ARGUE HOW TO SPEND IT.
FOR "HERE AND NOW" I'M STEVEN
POTTER.
>> IN A NEW REPORT TITLED THE
ASTOUNDING STATE SURPLUS THE
WISCONSIN FORUM RESEARCH
DIRECTOR SAYS THE PROJECTIONS OF
A 6.5 BILLION SURPLUS ARE USEFUL
BUT FAR FROM CERTAIN.
WE CHECK IN NOW WITH JASON STEIN
FOR MORE ON THE IMPLICATIONS FOR
STATE SPENDING AND TAXING.
JASON, NICE TO SEE YOU.
>> NICE TO SEE YOU.
>> YOU HAVE COVERED AND
RESEARCHED WISCONSIN STATE
BUDGETS FOR A WHILE.
AS YOU SAW THESE PROJECTIONS
GROW, DID IT SURPRISE YOU?
>> ABSOLUTELY.
I THINK WHEN WE THINK ABOUT TWO
YEARS AGO WHEN WE WERE AT THIS
POINT, THINGS DID NOT REALLY
LOOK THAT GOOD FOR THE STATE.
THEN WE HAD TWO VERY LARGE
FEDERAL PIECES OF LEGISLATION,
THE APPROPRIATIONS ACT AND
AMERICAN RESCUE PLAN ACT THAT
JUICED THE ECONOMY.
THEY SHOT STATE TAX COLLECTIONS
UPWARD AND DESPITE INFLATION,
THE STATE REALLY HASN'T SPENT A
TON OF THAT MONEY.
SO THAT WE FIND OURSELVES HERE
WITH THIS REMARKABLE SURPLUS.
>> HERE WE ARE.
ASTOUNDING SURPLUS.
WE DETAILED AND YOU EXPRESSED
SOME OF THE REASONS THAT THE
STATE COFFERS ARE SO FAT LIKE
THE COVID FUNDS AND AN INCREASE
IN SALES TAX REVENUE.
BUT WHAT KIND OF CHOICES, THEN,
DO LEGISLATIVE BUDGET WRITERS
MAKE WITH THIS MONEY?
>> WELL, THEY REALLY HAVE AN
UNPRECEDENTED LEVEL OF CHOICE.
CLEARLY YOU'VE SEEN THE GOVERNOR
AND LAWMAKERS TALK ABOUT SOME
SORT OF TAX CUTS BOTH THE
PERSONAL PROPERTY TAX IS
SOMETHING MENTIONED AS WELL AS
INCOME TAX CUTS.
I WOULD STAY TUNED FOR BOTH OF
THOSE THINGS.
AND THEN WE HAVE HAD A WORLD
WHERE IT'S 8% INFLATION AND YET
LOCAL GOVERNMENTS AND SCHOOLS
HAVE SEEN FAIRLY TIGHT LIMITS ON
THEIR STATE AND LOCAL FUNDING.
THEY HAVE GOTTEN FEDERAL
PANDEMIC FUNDSING BUT IT'S ALSO
RUNNING OUT.
ONE KEY QUESTION IS DOES THE
STATE TRY TO LOOK AT SOME OF
THOSE ISSUES AT THE LOCAL LEVEL
AND TRY AND STEP IN AND ASSIST
THE LOCAL OFFICIALS.
>> FOR SURE WE KNOW THAT
MUNICIPALITIES HAVE BEEN CRYING
OUT FOR MORE SHARED REVENUE.
WOULD NOW BE THE TIME PERHAPS
BOTH WITH ONE-TIME AND MORE
SUSTAINABLE FUNDING GOING
FORWARD?
>> RIGHT.
THERE ALWAYS OPTIONS THAT STATE
OFFICIALS HAVE.
ONE THING THAT LOCAL OFFICIALS
HAVE SOUGHT IS THE ABILITY TO
LEVY THEIR OWN SALES TAX.
CITIES AND VILLAGES SHOULD BE
ABLE TO DO THAT.
THE LEGISLATURE AT LEAST
REPUBLICANS IN THE LEGISLATURE
HAVE BEEN PRETTY RELUCTANT TO
TAKE THAT ON.
SO TO THEM INCREASING STATE AID
TO MUNICIPALITIES MAY SEEM LIKE
A COMPROMISE POSITION.
WHEN WE TALK ABOUT THE
MULTI-BILLION DOLLAR SURPLUS WE
HAVE, IN YEAR ONE OF THE BUDGET,
INCREASING SHARED REVENUE BY
EVEN 10% WOULD BE SOMETHING LIKE
$80 MILLION AND $160 IN YEAR
TWO.
