The Koch-funded Americans for Prosperity (AFP) has teamed up with Wisconsin's right-wing John K. MacIver Institute on a website and TV ad to support Governor Scott Walker as he faces recall. AFP and MacIver are aiming to convince residents that Walker's fiscal policies have been good for the state.
The “It's Working!” ad has started airing in Wisconsin and directs viewers to a website created by the two organizations, “ItsWorkingWisconsin.com.” The site touts the successes of Walker's policies, including policies impacting workers, local governments, public education and social programs. The site echoes many of the claims on Walker's taxpayer-funded “Reforms and Results” website, which has resulted in a complaint to the state ethics board.
In the ad, the voice over intones: “They told us the sky would fall. And Wisconsin would end as we know it. But the sky's still there. And Wisconsin is stronger than ever. Thanks to our budget reforms.” A charming family waves at the camera, but the family is not from Wausau, Waukesha or even Wisconsin. As MSNBC's Rachel Maddow first pointed out, they are “Family on a Bridge” I-stock photo number 10268583.
But the key question is whether Wisconsin really is “stronger than ever?” Below are the major claims of the ad, followed by some of the latest data from Wisconsin.
Spending and Taxes: “Instead of raising taxes, we cut spending” and “Taxes are going down”
Even though the Walker budget cut spending, with steep cuts to education, health care and localities, overall state spending does not go down, it goes up. According to Wisconsin Taxpayer's Alliance, general program revenue spending for the 2011-2013 budget will increase by 7.6 percent (pdf). This is due largely to increased health care costs and a reduction in federal aid.
There is no doubt that Walker lowered taxes on corporations and the wealthy, with a series of bills as well as the budget bill. The Legislative Fiscal Bureau tallied these tax breaks and they amount to $2.3 billion over 10 years (pdf), approximately $200 million a year.
But for many Wisconsin families, taxes will be going up. According to Wisconsin Council on Children and Families, Walker slashed $56.2 million (pdf) from the state's Earned Income Tax Credit program (EITC) for low income families. He also made changes to the Homestead program resulting in a $13.6 million (pdf) tax increase. About one-third of Homestead claimants are over 65 years old.
Property taxes are also going up in many areas, as counties and municipalities struggle to deal with what the Legislative Fiscal Bureau tallies as $170 million (pdf) in cuts in state aids to counties and cities. New property tax numbers are starting to come in. On top of new fees of every type, Madison's property taxes will be going up 3.7 percent, Rock County's 2.1 percent and Milwaukee County's 2.2 percent.
Unions: “We reined in abuses of collective bargaining privileges” “We asked government employees to contribute to their pension and health care like everyone else.”
The ad uses a graph showing that public employees, on average, pay less towards their health care and pensions than private sector employees. What the graph doesn't show is that public employees actually earn less than their private sector counterparts, even when benefits are taken into account. An Economic Policy Institute report (pdf) from before Walker's reforms demonstrates that, when controlling for education, “full-time state and local government employees in Wisconsin are undercompensated by 8.2 percent compared with otherwise similar private sector workers.”
What's more, the largest state employees union, the American Federation of State, City, and Municipal Employees (AFSCME), immediately agreed to Walker's demands for pension and health care concessions in an effort to preserve their right to collectively bargain. In the end, Walker's collective bargaining bill amounts to an 11 percent cut in pay for workers making $25,000 a year, and 8.5 percent cut in pay for workers making $50,000 a year, according to a Legislative Fiscal Bureau memo (pdf). This is on top of state employees agreeing to 16 furlough days in the previous budget cycle, approximately a 3 percent cut in pay for the average worker, according to AFSCME.
Collective bargaining for public workers started in Wisconsin 50 years ago. For unions, the heart of the controversy was not the health care and pension contributions, but the direct attack on the ability of unions to organize and collectively bargain. A series of measures in the collective bargaining bill, including annual recertification of unions with a majority of all eligible voters (not just a majority of those voting), will make it very difficult for unions to function or effectively represent workers.
Saving Programs: “Taxes are going down, programs are being saved” “saving vital programs”
Walker has limited the ability of school districts to raise funds for schools. He reduced the amount that school districts could raise and spend on education by $1.6 billion dollars. On top of this, Walker has slashed some $749 million over the biennium from public education in his 2011 budget, resulting in the second largest per pupil cut in the nation, according to the Center for Budget and Policy Priorities. As a consequence of these measures, 75 percent of school districts have started staff cuts, so far a net reduction of some 3,368 employees — triple the reduction of the previous school year. Forty percent of students this year were put in larger classrooms and 75 percent of school districts anticipate more cuts next year, according to a new survey of Wisconsin school districts.
Miles Turner, executive director of the Wisconsin Association of School Districts, summarizes the situation: “The majority of Wisconsin students attend a school district with fewer teachers, larger class sizes, fewer support programs, and fewer course offerings. Most districts expect next year's budget will be worse.”
Few programs are as “vital” as life-saving medical care. According to Wisconsin's Department of Human Services, the administration is preparing to cut $848 million in Medicaid benefits over the biennium. 65,000 state residents — around half of whom are children — could be dropped (pdf) from the state's Medicaid health program if the administration's proposal is approved by the federal government.
Deficits and Localities: “Today, Wisconsin eliminated its deficit, while reducing the strain on local governments.”
Walker's cuts to education, health care and localities balanced the budget, but this task is accomplished every biennium by every governor because of the state's balanced budget requirement. This does not mean the state will not be back in the red in future years. Walker was faced with a deficit of $3.6 billion. After the 2008 financial meltdown, former Governor Jim Doyle balanced the budget in the face of a much larger deficit of $6 billion in (2008-2009) with a combination of cuts and revenue raisers. Both governors engaged in “accounting tricks,” by pursuing strategies such as debt restructuring. In delaying Wisconsin debt payments, Walker increased interest rate payments by $149 million (pdf), according to the Legislative Fiscal Bureau.
As for local governments, there is not a city or county in the state that is not feeling the strain of the $170 million (pdf) cut in state aid to localities (affecting police, fire etc.), plus reductions in transportation aid, recycling and more. When Walker proposed these deep cuts, he said his collective bargaining provisions would provide the “tools” local governments need to make up the difference. However, the League of Wisconsin Municipalities based on worksheets from 36 large communities, estimated (pdf) that the savings in Walker's original budget proposal will cover only 61 percent of the funding cuts in 2012, potentially leading to layoffs, cuts in services or higher taxes. Already, 11,500 public workers were laid off in Wisconsin in September 2011. It is unclear how many of these worked for cities and counties.
The ad touts the fact that local governments and school districts now have more “flexibility” to balance their budgets. Interestingly, the website cites a February 2011 article quoting Dan Thompson, executive director of the League of Wisconsin Municipalities, discussing Walker's limits on collective bargaining. “It will give us flexibility, yes,” he said. But AFP/MacIver omits the rest of his sentence. Thompson also says “It goes far beyond what we asked for. We were not expecting to abolish the collective bargaining process altogether.” The title of the article cited by AFP? “Local Leaders from Throughout the State ask GOP to Not End Collective Bargaining.”
It is true that localities can extract massive savings from their workers, going far beyond the pension and health care contributions that Walker promoted. This may explain the $1.5 million surplus in Kaukauna and the $25 million “saved” in Milwaukee. But Milwaukee was also honest about the cost of Walker's measures — the school district lost 1,661 teachers, aids and administrators, according to the school district survey.