March 23, 2007

To:  Joint Committee on Finance

Re: Statements on 2007-2009 State Budget
Financing Government ( download PDF)  Testimony on School Funding
Health Care ( download PDF)
Children and Families ( download PDF)
Corrections and Juvenille Justice ( download PDF)
Natural Resources ( download PDF)
Lake Michigan ( download PDF)

Financing Government
The League of Women Voters believes in good government – honest, and open, democratic, and wise.  Governments are responsible for enacting regulations, providing services, protecting residents, their property and rights, and increasingly now, our common property–the environment–our air, lands, and waters.  Our mission, as always, is to press public officials to make it so. 

REVENUES
League members are distressed over our state’s failure to keep its tax system commensurate with its current needs.  We hoped for significant restructuring this year but we do not find it.  For several biennia chunks of money have been moved around the political game board with less concern for the value of the function than for avoiding anything that could be called a tax increase.  The so-called “structural deficit” is an embarrassing failure that underfunds our civil society, undermines public confidence, and encourages quibbling and dissension over what are finite resources.

INCREASED REVENUES
It must be recognized that repairing the deficit will require tax increases.  We urge that work begin on a general review of the whole state tax system. As an initial step in so doing, we recommend the Tax Incidence Study that was produced by the Wisconsin Department of Revenue in 2004.

Meanwhile, although some few would shrink government, many people are asking for more services and protections.  So the search is on for more revenue, for more taxes.  Cigarettes?  Oil?  Hospitals?

We can support taxing for social influences like discouraging smoking, spreading the profits from oil and reducing the damages from pollution, although charging hospitals to help pay for the indigent seems a stretch. Taxing these activities to balance a budget doesn’t really make good sense. Often such these taxes create more loopholes. 

We believe an increase in the motor vehicle registration fee is justified, and we wonder why an ad valorem motor vehicle tax is not proposed as well.

SALES TAX
As a rule, the League has not been a proponent of general sales taxes.  Even with the exemption of food and prescription drugs, the sales tax is regressive, taking a much larger bite out of a low income family budget than from more affluent families. However, we support increasing revenues by requiring on-line and mail-order purchases to pay the sales tax.  We do not know why the preceding Legislature did not adopt this measure.

Broadening the sales tax to include services is another measure left over from the preceding Legislature that could increase revenues as well as tax fairness. Now that services comprise such a large portion of the economy there is no reason to restrict the sales tax to the purchase of consumer goods.  This is a step we supported last biennium and would again.   It should be remembered that sales taxes offer the advantage of being deductible on the federal income tax.

INCOME TAX 
For revenue increases the League has for many years advocated adjustments to the Income Tax.  Among experts, income taxation ranks highest for administrative efficiency and for its flexibility–that is, by adjustments to deductions, exemptions, brackets, and rates so as to make the tax burden fit intended goals.  It is the best tax to use if ability-to-pay is a goal.

However, significant adjustments to Wisconsin’s income tax have been out of the game for years now.  Perhaps the Income Tax is too vulnerable—too open and too easily attacked by special interests.  Nevertheless, we believe that adjustments to the Income Tax provide the best means of eliminating the “structural deficit” and raising needed revenues.

CORPORATION INCOME TAX
The Corporation Income Tax suffers from a large loophole that could easily be closed.  Through it, businesses that operate in more than one state are able to report all their income to the state with the lowest tax.  In the interest of increased revenue and general fairness, we urge you to support the combined reporting system.  Several states, including Illinois and Minnesota, already use this system, and several other states are considering it.

FUNDING EDUCATION
The University.  Among the State’s funding responsibilities, education is perhaps the very most important and most expensive.  The League of Women Voters considers the University to be one of Wisconsin’s most valuable assets.  In the competition with other universities, it is vital that the UW be well-supported even as tuition is kept as low as possible.  If its quality were to diminish, it would be impossible for the University to regain the reputation and the financial benefits that it has accrued over the years.  Our students too face stiff competition with the rest of the world and must be equipped to succeed.  We will be looking for your more cooperative and generous attitude toward the University in this biennium. 

Kindergarten-Grade 12.  Quality in the elementary and secondary school system is also essential to the state’s continued well-being.  Recognizing this reality, Legislatures for some years have made larger contributions to school aids.  Perhaps the structural deficit began the year that legislators played a game of “chicken” and ended up agreeing to pay two-thirds of school costs but neglected to add anything to the state revenues to pay for it. 

The League supports maintaining the two-thirds funding of school cost and the provision in the budget of additional monies for SAGE, special education, four year-old kindergarten, and categorical aids.  We see the proposed budget as providing immediate, albeit temporary relief to local school districts.  We seek legislation defining a fairer public school funding formula.

PROPERTY TAX 
The League has always supported relieving the local property tax by the two-thirds state funding of the elementary and secondary school system.  It is quite reasonable to spread school costs over a statewide base.  Unfortunately, the relief that local governments might have felt was so unevenly distributed that the property tax is probably our most contentious tax.              

