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Finance Committee Approves Welfare Reform On Tommy@30 Day

Tue, 05/23/2017 - 23:01

MacIver News Service | May 23, 2017

By | M.D. Kittle

[Madison, Wis...] On a day devoted to the legacy of Wisconsin's longest-serving governor and its pioneer welfare reformer, the Legislature's budget committee took up several welfare reform measures.

Before Tuesday afternoon's Joint Finance Committee meeting, Wisconsin state government leaders past and present turned out for a Public Policy Symposium examined the innovator and master politician that is former Gov. Tommy Thompson.

The symposium is among several events scheduled this year in the Tommy@30 series, marking the 30th anniversary of the Republican's first inauguration as governor - the first of many over a remarkable 14-year career as Wisconsin's chief executive.

Among Thompson's myriad accomplishments, the governor may be best remembered for his Wisconsin Works, or W-2, his signature welfare reform package of the mid-1990s.

"Few governors have had such an impact on the nation's life," James Klauser, chairman of the Tommy@30 committee, Secretary of the Department of Administration under Thompson and one of the former governor's closest advisors, said in a press release. Klauser was among several former Thompson administration officials at Tuesday's symposium.

"Tommy Thompson's welfare reforms and job creation policies helped millions enjoy the dignity of work and independence," Klauser added.

Gov. Scott Walker and the Republican-controlled Legislature have sought to follow in Thompson's welfare reform footsteps.

Walker, who has been a national leader in government reform over his term and a half in office, earlier this year rolled out a package of welfare reforms billed as "Wisconsin Works for Everyone." Walker has sold the proposals as the next generation of Wisconsin Works.

Walker in January toured the state with Thompson. He pledged to make Wisconsin a national leader again in welfare reform, as Thompson had done in the 1990s.

Joint Finance Committee Republicans on Tuesday moved toward the fulfillment of that promise, getting behind Walker's proposal that would expand drug screening and testing for participants in the state's welfare-to-work program.

Republican lawmakers in 2015 passed a similar measure. Walker's plan expands the earlier reform measure, requiring welfare recipients who fail a drug test to seek treatment in order to receive benefits. The JFC motion passed 12-4, with the committee's four Democrats voting against.

On the same party-line vote, the JFC passed another Walker initiative that would trim W-2 benefits for families of children who are habitually truant and who do not cooperate with case management services to improve attendance. Currently, state law cuts benefits for families of children not enrolled in school.

Walker's plan to eliminate the so-called "benefits cliff" in the Wisconsin Shares child care subsidy program received unanimous approval from the committee, although a provision that would restrict would-be welfare recipients with $25,000 or more in liquid assets from receiving benefits seemed to thoroughly confuse Sen. Lena Taylor, D-Milwaukee.

"If you are a low-income individual, we want to help you, but you can't have a lot of cash sitting there," said Sen. Luther Olsen, R-Ripon, attempting to explain the liquid cash limits.

Current law discontinues child care subsidies for families with incomes at 200 percent of the Federal Poverty Level. Joint Finance Committee Chairwoman Sen. Alberta Darling, (R-River HIlls) has said the cliff is a disincentive to breaking the welfare chains. Walker's plan provides a sliding scale, allowing child care program participants to receive $1 for every $3 earned in excess of the eligibility limit. Benefits end once income hits 85 percent of the state's median income. The cost is projected at $4 million, over two years, funded through federal cash.

The committee also unanimously pushed aside Walker's proposed two-year, $1 million ad campaign encouraging the critical role fathers play in their children's lives. The ad campaign would highlight what has been described as the "success sequence," the idea that people who graduate from high school, work a full-time job and have children while married after the age of 21 are much more successful than those who don't follow this formula.

https://edexcellence.net/tags/success-sequence

The importance of two-parent homes is an idea that Eloise Anderson has long advocated. Wisconsin's Secretary of Children and Families who was at the forefront of Tommy Thompson-era welfare reform, recalled the battles surrounding W-2 at the Tommy@30 symposium. She said Democrats fought against the assertion that "we wouldn't have had so many poor families if we had intact families."

"There was never such a fight as the fight against fathers being in the home," Anderson said.

At a separate event, Republicans and university officials announced the proposed Tommy G. Thompson Center on Public Leadership to be located on the UW-Madison campus. JFC Republicans declined to comment on the cost. Liberals instantly blasted the proposal, fearing the nonpartisan center would be a conservative think tank. UW-Madison is arguably one of the more liberal universities in the country with not shortage of left-leaning thought centers, programs and initiatives.

Budget Blog: Struggling to Find Consensus on Tuition Cut, JFC Puts Off UW System Vote

Tue, 05/23/2017 - 15:09

May 23, 2017

The Senate and Assembly haven't yet come to a consensus on whether or not to lower the UW System's tuition by 5 percent in 2018, according to Joint Committee on Finance (JFC) co-chairs Sen. Alberta Darling (R-River Hills) and Rep. John Nygren (R-Marinette).

JFC was meant to take up provisions of Gov. Scott Walker's 2017-19 budget relating to the University of Wisconsin System today, but put off that vote entirely. Nygren said that the Assembly is not in favor of Walker's proposal to cut tuition, while the Senate has not yet come to a position.

"A tuition cut is a no-go for us," Rep. John Nygren @rep89 Assembly standing on a tuition freeze. Senate no consensus #wiright #wibudget

— MacIver Institute (@MacIverWisc) May 23, 2017

Nygren said that the Assembly would prefer to continue the tuition freeze and use the $35 million allocated for a tuition cut on other initiatives. Nygren and others in the Assembly who disagree with the cut have said they would prefer not to spend taxpayer dollars for an across-the-board cut that would also help students who can already afford tuition, instead preferring to grow need-based financial aid programs.

In April, Nygren went so far as to compare the provision to Bernie Sanders-esque "redistribution" policies.

Darling said that the tuition cut made up the entirety of the disagreement and that legislators are mostly in agreement with the rest of the Governor's UW budget proposal, such as a provision to tie UW System funding with performance on state priorities. That model, Darling said, has done well in the tech college system.

It is unclear when, exactly, the committee will vote on the UW.

'Getting A License In This State Has Been A Nightmare'

Tue, 05/23/2017 - 06:00


MacIver News Service | May 23, 2017

By M.D. Kittle

[Madison, Wis...] - Bradford Collins learned the ins and outs of the plumbing trade working on countless residential and commercial jobs for more than a dozen years in Illinois.

At one point he was earning a comfortable living doing remodeling and construction plumbing jobs for Chicago Land's rich and famous. Collins once worked for a master plumber who taught union apprentices and journeymen the secrets of the state's intricate plumbing code.

All of that experience, all of that training, and the certification that came with it, amounted to nothing when Collins, 46, moved to Green Bay six years ago to be closer to his kids.

The state Department of Safety and Professional Services told Collins he would have to start all over again in Wisconsin. He'd have to enter an apprenticeship program for five years before he could even think about taking the test to earn his plumber's license.

So, instead of doing the job on which he built a 14-year career, Collins is working six days a week - at a sausage factory and delivering pizza, to earn close to what he did as a licensed plumber in Illinois.

"That's why I keep pushing for this," he told MacIver News Service. "I had a lot more pride in myself as a plumber. I had a trade. I had more of a feeling of accomplishment than I do right now."

That's not to say that Collins doesn't respect and appreciate the work he does in the factory as a line operator. But he doesn't understand why a licensed plumber familiar with some of the most rigorous codes in the country can't ply his trade in the Badger State.

Actually, Collins knows all too well the reason for his professional displacement: Special interest protectionism. Unions and the keepers of the trade can keep out those they see as undesirables - nonunion, out-of-state plumbers, who would dare to compete with members of the state's plumbing club.

"Getting a license in this state has been a nightmare," Collins said.

Wisconsin's occupational licensure system has long rewarded special interests over the interests of workers like Collins. Of course they do it all under the premise of protecting consumers, but occupational license reformers like Rep. Andre Jacque will tell you that such talk is cheap - even as the protectionism behind it is costly to Wisconsin's economy, its workers, and its entrepreneurs.

The De Pere Republican recently requested a Joint Finance Committee motion requiring the Department of Safety and Professional Services to allow experienced plumbers like Collins to take a journeyman plumber examination and obtain a license upon successful passage. Rep. Dale Kooyenga, R-Brookfield, a JFC member, made the motion, which easily passed.

Under the rule change, candidates must have completed a plumbing apprenticeship in another state and maintained a license in another state as a journeyman plumber for at least five years without any disciplinary action taken against them by the state. Collins easily meets the standards, according to Jacque, who viewed the plumber's certificates and licenses from Illinois.

"This gives somebody the opportunity to demonstrate proficiency, somebody who has already had relevant experience proven in another state," Jacque said. "It's not automatically granting a license. That's all this guy ever asked for. He's said, 'I know I can pass this test. I know this stuff forwards and backwards. Just give me the chance to prove my knowledge.'"

The lawmaker, a member of the Assembly Committee on Regulatory Licensing Reform, said learned of Collins' licensure trouble and pushed for the change during a legislative session that in large part has been defined by regulatory reform.

"I realized this guy was getting a raw deal," Jacque said. "I mentioned to some students from my district who were touring the Capitol that this would be one of the things discussed by the (Joint Finance) committee. I told them that it would be like if they completed fifth grade and moved to Minnesota or Illinois and were told they had to start all over in kindergarten again."

As Collins and Jacque work to lift the yoke of government regulation off the shoulders of workers, the so-called "Fight for $15" crowd was preparing to protest - again - in a campaign that is costing jobs.

"We'll be in the streets in full force, joined by major resistance groups around the nation, as shareholders arrive for their annual meeting and McDonald's headquarters," wrote Devonte Yates, who identifies himself as a Milwaukee-based McDonald's employee and organizer of the big labor-led effort demanding a $15 an hour minimum wage nationwide.

"There's no chance in hell the billionaire class will miss us as thousands march to demand $15/hr and union rights," Yates wrote in an appeal to left-wingers to board several Milwaukee buses Monday bound for the Chicago protest. The national protest is scheduled for today.

"We cannot allow corporations like McDonalds to continue violating basic workers' rights to boost profits," Larry Cohen, chairman of the socialist, Our Revolution Board told the left-wing Common Dreams publication earlier this month.

What the Fight for $15 army likes to leave out is the fact that the campaign is taking paychecks away from the people they are supposedly serving. A study earlier this month by the District of Columbia's Office of Revenue found that as many as 1,200 jobs could be lost by 2020 thanks to D.C.'s $15 minimum wage. The mayor's "Fair Shot Minimum Wage Act" mandates the minimum wage increase by 2020.

As the Employment Policies Institute noted, the Congressional Budget Office in a 2014 "tossed cold water on the unsupported idea that new mandates on low-margin employers won't carry consequences." CBO estimated some 500,000 jobs would be lost nationwide in the wake of a $10.10 minimum wage.

A University of California-Irvine study found that each 10 percent hike in the minimum wage was followed by a 1 percent to 2 percent drop in youth employment.

The left has tried to paint victories in marginal losses.

A study by the University of Washington late last year on Seattle's minimum wage hike to $11 an hour - on a path to $15 hourly by 2021 - found any gain for low-wage workers was the result of Seatlte's booming economy.

"Seattle's low-wage workers would have experienced almost equally positive trends if the minimum wage had not increased," the analysis stated. "Although the minimum wage clearly increased wages for this group, offsetting effects on low-wage worker hours and employment muted the impact on labor earnings."

Top Five Wasteful Classes in the UW System

Mon, 05/22/2017 - 06:00

May 22, 2017

By Jessica Murphy
MacIver Institute Research Intern

Here at the MacIver Institute, we're dedicated to keeping you - the taxpayer - informed about wasteful spending at all levels of government. If you look closely, you can find questionable line items and waste in just about any arm of government. That's why we're skeptical of the constant drumbeat for higher taxes, bigger government, and of course, more and more spending.

Considering the UW System's never-ending cycle of demands for more state funding, one would hope that they are responsibly spending your tax dollars before they ask for more.

The MacIver Institute decided to dive deeper into the UW system to find places where frivolous spending runs rampant and where cost savings can be found. Our first stop: courses offerings in the UW System.

What we found were courses that degrade capitalism, praise Marxism and encourage a "social justice warrior" ideology. We wonder how many employers in the real world are looking to see if you took a class in how to be perpetually aggrieved or permanently pissed at the world?

Check out our list of the Top Five Wasteful Classes in the UW System to see if your school made the cut! We start with number five and make our way to the single most wasteful class in the UW System.

5. Teaching for Social Justice - UW-Superior

We start with this philosophy course offered at UW-Superior, which trains the teachers of tomorrow in social justice ideology. One of the main goals of the course is for students to reflect on their privilege and marginalization. Students also review how meritocracy - and the American Dream - is a myth. Why work hard to achieve your dreams if you can blame sex/race/class/sexuality for your lack of success?

A portion of the participation grade is based on whether or not students were inclusive and supported other students expressing their thoughts. This is college, not charm school - and these students (and taxpayers!) are essentially paying hundreds of dollars for a course on how to be nice to people.

For the course final, students write a 5-6 page paper about the purpose of education, why an education is valuable, and related topics. This is ironic considering the course itself provides little real value to the students enrolled.

One of the required readings, Chad Kautzer's "Radical Philosophy: An Introduction," reviews Marxism, feminism, queer theory, and more. Students are asked to call upon this book for the group presentation, which makes up 15 percent of the total grade.

The course instructor, professor Sarah LaChance Adams, is UW-Superior's Women's and Gender Issues Coordinator. She specializes in feminist philosophy and her current research project is titled "An Epistemology of Erotic Errors."

