Walker Strikes (Mostly) the Right Notes
As he declares a state of economic emergency and conducts his special "Wisconsin Is Open for Business" session, Gov. Scott Walker is hitting most of the right notes, and people doing business or thinking about doing business in Wisconsin should take comfort in that.
With the goal of creating 250,000 new jobs over the next four years, expect a series of pro-growth policies, all aimed at improving Wisconsin's suspect business climate, to be introduced in the Legislature. The forecast is for tax relief, regulation reform, legal reforms and, in the case of the Department of Commerce, agency reorganization.
Job One is Less Taxing
For the small business sector, Walker is pursuing something long overdue — to end the taxation of health savings accounts. Wisconsin is one of few states in the nation to tax HSAs, and removing the tax can not only help make health care insurance more affordable for entrepreneurs, but enhance our competitiveness. HSA tax deductibility legislation is modeled on a proposal that passed the Legislature twice in 2005, but was vetoed; if enacted this time, consumers would save between $4 million and $8 million, according to Walker.
A second piece of legislation he will introduce seeks to overhaul Wisconsin's regulatory process. It will give the Legislature explicit authority to regulate the bureaucracy, add another layer of review before a rule can be implemented, and modify the process in which a rule can be challenged, moving the venue from Dane County Circuit Court to the county circuit court where the plaintiff resides. Hopefully, rules and regulations won't go beyond what is outlined in state statutes; when they do, it's a sign of bureaucracy run amok.
Since the legislation will require the Governor to approve proposed rules, one Walker critic labeled it a "power grab." That made this humble columnist fall off his chair. Imagine, a chief executive exerting control over his own bureaucracy! Quite the revolutionary, that Walker.
I'm not exactly sure what can be accomplished with Walker's intention to replace the Department of Commerce with the Wisconsin Economic Development Corp., but I have an open mind. The WEDC, which is being organized as a state authority, will be led by a chief executive officer and a 12-member board of directors, and reportedly will take a public-private partnership approach to promoting commerce.
As part of this restructuring, about 400 Commerce employees will be asked to resubmit their resumes, and I hope Walker will give each of them a fair chance to explain how they can, in his words, promote commerce rather than regulate it. He should allow each of them to demonstrate the value they could bring to the quest for economic vitality.
Like it or not, Walker kept his commitment to kill the high-speed train between Milwaukee and Madison, but was unable to redirect the $810 million in rail money toward crumbling roads and bridges. Killing high-speed rail has earned him some enemies in Madison, but it's important to remember that he campaigned against the train statewide, and he won. People here tend to forget this, but the majority of folks outside these few square miles surrounded by reality weren't too thrilled to be on the hook for a minimum of $7.5 million of annual operating subsidies, not to mention maintenance and repair costs, especially if they felt they were not going to benefit from it. Rail proponents should have done a better job educating people statewide about the merits of "high-speed" rail, which was the strategy employed with embryonic stem cell research. You'll notice that stem cell research has more support statewide than rail.
At the moment, state employees pay between 4% and 6% of their health care costs, and most state employees contribute nothing to their pensions. I hope state employees are wise enough to ignore their union bosses, who certainly like to huff and puff rhetorically, and realize it's better to contribute more toward their pension and benefits than it is to force more layoffs, which would not be good for Madison's economy. They are not being asked to do something that workers in the private sector have not done, and there will be other contracts that will enable them to regain what they have lost this time around — provided the economy improves.
I would prefer that Walker not abolish public unions, as he has threatened to do, but that requires both parties negotiating with certain economic realities in mind. Without that dose of reality, it will be difficult to achieve the shared sacrifice that will be needed to address the $150 million current fiscal year budget shortfall and the $3.3 billion structural deficit while maintaining core government services.
Elsewhere, Walker's cabinet and senior staff appointments look sound, albeit somewhat male dominated. Former lawmaker Mike Huebsch, in particular, should bring ample fiscal acumen from his stint on the Joint Committee on Finance.
Former Green Bay Mayor Paul Jadin will hopefully bring an understanding of public-private partnerships as he leads the Wisconsin Economic Development Corp.
New Secretary of Health Services Dennis Smith can rely on his experience as head of the U.S. Centers for Medicare & Medicaid Services in shaping the new state health exchange established under the Patient Affordability and Protection Act, and in addressing the state's hefty Medicaid shortfall.
Given his controversial statements about raising the state sales tax, Revenue Secretary Rick Chandler might be a bit loose-lipped for the Governor's conservative base, but he also served as Secretary of DOR from 2001-03 and Wisconsin state budget director from 1987-2001, and he has vowed to make revenue collection more predictable and business-friendly. That's certainly one commitment we'll hold the administration to.
Every new administration starts out with fanfare and hope, but it does not take long for ideology to clash with reality. As for Walker, I make no predictions other than the business community will have a more prominent place at the table. We need to take full advantage of that.
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