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Jan 23, 201407:20 AMVan Lines

with Joe Vanden Plas

Walker and the budget: Shorting the shortfall

(page 2 of 2)

They have a point, up to a point. Marginal cuts in state tax rates have stimulated economic growth, resulting in modest job growth and more (not less) revenue to state government, but we’re not out of the economic woods yet.

Exhibit A: While the national economy grew at strong pace (4.1%) in the third quarter, it would be nice to see that sustained over consecutive quarters before people assume we’ve turned a corner.

Exhibit B: December’s preliminary national employment figures, which indicated that only 74,000 new jobs were created, are not exactly a reminder of the “go-go” days of the 1980s or 1990s. In his State of the State, Walker claimed that job creation in Wisconsin picked up in the latter half of 2013, but let’s wait and see what the quarterly data tell us. (After the State of the State address, the Department of Workforce Development released encouraging preliminary jobs data that indicates the state created 3,000 jobs from November to December of 2013, the state's unemployment rate fell to 6.2%, and that 43,900 jobs were created from December 2012 to December of 2013. The December figures are based on a very small sampling, about 3% of state businesses, which means they are subject to substantial revision in subsequent months. The quarterly data, produced in the Quarterly Census of Employment and Wages, is based on a much larger sample, roughly 95% of state businesses, and therefore is considered a more accurate barometer of job growth.)

What’s more, we’re still not sure what positive, negative, or neutral impacts the full implementation of the Affordable Care Act will have on job creation, and therefore tax revenue, in 2014.

Until we do, a little more prudence is in order, whether or not your name is on the ballot this fall. I realize this view isn’t politically sexy, but someone has to be the adult in the room. Grown-ups solve problems like structural deficits. They solve them completely. 

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Jan 24, 2014 06:33 am
 Posted by  Anonymous

I agree completely. I'm an average homeowner who would get that $101 tax break - in the face of the property tax bill, it really isn't that much. I'd rather the money be put toward road construction, always an ongoing project, or returned in some way to the public schools. Though an adjustment in withholding would be welcome and seems to make sense, as I always get money back from the state at tax time because too much was withheld.

Jan 24, 2014 11:21 am
 Posted by  Anonymous

A section of the non-profit world - those who read and understand state budgets are worried about the structural deficit in the next budget and possible extreme cuts to services to children and families. One thing not covered in the press is that part of the state's fiscal miracle was over spending a lot of the federal dollars targeted to low income families (instead of carrying them over into the next fiscal period). Those funds were shifted into areas normally funded by state revenue like funding the state's earned income tax credit to free up other funds for things like the Economic Development Office. Also as part of that budget deal $25 million in unspent child care funds were shifted from that budget line instead of using them to eliminate a 7 year freeze on rates instituted by Jim Doyle due to the recession. So we have an open for business government basically screwing existing small businesses across the state in order to give sometimes questionable grants to attract new businesses. (and the child care rates are set by a market survey based on real rates parents pay- and when there is a shortfall in state payments it is made up by middle and working class parents who pay out of pocket) So I would prefer the state pay down the deficit and use some (a relatively small amount) for corrections in its payments to small businesses to strengthen those sectors and correct those markets .

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