Yesterday we took a look at how income inequality in the United States has grown over the last 30 years, and how the federal government is doing less about it. A new Census Bureau report released this week sheds light on whether trends in Wisconsin have followed a similar path.
Wisconsin is among the states with the least income inequality, although that inequality is growing. For the period 2005-2009, the Census Bureau ranked Wisconsin 46th in household income inequality as measured by the Gini index, a measure of the degree to which income or wealth is dispersed. That means that only four states (Wyoming, New Hampshire, Alaska, and Utah) had less income inequality. The states with the most income inequality were New York, Connecticut, Louisiana, and Mississippi.
Thursday, October 27, 2011
Wednesday, October 26, 2011
Income Inequality Growing, In Part Due to Government Policies
The top 1% more than doubled their share of the nation’s income between 1979 and 2007, according to new figures released by the Congressional Budget Office. Several factors in both the private and public sector are driving the income inequality, including rapidly increasing CEO salaries, the growth in the number of high-earners in the financial services sector, changes in the way income is taxed, and changes in the makeup of beneficiaries of government programs.
Thirty years ago, income inequality in the U.S. was much less dramatic. In 1979, the top 1 percent of the population earned just under eight percent of after-tax household income, compared to 17 percent in 2007. Here’s a breakdown of income growth between 1979 and 2007:
Thirty years ago, income inequality in the U.S. was much less dramatic. In 1979, the top 1 percent of the population earned just under eight percent of after-tax household income, compared to 17 percent in 2007. Here’s a breakdown of income growth between 1979 and 2007:
- For the top 1 percent, after-tax household income grew by 275 percent in inflation-adjusted dollars
- For the remainder of the top 20 percent, income grew by 65 percent.
- For the individuals in the 20th through the 80th percentile, income grew by 40 percent
- For the bottom 20 percent, income grew by only 18 percent.
Tuesday, October 25, 2011
Governor Proposes Two Year Pay Freeze for State Employees
There would be no cost of living adjustments to state employee salaries for the next two years, under a plan Governor Walker’s administration has submitted to a legislative committee.
A letter outlining the pay plan, sent from the Director of Office of State Employment Relations (OSER) to the Joint Committee on Employment Relations, can be read here. The actual compensation plan is also posted on the Office of State Employment Relations website, but be warned the file is enormous and takes a long time to load.
According to OSER’s letter, the compensation plan retains progression adjustments, some reimbursements, and some of the various types of supplemental pay that appeared in collective bargaining agreements. Some types of supplemental pay were eliminated, and calculations for determining overtime pay were changed. Senator Jeff Fitzgerald said that the changes would reduce overtime payments at the Department of Corrections by $5 million per year.
A letter outlining the pay plan, sent from the Director of Office of State Employment Relations (OSER) to the Joint Committee on Employment Relations, can be read here. The actual compensation plan is also posted on the Office of State Employment Relations website, but be warned the file is enormous and takes a long time to load.
According to OSER’s letter, the compensation plan retains progression adjustments, some reimbursements, and some of the various types of supplemental pay that appeared in collective bargaining agreements. Some types of supplemental pay were eliminated, and calculations for determining overtime pay were changed. Senator Jeff Fitzgerald said that the changes would reduce overtime payments at the Department of Corrections by $5 million per year.
Thursday, October 20, 2011
Lapses Hit UW System Especially Hard
The UW System will bear the lion’s share of new budget cuts announced recently by the Wisconsin Department of Administration. The cuts were included in the 2011-13 budget but the allocation of the cuts were not specified until last week. Of the $174.3 million in cuts that will lapse money to the General Fund, $65.8 million comes from the UW System over the next two years. This cut comes on top of a $250 million budget cut dealt to the UW System in the biennial budget.
Most other state agencies must also make additional cuts, but the ones made to the UW System are disproportionately large. For example, state GPR spending on corrections is slightly higher than on the UW System, yet the lapse from the Department of Corrections is only about one-fifth the size of the one from the UW System. Along those same lines, in this Milwaukee Journal-Sentinel article, a UW System spokesperson points out that the UW System accounts for about 7 percent of GPR spending but is subject to 38 percent of the cuts.
Most other state agencies must also make additional cuts, but the ones made to the UW System are disproportionately large. For example, state GPR spending on corrections is slightly higher than on the UW System, yet the lapse from the Department of Corrections is only about one-fifth the size of the one from the UW System. Along those same lines, in this Milwaukee Journal-Sentinel article, a UW System spokesperson points out that the UW System accounts for about 7 percent of GPR spending but is subject to 38 percent of the cuts.
Tuesday, October 18, 2011
Most State Spending Supports Local Services
Most state spending goes to support local services, according to new spending figures released this week by the state Department of Administration. As shown in the chart below, 57 percent of GPR (General Purpose Revenue) expenditures support local services, amounting to $7.7 billion in fiscal year 2011. (If you get this post delivered to your inbox, you may need to tinker with your email program’s setting in order to be able to view the image.)
