Gov. Walker ginned up budget shortfall to undercut worker's rights

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meljomur's picture

I would like to give a nod to LeMoyne (a progressive who sites facts on this board, and unfortunately doesn't post very often here) for looking into this issue.

Furthermore, this broadside comes less than a month after the state's fiscal bureau -- the Wisconsin equivalent of the Congressional Budget Office -- concluded that Wisconsin isn't even in need of austerity measures, and could conclude the fiscal year with a surplus. In fact, they say that the current budget shortfall is a direct result of tax cut policies Walker enacted in his first days in office.


LeMoyne's picture
Thanks again Mel.  Because of

Thanks again Mel.  Because of your encouragement I did some more posting and even more digging.  Through the university site NEWS @ U-W Eau Claire, I found this awesome site: The Wheeler Report - just loaded with links to online print news and copies of real interesting source documents including the Budget Repair Bill itself. 

Posts on the Wheeler Report include Gov. Walker's  Letter to State Employees [PDF]  and the memo from the LFB: Impact of local collective bargaining changes under SS SB 11 on Federal Transit Aid [PDF].  These two PDFs make an interesting pair because Walker's letter (addressed to himself (!!)) claims $30 million savings from the benefits changes for the remainder of the fiscal year (effective date? thru June 2011?) while the LFB memo says "$46.6 million to [various] bus systems could potentially be withheld from state transit systems under the federal 13(c) provisions as a result of the changes to municipal collective bargaining under SS SB 11" (Federal Fiscal Year 2010 = ?Oct 2010 thru Sep 2011?). In a strange irony the privatized MTA (Milwaukee) would be immune to loss of Federal funds because the bargaining rights of the workers there are unaffected by the Budget Repair Bill. 

Though the time basis is not clear and certainly unequal, the payroll/benefits savings are expected to be undercut by loss of Federal transit funds due to the loss of collective bargaining rights.  In fact, the Repair may even be a net loser in the current budget cycle which is all it is supposed to address. 

If Transportation Sec'y LaHood continues his firm stance against these right-wing-nut Govs (as in high-speed rail in WI, FL and OH) then the likely net result will be reduced savings with losses of transit jobs and losses of transit services.  I don't expect Walker to make up any transit shortfall so the loss of jobs and services would add more imbalance to the budget by reducing income and business tax revenues.  Coming on the heels of the special tax credits for business this isn't 'Let them eat cake' this is 'Watch me eat cake, pay me for the privilege and then walk home.'  Governor Walker indeed. 

Many reports say that the $3+ billion shortfall Walker expects through 2013 would come primarily from reduced revenues (from weak economy not the transit scenario above) as well as from increased Medicaid and school costs.  None of these major deficit drivers are affected by the Budget Repair Bill, but again, the repair normally only addresses the end of this fiscal year ending in June 2011.

Perhaps best of all: hard charging Governor Walker - doin' the people's bidness you betcha - is almost a month overdue in submitting the biennial state budget (due 1/25/11).  This is already the latest budget since the 1970's.  Can hardly wait to see what's in the budget to deal with the $3 billion shortfall for next year - and yes, its still $3 billion after the benefit changes - I am sure there will be more excitement (and hopefully organizing) around that!

meljomur's picture
Thanks for the info. LeMoyne.

Thanks for the info. LeMoyne.  You certainly are good at doing your homework.  I will sift through this later, when I have some more time.

I feel very positive about what I am witnessing in Wisconsin.  People fighting back for their rights.  (And it's movement which isn't being backed by billionaires).

Perhaps this is the turning point in America.  I suppose it had to happen sooner or later.  Good for Wisconsin for being the starting point!

TimothyD11's picture
I'm afraid that these people

I'm afraid that these people will go home and pack it in - I don't want to see violence in this country - but I DO want to see the citizenry truly unite and push back hard - everywhere - throughout this ONCE great nation. EVERYTHING progressives demand is reasonable and we have to PUSH BACK HARD against the outrageous things conservatives want / believe - and put these Koch / Thomas / Scalia / Beck / Norquist / Peterson bastards BACK on a leash.

We don't have so much a SPENDING problem in this country as we have a cater-to-the-rich / defunding-of-government problem in this country.

douglaslee's picture
I haven't gone through

I haven't gone through LeMoyne's links so these 12 points might be covered already/12_things_you_need_to_know_about_the_uprising_in_wisconsin

LeMoyne's picture
Douglaslee thanks for the

Douglaslee thanks for the Alternet link. Joshua Holland does a good job with the national context of union busting and the facts that: -- union workers fare better than non-union (whether public or private) and -- public workers get less compensation (whether unionized or not).  In particular the FDL ALEC story explains how this is happening everywhere the Banana Republicans are in charge now. 

