Cheat Sheet: What’s Really Going On With Wisconsin’s Budget

by Sergio Hernandez
ProPublica, Feb. 22, 2011, 5:33 p.m.

 
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Protesters react to an appearance by Gov. Scott Walker at a news conference inside the Wisconsin State Capitol, Feb. 21, 2011, in Madison. (Photo by Eric Thayer/Getty Images)

A standoff is brewing in Madison, Wis., over Republican Gov. Scott Walker’s divisive proposal to cut union rights for state workers. Walker says the cuts are necessary to bridge the state’s growing budget gap, while throngs of protesters have gathered to oppose the cuts, and state legislators have fled to avoid a vote. Here’s our quick breakdown of the basics.

What Does Gov. Walker Want?

Two weeks ago, Walker introduced the controversial “budget repair bill” – an “emergency measure” he said was needed to bridge Wisconsin’s $137 million deficit.

Walker claimed the bill, which would require state employees to increase their pension and health insurance contributions, will save the state about $30 million for the current fiscal year.

But the governor’s proposal has drawn the ire of critics for two major reasons:

1. They say some of the bill’s provisions, like those that would repeal state workers’ collective bargaining rights, are merely a partisan attack that would do nothing to close the state’s budget gap; and

2. They say Walker created the deficit to begin with.

Is There Really a Budget Crisis?

Yes, it seems so.

Walker claims the state is facing a $137 million shortfall, but in the middle of his budget repair bill’s storm, critics have accused him of manufacturing that deficit in the first place, citing a government report that predicted Wisconsin could have ended the 2010-11 fiscal year with a surplus.

Opponents of Walker’s proposal have been quick to blame the deficit on a series of tax break measures he pushed through earlier this year. But while those tax cuts will cost the state nearly $140 million next year, the Wisconsin’s Legislative Fiscal Bureau, a nonpartisan state agency that provides budgetary and economic data to the Wisconsin legislature, said the state will actually have a modest surplus this year.

So, how does the Fiscal Bureau predict a surplus, while the governor’s math yields a multi-million dollar deficit?

The difference in calculus hangs on two expenses that are, currently, still in legislative limbo: One is a $58.7 million debt Wisconsin owes to Minnesota for income tax it collected from Wisconsin residents who worked in Minnesota; the other is a series of expected shortfalls totaling almost $199.4 million that the governor is including.

That includes an expected $174.2 million to fund the state’s medical assistance program, $3.5 million for the public defender’s office and $21.7 million for the state’s department of corrections.

Robert Lang, the Fiscal Bureau’s director, said those expenses – which total $258.1 million, plus the Minnesota debt’s daily $4,584 interest – were not factored into the Bureau’s estimate because addressing those costs still requires action by the legislature or the governor.

And meanwhile, the state is awaiting a court decision to determine when it must pay back an additional $200 million it owes to a patient compensation fund from a four-year-old case.

Walker’s deficit figure, then, might not be so “ginned up” after all; it just assumes Wisconsin will pay Minnesota back and fund those cash-strapped programs within the next four months.

But doesn’t this go beyond budget numbers?

It does.

The governor’s proposal to increase employees’ pension and health insurance contributions will supposedly save the state $30 million this year, but some critics charge this is about more than just fiscal matters. The governor’s office said repealing the collective bargaining rights will give state and local governments “the tools to manage spending reduction.” But critics – like the Washington Post’s Ezra Klein andMother Jones’ Andy Kroll – suggest that public employees are simply the scapegoat in a political ploy to “defund” the Democratic Party.

The bill will put other constraints on unions’ powers, for example, employees will be able to opt-out of paying union dues.

Some state employees – particularly police, fire fighters, and state troopers, whoendorsed Walker’s gubernatorial campaign – are exempt from the proposal. Last week, thousands of teachers and other affected state workers took to the state capitol to protest the governor’s plan.

Wisconsin is not alone, and in the last week, labor activists have begun organizing protests in other states – including Ohio and Indiana – that are likewise fighting over union rights. Democratic legislators in Wisconsin and Indiana have even fled the state to deny Republicans the quorum they need to force a vote, further escalating a debate that some, like the Wall Street Journal, say might even have “hold implications” on next year’s elections:

Republican and Democratic leaders and strategists appear to be relishing the broadening fight over labor unions, feeling it is energizing their core supporters and clarifying key differences between the two parties.

Democrats claim the fight has injected fresh energy into the ranks of labor unions, which are a major supplier of campaign money and volunteers for Democratic candidates. Republicans say the showdowns show they are the ones willing to make tough decisions to cut government spending and take on entrenched powers.

The various clashes over union benefits and clout hold implications for the 2012 elections as they spread to Indiana, Ohio and other presidential swing states.