4. The History and Politics of Hip Hop - UW-Platteville

This course satisfies the Ethnic Studies requirement for graduation (ETHNSTDY 2100) and focuses on hip hop as a "cultural phenomenon that has influenced America and the entire world." Throughout the course, students explore the origins, political economy, and global and domestic influence of hip hop.

Selected readings include "Why White Kids Love Hip Hop," "Scared Straight: Hip Hop, Outing, and the Pedagogy of Queerness," and "Love Feminism, But Where's My Hip Hop."

This course obviously appeals to college students (who doesn't love hip hop?), but it is a reach to claim that the course merits public funding. How does the UW System have the audacity to ask for more money if they still offer courses like this?

3. Exploring White Privilege - UW-La Crosse

Similar to the controversial UW-Madison course "The Problem with Whiteness," this course (ERS 325) operates under the assumption that all white people are racist, but most just haven't realized it yet. Course objectives include confronting personal denials of white privilege, developing strategies to confront racism, and "deconstructing the conscious and unconscious ways white privilege shapes our views, thoughts, and actions."

Students complete a "What Does It Mean to Be White?" project (10 percent of the final grade) for which they take photos of at least five different "concepts related to whiteness," interview someone to document "what it means to be white," and synthesize their work into a 4-6 page analysis.

Required and recommended readings include "White Man's Guilt," "Overt vs. Covert White Supremacy Pyramid," "Hey White Guys," and "Conservative Money Front is Behind Princeton's 'White Privilege' Guy."

The professor, Dr. Audrey Elegbede, writes in the course syllabus that while students are "expected to understand the ideas and arguments presented...this does not mean that they are expected to agree with all of the points of view discussed."

2. Culture of Third Wave Feminism - UW-Eau Claire

Our next finalist for wasteful UW classes brings us to the Women's Studies department at Eau Claire. The Culture of Third Wave Feminism (WMNS 210) fulfills two of the Liberal Education Core Learning Outcomes required for graduation.

For one class assignment, students perform a "positive, pro-feminist act" and share with the class - for 10 percent of the final grade. But sure, the UW is stretched thin. Other assignments include watching an episode of Sex and the City and reading about "lumbersexuality" - defined by Urban Dictionary as a metrosexual man posing to be a rugged lumberjack in order to "capture lost or missing masculinity due to being emasculated by things such as his childhood environment."

The course also delves into white privilege and students are required to attend a "Recognizing Privilege" workshop, watch videos like "How Privileged Are You?," and take the "Privilege Test" on Buzzfeed. That's right, this professor thinks a Buzzfeed quiz is the most appropriate medium to further the students critical thinking and reasoning skills.

But sure - there's absolutely no room to absorb cuts at the UW. None at all.

That brings us to our number one most wasteful class in the UW System. Drumroll, please...

1. Class, State, and Ideology: An Introduction to Social Science in the Marxist Tradition - UW-Madison

In first place - the UW System's most wasteful class - is this graduate level course (SOC 621) taught by the infamous Dr. Erik Olin Wright. The syllabus - 31 pages long with over 40 pages of supplementary topics - details how capitalism is evil and highlights the Marxist terms and concepts the students will review over the course of the semester.

Students are taught that the point of Marxism is to "transform the world in ways that increase the possibility of human emancipation." Is that why people desperately flee socialist and communist countries to the safe haven of their capitalist counterparts?

Topics to be covered include the "analysis of gender relations and male domination," "socialism and emancipation," and Marxist class analysis. Throughout the syllabus, Dr. Wright attacks capitalism in a way typical of socialists.

He alleges that capitalism is environmentally destructive and "irrational in ways that hurt nearly everyone." At one point, Wright argues that Marxism is both gender and race blind, yet later he calls out white capitalists specifically:

This one-sided account of capitalism seems to ignore all of the benefits reaped throughout the centuries thanks to capitalism and the free market. Wright argues that the free market causes people to suffer for no fault of their own, when in reality it causes people to flourish. Capitalism has saved and improved millions of lives through the innovation of products and services such as solar powered food dehydrators, water purification straws, refrigerators, penicillin, airplanes, and Uber. What are the chances these successes are accredited to capitalism in this course? My bet is slim to none.

One common critique by students in the course is that it's less about Marxism and more about "Wrightism," as Dr. Wright specifically refers to all other forms of Marxism that he doesn't study as "alternative perspectives" that simply hinder his course structure.

The students sit in class with their laptops open, with a textbook they bought from Amazon on the desk in front of them, holding a Starbucks coffee in one hand and an iPhone in the other. Maybe the irony is lost on them?

Honorable mentions:

  • Global Hip Hop & Social Justice - UW-Madison

  • Cut n Mix: Music, Race, and Culture in the Caribbean - UW-Madison

  • Medieval Love Poetry - UW-Madison

  • Cultures of Online Games and Virtual Worlds - UW-Milwaukee

  • Socialist Thought and Practice - UW-Parkside

  • Introduction to Wines and Spirits - UW-Stout

Why does this matter? While some students may be unphased by these courses, which many would consider an easy A for their transcript, it is important to remember that the taxpayers are funding the UW students' education. If passed today, Gov. Scott Walker's 2017-19 budget proposal would send $2.2 billion in state funding to the UW System.

Offering courses that ignore the prosperity created by capitalism and cover absurd topics such as "lumbersexuality" is not only a disservice to the students paying thousands of dollars to attend a university, but is also a slap in the face to the hardworking Wisconsin taxpayers whose money goes to waste on courses that do not have a direct, positive impact on society.

It is shameful for the UW System to ask the people of Wisconsin for more funding if they have not considered all of the cost savings opportunities, such as eliminating these courses, first.

Know of other wasteful or useless courses in the UW System? Comment them down below!

Chart Smart: University of Wisconsin System

Mon, 05/22/2017 - 05:55

May 22, 2017

Welcome to the second edition of Chart Smart! Today, we've got a look at the University of Wisconsin System in preparation for tomorrow's votes in the Joint Finance Committee.

These charts examine state support to the System, followed by the overall UW System budget, including federal dollars and gifts. Since the Governor's proposed tuition freeze and tuition cut are on the docket for Tuesday, we also take a look at in-state and out-of-state tuition across public Big Ten schools. A history of program revenues offers a peek into the UW slush fund debate, sure to come up this week. Finally, we compare salaries for the average household in Wisconsin with employees of the UW System.

Want more coverage? Head over twitter and check out @MacIverWisc for up-to-the-minute coverage of the UW budget debate and more!

Biennial Budget Analysis: Spotlight on UW

Mon, 05/22/2017 - 05:15

**May 22, 2017: Update**
This week, the Joint Finance Committee will finally be voting on budget provisions relating to the UW System! In our continued efforts to keep our readers informed of all things fiscal at the UW System, we have republished our original analysis on UW's budget below. Will JFC reject the continued tuition freeze for 2017? What about the 5 percent tuition cut for 2018? We'll all find out when they vote on May 23.

Want more coverage? Check out our twitter feed, @MacIverWisc, where we'll be live-tweeting every crucial hearing of the budget process.

**April 10, 2017: Update**
The Joint Finance Committee has scrapped all non-fiscal policy items from the Governor's budget proposal, including many items described in this piece. Read more about the latest move out of the budget committee here. In the below piece, any policy items with an asterisk beside them are now struck from the budget and may be introduced as separate bills.


Before the budget debate gets going, a look into the major provisions for the University of Wisconsin System

March 20, 2017

By Ola Lisowski
MacIver Institute Research Associate

[Madison, Wis...] In February, Gov. Scott Walker introduced his biennial budget for 2017-2019, officially launching this year's budget season. With the news that the Joint Finance Committee has finalized its dates for the forthcoming public hearings around the state, it's a good time to review what's in the queue for the University of Wisconsin System in this budget.

Overall, I summarize the goal for the System in one word: efficiency. As someone who hates the phrase "common sense" to describe policy, I found myself using it a lot in reviewing this portion of the budget. Many provisions had me shaking my head, asking, "this isn't already law? Crazy!"

Out of concern for you, the taxpayer, let's start with a basic overview of the scope and numbers of this proposal.

Total state spending (GPR): $2,191,070,500, a 3.65% increase
Total full time positions, all funds: 35,560.08, an increase of 159.22 positions
Total full time positions, general purpose revenue: 18,035.88
Total proposed spending, all funds: $12,431,997,800
Percent difference from the last budget: 1.94% funding increase
Portion of overall state spending: 6%

What's the Takeaway?
The Governor's budget grows the size of the University of Wisconsin System. Unlike prior budgets, Gov. Walker comes right out of the gate with $77 million more in state funding compared to 2017. That's an increase of over 3 percent from last year, and to no one's surprise, it's been warmly welcomed by System officials.

The biggest string on that funding increase? Performance. The Governor's budget provides $42.5 million to be distributed to institutions that perform well on the following state priorities:

  • affordability and attainability (30%)
  • work readiness (15%)
  • student success in state workforce (30%)
  • efficiency (10%)
  • service (5%)
  • additional criteria specified by the Board of Regents and approved by the Secretary of the Department of Administration (10%)

By tying funding to performance, the Governor makes it clear that there's no such thing as a free lunch. Kudos. This $42.5 million is split evenly across the biennium and will be distributed based on the listed state priorities. The Board of Regents would have to rank each institution's performance based on five sets of criteria for each fiscal year and would weigh each criteria accordingly, with affordability, attainability, and student success in the state workforce ranked by the Governor's office as the most important criteria.

Now that the overall numbers are out of the way, it's time to cover the most important UW-related provisions in this budget, starting with the one that has caused the most ruckus...

Frozen Tuition in Year One, Tuition Cut in Year Two
Gov. Scott Walker revealed his hope to cut resident undergraduate tuition at the UW System early this year during his State of the State Address to immediate outcry. Legislators on the left and the right immediately leapt at this provision, saying it would either drain the system's resources or be far too expensive for the state.

Under the Governor's proposal, resident undergraduates would enjoy a fifth year of the tuition freeze, setting the cost of a year of tuition at UW-Madison at $9,273. In the 2018-19 school year, tuition would be lowered by 5 percent, down to $8,809. The Governor's budget specifically allocates $35 million to the System to offset the lower amount of tuition dollars flowing in - just as System officials asked.

As a free marketer, I don't believe that a freeze is a sustainable long-term solution, but given the student debt crisis we're in now, it's the best option out there. Ever since the government began offering guaranteed loans for prospective students, the cost of higher education has skyrocketed. Rather than growing government at the latter end by creating new loan and grant programs, it's best to control costs to begin with and keep the cost of tuition from growing.

From the second Gov. Walker uttered the words "cut tuition" in his State of the State address, it was clear that some legislators wouldn't bite. It's a bit ironic that many legislators - who I will bet have boasted about the tuition freeze and how much money they've saved young Wisconsinites on nearly many pieces of lit that they've produced in the last four years - are balking at the cost.

Under the proposed reforms, students who began as freshmen at UW-Madison in 2015 would save $12,105 for a degree compared to the pre-freeze trend. How do you go after a growing student debt crisis? Cut the cost of a four-year degree by a full fourth.

Pathways to Three-Year Degrees*
Under another proposal, the UW System would be charged with to creating pathways to three-year degrees for 10 percent of programs by 2018, and 60 percent of programs by 2020. The System will also have to report on the number of three-year graduates and the percentage of programs for which a three-year pathway exists in an annual accountability report.

This proposal doesn't add additional burdens on students or ask the System or universities to create completely new programs. Rather, universities will have an opportunity to examine bloated degree requirements while shedding light on meaningful options for students. If passed, this proposal would save students valuable dollars - the benefits of which need not be explained here.

For purposes of transparency, the additional reporting requirement is a nice touch. Now let's work on that full audit.

Credit Transferability
One new requirement would have the UW System and Wisconsin Technical College System Board (WTCSB) ensure that for each course of study, no fewer than 60 core general education credits are transferable within and between each system institution. The System will also be required to submit a report to the Legislature describing any barriers to credit transferability by 2018. Under current law, only 30 credits are fully transferable within and between institutions.

Perhaps more than any other provision on higher education in this budget, this one is a no-brainer. Wisconsin's set of universities and tech colleges exist to serve our residents and get them prepared for the future, and any provision that helps them get there and streamlines the bureaucracy between institutions should be a welcome one.

Wisconsin's state institutions should be as flexible as possible for our residents and students while maintaining the high quality of education that the public expects. In this vein, the institutions should strive to complement one another and to maximize the ways in which students can benefit from them and complete their degrees. It's tough to tell how many students, exactly, will benefit from this provision, but the number is undoubtedly not zero. Besides, this should have been the rule from the beginning.

By requiring that a substantial number of credits transfer between each institution, each school's bureaucracy steps out of the way - just the slightest bit - in the favor of students.

Report Cards*
Similar to report cards for K-12 schools, each System institution will be required to publish single-page report cards beginning in 2018. The report cards will summarize each institution's performance during the prior year, based on the performance funding criteria and with metrics determined by the Board of Regents.

Any provision that increases transparency for the public is a good thing. Let parents and students have easier comparisons for and between each state institute. Another no-brainer.

Academic Freedom
The Governor's budget allocates $10,000 for the UW System to review and revise policies related to academic freedom. The Board of Regents will be charged with producing new language that codifies its commitment to students' right to free speech.

In an age of "free speech zones" on campuses - where every inch should be considered a free speech zone, not just a small corner - this provision is relevant and timely, as we've written here before. After all, college is a time for young people to open their eyes to new experiences and perspectives. No, it's not always comfortable. It's not supposed to be.

