March 16, 2009

Governor’s Budget Proposal Is Bad for the Economy

Given the economy’s dire straits, everything state government does right now should be done with an eye toward making Wisconsin a better place for jobs to flourish.

Last month, Governor Jim Doyle introduced his state budget proposal, which reflects his priorities for the next two years.  Unfortunately, his document fails as an attempt to spark job creation and, in several cases, his plans would make the economy worse.

First and foremost, the Governor’s budget is a cornucopia of new tax and fee hikes, which would poison Wisconsin’s jobs environment.  The Governor proposes tax increases on capital gains, discouraging reinvestment of those profits in new business ventures.  He singles out high income earners with a new, higher income tax bracket.  Despite the Governor’s promises to the contrary, motorists and small businesses will almost certainly wind up paying about 7 cents more per gallon should his tax on oil companies become law.  All these new tax hike ideas are in addition to another new tax on business the Governor just could not wait until summer to enact, so he signed it into law last month.  Doyle’s “combined reporting” scheme taxes companies on the business they do both inside and outside of Wisconsin.

So if not tax increases, what is the alternative for dealing with the Governor’s $5.7 billion budget deficit?  For starters, we could stop spending so much.  When the Governor introduced his budget back in February, he told us it was an austere proposal that actually cut spending.  Upon further review, this is false.  When one tallies up the federal “stimulus” dollars he uses to fund ongoing budget obligations, new programs and all his new tax and fee hikes, he increases spending 7.7%!

While not a specific tax or spending increase, the Journal Sentinel highlighted another provision tucked away in the Governor’s budget that would adversely affect community improvement and job creation efforts.  The Governor wants to change the law to require “prevailing wage” be paid to workers on private development projects receiving some form of public assistance, including TIF-financed developments.  Local officials and developers say this plan will either drive up costs on property taxpayers for projects that are approved or it will make some projects cost-prohibitive, effectively killing new jobs before they are even created in the first place.

The legislature’s budget-writing panel, the Joint Finance Committee, must make significant changes to the Governor’s budget plan.  The health of Wisconsin’s economy is on the line.