Friday, October 14, 2011
State Cuts to Individual School Districts Announced
Most school districts in Wisconsin will see their general aid from the state drop by 10 percent between the 2011 and 2012 school years, according to new district-by-district information published by the Department of Public Instruction.
The Legislature cut general aid by $393 million for K-12 schools for the 2012 school year. That doesn’t include additional cuts to categorical aids, which support specific programs such as student transportation or four year old kindergarten.
In dollar amounts, the largest cut is to Milwaukee Public Schools, which will receive $52.1 million less in 2012 than in 2011, a nine percent drop. Madison Metropolitan School District will receive a cut of $6.7 million, a 13 percent drop.
Governor Walker has argued that new restrictions on collective bargaining rights will make it easier for school districts to deal with reductions in aid, by allowing districts to cut the compensation of teachers and other school district employers. However, many school districts have argued that the Governor’s “tools” are insufficient to deal with the severe cuts.
Tamarine Cornelius
The Legislature cut general aid by $393 million for K-12 schools for the 2012 school year. That doesn’t include additional cuts to categorical aids, which support specific programs such as student transportation or four year old kindergarten.
In dollar amounts, the largest cut is to Milwaukee Public Schools, which will receive $52.1 million less in 2012 than in 2011, a nine percent drop. Madison Metropolitan School District will receive a cut of $6.7 million, a 13 percent drop.
Governor Walker has argued that new restrictions on collective bargaining rights will make it easier for school districts to deal with reductions in aid, by allowing districts to cut the compensation of teachers and other school district employers. However, many school districts have argued that the Governor’s “tools” are insufficient to deal with the severe cuts.
Tamarine Cornelius
Thursday, October 13, 2011
New Proposals Seek to Increase Taxes, Limit Deductions for Well-Off
Can we help fund the creation of jobs by increasing the amount of taxes paid by the well-off? Senator Harry Reid thinks so. He has proposed a “millionaire’s tax,” which would impose a 5.6 percent surtax on those who earn over $1 million a year. In Wisconsin, 0.1 percent of taxpayers would be subject to the surtax, according to an analysis by Citizens for Tax Justice.
The additional revenues raised by the surtax would pay for President Obama’s proposed American Jobs Act, a package that includes $447 billion in tax cuts and new spending aimed at increasing employment and upgrading infrastructure across the country. On Tuesday, the American Jobs Act failed to pass the Democrat-controlled Senate, and Sen. Reid has said he will break up the Act and try to pass individual pieces.
The additional revenues raised by the surtax would pay for President Obama’s proposed American Jobs Act, a package that includes $447 billion in tax cuts and new spending aimed at increasing employment and upgrading infrastructure across the country. On Tuesday, the American Jobs Act failed to pass the Democrat-controlled Senate, and Sen. Reid has said he will break up the Act and try to pass individual pieces.
Wednesday, October 12, 2011
Who Pays for Roads?
Proponents of highway spending often argue that roads in Wisconsin “pay for themselves” and they complain that funding for roads has been shortchanged at times by the diversion of transportation user fees to the state general Fund. A short report issued this week by 1000 Friends of Wisconsin presents facts countering those arguments.
Tuesday, October 11, 2011
JFC Meets Tomorrow to Vote on Bills
A handful of bills will be taken up tomorrow by the state’s Joint Finance Committee. The committee will meet Wednesday, October 12 at 11 AM in 412 East, at the State Capitol.
Here’s a short description of each bill that will be considered, along with its estimated fiscal effect:
1) Modification of the jobs tax credit (Assembly Bill 1/Senate Bill 5): Currently, companies can claim a tax credit of up to 10% of an employee’s wages, or the amount of training costs in a particular year. The Wisconsin Economic Development Corporation (i.e. the “new” public-private Department of Commerce) can allocate $5 million of these credits each year, for a maximum of $14.5 million between 2010 and July 2013. Currently, the jobs tax credit is nonrefundable for 2010 and 2011.
Here’s a short description of each bill that will be considered, along with its estimated fiscal effect:
1) Modification of the jobs tax credit (Assembly Bill 1/Senate Bill 5): Currently, companies can claim a tax credit of up to 10% of an employee’s wages, or the amount of training costs in a particular year. The Wisconsin Economic Development Corporation (i.e. the “new” public-private Department of Commerce) can allocate $5 million of these credits each year, for a maximum of $14.5 million between 2010 and July 2013. Currently, the jobs tax credit is nonrefundable for 2010 and 2011.
Monday, October 10, 2011
Wisconsin Cuts Education Spending by 10 Percent in a Single Year
Back in September 2011, the Wisconsin Budget Project blog highlighted a report showing that Wisconsin’s cuts to education were among the nation’s largest. At the time, figures were only available for about half the states.
Now, the Center on Budget and Policy Priorities has updated its report with figures from 46 states, and it turns out that Wisconsin is still among the states with the largest cuts to education. The new report shows that Wisconsin ranked #2 in the number of dollars cut per student in 2012, behind only New Mexico. These cuts mean that Wisconsin schools will receive $635 less per student in state support in 2012 than in 2011.