It's important to note that the UW Board of Regents already adopted written free speech principles known as the Chicago Principles in 2015, and reaffirmed them in 2016. However, such commitments to free speech haven't played out.

In November, protestors physically blocked conservative pundit Ben Shapiro from speaking on UW-Madison's campus. Shapiro eventually spoke, but protesters shouted down him and his supporters, including Vicki McKenna, who was repeatedly shoved and harassed but nevertheless kept filming.

The continual sifting and winnowing of ideas in the pursuit of truth can only occur if dissent in speech is continually protected. On, Wisconsin, indeed.

Freedom of Expression
In a similar vein to the academic freedom provision, the Board of Regents and each institution and UW College campus is charged with committing to free and open inquiry for the UW community as a whole. This provision for the UW System specifies that all members of the UW community share the responsibility to maintain a climate of mutual respect, and that concerns about civility can not be used as a justification for closing off the free and open discussion of ideas.*

This provision goes on to specify that while the UW's commitment to free speech and debate is crucial to its mission, the Board and institutions may restrict any expression that breaks the law, falsely defames a specific individual, constitutes a genuine threat or harassment, or that unjustifiably and substantially invades privacy. The Board and each institution are expressly given permission to "reasonably regulate" such speech as long as the fundamental commitment to the principle of discussion of ideas is not harmed. The bill language specifically writes that UW community members may not obstruct or interfere with the freedom of others to express their views on campus, even while they may reject or loathe such views. Rather, they are free to criticize and contest views with which they disagree, and the Board and each institution is charged with protecting the freedom of debate and deliberation.

I'll be curious to see what such "reasonable regulation" actually looks like, but I maintain heartened by the fact that this provision, and the one before it, make clear the System's commitment to free speech.

Faculty Workloads*
The System will be charged with creating a new system to monitor faculty and adjunct workloads, and rewarding those who teach more than the standard workload. By 2018, the System will have to devise policies for faculty members to regularly report their teaching hours on an accountability dashboard.

As a proud alumna of UW-Madison, I value my alma mater's reputation as a research institution. I also valued my professors having time to help me understand their classes and more than anything, I valued those classes that were engaging, thought-out, and comprehensive.

Ask any student if they can tell which professors showed up to class unprepared. They'll be honest with you. By tracking and reporting faculty workloads, professors will have the ability to be honest, too.

Opting Out of Seg Fees*
One provision would allow students to opt out of allocable segregated fees (known as seg fees) starting in the 2018-19 school year. Students would be able to decide whether or not they want to fund student organizations such as Sex Out Loud, the Tenant Resource Center, and Associated Students of Madison (ASM) bus passes.

One essential distinction - which is described in detail by ASM here - is that between allocable and non-allocable fees. This provision would not affect the non-allocable fees, which remain 83 percent of overall seg fees. Non-allocable fees fund things such as University Health Services, Recreational Sports, the Union, as well as all debt services and ongoing payments for building projects.

I'd be curious to see a breakdown of how many students would actually opt out of paying seg fees. My gut instinct tells me the majority of students would continue paying the fee because they enjoy the presence of such services on campus. But if they don't? That's their prerogative, and that's the way it should be.

Increased Flexible Options
The budget proposal requires the Board of Regents to expand the number of degrees offered through the UW Flexible Option program by at least 50 percent by December of 2019. At least one of the new programs created must be geared towards helping certified nursing assistants in becoming registered nurses, and another must help prepare nonteacher school district employees successfully complete standardized exams as a condition of becoming certified teachers. The proposal also offers $700,000 in financial aid for students who are enrolled in programs through the UW Flexible Option platform.

Currently, the Flex Option offers five degree programs and three certificates. The program is "made for busy adults" and catered towards individuals who want to get their degrees but who may already be working full time, supporting a family, or otherwise unable to attend traditional college courses.

Only UW-Milwaukee, UW-Parkside, and UW Colleges offer the Flex Option.

Wisconsin Tech College System
It's not just the UW System - WTCS is also affected by the Governor's budget. The biggest provision is one which would freeze tech college tuition for two years, providing $5 million to offset lost program revenues. According to the Governor's office, revenue per full-time enrollee at tech colleges has risen over 20 percent over the last five years and is at its highest level ever. Clearly, the system won't be bled dry by letting students save more of their hard-earned dollars.

Local tech college districts will be allowed the flexibility to drop tuition lower* than the statewide frozen amount. I won't hold my breath and wait for any districts to jump at the opportunity to make less tuition money, but it's nice that they'll be allowed the option.

WTCS will also be required to submit an annual accountability report* to the Governor and Legislature, just as the UW System already does. Such transparency is necessary and welcome.

Required Work Experience*
I've written on this issue here, leaning heavily on my experience as a young graduate who has never had to be told that getting a job is important. Maybe that's just me, though. ¯\_(ツ)_/¯

Other Odds and Ends
I could wax poetic on all the provisions in this budget for thousands of words, but in the interest of keeping my readers awake, I'll go through the last of the provisions here:

  • $11.6 million for a general wage adjustment for UW employees. This will fund both the expected inflation increases in fringe benefit costs as well as two 2 percent bumps in general wages, slated for September 2018 and again in May 2019.
  • $168 million in additional program revenue and 159.22 additional positions to reflect increases in tuition revenues and positions funded by that revenue.
  • $200,000 for the System's rural physician residency assistance program, spread evenly across the biennium.
  • Tuition fee remission for the children and spouses of deceased or disabled veterans: this provision expands tuition fee remission to the children and spouses of veterans who lived in the state prior to serving, rather than just those individuals who lived in the state after service.
  • *Student Housing Leases: the Board of Regents would be responsible for all student housing leases, rather than exempting the Board's lease authority for leases of real property as student housing, as is current law.

That's about it, folks. In your opinion, what's the most important provision related to higher education in this budget? As always, follow us at @MacIverWisc to stay up-to-date on all the latest state budget issues.

* indicates that the item has been removed from the budget, as of April 10, 2017.

Nickel: Health Insurance Reforms like Wisconsin's HIRSP Offer Way Forward

Fri, 05/19/2017 - 06:00

Wisconsin high-risk pool can be a national model in debate over pre-existing conditions

May 19, 2017

Guest Perspective By Ted Nickel
Wisconsin Commissioner of Insurance

Obamacare is falling apart. One third of US counties have only one health insurer offering coverage on the federal exchange. Last year, Tennessee indicated its market was very near collapse, and it hasn't gotten any better. Currently, no health insurers in Iowa will be participating on the exchange. Minnesota is planning on spending $800 million tax dollars just this year to shore up its individual market. Alaska is spending its entire premium tax to keep their one health insurer in the market.

Tragically, Wisconsin isn't immune from the harmful effects of Obamacare. We have seen insurers leave the exchange, significantly reduce service areas, and leave the individual market altogether.

There has been a lot of talk about what would happen to people with preexisting conditions if Obamacare was repealed and replaced. Thankfully, Wisconsin can provide a map for the road ahead.

Prior to Obamacare, Wisconsin consumers could choose from over 20 individual insurance companies offering coverage in our state. There were a variety of plan options to meet a range of coverage needs. If a person was denied insurance due to a preexisting condition, they would receive coverage from Wisconsin's high-risk pool known as the Health Insurance Risk-Sharing Plan (HIRSP).

For more than 30 years, HIRSP provided Wisconsin consumers with peace of mind by providing high-quality, comprehensive coverage to over 20,000 of our friends and neighbors. This plan is widely regarded as a national model for providing coverage to individuals who did not have access to coverage through an employer or the government.

Unlike the current Obamacare market where most people must wait until open enrollment to purchase coverage, consumers could enroll in HIRSP at any time. There were no preexisting condition limits for people signing up for coverage if they had prior coverage. If consumers had no prior coverage, they would receive coverage for most conditions, but had to wait 6 months for preexisting conditions. In contrast, with Obamacare you may have to wait up to 11 months for any coverage if you miss open enrollment.

Once enrolled in HIRSP, consumers chose from a variety of benefit plans including both high- and low-deductible plans. While Obamacare plans are criticized for having narrow networks, there were no network limitations for HIRSP; members were able to visit any medical provider in our state and receive coverage when traveling outside of Wisconsin. Subsidies were also available to offset premiums, deductibles, and prescription drug out-of-pocket maximums for low-income members.

HIRSP benefit and administrative costs were funded by member premiums and contributions from insurers and providers. No state dollars were needed to support this program.

HIRSP helped people like Sarah in Thiensville who was paying $260 per month under HIRSP and now her premiums are nearly $400 per month. She wrote, "Life was more manageable when my supplement insurance was the Wisconsin HIRSP plan. The premium was 50% lower allowing extra money for drug co-pays and all the rest of the co-pays...If Obamacare gets cancelled my only glimmer of hope is Wisconsin's HIRSP program would come back with its great coverage and lower premiums."

Obamacare did away with HIRSP, and premiums for individuals who were formally covered by HIRSP increased. Former members of HIRSP, like Sarah, have contacted us requesting a reinstatement of this program.

The bill that recently passed the House, known as the American Health Care Act (AHCA), provides a strong starting point for implementing a HIRSP 2.0. It utilizes federal dollars to ensure affordable and accessible coverage for all individuals with preexisting conditions.

Critics of AHCA are quick to claim the bill will provide no coverage for any preexisting conditions. This isn't true. AHCA specifically states, "Nothing in this Act shall be construed as permitting health insurance issuers to limit access to health coverage for individuals with preexisting conditions."

ACA is in trouble, but with AHCA help is on the way to stabilize insurance markets and return access to affordable health insurance choices for consumers. It is the failure of Obamacare which is going to leave people without coverage. This failure created an individual market not viable either in the short term or long term.

Reforms like Wisconsin's HIRSP offer a way forward.

Occupational (License) Hazards: Style Hair at a Church And Go to Jail?

Thu, 05/18/2017 - 13:46

MacIver News Service | May 18, 2017

By M.D. Kittle

[Madison, Wis...] In Wisconsin, a licensed beautician who styles the hair for bride-to-be and her bridesmaids at a church is a law-breaker.

Technically, a stylist could face fines or jail time for doing hair or nails outside a licensed establishment, according to state licensure laws.

"If government regulation is so onerous that the average citizens doing common-sense things are breaking the law without even knowing it, doesn't that tell you something about the state of regulation in Wisconsin?" said Sen. Chris Kapenga.

The Delafield Republican wants the Legislature to take a serious look at the barriers to individual and economic freedom in Wisconsin.

Kapenga and three other lawmakers - Sen. Alberta Darling, (R-River Hills), and Reps. Rob Hutton, (R-Brookfield), and Dale Kooyenga, (R-Brookfied) - are introducing a bill calling for a comprehensive review of Wisconsin's occupational licensing laws, ultimately determining which licenses and regulations are necessary, and which are not.

The Occupational License Review Council would be made up of gubernatorial and legislative appointees charged with "reviewing the validity of every license on the books and using an objective set of criteria," according to a press release. Four members would be appointed by the governor, two by the Senate majority leader, and two by the speaker of the Assembly. The secretary of the Department of Safety and Professional Services or his designee would serve on the council as a generally nonvoting member.

It must submit its report to the Legislature by Dec. 31, 2018.

The council will "arm the Legislature" with the information needed to decide whether a regulation is truly necessary, versus the "one-sided" process that often goes into creating license standards. Recommendations could include the elimination of occupational licenses, the modification of laws and rules governing occupational licenses, and the reduction or elimination of continuing and other education tied to licensure.

The Legislature would have to act on the council's recommendations by June 2019, the end of the next biennium. After that the council would be dissolved, or "sunset," but it would be revived every 10 years.

There also is a "Sunrise Review" process using the same criteria to review any bill that would create additional licensing requirements.

The bill has garnered several co-sponsors so far. Kapenga said he's hopeful to move through the committee and public hearing schedules in the coming weeks and that the measure could come up for floor votes before the Legislature wraps for the summer break.

"As we know, the regulation in this state has been ballooning considerably so we need to get our arms around this and get a process in place," Kapenga said. "Not just a quick review and take a couple of licenses off the book. It's a long-term look and putting a process in place to protect taxpayers and citizens long after we're around."

Over the past two decades the number of occupational licenses in Wisconsin has increased 44 percent, according to legislative documents.

Nationally, nearly 30 percent of workers need a license to do their job, according to a 2015 report from the Brookings Institution.

Critics of occupational license reform insist public safety is at risk. They fear a kind of deregulated "Wild West" service industry, where poorly trained electricians set homes and businesses on fire and unscrupulous contractors are allowed to take advantage of trusting seniors.

Kapenga and reform advocates say the fears are overblown, driven in large part by industry protectionists seeking to limit competition.

"There has to be a broad based public safety risk if there's going to be a regulation in place," Kapenga said in an interview with MacIver News Service. "We do have the responsibility of what I call civil justice to ensure public safety."

Many states require a license to legally perform a job "where the risks of getting it wrong seem far less dire for potential consumers," the Brookings Institution report notes. "For example, some states require that florists and make-up artists satisfy expensive and time-intensive requirements before they are legally permitted to perform their jobs."

"Also subject to such requirements in various states are locksmiths, ballroom dance instructors, hair braiders, manicurists, interior designers, and upholsterers."

A 2016 Institute for Justice report noted that, in most states, including Wisconsin, people who wish to braid hair for a living are forced to obtain a "government permission slip - an occupational license requiring up to 2,100 hours of training."

Cosmetology licensure in Wisconsin requires at least 1,550 training hours in not less than 10 months in a school of cosmetology, according to state law.

As reform advocates note, there has been renewed interest from across the political spectrum to reexamine licensure in the United States, with reform supported by everyone from the libertarian Cato Institute to the Obama White House.

