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4/13/2007
Guest Blog: Ellis says Governor's budget is beyond repair

The budget Governor Doyle sent to the legislature is a disaster, an expensive, deceitful mess of huge tax increases, raids on segregated accounts, fund transfers and other accounting gimmicks that threaten the health of Wisconsin’s economy for years to come.

His budget is beyond repair; no amount of amendments by the legislature can salvage it. The best course of action is simply to throw out the governor’s plan and start over. The legislature must instead build the next budget by working off the base of the current budget.

I’ve talked before about the accounting gimmicks that pepper the governor’s bill. Accounting tricks so egregious that tax hikes like the doubling of the current real estate transfer fee actually appear as a tax cut in the governor’s budget.

I’ve discussed the massive increase in the cigarette tax – more than $500 million over the next two years – that isn’t being used to fund new health programs as advertised, but is simply replacing tax dollars that already fund those programs, so the governor can spend more than $450 million on other government programs.

Perhaps worst of all, I’ve talked about the massive extraction of wealth from the private-sector economy. Governor Doyle is proposing to take more than $5.7 billion out of the private sector over the next two years and use that to grow government.

As I’ve said before, that will be devastating to the vitality of Wisconsin’s economy. Such a massive transfer of dollars from the private sector to big government will dry up capital investment, destroy consumer spending and further diminish Wisconsin’s competitive standing with our states in regard to taxes and economic health.

The 1,757 page budget the governor dropped on the legislature simply cannot be fixed through the usual route of an amendment here and an amendment there. The governor has so loaded this budget with fund transfers, new accounts, “trust funds” and other accounting tricks, that one needs a road map and a global positioning unit to follow the dollars from one account to another.

Rather than an orderly table of columns and rows that track incoming revenues to specific programs, this budget’s flow chart of dollars to programs looks as convoluted and tangled as a plate of spaghetti.

To show how impossible it is to “fix” Doyle’s disastrous budget through the normal amendment process, consider his proposed unfair hospital tax, ($205 million in the first year) and his ill-conceived $175 million raid on the Patients’ Compensation Fund. That’s $380 million of bad ideas that the legislature absolutely must jettison.

It gets worse. You see, Doyle is not proposing to use the new funds from that tax and raid to pay for a new program that could also be eliminated with an amendment. Rather, those funds are used to replace existing spending on the state’s medical assistance fund. If we deny Doyle his taxes and raids, we leave a $380 million hole in medical assistance. The legislature has to follow the twisting trail to try to track down and return the money diverted from medical assistance.

Doyle’s budget is rife with bait-and-switch tactics like that. When he doubles the real estate transfer fee, for example – anther bad idea – he uses the new funds and the funds from the current fee to replace existing spending on shared revenue for counties. Rather than try to unravel all of this, it only makes sense to work from our current budget, ignoring Doyle’s mess altogether.

Ignoring the governor’s budget is the only sensible course for the legislature to take. Start with where we are – the base budget for fiscal year 2006-07. Over the course of the next two years, through natural revenue growth alone, the state will take in $1.2 billion more than this year’s base. Isn’t $1.2 billion enough?
State government needs to learn to live within its means, just like any family in Wisconsin struggling to live within its budget. How about this for a crazy idea? Let’s pay for the programs we already have before we commit ourselves to expensive new ones. If $1.2 billion isn’t enough to pay those bills, rather than reach into the taxpayers’ pockets to grab another $4.5 billion, let’s look for cuts to bring our fiscal house in order.

One reason we can count on an additional $1.2 billion without increasing or creating new taxes is because we have a relatively healthy private economy in Wisconsin. It’s an economy that is generating good-paying jobs that in turn allow our citizens to purchase goods and services and to make investments that further fuels the engine of economic growth and job creation.

With his tax increases above and beyond natural revenue growth, Doyle is proposing to extract an additional $4.5 billion from the private sector. In other words, he wants to take away the very fuel that drives a healthy economy. The legislature needs to put an end to that foolhardy proposal.
Senator Mike Ellis represents the 19th Senate District and resides in Neenah.

COMMENTS

Great analysis of the Doyle program to destroy the enonomic guts of Wisconsin. Let's hope others in madison head his words. Way to go, Mike.

Richard H. Griesser (Fri Apr 13 07:13:45 2007)

The Bush tax CUTS have substantially increased revenue flow into the US Treasury during the last few years. Increased economic activity was the reason. it is predictable the Doyle tax INCREASES will decrease economic activity in Wisconsin. That will result in stagnant or decreased revenue flow into the Wisconsin Treasury. This isn't rocket science Governor Doyle, it's Econ 101.

Russ (Fri Apr 13 08:25:50 2007)

I agree 100% with Mike's analysis. I was at the JFC public hearing on the state budget yesterday. Unfortunately I arrived late and I would have had to wait until 5:00pm to voice my opinion. I think the problem with the budget goes deeper than the points that Mike made. Basically, the state is not obligated to use standard accounting principles in building the budget. As of two years ago, the municipalities and counties were forced to use the standard accounting principles by law and that was a good thing because it forced those government entities to address revenue and spending similar to the private sector. This included addressing unfunded retirement health benefits as a liability on the balance sheet. Unfortunately, the state has not elected to police itself by mandating the use of standard accounting principles. Shifting money between accounts with designated funds would not be allowed. Can you imagine if the counties and municipalities were allowed to "shuffle" money around how big a mess we would be in? Another concept that should be modeled after the private sector is "Zero Based Budgeting". Simply put, you start with a blank piece of paper each year and budget each year based on priorities that are set as criteria for the budget. It means there could be new programs and programs that are dropped based on agreed priorities. The current method is to increase each department by a percentage without really looking at the need for the program. It is like adding an new roof onto the old one without first stripping the old roofing off. If you do that enough times the roof will collapse because of the weight of the shingles. I fear the state's roof is about to collapse.

Mike Thomass (Fri Apr 13 09:46:03 2007)

Great piece Mike. My question is why this piece will never make the Gannett monopoly, the television item of the nanosecond? We have no responsible sounding board that has the power to reach the dim light of personal and civic responsibility. We are privileged to have this new firestarter, FoxPolitics.net, because only the perseverence in the face of stagnant status quo will prevail. Keep fighting Mike and lead. It's why you were elected.

Richard Parins , Taxpayer (Fri Apr 13 11:48:18 2007)

Keep up the good fight! I can not believe people fell for Doyle's "no new taxes" compaign promise. We need to be reminded of his words from last fall.
Hear Hear! JE

Sue Stephenson (Sun Jun 17 17:03:51 2007)

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