Revenue projections spell opportunities for union backers

If the most recent spate of legislative activity is any indication, the Republicans are going to continue to roll right through the state budget, but if union backers were so inclined, they might try to form some alliances with Republicans and at least restore some of the money that would otherwise be pared from local schools and municipalities.

Thanks to an improving state economy, they have a golden opportunity to use higher tax collections to make some of those cuts less severe, even with property tax controls enacted last week. At least explore the potential for this, and use any stubbornness by the GOP against them in the forthcoming recalls.

Last week, the Legislative Fiscal Bureau, citing "unexpected strength" in individual income tax collections so far in 2011, raised its forecast for state revenue for the current fiscal year, and the forthcoming biennium, by $636 million.

Unexpected, my foot. What did they think was going to happen when more jobs were created? As I've stated before, the more robust pace of hiring in Wisconsin – 24,000 new jobs since the beginning of the year – would lead to greater state income tax collections. There is nothing particularly brilliant about that call; that's what always happens when the economy gains some traction.

Historically, the best way to boost tax revenue to the government is with a thriving economy – more businesses forming that pay taxes, and more people being hired who pay taxes. That's exactly what is happening in our state, especially the latter, and as more jobs are added, more revenue will be forthcoming. Creating more taxpayers through economic growth is always preferable to raising individual tax rates, which are applied to our income and/or wealth assets to derive the tax revenue that individuals and business entities pay to the government.

So as the Legislature wrestles with Gov. Walker's proposed budget, which to his credit would considerably shrink a $3.6 billion "structural" hole in the 2011-2013 state budget, lawmakers opposed to his spending blueprint might have a real opportunity to avoid deep cuts in aid to schools and cities, provided that people are willing to reach across the aisle.

Perhaps that's too much to expect in such a contentious atmosphere, where senators in both parties could be subject to recalls. But the people being recalled, and those who could still face a recall down the road, might want to ease the tension just a bit. Is there anything, other than blind ideology, preventing them from forming bipartisan coalitions to use the growing pot of tax revenue in ways the Governor does not endorse?

In addition to using the additional revenue for K-12, they can, for example, forgo Walker's plans to expand school choice to the middle class and instead use those funds on K-12. Even school choice advocate Howard Fuller is skeptical about using choice money for anyone other than economically disadvantaged families, so why would lawmakers outside metro Milwaukee feel compelled to go along with Walker on this plan?

The Governor deserves credit for putting business-friendly, job-creating policies in place, but his plan to limit collective bargaining is a bridge too far and not something he campaigned on. Lawmakers in both parties can do a great deal to reverse that, and perhaps defuse some public anger, if they are willing to build bridges of their own.

Unfortunately, it doesn't appear as though anyone is in a bipartisan mood. Everyone is dug in.

Sign up for the free IB Update – your weekly resource for local business news, analysis, voices, and the names you need to know. Click here.