Kapenga's bill is part of a suite of legislation aimed at occupational license reform in Wisconsin.

Darling on Thursday introduced a bill that creates a self-certification process that sets up an alternative to the more onerous licensure process. Applicants would have to meet certain requirements set out by professional organizations in order to be certified.

Americans for Prosperity-Wisconsin is a strong supporter of the reform measures, bills AFP says will remove barriers Wisconsinites face to obtaining their version of the American Dream.

"Wisconsin's occupational licensing laws are among the worst in the nation, raising prices and killing jobs in our state," said AFP-Wisconsin State Director Eric Bott. "These laws are outrageous because they effectively require Wisconsinites to get government permission slips to work for a living. It is no coincidence the biggest supporters of these laws are often businesses that profit from fewer competitors in their industry."

"Thankfully, two bills have been proposed that would greatly reduce these barriers to opportunity by making sure that any licensing requirements provide a clear benefit to society, not just protect special interests," Bott added.

Budget Blog - JFC Rejects Dems' "Free Tuition" Stunt

Thu, 05/18/2017 - 09:00

May 18, 2017

The Joint Finance Committee took up the first of the big education agencies today when voting on budget provisions for the Wisconsin Technical College System. Most notably, JFC bucked Gov. Scott Walker's proposal to freeze tuition at the tech colleges and voted instead to send that money towards scholarships.

The committee cast a 12-4 party-line vote to delete the proposed tuition freeze and instead provide $2.5 million annually for need-based Wisconsin Grants for technical college students. Rather than spending $10 million in GPR across the biennium, the approved motion spends $5 million during the same period of time.

Sen. Harsdorf: we need to make sure we're helping the students who NEED the help. https://t.co/9Fd2hMiWKy

— MacIver Institute (@MacIverWisc) May 18, 2017

The stunt of the day came when Democrats on the committee tried to pass a motion that would spend $545 million in GPR to make tuition and fees at the tech colleges completely free. The legislators took great lengths to describe the food insecurity that tech college students face that they claimed could all be solved by this motion. Not mentioned, of course, was the multitude of research showing that affluent students typically benefit the most from "free college" schemes.

The one-page motion did not include any information on how the legislators would pay for the massive new expenditure.

Fact: students with higher incomes benefit the most from #freecollege proposals. And yet, today's motion hands out the $$$ like it's free pic.twitter.com/iNfivSTP3o

— MacIver Institute (@MacIverWisc) May 18, 2017

JFC Co-chair Rep. John Nygren (R-Marinette) noted that the expense would throw off the entire budget and reminded Democrats on the committee that "Bernie Sanders lost." With that, the committee went to a vote, which failed 12-4.

.@rep89: "Reminder: Bernie Sanders lost." #freecollege motion fails, onto next paper. #wipolitics #wibudget

— MacIver Institute (@MacIverWisc) May 18, 2017

The last major tech colleges-related issue was that of performance-based funding. Walker's budget proposal would change the way that funding is allocated to each of the colleges, relying more heavily upon each school's performance. Rather than approving the Governor's plan, the committee voted to keep the current law's allocation mechanism.

Local Debt Explodes Across Wisconsin

Thu, 05/18/2017 - 06:00

MacIver News Service | May 18, 2017

By Bill Osmulski

[Milwaukee] Local government debt in Wisconsin is exploding, according to the non-partisan Legislative Fiscal Bureau, because state policies have made borrowing so much easier and more attractive than budgeting.

Unlike school districts, local governments do not need to go to referendum to take out bonds. Also, borrowed money doesn't count towards levy limits. And so, local officials have come to see bonding as an easy way to plug their budget gaps.

From 2005 to 2015, local debt shot up 30.7%. At the same time, annual debt service payments increased 56.8 percent, according to LFB. Total municipal debt in Wisconsin is around $6.1 billion, according to the League of Wisconsin Municipalities. That comes out to $1,057 for every man, woman, and child in the state.

It's hard to imagine the problem being any worse than it is in the City of Milwaukee, which has a total annual budget of $1.5 billion. The city is carrying $1.25 billion in outstanding debt, according to its 2015 comprehensive annual financial report. $880 million of that is in city-backed bonds. These amounts don't include interest payments.

"Long term obligations must always have our attention. Remember, regardless of how low the interest rate is, we always have to pay back the principal," Mayor Tom Barrett said in his budget address last year.

However, Barrett's comments have yet to translate into actual fiscal policy. Milwaukee's 2017 budget included a $831 million authorization for new borrowing - more than half the total budget. That's down from the $842 million authorization last year, but up from $801 million in 2015.

Over the past six years, shared revenue funding (for the entire state) has held steady at $753.1 million. Fiscal bureau suggests increasing shared revenue to local governments could help address the debt crisis. However, LFB did not estimate how much state funding that would take. The most ambitious option lawmakers are considering for the budget would increase shared revenue a mere 5 percent. That would provide an extra $37.7 million, and again, that would be divvied out throughout the state. This year Milwaukee will receive $219 million in shared revenue, and a 5 percent increase would equal about $11 million.

In his budget address, Mayor Barrett said without more state aid or higher property tax levies, the only way Milwaukee can get its debt under control is to cut personnel and costs. He will have the opportunity to pursue that option when he presents his annual city budget proposal this fall.

Of course, Milwaukee can always borrow even more money. Moody's still ranks the city's bonds as Aaa, the highest rating possible.

MacIver Institute Analysis: A Deeper Dive Into the Assembly's "Road to a Flat Tax"

Wed, 05/17/2017 - 14:21

Is a flat tax worth a sales tax on gas?

A look at the numbers and details of the latest development in Wisconsin's transportation showdown

May 17, 2017

[Madison, Wis...] State Rep. Dale Kooyenga knows the odds are long that his "Road to a Flat Tax" will survive the budget process.

The Brookfield Republican's ambitious transportation and tax reform package aims to build a sustainable transportation infrastructure program while simplifying and lowering the state's complicated tax code, eventually bringing a 3.95 percent flat income tax to all Wisconsin taxpayers. (For background on what a flat tax could look like in Wisconsin, please read MacIver's report from January, A Glide Path To A 3% Flat Income Tax).

Click to enlarge

Kooyenga's goal of moving away from our highly punitive income tax brackets to a single flat tax is an important goal and one we need to pursue if Wisconsin is to compete for population growth, business start-ups and retiree retention in the future. While Gov. Scott Walker and the Republican-controlled Legislature have provided nearly $5 billion dollars in tax relief since 2011, Wisconsin's high overall tax ranking has only improved one spot, down to 16th highest among the states.

Ultimately, the proposal could cut taxes by billions of dollars, significantly lowering the burden that has long plagued citizens of this high-tax state. It drives down transportation bonding, potentially saving taxpayers hundreds of millions of dollars in interest payments that could be dedicated to other priorities. The plan also would start to reform Wisconsin's anti-consumer and unjust minimum markup law, which forces Wisconsinites to pay higher prices on many of the goods they purchase every day. And, if government doesn't get in the way, Kooyenga's plan could truly limit the size of state government.

There are big victories for free-market conservatives in this plan; unfortunately, the pros come with one incontrovertible and overriding negative. Kooyenga's plan, in order to placate the tax-and-spend crowd, makes a deal with the devil: it applies the 5 percent state sales tax, 5.5 percent in almost every county in the state when you add in the local 0.5 percent sales tax option, placing a new tax on a widely-used and critically-important product.

Here is the biggest problem with the proposal to apply the 5 percent sales tax to gas - we would be adding a new tax on a tax, only to be taxed again. It is nearly impossible, as witnessed by the Legislature's reluctance to agree with Walker's proposal to abolish the statewide forestry tax, to repeal or get rid of a new tax once it has been created. Most politicians are loathe to ever give up revenue, or as we like to say, your money. Wisconsinites do not need a new tax. Wisconsinites need fewer taxes and an overall lower tax burden.

The transportation proposal does lower the state's gas tax - at 32.9 cents per gallon one of the highest taxes in the country - by nearly 5 cents. But those savings are overshadowed by the implementation of a new tax that could burrow into the state's revenue system forever.

Taken separately, there are some very intriguing ideas worth exploring in the reform package. At the top of that list is a flat tax that could not only keep a lot more money in the wallets of Wisconsin taxpayers, it could single-handedly make the Badger State a much more competitive place to do business. States with flat income taxes have better population growth, more in-migration, faster private sector growth, higher personal income growth, and larger gross state project growth than states with high income taxes.

Wisconsin has had a progressive tax structure the entire time it has taxed income, but that doesn't make the flat tax an "out-there" idea. Seven states levy no individual income tax at all, and eight states have a flat individual income tax, including Illinois, Indiana, and Michigan. Two more states, New Hampshire and Tennessee, only tax income on dividends and interest, and Tennessee is on a glide path to complete elimination of the income tax by 2022.

Some might portray the idea as radical, but it's important to note that all Illinoisans pay a 3.75 percent flat tax rate. That's right - millionaires in Chicago pay a lower state income tax rate than single people earning less than $11,000 in Wisconsin.

Wisconsin's lowest income tax rate of 4 percent is the fourth highest bottom rate among the 33 states with a progressive income tax. Not only do we push away high earners with rates that punish success, we punish the poorest in our society.

Kooyenga's plan also bolsters the free market by starting to reform the state's Great Depression-era prevailing wage law, and directly limits the size of government by eliminating 180 state Department of Transportation jobs. It brings "fund integrity" back to the state budget by preventing $81 million from being transferred from the general revenue account to the transportation fund. This is important to those of us who care about GAAP accounting standards.

Kooyenga says there's been a good deal of misunderstanding, if not misinformation, about his reform package, from its cost to its ultimate impact.

Today, the MacIver Institute takes a closer look at the key elements of the proposal, and what they aim to accomplish.

Numbers Game

Kooyenga these days must feel like a dead man walking. Members of his own party have skewered his proposal, unveiled earlier this month.

Walker has panned the plan as a tax increase at the pump. The Republican governor, pointing to Legislative Fiscal Bureau projections showing a net effect $433 million tax increase, said he cannot support the package.

"To me, that is the most troubling part of the plan," Walker told the Associated Press. "I think people are taxed enough. I oppose a gas tax increase, no matter what you want to call it."

While the GOP Assembly made a show of solidarity with Kooyenga during the unveiling of his reform package, several lawmakers tell MacIver News Service the proposal, as it stands, is probably dead on arrival.

Currently, gas is exempted from the 5 percent state sales tax and the 0.5 percent add-on in 64 of Wisconsin's 72 counties. While Kooyenga justifies the revenue increase with a 4.8 cent-per-gallon reduction in the state's high gas tax and the lowering of the minimum markup, it doesn't change the fact that a conservative transportation plan adds a tax.

"The Assembly plan includes a massive net tax increase on fuel to reduce bonding in a budget that has the lowest level of transportation bonding since the 2001-2003 state budget - without any new road projects," Walker wrote in an email to MacIver News Service. "I am working with members of the Senate and Assembly on reforms that protect taxpayers while investing in our infrastructure - all without an increase on taxes at the pump."

Transportation bonding may be at its lowest level in 15 years, but debt continues to dog the fund. Assembly Republicans are adamant that the lower bonding level is still just too high.

Walker's 2017-19 budget proposal includes $6.1 billion for transportation, with $500 million in new bonding.

Kooyenga estimates the sales tax on gas would generate some $660 million in new revenue over the biennium, $300 million of that marked to buy down Walker's bonding proposal to $200 million. Doing so would significantly ease borrowing costs.

By 2018, the transportation fund is expected to fork out $413 million a year in debt service, representing 22 percent of tax-and-fee dedicated transportation fund revenue. Walker last week reiterated to conservative talk show host Vicki McKenna that state bonding is at its lowest level since 2001-2003.

The Fiscal Bureau projects sales tax collections would be more like $270 million in 2017-18, including $70 million in contingent bonding authority, and $390 million in 2018-19.

Kooyenga and Assembly Republicans have attempted to make debt reduction a huge selling point of the package, but is the current debt load too high? There is disagreement on that front. The Transportation Projects Commission has said the transportation fund could still be considered stable with debt service as high as 25 cents of every transportation dollar.

'Fund Integrity'

Walker's budget proposal calls for spending $325 million in general fund money on transportation over the next two years.

Kooyenga notes that what Walker characterized as a $433 million tax increase includes leaving $81 million in the state's general fund that could no longer be siphoned into the troubled transportation fund. The legislator's plan puts a lock on the general fund, at least when it comes to transportation.

Walker and fellow Republicans have long criticized his predecessor, Gov. Jim Doyle, a Democrat, for grabbing $1.3 billion from the segregated transportation fund. In November 2014, voters approved a referendum establishing a constitutional amendment ending the practice of raiding the transportation fund for other government programs.

While Kooyenga says he doesn't find using general fund money for transportation as egregious, he asks, "Why is it right to go from the general fund to transportation but not okay to go from transportation to the general fund?" It's a matter of fund integrity, the lawmaker says.

Kooyenga's plan would use the $81 million for income tax reduction. The counties' portion of the sales tax on gas, an estimated $43 million, would be retained by the state and applied to the flat tax.

Maximum Friction - The Unjust Minimum Markup Law

The reform package rests heavily on reducing Wisconsin's minimum markup rate from 9.18 percent to 3 percent.

Also known as the Unfair Sales Act, the minimum markup law prohibits the sale of merchandise at less than cost while ratcheting up the "minimum price" for alcohol, tobacco and gasoline.

Any move by lawmakers to reform this special interest protection will be difficult. There will be pitched resistance from an army of lobbyists and flacks who will stop at nothing to maintain the status quo.