Meanwhile, the property tax remains the most disliked, most regressive, most difficult to pay of our state tax system.  The exemptions intended to help one group often impose unfair burdens on others.  Such is the case with the M&E tax exemption.  Also, tax exemptions intended to preserve open space and protect agricultural land usually move the burden to urban residents. Such dilemmas illustrate the problems of the property tax and may justify efforts to ameliorate it with state aids and shared taxes, both of which we have always supported.

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Health Care
LWVWI supports the base funding for SeniorCare benefits and the funding needed to support the current program in each year of the 2007-2009 biennium. We continue to await renewal of the federal waiver that will expire in June 2007.

We support the Badger Care base funding and the cost to continue.  We would support increasing eligibility for Badger Care to families with incomes up to 200% of the poverty line, rather than setting the limit at 185%.

We support the expansion of the Family Care program in the 2007-2008 biennium. This expansion will provide real choices to Wisconsin’s older people and people with disabilities to eliminate waiting lists and provide them with quality services.

Other measures that we support in this budget include:
• The expansion of Family Planning Waiver demonstration project to include men aged 15-44.
• The expansion of the Family Planning Waiver eligibility to individuals with incomes up to 200% of the federal poverty level.
• Funding of additional ADRC’s as the primary point of entry for accessing long-term care services.
• The BadgerCare Plus Initiative that would merge the current MA programs and would add several related initiatives.
• Funding increases for the HIV/AIDS drug assistance programs and the HIV/AIDS insurance premium subsidy program.
• Expansion of the Volunteer Ombudsman Program
• The increase in the cigarette tax because it will decrease youth smoking and decrease tobacco-related health care problems.

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Children and Families
The League appreciate Governor Doyle’s efforts to include an increase in funding of Wisconsin Works considering the many financial challenges the Doyle Administration faced in developing the budget, including TANF block grants reductions.  However, we would be remiss if we did not address the recommended Wisconisn Shares cost-saving measures. These measures will undermine the integrity of the program and the goal of W-2 to move families out of poverty: 1) lower eligibility levels, 2) increase co-payments by 10%, 3) authorizes waiting lists when needed, and 4) freeze payment rates to providers at the 2006 level.

While the W-2 program has greatly reduced the number of people on its roles, it has been a failure in meeting the goal of reducing the number of people in poverty.  The League urges the legislature to continue to provide the supports needed by poor Wisconsin families.  We support the increase in emergency assistance of $4 million, although this is not nearly enough.

Some years ago, the legislature diverted TANF funds to replace General Purpose Revenue, which had been used to fund the Earned Income Tax Credit, and freeing up GPR for other uses.  We strongly support restoring the TANF grant for services to poor families and returning that amount of the funding of the EITC to the GPR.

We applaud the inclusion of the Transitional Jobs Pilot Program in the budget.  TANF recipients have a large number of barriers to work and the transitional job allows them to build job experience while working to overcome those barriers. We have pleaded before to increase the educational opportunities for TANF participants.  Currently they are required to be working half time and be enrolled in classes half time.  With family responsibilities, this becomes virtually impossible for poor families.  Many recipients need basic education before they can find low-wage jobs.  There is a growing demand for skill workers in the state.  By allowing them to go less than 1/2 time and fostering movement into higher level courses in specific occupations and industries, they will not only be able to earn higher wages and move out of poverty, but they will help to fill the growing shortage of skilled workers.

The League also acknowledges and supports other programs and initiatives included in the budget that will benefit our youngest citizens and their caretakers and asks that you give them careful consideration. Research is proving the economic and social benefits to our society of early prevention and intervention far outweigh the costs.

The League supports:
1. The creation of the Department of Children and Families.
2. Funding to support a new Home Visiting Program, which will be universal, and increased funding for the current program that provides targeted home visiting services for first time medical assistance-eligible parents with identified risk factors for child abuse and neglect,
3. Funding to implement a quality day care rating system; increased funding for child care and education providers’ scholarships; and funding for start-up grants in the first and second year that a district offers a 4-K program. (All are part of the Governor’s Quality Care for Quality Kids initiative.)
4. Funding to continue the Allied Drive Initiative in the City of Madison to provide home visiting and employment preparation and support for low-income families, and additional funding to expand the program within Dane County. (This will be a model program which then can be adopted throughout the state.)
5. Funding to extend the amount of time an eligible custodial parent of an infant may receive a monthly W-2 grant from 12 weeks to 26 weeks.  (This change will actually save W-2 funds.)
6. The creation and funding of an "affordable housing trust fund."

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Corrections and Juvenile Justice
Since the passage of Truth In Sentencing legislation, the League has expressed grave concern about this state’s move to base public safety policy on increased prison sentencing while virtually ignoring rehabilitation and community corrections. This budget presents the sobering truth that since fiscal 1997-98 adult prison costs in Wisconsin have increased 83 percent.

The second largest General Purpose Revenue (GPR) increase over base in this 2007-09 budget is Corrections—topped only by School Aids.  Indeed, the projected population in prison facilities continues to increase.  It is disappointing that our concern has been justified.

