For the first time in a long time, the state of Wisconsin is facing a budget surplus. Hooray! We don’t get to say that very often—about any state. What will Wisconsin do with their expendable cash? Governor Scott Walker wants to return the money to the taxpayers via tax cuts.
The surplus would result from $912 million in unexpected tax collections predicted to flow into the state through June 2015. If Walker has his way, the funds will be used to enact $800 million in tax cuts. Half the funds will be used to reduce property taxes, the rest used to lower payroll taxes and lower income tax rates for the lowest state bracket.
In his final State of the State speech this term, Walker said his “blueprint for prosperity” would reduce property and income taxes by $504 million over the next 18 months and put more than $100 million into the state’s rainy-day fund. He made clear that he believes the key to state affluence lies with the people, and not the expanse of government. Said Walker:
“When I travel the state, people don’t tell me that they want to keep sending more money to Madison…They don’t tell me that taxes are too low or even that taxes are just right. Overwhelmingly, people across the state tell me that one of the best ways to fuel the economic recovery is to reduce their tax burden.”
To the surprise of no one, Democrats in Wisconsin (and some Republicans) consider Walker’s proposal to be negligent at best. The state still faces more than $47 billion in state debt, and many people agree with Senate Minority Leader Chris Larson’s sentiment that “you pay off your credit card bills before you go on vacation.”
Here’s something else you don’t hear me say that often: the Democrats are probably right. Scott Walker is soon to face re-election, and his “blueprint for prosperity” is one that is probably intended to do more for his election efforts than the state economy.
Democratic State Senator Jennifer Shilling purports that the tax cuts would amount to about $33 per household over the span of two years, and according to figures released by Wisconsin’s Legislative Fiscal Bureau, Walker’s proposals to cut property taxes and establish worker training bills stand to increase costs by $180. The report claims that enacting the proposals would turn the current surplus to a deficit of $725 million for the 2015–2017 calendar period.
Perhaps it is a good thing that Walker’s bill, as it reads today, doesn’t have the necessary support from the state legislators. Many Republicans want to see the bill include more money allocated to improving the state’s long-term finances. Senate Majority Leader Scott Fitzgerald has said he does not have the votes needed to pass “what the governor has announced,” so the bill will likely face massive overhauls.
I completely support cutting taxes in Wisconsin – especially since I am now a resident of the state – but not if it may impede financial progress. “It’s what people are asking for, it’s what they deserve,” Walker says. Unfortunately, good government policy has to be built on more than that.
Great, we have stemmed the leak and cut the deficit, but the basement is still flooded – there is still debt to take care of. We need to get the standing water out before we focus on remodeling the kitchen.