Krist Atanasoff, owner of Iron River, Mich.-based Krist Oil Co. and an outspoken critic of the minimum markup law, operates 37 gas stations in Wisconsin and 36 in Michigan. Although Michigan's gas tax is 5 cents higher than Wisconsin's, Atanasoff says his Wisconsin customers pay a higher price at the pump thanks to the state's "dumb state law." The businessman supports Kooyenga's plan.

"As a petroleum marketer, I don't want the crony capitalist protections so many in our industry want. I just want to compete, without government favor," Atanasoff wrote this week in a letter endorsing "The Road to a Flat Tax." As the convenience store chain owner notes, none of the money consumers pay in minimum markup costs goes to road construction or upkeep. "It is merely a government-mandated guaranteed profit margin for one industry."

But are there any guarantees that consumers will see cost savings at the pump should the minimum markup rate be reduced? No. Some speculate that convenience stores could simply raise the price of gas to offset the loss.

Matt Hauser, executive director of the Petroleum Marketers, told the Wisconsin Radio Network that there has never been conclusive evidence changing or eliminating the markup on gas would offset a tax increase. He, again, defended the minimum markup law as protection from large chain retailers pricing out smaller operators.

"We're concerned it's really just a smoke screen to draw away from the real issue...that Wisconsin is getting ready to implement a significant tax increase on gasoline," Hauser told WRN, referring to Kooyenga's plan to lift the sales tax exemption on gas.

Kooyenga countered that it's the convenience store lobby creating the smoke screen. The minimum markup is applied on top of the state's gas tax. Lowering the tax by nearly 5 cents would cut into gas station profits.

While the Legislative Fiscal Bureau examined the other elements of Kooyenga's reform package, it curiously seems to have taken a pass on reviewing the minimum markup reduction and the impact it would have on consumers.

The mark down on minimum markup is a small step in the right direction but a colossal missed opportunity. What about all of the other products consumers are overcharged on because the minimum markup is applied? Why is it the job of the state government to prevent businesses from giving their customers a better deal or a low, low price?

The minimum markup law is an unjust law. Wisconsin consumers are being ripped off everyday and every time a business is prevented from offering their products at the lowest price possible. But making an unjust law a few percentage points better does not suddenly make it a just law.

Mega Money

Wisconsin's powerful road-building lobby has offered a relatively tepid response to Kooyenga's proposal - no sharp criticisms, but certainly no ringing endorsements. Road builders, of course, want more money now, but they like the projected $3 billion in new revenue that could be generated over the 12-year life of the transportation/tax plan. That money could be used to buy down debt, but it more than likely would go to projects.

The Southeast Wisconsin Mega Projects, north and south and eventually east and west, are pegged at $9 billion-plus.

Assembly Speaker Robin Vos (R-Rochester) and Rep. John Nygren (R-Marinette), who serves as co-chairman of the Legislature's budget-writing Joint Finance Committee, have sought much more in revenue. They have long said every idea is on the table, including higher gas taxes and vehicle fees, but they insist Kooyenga's reform package is a good start in finding long-term solutions for Wisconsin's transportation budget problems.

One of the big complaints from fiscal conservatives is that the plan includes an increase in funding for a Wisconsin Department of Transportation that has been found to be poor stewards of taxpayer money. An audit released earlier this year showed the agency was riddled with significant cost overruns, due in large part to its failure to account for inflation on major highway projects.

"I'm not giving DOT an additional cent," Kooyenga said. "I'm actually giving DOT less money because I'm cutting 180 of their engineers. I am lowering bonding." Kooyenga, a certified public accountant who helped uncover a huge surplus in the poverty-declaring University of Wisconsin System, does not consider bonding - or using tax money to pay down tax money - as increased revenue for the agency.

Checking Government Growth - Lowering Tax Revenues to Control the Growth of Government

Kooyenga's reform package, he says, limits the growth of state government. The proposal's most ambitious and quite frankly most appealing idea, a 3.95 percent flat tax phased-in over 12 years, could slow government growth.

"We are reducing the size of government by $2.3 billion that never gets here," Kooyenga said. "This represents about 1.5 percent growth that will not go to increasing the size of government. It will stay in income taxpayers' pockets."

The tax cuts are even higher than Kooyenga's projections, according to a Fiscal Bureau review. The flat tax would trim income taxes by a net $2.7 billion by 2029, the bureau reported Wednesday. Democrats and their friends on the left are characterizing Kooyenga's plan as tax cuts for the wealthy, with a little over one-third of the reductions targeted for taxpayers making $300,000-plus per year.

"The simplicity of the flat tax masks the inequality of it," Rep. Gordon Hintz (D-Oshkosh) told the Milwaukee Journal Sentinel. "It's really a tax giveaway to the wealthiest individuals."

Or as we like to point out, a flat tax is really about tax fairness and stopping the counterproductive punishment of success. Simple math shows that Hintz is just plain wrong. A person earning $25,000 a year will pay $1,000 in tax under a 4 percent flat tax system. A person making $300,000 a year will pay $12,000 in tax.

The successful will still pay more taxes to cover the cost of government under a flat tax system but it would no longer be at an unfair and inequitable ascending rate.

Critics of a flat tax also don't recognize the significance of the individual income tax in today's economy - particularly for pass-through businesses. Business structures have changed quite a bit since the invention of the Internet, let alone since the invention of the income tax.

Pass-through businesses - including S-corps, sole proprietorships, and partnerships - are an increasingly common form of business practice in which profits are taxed under the individual income tax rather than the corporate tax. More than half of working Wisconsinites are employed by a pass-through business, which pay a top marginal income tax rate of more than 48 percent - the eighth highest rate in the country.

Ultimately, Kooyenga and advocates of a flat tax say the reform is about fairness, lifting the yoke of heavy taxation off of all taxpayers. Wisconsin has long had its progressive tax code under the guise of being more fair and friendly to the poor. Liberals in particular demand the rich must "pay their fair share" and help reduce income inequality by paying more in taxes.

Quantitative state data from 2002 to 2012 show states with flat income taxes have better population growth, more in-migration, faster private sector growth, higher personal income growth, and larger gross state product than states with high income taxes. State revenue also grew more in states with no income taxes, showing that life doesn't grind to a halt when the government stops taxing its citizens as heavily.

As the MacIver Institute notes in its "Glide Path To A 3% Flat Tax Income Tax," tax migration plays a significant role in economic competitiveness.

"Wisconsin's reputation as a high-tax state has a significant impact on the state's ability not only to attract newcomers, but also to retain those who are already residents," MacIver's Ola Lisowski wrote in a January policy brief. "Annually, Wisconsin loses an estimated $136 million in adjusted gross income to tax migration."

Census Bureau data show that the majority of those leaving Wisconsin are heading to states that boast warmer weather and lower taxes, such as Florida, Arizona, Texas, and Colorado. A flat tax could stem the tide of Wisconsinites fleeing the state for lower tax burdens.

Some conservative lawmakers have expressed concerns that a change in political leadership could wipe out the flat tax. Kooyenga says it would take a two-thirds vote in both houses to change the rates once they are in statute. The beautiful thing about it all, the lawmaker says, is that the income tax cuts would go on, no matter who's in office. "It's on autopilot."

Rounding Down

While making up a fraction of the traffic control systems statewide, not many transportation topics have ignited more controversy than roundabouts. Beyond their costs, critics say roundabouts pop up without much DOT consideration of public input.

Kooyenga's reform package would prohibit DOT and local governments from designing a roundabout for any state or local highway unless the roundabout is approved by the local government of the community where the roundabout would be located. But the moratorium would be in place for just two years and would not apply to projects that commenced before the moratorium bill is signed.

Taxpayer Option

The transportation plan would allow counties to impose a 0.5 percent sales tax, with the proceeds to be used for local road maintenance and repair. Voters must approve the local roads optional sales tax at referendum. The ballot question must be held during a spring election or a general election, not during the lower voter turnout elections. The sales tax would be in effect for four years, with a four-year renewal, if voters concur. If voters reject the question, the county would have to wait at least 12 months before putting the issue on the ballot. It all goes away after Dec. 31, 2027. Local governments in the county would divide 50 percent of annual proceeds for their road repair and maintenance needs.

The optional sales tax would come with a "maintenance of effort" provision. Such mandates under Obamacare have tied states' hands and extended financial obligations under the law. They lock governments into maintaining taxpayer-funded programs, typically at an escalating cost to taxpayers.

Republican governors have long railed against the extension of the maintenance-of-effort imposed in the "free" money to states in the 2009 federal stimulus package. States were forbidden to make major changes in Medicaid eligibility. "Therefore, Medicaid spending has continued to rise as lawmakers have chosen to cut other programs or raise taxes," wrote John Hood in a 2012 National Review piece headlined, "Say No To Medicaid Expansion."

Kooyenga says the idea behind his maintenance-of-effort mandate in his local option sales tax proposal is to keep local governments from shifting sales-tax-based transportation money into another government fund. But those who warned against Medicaid expansion have seen their admonitions come to pass. The base of Medicaid spending, once expanded, continues to grow at a broader, expanded rate.

The transportation plan includes the complete repeal of the state's prevailing wage law, an anti-free-market giveaway to labor unions at the expense of taxpayers. The law requires wages on taxpayer-funded construction projects to be paid at inflated rates preferred by unions. Two years ago, the Republican-controlled Legislature repealed prevailing wages for certain local projects. If only conservatives had control of every branch of the federal government so we could make some progress with the equally repugnant Davis-Bacon Act.

Kooyenga's reform package adopts many of the cost-savings and oversight recommendations included in the Legislative Audit Bureau's January report.

The Final Analysis

While they may not support his proposal, or at least elements of it, many of Kooyenga's Republican colleagues say the lawmaker did what Republican leadership said the party would do after posting historic wins in November: Go big and bold. He was charged with a Herculean task in coming up with a plan that would solve the DOT's budget problems, put Wisconsin on the road to real income tax reduction, and work to bring a broad spectrum of competing interests to some kind of consensus.

"I understand there is an insatiable appetite" for transportation money, Kooyenga said. "I just thought it was my job to figure out what we need and go from there."

While it includes some worthwhile, free-market ideas, Kooyenga's reform proposal ultimately is flawed by its need to appease. It has the fingerprints of politics and special interests all over it. Anytime politicians make a decision based on politics or the next election, taxpayers lose.

While proponents claim the gasoline sales tax is not a tax increase but simply an expansion of the tax base, we disagree. There's no way around it - this is a tax increase for the consumer.

According to the nonpartisan Legislative Fiscal Bureau, the sales tax would result in an equivalent fuel tax increase of 7.2 cents per gallon for gas and 10 cents for diesel, based on a price of $2.40 per gallon of gas and $2.95 per gallon of diesel. The pain at the pump only increases as the price per gallon of gas increases. What happens when gas prices hit $3.50 per gallon again? What about $4? Kooyenga has said the idea is to put curbs on high-end and low-end pricing, but consumers have a right to be concerned.

While we applaud the immediate 4.8-cent cut in the gas tax, without scoring the impact of the change in the minimum markup law, questions remain about the overall taxpayer impact of the transportation funding plan. We would be much more comfortable with the overall design of this proposal if it deleted the entire minimum markup law and let full competition for customers drive down the price of gas. MacIver has spent a great amount of time and effort reporting on the consumer injustice that is Wisconsin's minimum markup law. Our feelings are clear. Why does the government have any role in the setting of prices? Sounds like a scheme you might find in Venezuela.

When it comes to taxation, simplicity and transparency are critical to a fair and effective tax system. Having state government impose a sales tax on top of a tax is a step in the wrong direction.

In the final analysis the question remains: Is a simplified, fairer flat tax worth the price of applying the sales tax to gasoline? We think not. While there is much to like in "The Road to a Flat Tax," there is more work needed to make it a good deal for taxpayers.

As Obamacare Continues Sinking, Americans Continue Losing

Wed, 05/17/2017 - 11:58

May 17, 2017

Perspective by Chris Rochester
MacIver Institute Communications Director

The mainstream media seems fixated on the insider politics surrounding repealing and replacing Obamacare, but the average person couldn't care less about parliamentary procedures and intra-party squabbling. They're faced with an inescapable reality: healthcare is unaffordable and inaccessible thanks to Obamacare. The question they want answered is: What is the point of having insurance if you can't afford to use it?

The out-of-touch media coverage reminds me of the apocryphal tale about elite passengers on the Titanic arguing over the bar tab as the ship takes on water. Meanwhile, the people in steerage are stuck behind those gates trying to escape before the water reaches their heads.

The water is rising fast. In 2017, the average premium increase on the individual market in Wisconsin was 16 percent. One of the most egregiously expensive plans was in western Wisconsin, costing $51,000 per year in premiums for a couple unfortunate enough to be in their 50s with three children.

The cost of Obamacare plans is staggering. In a report last year that scoured the federal database of 2017 premiums in Wisconsin, the MacIver Institute found that a family of four would fork over an average monthly premium of $1,609.11 for a platinum plan - $19,309.32 per year - while a mid-level silver plan would cost them $1,297.02 in average monthly premiums, or $15,564.24 per year

Deductibles - the out of pocket cost of using your health insurance - also keep spiraling upward. For a top-tier platinum plan in Wisconsin, we found the average deductible is $900 for a family and $450 for an individual.

However, for a mid-level silver plan, the average deductible is $7,015.71 for a family and $3,491.92 for an individual. The average catastrophic plan deductible will be $14,300 for a family and $7,150 for an individual. That's not cut-back-on-Starbucks money, that's bankruptcy court, even for those earning a decent salary.