I am trying to sort out the budget mess in WI in particular - it seems that Walker has really put his foot in it. The Republicans (hence the corporate media) say that the LFB report has the surplus turning into a deficit because of deferred payments to Minnesota (income taxes withheld in WI but due in MN), the medical assistance to the uninsured and repayments due to a WI injury compensation fund.  Two of these hese have been deferred until now - the end of Wisconsin's 2 year budget cycle (2009-6/30/2011).  [Note this source of the deficit is not the special tax breaks just assessed last month, as many (self included) thought at first... those special breaks apply and increase the deficit in the next cycle 2011-2013].  The medical assistance problem, well... maybe someday after the next biennial -- Obamacare.  In the meantime, the problem of keeping the uninsured from dying from lack of treatment remains as a nationwide problem. 

Two points about the deferred obligations that are the source of most of the deficit in the current cycle - i.e. the reason for the Budget Repair Bill: 1) The deferred payments are far larger than the revenue expected from having the state workers contribute more towards their benefits -- five to ten times larger in fact, and 2) I am not sure that the Budget Repair Bill actually addresses these deferred payments.  If the latter case is true, then they are deferred again to 2011-2013 -- and the surplus actually returns.

If the budget is repaired in this manner then:  A) it is by the same mechanism that Walker has repeatedly derided in public and  B) there is absolutely no need for a budget repair bill beyond deferring the payments!! 

I will do more research this weekend and try to make it crystal clear.  I am thinking that this is why Dem Senators walked out - there is no immediate need for budget repair beyond deferral of these two payments and fixing them in the long awaited (Walker is over a month late) biennial budget for 2011-2013. 

Best summary so far (but don't quote me on this yet), there is no emergency and Walker's repair bill doesn't even address his fake emergency - instead he is deferring much of the budget shortfall.  Deferral is something he campaigned against and is claiming that he is not doing while he is actually doing it.  Ooooo -- much practice of deceit and tangled webs by the Banana Republicans here ... looks like maybe Brer Fox might be stuck to his Big Lie tar baby.

On 8/24/10, candidate "Scott Walker tells the Wausau Daily Herald Editorial Board about his plans to curtail public employees' benefits if elected as governor (start at 7:25)".  Loads about negotiation with the unions (didn't happen) and nothing about stripping collective bargaining rights (is the proposal behind the controversy).  Similarly for Walker's State f the State address in early February - it spends much on the budget, most of that on the repair bill, and a chunk of that (1/8th of speech) on the benefit charges to public employees.  Nothing in the speech about collective bargaining or unending emergency powers or selling power plants or changing rule-making procedures ...

The pro-union protest vastly outnumbered (at least 10:1) the hour-and-a-half Tea Party protest.

LeMoyne's picture
I have done more research but

I have done more research but still need to slog through the actual bill.  I have found that this 'repair' bill gives autocratic control to the Governor over the sale of state property and over Medicaid eligibility and co-pay rules

OneWisconsinNow's must-read for 2/18 uncovers some of the other changes going on under the radar in WI: changes already passed give Walker a choke-hold on rule-making from laws and, of course, public workers are already compensated less than equivalent private sector workers and much less than similarly educated private sector workers. Expected revenue losses from public worker take-home cuts may undo most of the savings.

The reactionary collective bargaining provisions were known to outside special interests before they were known to legislators or known by the public: 

" (Oshkosh)" wrote:
Its lesser-known provisions set a dangerous precedent for granting the executive branch broad emergency powers where an emergency does not exist. The speed in which the bill is heading from proposal to adoption is also of concern. It is slated for a vote Thursday, just six days after it was released to the public. The fact that a national special interest group, The Club for Growth, began broadcasting ads in support of the proposal at the same time the bill was released shows that this is not a homegrown effort to fix Wisconsin's problems, but an orchestrated, ideologically driven campaign.

Finally, in a Politifact Pants-On-Fire whooopsie, Walker claimed Friday 2/18 that the bill leaves collective bargaining rights intact.  - LOL - Sorry, Brer Fox we can all see at least that much of your 'repair' plan after you have repeatedly defended the need for not just you, but all of the mayors and county managers to have the power to dictate terms.  Appleton's mayor seems lukewarm at best but hmmm I wonder why the police and fire unions there settled already?  Oh yeah right - maybe  they are in on the deal... *nudge*nudge*wink*wink* say no more   LOL  MiniMubarak!  it's truer than it seemed at first, but sadly, MiniMubarak! is less funny now.

