•League of Wisconsin Municipalities: State surplus could help fund $121 million shortfall for municipalities
Wisconsin municipalities took a $100 million hit in the 2011-2013 state budget to help resolve the state’s financial difficulties. Almost none of those cuts have been restored. Now, the state anticipates it will have $912 million more in tax revenues at the end of the current budget in June 2015.
The Governor and Legislative leaders have already agreed that the surplus should be used for a tax cut. The only debate is over the size and form of the tax cut. The League of Wisconsin Municipalities urges the Governor and legislators to consider four ways to ease the burden that Wisconsin’s cities and villages have been shouldering for years.
“Job creation and economic growth in cities and villages is what generated the additional sales and income taxes for the state,” said Dan Thompson, executive director of the League. “The state should invest at least part of the surplus in local communities to spur further job creation and economic growth and put Wisconsin on the road to permanent financial stability.”
Beloit City Manager Larry Arft, president of the League’s Board of Directors, notes that even if the 2012 cuts were restored, general purpose funding for local governments would still be lower than in 2006.
“Getting local funding restored, at least to 2012 levels, should be a priority of the Legislature before we talk about anything else,” said Arft. “The value-add of municipalities in the state, particularly as the entities that create the economic development that produces the vast majority of sales and income taxes for the state, is huge.”
The League is recommending that the Legislature:
1. Address the anticipated shortfall in the State’s Transportation Fund byrestoring the $30 million cut made in 2012 to general transportation aids that go to cities and villages to help maintain local streets, and restoring the $12 million cut made in 2012 to the mass transit aids program that helps fund city bus systems.
2. Restore the $48 million cut made in 2012 to the shared revenue program, which helps municipalities pay for basic services like police, fire protection and snow plowing.
3. Fully fund the Payment for Municipal Services Program, which reimburses municipalities for services provided to state-owned facilities located in the municipality. Under the most recent state budget, the payment for municipal services program was underfunded by 50 percent, covering less than half of the $37.4 municipalities were entitled to receive.
4. Restore the 41 percent cut – about $13 million – made in 2012 to the Recycling Grant Program, which helps cities and villages operate recycling programs.
The League of Wisconsin Municipalities is a voluntary, nonprofit, and nonpartisan association of Wisconsin cities and villages working to advance municipal government. First established in 1898, the League’s membership consists of 190 cities and 393 villages.
•New State Revenue Numbers Show $911 Million Surplus
Rep. Dean Kaufert (R-Neenah) issued the following statement announcing projections by the nonpartisan Legislative Fiscal Bureau that Wisconsin will take in $911 million more in revenue than expected because of a growing economy:
“The fiscal discipline and prudent management by the state legislature and governor over the past few years are paying dividents for our citizens. This new increase in revenue is another sign that our economy is growing and heading in the right direction,” Kaufert said.
“We should maintain our prudent fiscal management in how we use this surplus. It should go toward eliminating the relatively small structural deficit that exists, paying down past debt, reducing borrowing, and the remainder should be returned to the hardworking middle class workers and taxpayers in tax relief.”
•War on poverty anniversary leads to release of national poverty report card
Income inequality is on the rise, according to a national report card co-authored by Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin-Madison.
“It looks like inequality is resuming its relentless upward trend after a brief respite during the recession and that we are headed for yet higher inequality in income and wealth in the years to come,” Smeeding says.
Smeeding and Jeffrey Thompson, an economist with the Federal Reserve, examined trends before, during and after the Great Recession of 2008 to 2009. They found that the recession had a mixed effect on inequality, with some measures increasing and others flattening.
In the recovery period since mid-2009, however, all of the measures show income inequality is rising. By 2012, the share of income going to the top one percent had rebounded close to the high levels measured before the recession.
Their findings are part of the first national Report Card on Poverty and Inequality published by the Stanford Center on Poverty. The report card coincides with the 50th anniversary of the War on Poverty, President Lyndon B. Johnson’s initiative that he announced during his 1964 State of the Union Address.
“Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it,” Johnson said.
Smeeding and Thompson also found that taxable income of the top one percent grew 31 percent from 2009 to 2012, while for the rest of the population it grew by only 0.4 percent. The highest-income group captured 95 percent of all income growth in the first three years of the post-recession recovery due to strong rebounding of profits and equities that were not accompanied by improvements in wages.
“The analysis of recent changes in poverty… suggests that when properly accounted for, in-kind benefits like food assistance (SNAP), housing subsidies and refundable tax credits have improved the lot of the poor in recent years and have fought back against the unemployment and low wages since the Great Recession,” Smeeding says. “The long-term solution to poverty is a steady job that pays high enough wages to move a family over the poverty line. Until the labor market recovers, benefit programs are necessary to supplement low wages for otherwise desperate families.”