A post-deal tally: Winners and losers in state budget debate

22 Oct A post-deal tally: Winners and losers in state budget debate

Madison, Wis. – Every state budget debate produces winners and losers among the politicians – Democrat and Republican, executive and legislative. It’s just as certain that some policies prevail over others, and some stakeholders fare better than others.
The Assembly and Senate must vote Tuesday to confirm the deal struck Friday between Gov. Jim Doyle and key leaders of the Legislature, but here is a quick assessment of which ideas, interest groups and institutions emerged on top in the 2007-2009 budget deal.
Winner: Taxpayers. Yes, the budget spends about $58 billion over two years, which is 8 percent more than the biennial budget that ended June 30. But early calculations show spending is down $400 million from Doyle’s proposal, and there are no general tax increases (personal income, sales, and corporate income.) The deal also puts reasonable limits on property tax levies for cities, towns and villages. By and large, the Republican refusal to accept new taxes worked.
Loser: Taxpayers. The budget will take $200 million from the fund that helps pay legal awards in medical malpractice cases. While that may not seem like something that could directly hit taxpayers, the transfer will be challenged in court – and it’s a source of revenue that will never be available again. The deal also increases the annual vehicle registration fee by $20, to $75, and raises registration fees for large commercial trucks. Like cigarette taxes, however, the transportation taxes are more akin to user fees than not.
Winner: The war against smoking. Raising the tax on a pack of cigarettes by $1 will stop more smokers than you might think, especially those who are young and just getting hooked. Think of this as a “user fee” paid by people whose healthcare costs are ultimately shared by everyone.
Loser: The “sock-it-to-Big Oil” crowd. Doyle proposed a $275 million tax on oil companies, which Republicans feared would only be passed through to consumers. Doyle said his proposal was written in a way that would prevented Big Oil from passing it on, but only four states impose a tax on oil revenues, and none of them bar the companies from adding it to the pump price. It was never clear how Wisconsin would have legally blocked the pass-through to consumers.
Loser: Wisconsin hospitals. Doyle’s proposal to levy a “gross revenues tax” on Wisconsin hospitals was initially opposed by the statewide association representing most of those hospitals, but the group switched positions late when it became clear the tax would help lay claim to federal Medicaid reimbursement dollars. The change in heart came too late for most Republican lawmakers. Now, some of the state’s largest hospitals will continue to limp along with an increase in Medicaid reimbursements – something they haven’t seen in 12 years.
Winner: The University of Wisconsin System. The folks in Van Hise Hall didn’t get everything they wanted, but it was more than half a loaf. The budget included $32 million in new financial aid and backs the system’s plan to increase enrollment, which should improve access to higher education in Wisconsin at a time when the “knowledge economy” needs more skilled workers. The University of Wisconsin-Milwaukee’s $8.4 million engineering campus also survived the budget negotiations.
Winners: Wisconsin military veterans. Speaking of skilled workers, the budget retains a program that pays 100 percent of the UW System tuition for returning military veterans. Mounting costs had threatened to cut back the program, but let’s face it: We owe them.
Winner: The tech economy. Tax credits for investors in tech-based start-up companies were retained and expanded in some ways, and a new grant and loan program for biofuels and other alternative energies was earmarked for $15 million. That’s about half of what Doyle wanted, but still enough to leverage Wisconsin’s recent award of a $125-million federal research grant tied to production of ethanol from wood waste, plants, and other non-food sources.
Winner: Healthy kids. Although the Senate Democrats’ $15-billion “Healthy Wisconsin” plan was finally euthanized, important changes were made in existing state health plans. The budget will expand coverage to almost all Wisconsin children through the new “BadgerCare Plus” program, as proposed by Doyle. It’s manageable and could become a national model.
Loser: Budget reform. For all the sound and fury, the state budget poised for passage Tuesday is structurally almost identical to the one it replaced. Some day, perhaps in the 2009 debate, policymakers can talk about fundamentally changing how we pay for schools, local government, and the UW System. When that day comes, we’ll all be winners.
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