There seems to be a lot of misunderstanding about the cause of the problems in Wisconsin. The new governor, Scott Walker, is proposing a new budget to close a budget gap. In the proposed legislation he’s proposing big cuts to state workers salaries, but he’s also trying to remove all bargaining rights from the unions. Now it turns out that this fiscal crisis is brand new, he actually inherited a surplus:
The reality is radically different. Unlike true austerity measures — service rollbacks, furloughs, and other temporary measures that cause pain but save money — rolling back worker’s bargaining rights by itself saves almost nothing on its own. But Walker’s doing it anyhow, to knock down a barrier and allow him to cut state employee benefits immediately.
Furthermore, this broadside comes less than a month after the state’s fiscal bureau — the Wisconsin equivalent of the Congressional Budget Office — concluded that Wisconsin isn’t even in need of austerity measures, and could conclude the fiscal year with a surplus. In fact, they say that the current budget shortfall is a direct result of tax cut policies Walker enacted in his first days in office.
“Walker was not forced into a budget repair bill by circumstances beyond he control,” says Jack Norman, research director at the Institute for Wisconsin Future — a public interest think tank. “He wanted a budget repair bill and forced it by pushing through tax cuts… so he could rush through these other changes.”
In less than 2 months, Walker has turned a $120M surplus into a $140M deficit. You can guess why there’s a looming deficit right? Of course you can – it’s tax cuts.
You can read the fiscal bureaus report here (PDF). It holds that “more than half” of the new shortfall comes from three of Walker’s initiatives:
$25 million for an economic development fund for job creation, which still holds $73 million because of anemic job growth.
$48 million for private health savings accounts — a perennial Republican favorite.
$67 million for a tax incentive plan that benefits employers, but at levels too low to spur hiring.