THE STATE OF THE STATE – POLITICAL ECONOMY OF … DYSFUNCTION ?

Todd Barry, President of the Wisconsin Taxpayers Alliance, talked about how they are a private government research organization established in 1932 dedicated to teach and inform citizens about state and local government. They are a 501(c)3 nonprofit organization that does not advocate or lobby. The per capita income has dropped going into the recession and now Wisconsin is starting to bounce back. Since Wisconsin is largely a manufacturing state, it tends to go into recession before the rest of the country and comes out a little before. Employment has been going down. Is it predicting a national slowdown or is it just a blimp and we are on a long term trend line? Wisconsin doesn’t tend to create a lot of new firms compared to the rest of the country but it tends to hang on to new start-ups and young businesses it creates. Wisconsin tends to raise a majority of its revenue through income and sales taxes. Services tend to be delivered more at the local level. Wisconsin spends its money on aid to local governments and schools (55-60%), Medicaid, corrections and the U. W. System. During the 1990’s, Wisconsin’s economy was doing well and incomes were growing. The State had a lot of revenue coming in and a lot of money went into school aid and Medicaid. At the time, Barry felt we didn’t have the economic growth and tax revenue to sustain everything that was going on. During the recession in 2001, Wisconsin became overcommitted and had a $1 billion deficit which was never dealt with. Currently Wisconsin has about 1.2 million Medicaid recipients (1 in 5). Over the last few years, Wisconsin has kept smaller reserves than any state in the country and relied heavily on stimulus money which was spent on schools and Medicaid. When this money was no longer available, the State was left with trying to figure out how to fill this hole. During the last 15 years, Wisconsin has had structural deficits going into the first year of each new budget of about one half a billion dollars or more. Medicaid’s funding is being cut but the program is still going up $1.4 billion. Rather than raising taxes or making accounting adjustments, some debt was restructured and major programs were cut to fund health services (Medicaid). At the local level, this created difficulty. Recalls were and are being held. Wisconsin has become divided and Wisconsin is being known as a state of chaos and turmoil. Could this effect employee transfers, recruitment of faculty and business relocation/attraction? Some ideas for change could be a part-time citizen legislature, smaller assembly districts, session limits, one long senate term, ballot reform (instant run off voting), nonpartisan redistricting, unicameral legislature (nonpartisan)and multimember districts.