Tuesday, May 6, 2014

Walker Jobs Failure Extends 30 Years into the Future.

It won't be hard to make the case Scott Walker's purely ideological economic agenda for the state comes at a very inopportune time. The reset after the Great Recession was another Republican missed opportunity to actually move the state forward, as opposed to just saying it.

Progress...or the Walker promise of unnoticeable tax cuts, more borrowing, cuts to education and the presence of a no tax pledge that makes it impossible to adjustment taxes up or down depending on new targeted spending? I know, revenues are up in the general fund, but that's because Walker made huge and unwise similar spending cuts. Without that, no surplus. And as we're finding out, those cuts are killing rural schools and decimating our transportation infrastructure.

The timing is bad because our "fiscally conservative," accountant heavy know-it-all state legislators believe austerity is the only way to balance the books.

Bad Timing: But the Taxpayer Alliance's new research is telling us our aging population and slow job growth is a big future threat to revenues. Ratcheting down revenues now, before the natural aging of Wisconsin's work force will do pretty much the same thing, is a formula for disaster.

According to Todd Berry of the Wisconsin Taxpayer Alliance:
WSJ: “Wisconsin is undergoing a major demographic shift that will adversely impact employers, taxpayers, government revenues and the state economy’s capacity to grow.” The Wisconsin Taxpayers Alliance report (is) ominously titled “The Impending Storm.” So what can we do? For starters, Wisconsin needs to graduate more of its students from high school and send more to college and successful careers.
Here's what Berry said on WPT's Here and Now:

The not so great news in the report:
Individual income and sales taxes provide more than 80% of state general fund revenues. Slow income growth will restrict growth in income tax collections over the next 30 years. Additionally, a growing share of all income will come from Social Security, which Wisconsin no longer taxes. That will further adversely impact income tax collections since seniors purchase food, drugs, more services (generally not taxable) and fewer goods (taxable), a boom in seniors will slow sales tax collection growth.
Red line population growth/Blue line job growth
Increasing Demand for Public Services. To the extent that seniors use government services more than others, the rise in retirees will put further pressure on state and local government spending at the same time that revenues increase little.

A slowdown in tax collections and more demand for public services are a difficult combination that will force state and local governments to choose between cutting programs and increasing taxes.Wisconsin’s population shift has already affected public school finances. Little or no growth in school enrollments for the past 15 years depressed school revenues. Because state mandated revenue limits are directly tied to student counts, little or no increase in enrollments makes it more difficult for schools to increase revenues, unless they regularly ask for voter approval via referendum.

Passing referenda will likely become more difficult in the next 30 years. (Seniors) living on fixed incomes … might be less likely to support higher property taxes that come with successful referenda. Since retirees vote at significantly higher rates than younger residents, rapid growth in the senior population will create more obstacles to passing school referenda.
Also check out Jakes Economic TA Funhouse for another detailed breakdown.

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