Mr.Burns's picture
LeMoyne wrote:Finally, in a

LeMoyne wrote:
Finally, in a Politifact Pants-On-Fire whooopsie, Walker claimed Friday 2/18 that the bill leaves collective bargaining rights intact.

The official budget report

The official budget report from WI including updated info from bills passed since Walker was put into office can be found here:

It clearly shows that a surplus for the 2011-2012 was put in the red by his bills including special tax breaks for companies moving from IL to WI.

Hope this helps.

bobbyg77's picture
Governor Walker and 3 other

Governor Walker and 3 other Republican Governors killed High Speed Rail in their states (Walker lost millions for the State) because Big Oil, Airline Industry, and probably some Car Companies lobbied against it. I'd like to know how much he got?

This shows he never cared about the budget!

Mr.Burns's picture
bobbyg77 wrote: Governor

bobbyg77 wrote:

Governor Walker and 3 other Republican Governors killed High Speed Rail in their states (Walker lost millions for the State) because Big Oil, Airline Industry, and probably some Car Companies lobbied against it. I'd like to know how much he got?

This shows he never cared about the budget!

The problem with the federal high speed rail dollars is that it requires states to allocated funds for it too. Why spend money on trains that will not be used and requires the state to heavily subsidize the operations?

DRC's picture
They will be used, of course.

They will be used, of course.  But the America Haters want us to believe that stuff that pays off for others is just too whatever for us, so we don't get it.  They don't get it.  This is an instant job creator as well as an infrastructure advance that would make Wisconsin businesses more efficient and better able to get their stuff moved around.  As well as people who could enjoy the fine facilities of Wisconsin's vacation resorts, etc.

Sure, states need to invest in their future prosperity, but when they get a big check from the feds to incentivize it, they have a great deal to capitalize.  The lords of industry ought to love better infrastructure and better education for their employees and customers.  Higher incomes around means a higher bottom line.  Lots of poor people means being rich in the midst of poverty.  It is not as great as it sounds.

What does not return its investment is the typical tax break given to some company to move into a state or city to hire low wage workers.  Even when it is a higher level of employment, the tax breaks are more giveaways than what the companies really need to make the move.  Research "parks" around major universities reflect the multiplier effect of education investment.  Similar multipliers can be found for transportation upgrades.

Our local conservatives have nothing but disdain for modern rail in Oregon.  But, were there good rail service through Medford, with its connections to California Coast, Coos Bay, Crater Lake and K Falls would open up many tourist destinations.  Were there a good coastal line, tourists would be flocking to the various isolated beach towns where hotels and restaurants would flourish.  Oregon is a tourist mecca, but the pilgrimage is way too hard.  

Those who built our states invested in our future.  Even if the cons have raided our treasury, what we need to do is to take back enough of that ill gotten gain to have a democracy and prosperity by investing.  We have too much to fix not to take care for the future.  How we get the money is our challenge.  Letting the rich have it all is not the answer.

norske's picture
Create a false financial

Create a false financial crisis by further enriching corporations and the already wealthy....then place the blame on unions and public employees....Republican and Democratic conservatism 101 ala "Shock Doctrine"

They may have 99% of the wealth....but we have 99% of the people.

'Rise like Lions after slumber
In unvanquishable number,
Shake your chains to earth like dew
Which in sleep had fallen on you -
Ye are many - they are few.  Percy Bysshe Shelley- The Mask of Anarchy


LeMoyne's picture
Excellent Norske.  I think

Excellent Norske.  I think you hit the nail on the head.  The only way to get the Republicans off of this jag of Disaster Capitalism based on the Shock Doctrine [props to Naomi Klein] is to have a massive popular response to the real crises that they create.  Provide a backfire to kill off the smoke of their demagoguery. 

The WI state budget could be balanced by a few pages of legislation - instead they promulgate a 144 page, 300 section budget despair bill (selling state assets without bids or oversight, gutting collective bargaining for ALL state, county, city, town and school workers and opening the way for authoritarian control of medical assistance benefits and eligibility).  Refinancing the state debt is predicted to save $165 million - the current biennial deficit is $137 million.  I am not sure if the time periods allow an unscaled comparison for those numbers, but one can get a good picture of the scale of the problem,  the ease of solution and what no collective bargainng for teachers means in this 2 minute YouTube video. 