Measured as a percentage change, Wisconsin’s cuts to education rank 4th among the states, with a 10.0 percent drop in 2012. Wisconsin will spend $776 less (11.9 percent less) per student in 2012 than in 2008, in inflation-adjusted terms.
Now, the Center on Budget and Policy Priorities has updated its report with figures from 46 states, and it turns out that Wisconsin is still among the states with the largest cuts to education. The new report shows that Wisconsin ranked #2 in the number of dollars cut per student in 2012, behind only New Mexico. These cuts mean that Wisconsin schools will receive $635 less per student in state support in 2012 than in 2011.
Measured as a percentage change, Wisconsin’s cuts to education rank 4th among the states, with a 10.0 percent drop in 2012. Wisconsin will spend $776 less (11.9 percent less) per student in 2012 than in 2008, in inflation-adjusted terms.
Friday, October 7, 2011
How to Keep Up with the Wisconsin Budget Project
Do you want to keep up with developments on state, local, and federal budget issues? The Wisconsin Budget Project now offers several ways that you can follow our work:
- Subscribe to the Wisconsin Budget Project Blog to make sure you never miss a post. You can subscribe via email or RSS feed.
- Follow the Wisconsin Budget Project on Facebook or Twitter (@WIBudgetProject).
- Sign up to receive our monthly Revenue Matters e-newsletters.
- And, of course, check out our website at http://www.wisconsinbudgetproject.org/.
Thursday, October 6, 2011
New Federal Proposal Could Help States Avoid Unemployment Fund Pitfalls
President Obama has proposed several big changes to the nation’s unemployment benefits system. Some of the changes would give states additional flexibility in to providing incentives for workers to return to employment as quickly as possible. Obama has also proposed making changes to how the unemployment benefits system is financed, changes that could be felt by Wisconsin employers and workers.
First, some background on the condition of Wisconsin’s unemployment system. During the recession, Wisconsin borrowed money from the federal government (as did most other states) for the purpose of providing benefits for unemployed workers. Currently, Wisconsin owes $1.2 billion to the federal government, a significant amount. In comparison, Minnesota owes less than $300 million.
Two factors forced Wisconsin’s Unemployment Trust Fund into the red and spurred the borrowing from the federal government. First, the number of jobless workers claiming unemployment benefits has climbed with the recession, helping drain the fund. But a second, less obvious, factor contributed to the need to borrow as well: the failure to adequately finance the fund when economic times were good. An earlier Wisconsin Budget Project post explains why the balance in Wisconsin’s Unemployment Trust Fund dwindled even during the fat years of the mid-2000s.
First, some background on the condition of Wisconsin’s unemployment system. During the recession, Wisconsin borrowed money from the federal government (as did most other states) for the purpose of providing benefits for unemployed workers. Currently, Wisconsin owes $1.2 billion to the federal government, a significant amount. In comparison, Minnesota owes less than $300 million.
Two factors forced Wisconsin’s Unemployment Trust Fund into the red and spurred the borrowing from the federal government. First, the number of jobless workers claiming unemployment benefits has climbed with the recession, helping drain the fund. But a second, less obvious, factor contributed to the need to borrow as well: the failure to adequately finance the fund when economic times were good. An earlier Wisconsin Budget Project post explains why the balance in Wisconsin’s Unemployment Trust Fund dwindled even during the fat years of the mid-2000s.
Wednesday, October 5, 2011
Should Wisconsin Use Tolls to Finance Interstate Highways?
For Whom Would the Tolls Toll?
Conservative groups generally don’t like taxes and government spending, but there are some areas where they do support more spending – such as highways, and especially Interstate highways. So how does one resolve opposition to taxes and support for additional spending in certain narrow areas? One way to do that is through user fees, such as highway tolls, rather than taxes.
A report issued this week by a conservative think tank, the Wisconsin Policy Research Institute (WPRI), makes the case for gradually phasing in tolls. I applaud WPRI for promoting public debate about an important fiscal issue and for proposing a solution. Because Wisconsin, like other states, faces serious challenges for the financing of the transportation system, I think tolls are an idea worth considering. This blog post looks at a few of the pros and cons of the idea, and why I’m leaning more toward increased gas taxes.
Conservative groups generally don’t like taxes and government spending, but there are some areas where they do support more spending – such as highways, and especially Interstate highways. So how does one resolve opposition to taxes and support for additional spending in certain narrow areas? One way to do that is through user fees, such as highway tolls, rather than taxes.
A report issued this week by a conservative think tank, the Wisconsin Policy Research Institute (WPRI), makes the case for gradually phasing in tolls. I applaud WPRI for promoting public debate about an important fiscal issue and for proposing a solution. Because Wisconsin, like other states, faces serious challenges for the financing of the transportation system, I think tolls are an idea worth considering. This blog post looks at a few of the pros and cons of the idea, and why I’m leaning more toward increased gas taxes.
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