Wisconsin Budget 101: The Numbers and the Stakes in the Public Employee Bill
There’s been a lot of confusion about the Wisconsin budget picture and how it plays into this assault on collective bargaining rights for public employees, so it’s worth taking a look at the full picture to get the best sense of what’s happening and why.
• Two budgets. Much like the federal level, where we are simultaneously talking about a continuing resolution for the 2011 fiscal year and the 2012 budget resolution, we have two separate processes happening at once in Wisconsin. The collective bargaining stripping is happening in a “budget repair bill.” This must be done under Wisconsin law if there is a shortfall in the current budget cycle, which covers the 2009-2011 fiscal years. That shortfall is relatively small, about $137 million for the rest of the year, which goes untul the end of June. There’s a much bigger shortfall, $3.6 billion, estimated for the next budget cycle, from July 2011 to June 2013. Wisconsin has a two-year budget cycle. The $3.6 billion seems large, but Wisconsin closed a gap twice as large in the last budget cycle, and didn’t strip public employee bargaining rights to do it.
When you hear Scott Walker talk, he usually invokes the bigger number, the $3.6 billion, to justify his plans. But he’s putting those plans into a budget repair bill for the current fiscal cycle, not the 2011-2013 budget.
• How Walker’s tax cuts play into this. Walker, aided by his Republican allies in the legislature, almost immediately passed a passel of corporate tax cuts which cut around $140 million in revenue. It’s tempting to believe that, since that number almost precisely matches the shortfall in the budget repair bill, that Walker created the crisis he is now exploiting. That’s not quite right. The tax cuts will not take effect until the next fiscal cycle. They increase the deficit in that cycle, and by more as long as they continue. In addition, Walker will probably seek more tax cuts in his 2011-2013 budget, which is scheduled to be presented on March 1 (this has been delayed by one week; presumably he doesn’t want to have to go to the Capitol building, essentially under occupation by protesters, to deliver this presentation).
• The current shortfall. As explained here, it’s real. As I said, it’s relatively minor by the standards of Wisconsin in the past decade and by other states during the Great Recession. But because of shortfalls in budgets for Medicaid and corrections and the public defender’s office, it’s real, and $137 million is the rough number used. It could rise higher depending on a legal dispute over $200 million owed to the state’s patient compensation fund. $137 million represents one percent of the total budget, so it’s a modest balance. But under the law, they have to do something about it.
• How do the solutions address the shortfall? The ones you’re hearing so much about, to put it bluntly, don’t. Wisconsin public employees agreed last year to a contract that would have given back some pension and health care benefits and increase worker payments into those funds. They have agreed to the budgetary concessions laid out by Walker’s repair bill. None of that is in dispute, though Walker still acts like it is and calls this agreement a red herring. The givebacks would save $30 million by June 30, amounting to around 20-25% of the total solution in the repair bill. Just for context, the Legislature could get $30 million in solutions simply by firing an out-of-state consulting company which has a lucrative contract with the Department of Health Services for IT that costs more than administering the services in-house.
But that’s not all the repair bill does. It includes legislative policy items that strip the right to collectively organize from public workers. These would not have a budgetary impact, and certainly not any the immediate term. Unions would be able to negotiate with the state only on pay, not benefits, but would be barred from increases above inflation in future years. That has a quite modest overall fiscal impact, and an impact of $0 in the near term, since the benefit givebacks have been agreed to. In addition, the unions would have to withstand a re-certification election every year, wouldn’t be able to collect dues from members without permission, wouldn’t be able to negotiate on work conditions (that would be part of a civil service protection), etc.
So under the guise of a budget repair bill, these policy items would make it impossible for workers to collectively bargain on anything of value, and then would put that intentionally broken unionizing up to an annual vote. There would be little reason for workers to re-certify under those rules, and eventually the unions would get voted out. This is the part Scott Walker doesn’t want to talk about. He keeps saying it’s a fiscal issue but it’s a collective bargaining issue.
What gives this game away is the fact that public safety officials like firefighters and police officers, the very unions who supported Scott Walker in his election bid, are exempt from the rules. They also happen to have higher salaries relative to other public workers. If this is purely a budget saver, it would be just so for those public employees as well. But they are exempt for purely political reasons. And this is backfiring: The Wisconsin Law Enforcement Association just withdrew their support of Scott Walker.
I SPECIFICALLY REGRET THE ENDORSEMENT OF THE WISCONSIN TROOPER’S ASSOCIATION FOR GOVERNOR SCOTT WALKER. I REGRET THE GOVERNOR’S DECISION TO “ENDORSE” THE TROOPERS AND INSPECTORS OF THE WISCONSIN STATE PATROL. I REGRET BEING THE RECIPIENT OF ANY OF THE PERCEIVED BENEFITS PROVIDED BY THE GOVERNOR’S ANNOINTING.
I THINK EVERYONE’S JOB AND CAREER IS JUST AS SIGNIFICANT AS THE OTHERS. EVERYONES FAMILY IS JUST AS VALUABLE AS MINE OR ANY OTHER PERSONS, ESPECIALLY MINE. EVERYONES NEEDS ARE JUST AS VALUABLE. WE ARE ALL GREAT PEOPLE!!
(Caps lock hers)
Another budget repair bill legislative item takes BadgerCare, basically a part of Wisconsin’s version of Medicaid, out of the hands of elected lawmakers and into the power of the executive agency that deals with Health Services. The Department Secretary of Health Services would be allowed to make emergency rules to change BadgerCare during a shortfall. Essentially, this would give an executive agency the power to make future cuts without legislative input. That’s a structural change to strip the legislature of power.
• Is this “shared sacrifice” for the public employees? They’ve already been sacrificing. Wisconsin public employees have already experienced furloughs and layoffs since the Great Recession began, and they’re currently under a hiring freeze. In addition, it’s pretty clear that collective bargaining rights have little to do with state budget shortfalls, or at least, there’s no real correlation.
• Has the process been fair? Listen to this Democratic state legislator. He heard about the budget repair bill from an ad paid for by the Club for Growth. When he confronted the Republicans in the Assembly about it, they didn’t have a bill yet. Gov. Walker’s friends were advertising about the bill, and its assault on public workers, before it existed. They held one public hearing. They tried to pass a bill of 144 pages and all these legislative changes in a week. By leaving the state, Senate Democrats have successfully slowed down the process so more scrutiny can be given to the repair bill, and the public can have a chance to weigh in on it.