I have often thought recently that we need a 99er party - a party for the rest and most of us.  Can't quite frame it right, but I am certain that if it appeared on the Left then the Democrats could triangulate their way back to the center from the right-off-the-cliff madness US politics has slid into since Reagan.  LOL we don't have US politics anymore - we have THEM politics.

dstack's picture
I was just looking for a

I was just looking for a story like this to post on my Facebook page, but then I came across this Politifact report. It says that Rachel Maddow's claim that Wisconsin was on track to have a budget surplus is false. So before I post your story, I'd like to know ahead of time what to say if someone answers with something like this. Here's the Politifact link:

Please advise!

LeMoyne's picture
The statutory trigger for

The statutory trigger for special budget session has not been reached - there is enough cash in general fund to reach the next budget cycle due to start in a few months.  A more normal and coherent method is to deal with the problems noted in the LRB report in the next biennial budget cycle (2011-2013). The WI 14 point to this in several interviews as the primary justification for saying there is no hair-on-fire crisis.

Maddow's statement was rated false because she said the tax cuts this year are the source of the imbalance.  This is false.  See #5 above.  The tax cuts that Walker and the Republicans passed are part of the problem in the new cycle beginning 6/30/2011 and going forward. 

The last WI Governor dealt with a deficit that was twice the size ($6B) of the expected deficit ($3B) from 2011-2013.  Furloughs agreed to by unions through collective bargaining were part of the solution.

The largest liability mentioned in the LRB report and by Politifact is tied up in court ($200 million owed to the state’s patient compensation fund) - preparation is wise but solution can't be made until decision comes down.  Next budget cycle. 

The second largest liability is Medical Assistance shortfall - $174 million - increased demand during economic hard times and the expiration of stimulus funds to states for Medicaid.  You can say that the stimulus did something but it has run out.  The budget repair bill does re-allocate money to cover most of this by moving money around in the current budget.  Crisis?

Wisconsin owes Minnesota $58.7 million under a discontinued tax reciprocity deal.  As far as I can see the budget repair bill does nothing to address this.  Nothing. Crisis?

Another problems noted in the LRB report (corrections shortfall) is addressed by moving money around in the current budget.  Crisis?

Other problems noted by LRB appear to be ignored in the repair bill.  Crisis? 

The repair bill is 144 pages long.  Over 90% of the bill is one of two things: 1) stripping the collective bargaining rights of ALMOST ALL PUBLIC EMPLOYEES in WI (county, town, city, municipal water/sewage/trash, Univ Wisc, public hospital and state workers - phew!).  Excludes police and fire only - not EMTs. Prohibition on collective bargaining for anything but wages and complete restriction of bargaining on wages.  Mandatory recertification elections of ALL collective bargaining units in April 2011. Recertification elections require that one union receive the votes of 51% of the people in the unit.  If (when ) recertification fails there is a mandatory period of one year where workers are unrepresented.  Absolute prohibition on continuation of expired collective bargaining agreements. Deletes the entire chapter IV - erases several sections of public employee law.  See Politifact ruling on Walker's declaration that the Budget Repair bill leaves collective bargaining 'intact'.  Walker got a PantsOn-Fire for that one. 

2) Inserted emergency rule-making power into broad swaths of state medical assistance laws.  No expiration or legislative approval required for emergency powers.  Inserted the same exception clause into the existing state law that bars illegal aliens from recieving assistance (in case you need proof this is a hurry-up hack job).  New section gives DHS secretary complete power to set eligiblity and benefits rules unless the Joint Finance Committee objects within 14 days.  Another new section gives DHS the power to go ahead with rules even if they do object. Clearly they plan to save money by cutting medical assistance but no savings in the current cycle - again Crisis?  Why not in the next budget cycle unless ramming this through is the only way they can do it. I explore the likely purpose here : Will Wisconsin Drop Medicaid?  Medicaid is a voluntary program.  Expect Walker to describe it like an AA intervention when they drop it. 

Bill also contains a few sections that give Walker permission to do no-bid sale or contract operations of 32 state-owned power plants without legislative or PSC oversight.  Declares any such sale or contract to be in the public interest a priori - no ifs ands or buts.   Ahem.  How can introducing a profit layer save the state money?  Without oversight? 

Bill also creates 35 new unclassified administration positions that negotiate salary directly with the Governor outside the civil service system.  Removes corresponding existing positions but saves no money here.  Crisis?  more like crony holes...

What more can I say?  I apologize that I have not been able to create 3 or 4 coherent blogs on all the machinations within this bill with specific section numbers.  I have read it and will try to do a coherent overview.  That was a good question dstack...

LeMoyne's picture
John Nichols stories in the

John Nichols stories in the Nation are a good resource

Wisconsin's Political Crisis Is a Good Deal More Serious Than Its Fiscal Crisis