We certainly support the few rehabilitative initiatives in this almost billion-dollar Corrections budget, but it is still insufficient compared to the costs of incarceration.

Two proposals in the budget do receive our strong support. The establishment of a Truth In Sentencing Phase II Commission to propose legislation for sentencing guidelines is long overdue and is needed to eliminate the piece-meal legislation that has occurred.

The most promising budget proposal is the establishment of a Criminal Justice Research Office to review and analyze information on the cost effectiveness of criminal sentencing, incarceration and offender rehabilitation programs. We believe this much needed initiative will begin a transition to a more thoughtful, factual and productive corrections policy. 

JUVENILE JUSTICE
The League supports the increase in Youth Aids funds paid to counties for juvenile delinquency related services. 

We are disappointed to see a continued decrease in the number of positions for professionals who work with youth in recreational, work and educational services. 

The League supports returning 17-year-olds to the juvenile justice system, a measure that is not addressed in the Governor’s budget.  Were this to happen there would need to be an increase in the budget for services to this age group.

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Natural Resources
The League of Women Voters of Wisconsin supports the following provisions of the Governor’s budget:

1.  Reauthorization of the Stewardship Fund at $105 million per year for 10 years. Consistent with our support of policies and programs which encourage acquisition of undeveloped areas, we supported the initial passage of the Stewardship Program and believe it has provided an invaluable service to the citizens of Wisconsin by protecting nearly half a million acres of undeveloped land. The increased funding is necessary to keep up with the dramatic increase in the price of land, particularly in the northern part of the state as paper companies make available for purchase vast tracts of previously undeveloped forestland.

2.  $30 million to fund a renewable energy grants and loans program.  We have for many years supported increased research, funding and tax incentives for development of new sources and improved methods of energy production. We strongly support the Governor’s request for $30 million to fund the development and commercialization of new technologies to increase renewable fuel or energy production, with $5 million earmarked for the construction of a cellulosic ethanol plant in Wisconsin. This proposal will attract private investment as well, since grants under the fund could not exceed 50% of the costs of an eligible project.

3.  Restoration of the position of Public Intervenor in the Department of Justice. For thirty years the Public Intervenor advocated on behalf of the public’s interest in natural resources, helping to protect underground drinking water supplies, wetlands, soils and forests. We supported the creation of the office of Public Intervenor and strongly opposed its elimination in the 1995-96 budget cycle. As the legal system has become increasingly inaccessible to any other than those with extensive financial resources, it is more important than ever to give ordinary citizens effective representation by restoring the office of the Public Intervenor.

4.  Increase in the recycling tipping fee. For many years, the League has supported measures to increase recycling throughout the state and reduce the amount of solid waste being dumped in landfills here. The amount of garbage dumped in Wisconsin from neighboring states continues to increase – up 46% last year alone – partly because of our relatively low tipping fees. The Governor’s budget provides for an increase in the recycling tipping fee from $3 to $6 per ton, an increase estimated to generate $18 million the first year and $24 million the second year. The budget proposes to allocate much of that increase to the new Renewable Energy Grants and Loans program, which we also support. However, we believe that the recycling tipping fee should be increased more than the Governor’s budget proposes, from $3 to $10 per ton. Such an increase would serve the dual purpose of reducing significantly the waste dumped in Wisconsin by neighboring states as well as increasing state funding for local recycling programs.

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Lake Michigan
The League of Women Voters of Wisconsin supports the following measures in this budget:
• Funding for conservation wardens to visit boat landings to conduct public education and enforcement of aquatic invasive regulations.
• An increase in the state cost-sharing grants to up to 75% of costs of projects to control aquatic invasive species.  Public and private entities are to be eligible for these grants.
• The environmental repair fee on solid and hazardous waste disposed of at a waste disposal facility to $1.60 per ton. Of this amount, 75 cents per ton would be deposited to the nonpoint account of the environmental fund.
• An increase in the supplement motor vehicle title fee by $2. This would be deposited to the nonpoint account of the environmental fund.
• An increase in general obligation bonding for cost-share grants for rural landowners to install nonpoint source pollution abatement projects in designated priority watersheds. The budget also supports short-term nonpoint source water pollution abatement projects undertaken by local governmental units.
• An increase in bonding to provide cost-share grants for landowners and provide financial assistance to municipalities and sewage districts for construction of facilities and structures for urban nonpoint source water pollution abatement and storm water management and the municipal flood control.
• The provision by which DNR may make grants from its nonpoint source water pollution abatement program to local government to be used for cost-share grants to landowners for the implementation of animal water management practice if the DNR has issued a notice of discharge to the landowner.
• The budgeted $17 million in bonding to fund a portion of the costs to remove contaminated sediment from Lake Michigan or Lake Superior if federal funds are provided for the project under the Great Lakes Legacy Act.
• The creation of a sum sufficient appropriation from a segregated environmental management account of the environmental fund to pay debt service costs. The fund could be used for cleanup of contaminated sediment in Milwaukee in the Kinnickinnic River and the Milwaukee River in Estabrook Park and would be expected to leverage $31 million in federal funds from the Great Lakes Legacy Fund.

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