' child care assistance programs, $41 million from the Earned Income Tax Credit for low-wage earners, and even cuts in W-2 benefits.

State and local employees—who make up the state's solid but struggling middle class—will contribute more toward their pension and health care obligations, in addition to losing most of their collective bargaining rights.

But this alternative budget offers a more balanced way to close the $3.62 billion deficit. The Wisconsin Values Budget:

  • Offers no special tax breaks to high-earning individuals and profitable corporations.
  • Asks public employees for concessions, but makes the more reasonable assumption that they will total $1.04 billion over the biennium, instead of Walker's promised $1.54 billion in savings.
  • Creates $1.04 billion of narrowly targeted tax increases for the wealthy to balance the sacrifices made by public employees. For example, capital gains would be taxed as regular income unless the profits were generated from Wisconsin corporations or reinvested in state businesses. The Wisconsin Values Budget also reinstates the estate tax for wealthy individuals, increases the top tax rates for high-earners and increases corporate taxes to bring them up to the national average.
  • Improves Wisconsin's tax collection efforts, which would bring in $300 million in additional revenue over the biennium.
  • Includes the $636 million in increased revenue, as projected by the Legislative Fiscal Bureau.
  • Whittles down Walker's $2.48 billion in spending cuts to $640 million, a difficult but not impossible task.


A Moral Deficit

Linda Ketcham, executive director of the Madison-area Urban Ministry, said that Walker's budget creates a “moral deficit inasmuch as it fails to address and to protect our most vulnerable brothers and sisters.”

She said that the faith community recognizes that “poverty is the result of conscious decisions by those in power,” including profitable corporations that take advantage of tax breaks at the same time that they ask more of their workers while cutting their pay.

“A budget that is balanced on the backs of workers and the poor is not just, it is not moral and it is simply no solution,” Ketcham said.

Robert Kraig, executive director of Citizen Action of Wisconsin, said that Gov. Walker, the son of a Baptist minister, is turning his back on Wisconsin's long tradition of investing in high-quality public education at all levels and access to health care. He said the state's economic difficulties are due to the Wall Street-created recession, not government spending.

“It's a short-term crisis,” Kraig said. “It is not an excuse for rolling back Wisconsin's investments that we have done for generations. It's a moral choice that's being made. Not an economic choice.”