Obamacare proponents constantly point to the number of people they claim are insured because of Obamacare. But conflating health insurance with access to actual health care is looking through rose-colored glasses. In the real world, Obamacare decimates household budgets, especially middle class families who don't receive federal subsidies and are whipsawed by the full cost of both premiums and deductibles.

Despite the double digit price spikes and astronomical deductibles in Wisconsin, we drew the long stick compared with our neighbor across the Mississippi River. Minnesotans on the individual exchanges got stuck with premium hikes as high as 67 percent in 2017.

In response, Minnesota Governor Mark Dayton and the Legislature were forced to bail out 123,000 middle class families to the tune of an additional $313 million in taxpayer money.

"If you like your plan, you can keep your plan," President Obama said in PolitiFact's 2013 Lie of the Year. In Minnesota, that lie came with the added asterisk that taxpayers have to come to your rescue after finding out your state's politicians fell for a federal "free money" scam.

Fortunately, Gov. Walker and Wisconsin's fiscally conservative legislature were more skeptical of Obama's P.T. Barnum routine, saving us from a similar fiscal calamity.

The Minnesota example highlights an important and all-too-often overlooked point. If you're unfortunate enough to make too much money to receive a federal subsidy - like most middle class families in America - you're on the hook for the entire inflated premiums plus exploding deductibles for your Obamacare plan.

Middle class families stuck with Obamacare are drowning in the exorbitant costs, while poorer families who do receive subsidies can't even afford to see their doctor because their deductibles are so high that the coverage is little more than a piece of paper. Worse, if you're so cash-strapped that you choose to go without coverage, the IRS slaps you with a fine.

I recently heard the story of one low-income Wisconsin family of five - a husband, a wife, and three kids under the age of 10. Their punishment for going without insurance for three months last year was more than $800.

Only a nanny-state bureaucrat in a Washington, D.C. corner office would be so divorced from reality that they'd think such punitive policies are somehow fair, right, or just. They should get out of their plush enclaves and see how their policies really affect people. Or better yet, if Congress can get its act together, Obamacare bureaucrats should be standing in an unemployment line.

Obamacare cheerleaders can go on cable news and pen all the columns they want touting the expansion of health insurance coverage, but what good is having health insurance if the deductible alone will send your family into bankruptcy?

Obamacare's continuing price spiral is caused in part by declining competition across the nation. One-third of counties in the United States have only one insurer this year, according to the Kaiser Family Foundation. Residents in these counties will have only one choice - in other words, no choice at all.

Wisconsin's Obamacare market lost an average of 1.39 insurers per county from 2016-2017 according to our analysis. Fourteen counties have just one or two insurance companies offering Obamacare plans in 2017.

Competition - which inevitably "bends the cost curve down," to parody another failed Obama promise - is drying up by the week. Just this month, Aetna announced it would stop selling Obamacare policies entirely next year, citing $381 million in losses in the first quarter of 2017 and $700 million in total losses.

Aetna joins insurance giants Humana and UnitedHealth in completely withdrawing from Obamacare in the wake of massive, unsustainable losses. A network of other non-profit health insurance co-ops established by Obamacare have also folded, taking billions of taxpayer dollars down with them. Out of 23 co-ops, only 4 remain, including Wisconsin's imperiled Common Ground Co-op, which survived only after a secret infusion of cash.

Insurers' inability to simply break even on Obamacare plans is the result of far more older, sicker enrollees and far too few younger, healthier enrollees to balance the actuarial tables. Obama should've been honest with the American people and said the law depends on younger and healthier people paying exorbitant rates for coverage they don't need in order to prop up the rickety system he and Democrats rammed through Congress.

Obamacare is in a death spiral. Though the House's version of repeal and replace narrowly passed - certainly a cause for celebration - Congress remains mired in inaction and Americans remain stuck in quicksand. Reporters wringing their hands over CBO scores and telenovela theatrics should remember that few outside the beltway ultimately care about any of that.

There is no bailing out or patching up Obamacare. It will eventually sink to the bottom of the abyss. When it does, nobody in real America will thank the media for keeping them up to date with irrelevant process stories as they go down with the ship.

Whatever Happened To The Probe Into John Doe Leaks to The Guardian?

Wed, 05/17/2017 - 09:40

MacIver News Service | May 16, 2017

By M.D. Kittle

[Madison, Wis...] - Five months ago this week, state Attorney General Brad Schimel first publicly declared he would likely convene a grand jury to look into leaked court-sealed documents in Wisconsin's infamous John Doe investigation.

There's still nothing new to report, an official from the state Department of Justice tells MacIver News Service.

"I have no new updates for you since we last spoke. If anything changes, I will let you know," wrote Schimel spokesman Johnny Koremenos in an email response.

Koremenos said the same thing in March, three months into the investigation.

There's been little reported movement in the probe since February, when, according to the Milwaukee Journal Sentinel, the DOJ seized materials from the state Ethics Commission - the successor of the the Government Accountability Board.

In December, the DOJ opened an investigation into the leak of 1,300-plus pages of John Doe-related court documents, published in September by liberal British publication, The Guardian. The printed story, picked up by mainstream publications nationally, amped up the "John Doe II" prosecutors' widely rejected investigation into alleged illegal campaign coordination between Gov. Scott Walker's campaign and conservative allies during Wisconsin's bitter recall season.

The Wisconsin Supreme Court in 2015 declared unconstitutional the politically charged investigation, launched by highly partisan Democrat Milwaukee County District Attorney John Chisholm and carried out by his prosecutors, the GAB and the agency's hand-picked special prosecutor, Francis Schmitz. The 4-2 decision found that Schmitz's position was invalid and that the special prosecutor had perpetrated a "perfect storm of wrongs" against innocent citizens whose First Amendment rights were trampled during the multi-year John Doe investigation.

But multiple court findings that prosecutors did not have probable cause for their free speech investigation meant little to The Guardian and the publications that pushed a "criminal scheme" theme in painting Walker and right-of-center groups as campaign finance lawbreakers.

The documents leaked to The Guardian were sealed by the courts and strongly suggest that sources within or close to the investigation provided them to the newspaper.

As Wisconsin Watchdog has reported in its investigative series into the unconstitutional probe, experts say there is a small universe of people who had access to the documents, and that universe is almost exclusively populated by prosecutors, investigators and court officials.

"The records include handwritten notes on the motion of an unnamed movant (one of dozens of conservatives targeted in the probe), as well as an unsigned draft of an affidavit from John Doe special prosecutor Francis Schmitz," the publication reported.

Sources with knowledge of the leak have said there is other actionable intelligence - the time zone, date and exact time these documents were scanned. And the information includes the make and model of the copier used to scan them.

Earlier this year, the Journal Sentinel reported state Justice Department investigators reviewed documents in the Wisconsin Supreme Court's office.

Sources told MacIver News Service that the probe was heating up in late winter, but things seem to have cooled since.

After the prosecutors' unconstitutional raids on homes, the years-long secret spy operations, the chilling of conservative speech, the threats of incarceration and hefty legal bills, the victims of Wisconsin's infamous John Doe probe continue to wait for justice.

"The only way to put an end to this abusive treatment of private citizens is to fully expose it when it happens," a target of the secret probe told MacIver News Service. "It seems we have leaders in power in Washington as well as Madison who believe it's more important to protect institutions and the people in power than it is to protect the people they serve. The Constitution was written to protect private citizens from government, not the other way around."

Budget Blog - Property Taxes Might Go Up

Tue, 05/16/2017 - 12:44

Not all Republican lawmakers in Wisconsin want to see the forestry tax go away, even though it would save property taxpayers $180.5 million over the next biennium - and keeping it could mean an overall increase in property taxes.

"Right now there are very passionate views on both sides," Senator Alberta Darling told reporters on Tuesday.

Gov. Walker wants to eliminate the tax, which is the last remaining portion of the state property tax. However, Joint Committee on Finance Co-Chairs, Senator Darling and Representative John Nygren, said there is division in their caucuses whether or not to do that.

"I think there's some in our caucus that have concerns about the funding that the mill tax - things it funds with forestry - especially when you get into more rural parts of the state, but we also know it's been a little bit of a slush fund," Nygren said.

Nygren said he agrees with the governor on eliminating the tax. Darling said lower property taxes is a shared priority between the governor and legislature, but was less committal about where she stands on the issue.

"I think if you ask the regular person, what's the most onerous tax? They'd say the property tax," Darling said. "So that's why we have it as a priority, and why it's going to be a big issue of whether to accept the governor's proposal on the forestry mill tax, or to have an alternative."

According to the governor's budget proposal, eliminating the forestry tax will save the median value homeowner $27 a year.

A Legislative Fiscal Bureau analysis shows, altogether, the governor's budget will save the median value homeowner $20 the first year and $1 the second year. That means if the forestry tax is kept in place, the median value homeowner could see an increase of $7 the first year and $26 the second year.

The last time property taxes increased was in 2015, when the "typical" homeowner went from paying $2,833 to $2,850. That's still over $400 less from the trajectory under Governor Doyle, according to the Walker administration. They're currently at $2,824.

In any case, going from a proposed decrease this year to a possible increase in property taxes is probably not something the governor wants to see in this budget.

But, as Sen. Darling put it, "It's being debated so stay tuned."

Freedom of Speech Attacked, Defended During Public Hearing

Mon, 05/15/2017 - 09:33

MacIver News Service | May 15, 2017

[Madison, Wisc...] Advocates and Opponents of campus free speech testified at an Assembly Hearing on a bill that would require the UW Regents to adopt policies to safeguard the First Amendment throughout the UW System.

Assembly Speaker Robin Vos and Representative Jesse Kremer are co-authors of the bill. They cited an event at UW-Madison in November where protesters blocked a speech by conservative commentator Ben Shapiro for over a half-hour.

Conservative and Liberal students talked about the importance of free speech on campus. However, some students, like Savion Castro, also presented a unique interpretation of the First Amendment, where speech is considered a luxury and their right to not be offended takes precedence over other's constitutional rights.

Kooyenga's Plan: A Closer Look At The Bumpy Path To A Flat Tax

Mon, 05/15/2017 - 06:00

MacIver News Service | May 15, 2017

By M.D. Kittle

[Madison, Wis...] - State Rep. Dale Kooyenga these days must feel like a dead man walking. 

The Brookfield Republican's ambitious transportation and income tax reform package, released earlier this month, has been skewered by the left and the right. Conservative talk show hosts have railed against the package's proposed sales tax on gas, and the state's petroleum marketers loathe a proposal cutting their precious minimum markup on the price of gasoline. Liberals hate the package's proposed 3.95 percent flat tax on income (and just about everything else in it), lambasting it as a tax cut for the wealthy. Some Republicans are skeptical about just how much it will simplify the state's tax code. Still other Democrats and Republicans worry about the potential bite the flat tax might take out of state government. 

Gov. Scott Walker panned the plan as a tax increase. The Republican governor, pointing to Legislative Fiscal Bureau projections showing a net $433 million tax increase, said he cannot support the package. 

"To me, that is the most troubling part of the plan," Walker told the Associated Press."I think people are taxed enough. I oppose a gas tax increase, no matter what you want to call it." 

While the GOP Assembly made a show of solidarity with Kooyenga during the unveiling of his, "The Road to a Flat Tax," several lawmakers tell MacIver News Service the reform package, as it stands, is a dead letter.
 
Kooyenga knows the odds are long against his legislative creation surviving the budget process, but he's hopeful elements will make the cut.

At the very least, the lawmaker has put the spotlight on Wisconsin's 80-year-old minimum markup law, a relic of the Great Depression that artificially inflates the cost of Wisconsin retail goods - substantially in the case of gasoline.  That's the kind of attention the petroleum marketing industry doesn't want. 

Kooyenga says there's been a good deal of misunderstanding, if not misinformation, about his reform package, from its cost to its ultimate impact.

Today, the MacIver Institute takes a closer look at the key elements of the proposal, and what they aim to accomplish. 

Numbers game

Like most things in public policy and politics, the numbers don't lie - but they sure can be worked. 

Conservatives are having a hard time stomaching a transportation plan that puts a sales tax on gasoline. Currently, gas is exempted from the 5 percent state sales tax and the .5 percent add-on in 64 of Wisconsin's 72 counties.  While Kooyenga justifies the revenue increase with a 4.8 cent-per-gallon reduction in the state's high gas tax and the lowering of the minimum markup, it doesn't change the fact that a conservative transportation plan adds a tax - at the pumps, nonetheless.

"The Assembly plan includes a massive net tax increase on fuel to reduce bonding in a budget that has the lowest level of transportation bonding since the 2001-03 state budget - without any new road projects," Walker wrote in an email to MacIver News Service. "I am working with members of the Senate and Assembly on reforms that protect taxpayers while investing in our infrastructure - all without an increase on taxes at the pump."

Transportation bonding may be at its lowest level in 15 years but debt continues to dog the fund.  

Walker's 2017-19 budget proposal includes $6.1 billion for transportation, with $500 million in new bonding. 

Kooyenga estimates the sales tax on gas would generate about $300 million annually in additional revenue to be used in the upcoming biennium to reduce the half billion dollars in bonding. Doing so would significantly ease borrowing costs. By 2018, Kooyenga asserts, the transportation fund is expected to pay $413 million a year in debt service, representing 22 percent of tax-and-fee dedicated transportation fund revenue. Walker told conservative talk show host Vicki McKenna on Wednesday that this is no time to raises taxes on "hard-working Wisconsinites.

The Fiscal Bureau's analysis estimates Kooyenga's proposal would bring in $660 million more from applying the sales tax and $278 million less from lowering the gas tax. So the net tax increase would total $382 million for those provisions.