IN A NORMAL WORLD THAT'S A LOT
OF MONEY.
BUT IN THE PRESENT CIRCUMSTANCE
IT IS NOT AS MUCH AS IT
TYPICALLY WOULD BE.
>> THEY'VE ALSO ASKED FOR AGAIN
THIS KIND OF SUSTAINABLE FUNDING
MECHANISM AND THAT WOULD BE LIKE
THE LOCAL SALES TAX.
>> RIGHT.
YOU KNOW, THE STATE WOULD HAVE
THE OPTION OF EVEN LAWMAKERS WHO
ARE CONCERNED ABOUT RAISING
TAXES COULD COMBINE A LOCAL
SALES TAX WITH, SAY, INCOME TAX
CUTS AT THE STATE LEVEL AND
LEAVE TAXPAYERS AT LEAST IN THE
STATE AS A WHOLE BETTER OFF OR
PAYING LOWER TAXES.
BUT OF COURSE SALES TAX WILL
HAVE MORE IMPACT ON PEOPLE AT
THE LOWER END OF THE INCOME
SCALES.
IT IS MORE REGRESSIVE.
SO THERE WILL BE A LOT OF
DISCUSSION ABOUT THAT, I THINK.
>> STEPPING BACK A LITTLE BIT,
WHAT DO YOU REGARD AS THE
BIGGEST NEED AREAS.
>> GREAT QUESTION.
AGAIN, SCHOOLS HAVE BEEN AT
THEIR STATE AND LOCAL REVENUE
LIMITS HAVE BEEN FROZEN FOR TWO
YEARS.
AND IS SO THAT'S SOMETHING THAT
-- THE FEDERAL PANDEMIC AID IS
RUNNING OUT.
THAT'S A MAJOR ISSUE.
YOU SEE AT -- IN TERMS OF PUBLIC
SAFETY YOU SEE CITIES AND
VILLAGES GOING TO REFERENDUM
ASKING VOTERS TO APPROVE RAISING
THEIR OWN PROPERTY TAXES THE PAY
FOR PUBLIC SAFETY.
AND YOU SEE IN SOME COMMUNITIES
THAT THAT HAPPENED IN NOVEMBER,
WHICH IS PRETTY NEW.
YOU DON'T SEE THE LEVEL OF OTHER
LOCAL GOVERNMENT REFERENDA.
THOSE THINGS THAT STEP OUT.
WE HAVE HIGHER EDUCATION, WE
HAVE TURNOVER WITHIN STATE AND
LOCAL GOVERNMENTS AND THEN WE
HAVE INFRASTRUCTURE NEEDS AS
WELL.
>> WE NEED A LOT OF MONEY TO DO
A LOT OF THINGS AS ALWAYS IN A
STATE BUDGET.
BUT AS WE HAVE POINTED OUT, IT
IS NOT LIKELY TO BE SMOOTH
SAILING BETWEEN THE GOVERNOR AND
REPUBLICAN BUDGET WRITERS.
FOR EXAMPLE ON THINGS LIKE
MEDICAID EXPANSION FOR AS WE'VE
DISCUSSED SCHOOL FUNDING.
>> ABSOLUTELY.
SO ONE THING TO UNDERSTAND YOUR
MEDICAID, THE SECOND BIGGEST
EXPENSE FOR THE STATE
HEALTHCARE, JUST TO KEEP CURRENT
SERVICES THE SAME WOULD BE $3
QUARTER OF A BILLION OVER THE
NEXT TWO YEARS.
AT THE SAME TIME THERE IS THIS
OPPORTUNITY TO EXPAND THE
PROGRAM AND PULL IN ADDITIONAL
FEDERAL MONEY THROUGH THE
FEDERAL AFFORDABLE CARE ACT AND
THE AMERICAN RESCUE PLAN ACT,
LIKE A BILLION AND A HALF OVER
TWO YEARS.
THAT'S SOMETHING THAT THE
REPUBLICANS HAVE TURNED DOWN IN
THE PAST.
BUT I THINK THERE IS ALSO AN
UNPRECEDENTED OPPORTUNITY FOR
HORSE TRADING IN THIS BUDGET.
SO EVEN THOUGH YOU WOULDN'T
EXPECT THAT TO BE ON THE TABLE,
PERHAPS IT MIGHT.