That calculation did not include the .5 percent additional sales tax collected in 64 of Wisconsin's 72 counties. That would bring an additional $43 million over the biennium, but it would not go to the counties. Instead it would go into the state's general fund.

Kooyenga and Assembly Republicans have attempted to make debt reduction a huge selling point of the package, but there is disagreement on just what the line is on maximum borrowing.  

Paying for $300 million in projects with cash instead of bonding would save taxpayers $150 million over the course of a typical financing period, the proposal states. 

'Fund integrity'

Walker's budget proposal calls for spending at least $325 million in general fund money on transportation over the next two years. 

Kooyenga notes that what Walker characterized as a $433 million tax increase includes leaving $81 million in the state's general fund that could no longer be siphoned into the troubled transportation fund.

Walker and fellow Republicans have long criticized his predecessor, Gov. Jim Doyle, a Democrat, for raiding $1.3 billion from the segregated transportation fund during his tenure. In November 2014, voters approved a referendum establishing a constitutional amendment ending the practice of raiding the transportation fund for other government programs. 

While Kooyenga says he doesn't find using general fund money for transportation as egregious, he asks, "Why is it right to go from the general fund to transportation but not okay to go from transportation to the general fund?" It's a matter of fund integrity, the lawmaker says. 

Kooyenga's plan would use the $81 million for income tax reduction. The counties' .5 percent sales tax on gas, generating an estimated $43 million, would be retained by the state and applied to tax relief. 

Maximum friction

The reform package rests heavily on reducing Wisconsin's minimum markup rate from 9.18 percent to 3 percent. 

Formally known as the Unfair Sales Act, the minimum markup law prohibits the sale of merchandise at less than cost while ratcheting up the "minimum price" for alcohol, tobacco and gasoline. 

Any move by lawmakers to kill the special interest protection has been met with pitched resistance by the Wisconsin Petroleum Marketers & Convenience Store Association, a powerful lobby that has the ear of some very powerful friends in the Legislature. 

Krist Atanasoff, owner of Iron River, Mich.-based Krist Oil company and outspoken critic of the minimum markup law, operates 37 gas stations in Wisconsin and 36 in Michigan. Although Michigan's gas tax is 5 cents higher than Wisconsin's, Atanasoff says his Wisconsin customers pay a higher price at the pump thanks to the state's "dumb state law." The businessman supports Kooyenga's plan. 

"As a petroleum marketer, I don't want the crony capitalist protections so many in our industry want. I just want to compete, without government favor," Atanasoff wrote last week in a letter endorsing "The Road to a Flat Tax." As the convenience store chain owner notes, none of the money consumers pay in minimum markup costs goes to road construction and upkeep. "It is merely a government-mandated guaranteed profit margin for one industry."

But are there any guarantees that consumers will see cost savings at the pumps should the minimum markup rate be reduced? No. Convenience stores could simply raise the price of gas to offset the loss. 

Matt Hauser, executive director of the Petroleum Marketers told the Wisconsin Radio Network that there has never been conclusive evidence changing or eliminating the markup on gas would offset a tax increase. He, again, defended the minimum markup law as protection from large chain retailers pricing out smaller operators. 

"We're concerned it's really just a smoke screen to draw away from the real issue ... that Wisconsin is getting ready to implement a significant tax increase on gasoline," Hauser told WRN, referring to Kooyenga's plan to lift the sales tax exemption on gas. 

Kooyenga countered that it's the convenience store lobby creating the smoke screen. The minimum markup is applied on top of the state's gas tax, one of the highest in the nation, at nearly 33 cents a gallon. Lowering the tax by nearly 5 cents would cut into gas station profits. 

The Federal Trade Commission has long rejected the assertions that minimum markup laws protect smaller stores from predatory pricing. Such practices, the agency says, aren't wide-ranging.

"Can prices ever be 'too low?' The short answer is yes, but not very often," the FTC states in an online Q&A. "A firm's independent decision to reduce prices to a level below its own costs does not necessarily injure competition, and, in fact, may simply reflect particularly vigorous competition." 

Some conservative critics don't like the fact that Kooyenga's plan doesn't just do away with the minimum markup law. If you're going to bother the bees, don't just smack the hive and run, they say. Knock it down and crush every bee inside.  

While the Legislative Fiscal Bureau examined the other elements of Kooyenga's reform package, it curiously seems to have taken a pass on reviewing the minimum markup reduction. 

Mega Money

Wisconsin's powerful road-building lobby has offered a relatively tepid response to Kooyenga's proposal - no sharp criticisms, but certainly no ringing endorsements. Road builders, of course, want more money now, but they like the projected $3 billion in new revenue that could be generated over the 12-year life of the transportation/tax plan. That money could be used to buy down debt, but it more than likely would go to projects. 

The Southeast Wisconsin Mega Projects, north and south and eventually east and west, are pegged at $9 billion-plus. More funding would be required, but it would be a good start. 

Assembly Speaker Robin Vos, R-Rochester, and Rep. John Nygren, R-Marinette, who also serves as co-chairman of the Legislature's budget writing committee, have sought much more in revenue, potentially driven by a sales tax increase. They say Kooyenga's reform package is a good first step in finding long-term solutions for Wisconsin's transportation budget problems. 

Additional savings could be realized through the full repeal of prevailing wage. While a bill is moving through the Legislature, Kooyenga's transportation package also does away with the long-held practice of artificially setting higher wages for public projects.

One of the big complaints from fiscal conservatives is that the plan includes an increase in funding for a Wisconsin Department of Transportation that has been found to be poor stewards of taxpayer money. An audit released earlier this year showed the agency was riddled with significant cost overruns, due in large part to failing to account for inflation on major highway projects. 

"I'm not giving DOT an additional cent," Kooyenga said. "I'm actually giving DOT less money because I'm cutting 180 of their engineers. I am lowering bonding." Kooyenga, a certified public accountant who helped uncover a huge surplus in the poverty-declaring University of Wisconsin System, does not consider bonding - or using tax money to pay down tax money - as increased revenue for the agency. 

The plan does incorporate many of the Legislative Audit Bureau recommendations aimed at reforming DOT's inefficient practices, even as it opens the door to the possibility of revenue rich tollroads in Wisconsin's future.

Checking government growth

Kooyenga says his reform package limits the growth of state government. It does so through the reduction of 180 DOT engineers. More so, the proposal's most ambitious idea, a 3.95 percent flat tax phased in over 12 years, is aimed at delivering taxpayer relief an shrinking the size of government.

"We are reducing the size of government by $2.3 billion that never gets here," Kooyenga said. "This represents about 1.5 percent growth that will not go to increasing the size of government. It will stay in income taxpayers' pockets."

The tax cuts are even higher than Kooyenga's projections, according to a Fiscal Bureau review. The flat tax would trim income taxes by a net $2.7 billion by 2029, the bureau reported Wednesday. The tax cuts build from nearly $20 million net in 2018, for combined savings of billions of dollars over the life of the flat tax.

To pay for the flat tax, Kooyenga's plan eliminates or reduces several tax credits built into Wisconsin's complicated code - from phasing out the First Dollar Credit to doing away with the marriage credit to repealing the double-dipping property tax/rent credit for renters.

The flat tax initiative also includes the elimination of the state property tax, first proposed in Walker's biennial budget. Doing so gets the state out of the business of levying property tax and lowers the overall property tax burden, providing an estimated $180 million in property tax relief over the biennium.

Democrats, their friends on the left and the mainstream media are characterizing Kooyenga's plan as tax cuts for the wealthy, with a little over one-third of the reductions targeted for taxpayers making $300,000-plus per year.

"The simplicity of the flat tax masks the inequality of it," Rep. Gordon Hintz, D-Oshkosh, told the Milwaukee Journal Sentinel. "It's really a tax giveaway to the wealthiest individuals." 

Kooyenga and advocates of a flat tax say the reform is about fairness, lifting the yoke of heavy taxation off of all taxpayers. 

As the MacIver Institute notes in its "Glide Path To A 3% Flat Tax Income Tax," it's also about economic competitiveness. 

"Wisconsin's reputation as a high-tax state has a significant impact on the state's ability not only to attract newcomers, but also to retain those who are already residents," MacIver's Ola Lisowski wrote in a January policy brief. "Annually Wisconsin loses an estimated $136 million in adjusted gross income to tax migration."

Seven states levy no individual income tax at all. Eight states have flat individual income tax structures, and Tennessee is on a glide path to total elimination of its state income tax by 2022. Wisconsin is among 33 states that levy progressive tax rates based on income level.

Some conservative lawmakers have expressed concerns that a change in political leadership could wipe out the flat tax. Kooyenga says it would take a two-thirds vote in both houses to change the rates once they are in statute. The beautiful thing about it all, the lawmaker says, is that the income tax cuts would go on, no matter who's in office. "It's on autopilot." 

Rounding down

While making up a fraction of the traffic control systems statewide, not many transportation topics have generated more controversy than roundabouts. Beyond their costs, critics say roundabouts pop up without much public input. 

Kooyenga's reform package would prohibit DOT and local governments from designing a roundabout for any state or local highway unless the roundabout is approved by the local government of the community where roundabout would be located. But the moratorium would be in place for just two years and would not apply to projects that commenced before the moratorium bill is signed. 

Take a few loops around Dane County's bike roundabout with @MacIverWisc and @VickiMcKenna. #WISDOTwasted pic.twitter.com/aSFTB2ck6m

— MacIver News Service (@NewsMacIver) April 21, 2017

Taxpayer option

The transportation plan would allow counties to impose an additional .5 percent sales tax, with the proceeds to be used for road maintenance and repair. Voters must approve the local roads optional sales tax at referendum. The ballot question would have to be held during a spring election or a general election, not during the lower voter turnout elections. The sales tax would be in effect for four years, with a four-year renewal, if voters concur. If voters reject the question, the county would have to wait at least 12 months before putting the issue on the ballot. It all goes away after Dec. 31, 2027. Local governments in the county would divide 50 percent of annual proceeds for their road repair and maintenance needs. 

The optional sales tax would come with a "maintenance of effort" provision. Such mandates under Obamacare have tied states' hands and extended financial obligations under the law. Kooyenga says the idea is to keep local governments from shifting sales-tax based transportation money into another government fund.

Kooyenga's reform package adopts many of the cost-savings and oversight recommendations included in the Legislative Audit Bureau's January report. 

While they may not support his proposal, or at least elements of it, many of Kooyenga's Republican colleagues agree the lawmaker did what Republican leadership pledged the party would do after posting historic wins in November: Go big and bold. He was charged with a Herculean task in coming up with a plan that would solve the DOT's budget problems, put Wisconsin on the road to real income tax reduction, and work to bring a broad spectrum of competing interests to some kind of consensus.

"I understand there is an insatiable appetite for transportation money," Kooyenga said. "I just thought it was my job to figure out what we need and go from there." 

MacIver News Service's Bill Osmulski and Ola Lisowski contributed

$17,000 DNR Video Promotes High Adventure Wardens Life

Sat, 05/13/2017 - 06:00

MacIver News Service | May 13, 2017

By M.D. Kittle

Madison, Wis...] - A synthesized drum pounds, a single echoing shot. The camera trains on a polished Wisconsin Conservation Warden badge.

Cut to images of the wilds of Wisconsin - the Northwoods, a massive buck, a churning waterfall. With each new image the drum beat blasts. The producers of this two-minute-plus promotional video aim to quicken the blood, create a counter of natural beauty and musical tension.

Now, the money shot: A conservation warden easing her DNR patrol boat next to a sleek Crestliner. This agent means business. She does a check of the fishing boat, making sure the angler isn't over his bag limit, looking over his license.

The Wisconsin Department of Natural Resource's "Experience the Inside of the Outside" game warden recruitment video has the look and feel of an outdoor action movie. The promotional vehicle also spotlights how heavily armed and equipped DNR agents seem to be these days (Get out of the way of DNR's boat, The Tim Carpenter!)

It is but one of myriad examples of a powerful state agency doing too much and wasting taxpayer money, according to a northern Wisconsin lawmaker and vocal DNR critic.

DNR officials say the video is at least a couple years old, but it's still on the agency's website.

Spokesman James Dick says the promotional video was produced in-house at a cost of "approximately $17,000, which could easily have been 45 to 50 thousand dollars if produced by an outside vendor." Dick said video captured during the filming process but not used in the recruitment video has been featured in several other video projects, including recreational safety messages.

"That's efficient use of time and helps reduce the cost of those other projects as well," the spokesman said.

State Rep. Adam Jarchow questions the need for such elaborate productions at an agency constantly "crying, We need more money!'"

"In a time when we are trying to prioritize the spending of taxpayers' dollars, I'm not sure this is the kind of video that is the best use of our limited tax dollars," the Balsam Lake Republican said.

Dick said there is no warden shortage in the state now and there wasn't "back in 2014 when the idea for a recruitment outreach program, including the video, was developed." The DNR typically hires 10 to 15 recruits per year for various reasons - retirements, wardens leaving for other jobs, etc. What the agency noticed in 2014, Dick said, was a trend in what seemed to be a "drop-off in the numbers and quality of applicants" for the positions.

"So, an outreach plan was developed to reach a wider audience of potential recruits and introduce more people to the opportunities and benefits of become a DNR conservation warden," the spokesman said. "The video, completed and posted in April 2015, was just a part of that outreach."

Environmentalists and Democrats have decried moves by Gov. Scott Walker and the Republican-controlled Legislature to make the agency more efficient and more accountable to the hunters and businesses it regulates. Walker's previous budgets have trimmed nearly $60 million from the department and did away with nearly 200 DNR positions.

"So many changes and roadblocks have tied DNR's hands so dramatically that they're really not able to do the job the public expects them to be doing," Amber Meyer Smith, a lobbyist for environmental advocacy group Clean Wisconsin, told the Associated Press earlier this year.

But it seems the DNR has enough money to produce high-action warden recruitment videos and hold training events at some of Wisconsin's higher priced hotel and conference destinations, Jarchow said. The lawmaker's initial review has found the DNR has spent hundreds of thousands of dollars in the current biennium on conferences, seminars and other training events, including the hotel accommodations that often go with them. Jarchow last week said he is waiting on an open records request to track what he asserts are unnecessary expenditures. MacIver News Service, too, is seeking similar information through an open records request.

Initial payment vouchers through the state's billing system show one statement for nearly $12,000 at Wisconsin's Dells' Chula Vista Resort.

Dick said he could not speak to the training expenditures until the financial information becomes available.

The DNR spokesman insists the recruitment video has been successful, noting a class of 13 qualified candidates was hired last year.

"The feedback we've received on the video (individual and conservation partners) has been outstanding," Dick said, adding that the recruiting website receives approximately 1,000 hits weekly and increases "considerably" during the conservation warden hiring processes.

Jarchow isn't sold.

"This reaffirms my opinion that the DNR does way too much, and this is why earlier this year I had proposed splitting the DNR," the lawmaker said. "Now we find out in addition to all of its duties that it also creates videos. "It just reaffirms that this is an unwieldy agency that seems to have no boundaries."

Budget Blog - Tackling The Easy Stuff First

Fri, 05/12/2017 - 11:32

May 12, 2017

The Joint Committee on Finance chipped away at the budget this week, focusing on some of the least contentious items of Gov. Scott Walker's proposal.

On Tuesday, it took up Secretary of State, WEDC, Military Affairs, Legislature, and Justice. Then on Thursday it addressed Financial Institutions, PSC, DSPS, VA, Legislature and DHS (MA Administration). The lack of controversy was evidenced by about three dozen items approved unanimously.

All week, everyone's attention seemed focused on the Assembly Republican's transportation and tax plan, which was released on May 4th. The plan would lower the gas tax and minimum markup rate, but then apply sales tax to gas purchases. It would also put the state on the path toward a 3.95 percent flat tax by 2028, eliminating several credits right away like the marriage credit, working families credit, first dollar credit, and rent credit.

Assembly plan does not increase $ for the Dept of Trans... 100% of revenue lowers bonding, saving $150million in interest @WIAssemblyGOP pic.twitter.com/JXFzls6f72

— Dale Kooyenga (@DaleKooyenga) May 11, 2017

Assembly transportation plan includes a $433 million net increase at the pump. Yet it doesn't include any new road projects.

— Governor Walker (@GovWalker) May 8, 2017

Walker immediately dismissed the plan as a tax hike. On Wednesday, Senate Majority Leader Scott Fitzgerald said it was a non-starter. He suggested more bonding and toll roads as a more appropriate solution to transportation funding. The Assembly is sticking with its plan, but Rep. John Nygren said they were at an impasse.

Thursday morning, JFC co-chairs Sen. Alberta Darling and Nygren said they might take transportation out of the state budget and deal with it as a separate bill. That could be complicated because some options involve transferring money from the general fund to DOT. Both Walker and Fitzgerald said they do not support that idea.

Assembly, Senate, and Gov all disagree on transportation plan. Here's an update from @SenDarling & @rep89. #WIbudget #WIright pic.twitter.com/Pq2T2UOC6t

— MacIver News Service (@NewsMacIver) May 11, 2017

In addition to transportation, there is also disagreement between the governor and the legislature on self-insurance. The governor says the state could save $60 million by switching to a self-insurance model for 225,000 state employees. JFC is opposed to that idea. There is talk lawmakers are working on a high-deductible state health care plan, including health savings accounts.

On Wednesday, the Legislative Fiscal Bureau reported that year-to-date tax collections match the estimates made in January. Nygren said he's satisfied with that news and many states aren't so lucky.

Next week JFC is scheduled to take up: Lower Wisconsin State Riverway Board, Kickapoo Reserve Management Board, State Fair Park, Elections Commission, Ethics Commission, Administration (General Agency Provisions), Health Services (Care and Treatment Services), and Children and Families, Labor and Industry Review Commission, Wisconsin Technical College System, Historical Society, and Shared Revenue.

Walker to JFC: Don't leave $60 million on the table

Fri, 05/12/2017 - 06:00

MacIver News Service | May 11, 2017

By M.D. Kittle

Madison, Wis...] - Gov. Scott Walker and members of his administration are firing back at Republicans who have all but declared the governor's self-insurance plan dead on arrival.

A key Walker administration official tells MacIver News Service that lawmakers and insurers have been engaging in "fear mongering" and the Legislature will have a hard time explaining to taxpayers why they are "leaving $60 million in savings on the table."

"It's a step in the wrong direction if they go down this path," Walker said of the Republican-controlled Joint Finance Committee during an interview Wednesday with conservative talk show host Vicki McKenna.

"Why would you walk away from $60 million in proven savings out there when you've got people wanting to spend more money on transportation," Walker added during the interview on NewsTalk 1310 WIBA in Madison. "At a time when they're looking for money it seems like walking away from $60 million is ridiculous."

The governor used his radio address Thursday to take the same message to the public.

Walker in recent days has ramped up his rhetorical campaign in an effort save one of his more ambitious biennial budget proposals from the sharp knife of the powerful budget-writing committee.

Top administration officials have been hammering home the message that moving some 250,000 state employees to a self-insurance model would be a huge savings for taxpayers while maintaining quality health care for enrollees.

Plan critics, particularly Wisconsin's insurance lobby and some of their allies in the Legislature, insist Walker's idea is risky and could disrupt and damage the state's robust health insurance marketplace.

Michael Heifetz, the state's Medicaid director and administrator of the Division of Healthcare Access and Accountability, blasted what he called the fear mongering surrounding the governor's proposal.

Heifetz also is a member of the state Group Insurance Board, which in February voted 10-to-1 in support of the self-insurance switch.

"These complaints are not grounded in the facts that the Group Insurance Board and the governor have looked into," Heifetz told MacIver News Service Thursday morning on the Dan Conry Show. "There's a lot of fear mongering on this issue and it's intentional."

Self-insurance isn't some "wild-eyed idea," Walker said. As MacIver News Service has reported, at least 20 states completely self-fund their state employee health plans, including Minnesota, which moved to 100 percent self-funded insurance in 2002. Also, 46 states use self-insurance in some way, including Wisconsin.

On Monday, the Group Insurance Board submitted contracts with third-party administrators for a self-insurance system. Those contracts spell out in black and white at least $60 million in savings over the biennium - that's on top of $22 million in possible savings depending on happens with Obamacare. With the contracts in hand, JFC has less than three weeks to convene a meeting and make a decision.

Previously, consultants contracted by the state have estimated self-insurance could save $42 million a year, but it could cost as much as $100 million, depending on a range of variables. Employee union leaders say this is no time to roll out an "unpredictable" model of health insurance.

Sen. Alberta Darling, R-River Hills, co-chairwoman of the Joint Finance Committee, this week said there isn't convincing evidence the state needs to move to a self-insurance system now.

"In Wisconsin, we have a very healthy health care system, and if we move thousands of state employees, it can really effect the economics of our health care system," she told Wisconsin Public Radio.

JFC co-chairman, Rep. John Nygren, R-Marinette, said the budget committee isn't saying no to saving money, even if rejects the governor's plan. He said the JFC is looking for health savings through other means.

Multiple sources have told MacIver News Service that Rep. Mary Felzkowski is working on a high-deductible state health care plan, including health savings accounts. The Irma Republican has not returned several phone calls seeking comment.

The question is, if savings can now be wrung out of the state's health insurance plan, couldn't they have been realized all along?

Rep. Bob Gannon, R-West Bend, said Wisconsin has a three-decade-old health plan design in need of fixing. Gannon, owner of an independent insurance agency, said insurers are not in this world to lose money. They have a profit incentive, which is fine, Gannon said, but it stands at odds with the state's mission to protect taxpayers.

Heifetz, the Medicaid director, was even more blunt.

"There are some special interersts involed who are doing very well off of the current system," he said. "Everyone wants health care costs controlled. The governor has made a very simple proposal to start doing that. So it's very surprising that there's this level of objection to save taxpayers money."

Did Politics Trump Good Policy in Self-Funded Insurance Debate?

Thu, 05/11/2017 - 10:02

May 11, 2017

Perspective By Chris Rochester
MacIver Institute Communications Director

At long last, the Legislature's Joint Finance Committee will have to make a decision on whether to adopt a self-funded insurance system for state employees' health insurance. The bad news is that Governor Walker's proposal to make the switch and save $60 million is all but dead in the state Legislature.

On Monday, the Group Insurance Board submitted contracts with third-party administrators for a self-insurance system. Those contracts spell out in black and white at least $60 million in savings over the biennium - that's on top of $22 million in possible savings if Obamacare and its obscene tax burden is not repealed. With the contracts in hand, JFC now has about three weeks to convene a meeting and make a decision.

"Since taking office, we have sought to reform government to make it more accountable and cost effective to the hard-working taxpayers," Walker said in a statement on Monday. "Moving to self-insurance is one of these reforms and we urge the Joint Committee on Finance to approve these contracts and invest these savings into the classroom."

Unfortunately, it appears that JFC is prepared to leave this windfall for taxpayers on the table. Why? We've heard a carousel of arguments against self-insurance that have all stalled, but the final stand for self-insurance naysayers might boil down to pure politics.

Early arguments by opponents of self-insurance breathlessly claimed that the move would gut state workers' health insurance plans. Ignoring how out of step these lavish plans are compared with their private sector counterparts, it quickly became clear this doom-and-gloom claim had no basis in reality - especially after the actual proposals were received.

Next, the self-insurance doom-mongers portrayed the switch as a journey down a long, dark tunnel. The fact is that there's nothing mysterious or scary about self-insurance; Wisconsin already partly self-insures its dental plan and its pharmacy plan.

At least 20 states completely self-fund their state employee health plans, including Minnesota, which moved to 100 percent self-funded insurance in 2002. Also, 46 states use self-insurance in some way.

In the upper Midwest, no states are fully-insured, meaning none completely rely on private insurance and all are self-funded at least in part.

More than 90 percent of all large employers, companies that employ 5,000 or more employees, also use self-funded insurance. To say adopting this system would be risky and experimental is diametrically untrue. In fact, it would be routine and economical.

Critics then moved on to prophesizing that the switch could pose a potentially catastrophic financial risk to the state. True, the state would be directly assuming the risk rather than putting insurance companies in the middle. But barring an unprecedented epidemic sweeping state office buildings, the risk factor has been greatly hyped.

The risk would actually be low because of the sheer size of the state's workforce, which means total annual payouts would be predictable and fluctuations minimal, according to insurance expert Dean Hoffman, who recommended the switch to the Governor's Commission on Government Reform last May.

Legislative Republicans are also uncertain about the future of Obamacare, which imposes a variety of taxes and fees on the insurance marketplace that would be absorbed by taxpayers in Wisconsin.

JFC co-chair Sen. Alberta Darling cited Wisconsin's relatively low premium increases at a Tuesday press conference. "Why would we want to shift out of that and into uncertainty at this point?" she asked.

Caution isn't unreasonable, but moving to self-insurance would actually protect Wisconsin taxpayers from uncertainty. Taxpayers should be the focus, not protecting the platinum health insurance of government employees.

Obamacare hits the insurance market, and thus taxpayers, in two big ways. The reviled Obamacare Cadillac Tax applies an exorbitant 40 percent tax on all employee benefits exceeding $10,200 annually for an individual, $27,500 for a family.

Sadly, the AHCA healthcare bill that passed the House last week retains the Cadillac Tax, although it pushes off the starting date of the Cadillac tax until 2026. Self-insurance would help mitigate that cost by eliminating the middle man in the current setup.

Then there's the insurer tax, a special levy charged to private insurance companies that's tied to the insurer's premiums collected in the previous year. In 2016, the insurer tax ranged from 1.5 to 3.5 percent, with future rates yet to be decided. As the state's deputy commissioner of Employee Trust Funds, Lisa Ellinger, pointed out last year, the state pays out about $1.4 billion annually in premiums.

Self-funded insurance systems are exempt from this tax. Quick cocktail-napkin math shows that switching to self-insurance would conservatively save tens of millions on top of the $60 million outlined in the contracts.

Despite ongoing uncertainty about Obamacare, keeping the status quo is precisely the wrong decision. Assuming Obamacare's taxes are here to stay, seizing the $60 million moment would be responsible management of taxpayer dollars. Keeping the status quo and hoping Washington politicians do the right thing would not.

Instead, legislative leaders are considering "finding" $60 million in savings within the existing system. "We're not saying no to savings. If we do that we're going to find a similar amount of savings in some way, shape or form," said JFC co-chair Rep. John Nygren on Tuesday.

If that's actually possible, it begs the obvious question: how much taxpayer money has been wasted by not finding these supposed savings years ago?

With most of the arguments against self-insurance out of gas, opponents' final stand may betray the truth: self-insurance is good policy, but protecting the status quo is even better politics. Or protecting the status quo is better politics for any politician worried more about the next election and less about taxpayers. Unfortunately for taxpayers, just about every politician in Wisconsin fits in that category.

The fact that self-insurance is good policy is evident from how many states and large employers use it successfully.

The likely end result is that Wisconsin taxpayers will get a watered-down half-measure that goes through the motions of saving taxpayer money while keeping the bloated and expensive existing system in place. That's bad public policy.

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