Wisconsin Trails in Forecasted Economic Growth

Wisconsin’s economic growth in the months ahead is forecasted to be among the worst in the nation, according to new figures released this week by the Philadelphia Federal Reserve Bank. Wisconsin ranks 42nd in predicted economic growth in the next six months.

The Philadelphia Federal Reserve Bank, which looks at recent trends to project a state’s future growth, estimates a 1.1 percent growth rate for Wisconsin in the next six months. Only eight other states have lower growth projections. As the bar graph below shows, the estimated growth rate nationally is 1.6 percent over the next six months, and for other states in this region it’s between 1.6 percent and 3.0 percent.

The Recovery Act: Still Creating Jobs in Wisconsin

Thousands of Wisconsinites – perhaps tens of thousands – owe their jobs to the Recovery Act. Nationally, the Recovery Act increased the number of people employed by between 200,000 and 1.5 million in the first quarter of 2012, according to a new report by the Congressional Budget Office. If one-fiftieth of that increased employment occurred in Wisconsin, then the Recovery Act increased the number of employed Wisconsinites by between 4,000 and 30,000 in 2012. That’s a significant boost, especially considering the very limited job growth in Wisconsin over the last year.

The Recovery Act (officially known as the American Reinvestment and Recovery Act) was passed in early 2009 with the goal of stimulating the economy, creating jobs and cushioning the worst effects of the recession. The Recovery Act included a temporary mixture of tax cuts, fiscal relief for states, and enhanced support for families affected by the crisis.

Hospital Association Reinforces Concerns about Cost-shifting from BadgerCare Cuts

Original BadgerCare Proposals Would Have Raised Uncompensated Care Costs by At Least $100 Million

In testimony before the Assembly Health Committee on Wednesday, a representative of the Wisconsin Hospital Association (WHA) said the original BadgerCare changes proposed by the Walker Administration would have increased uncompensated care for hospitals by at least $100 million.

Fortunately, the original proposal was not approved by federal officials, and the number of people who are expected to lose their BadgerCare coverage as a result of the upcoming changes has dropped from nearly 65,000 to about 17,000. (See our May 3 summary of the original DHS proposal and the approved changes.)  Nevertheless, the state’s scaled back cost-cutting plan will shift significant costs onto other health care consumers.

Whatever Yardstick You Use, Wisconsin Remains Stuck in Neutral on Jobs

In recent weeks, much has been made of Governor Walker’s rejection of the traditionally used jobs figures provided by the U.S. Bureau of Labor Statistics (BLS), choosing to focus instead on an alternative counting method. A new analysis by the Wisconsin Budget Project, “Stuck in Neutral,” shows that whatever batch of data one relies on, Wisconsin’s economic recovery is lagging the rest of the country. There are not enough jobs being created in the state to keep up with population growth, let alone regain what was lost during the recession.

The issue brief is accompanied by a fact sheet that lays out the different sets of numbers, leaving the interpretation to the reader.

A second issue brief released today by the Wisconsin Budget Project “A Broader Measure of Economic Performance in the States,” looks at a measure of economic growth known as the “coincident index,” updated each month by the Federal Reserve Bank of Philadelphia. The “Philly Fed” uses a broader set of indicators to calculate its index. 

Wisconsin Gets Another Low Ranking for Economic Performance from the Philly Fed

The Federal Reserve Bank of Philadelphia tracks economic indicators for each state on a monthly basis and prepares a map comparing the states’ economic trends over the last three months. Wisconsin is doing a little better than it was late last year, when it had the lowest ranking, but our state only moved up to 40th for its economic performance over the period February through April.

If we use December 2010 as our baseline for analysis, the newly released data indicate that only one other state (Alaska) has experienced slower growth than Wisconsin.  See the Budget Project's new two-page paper for several charts analyzing the "Philly Fed's" data and comparing Wisconsin to the national average and the growth in neighboring states.

The ratings are based on a measure the Philly Fed developed called the Coincident Index, which combines four state-level indicators: non-farm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements. The index for Wisconsin improved by 0.6 percent over the past three months, whereas the national average grew by 0.82 percent.

Congratulations Graduates, and Good Luck with that Crippling Debt

Many students graduating from the University of Wisconsin this week leave campus with potentially crushing levels of student loans.

Nearly three-quarters of in-state students attending Wisconsin’s public universities take out loans, totaling an average of more than $27,000 of debt, according to the most recent figures. The average amount for University of Wisconsin students taking on debt has climbed 35 percent since 2002, even after being adjusted for inflation.

That increase in debt for new UW graduates is caused in part by tuition hikes and decreases in state support for the state’s university system. The state budget passed last year increases in-state tuition for undergraduates by 5.5 percent for two years in a row, and freezes financial aid.

Is it Working For Kids?

“It’s working,” claims Governor Walker about changes he has made to state government.

“It’s not working,” reply his opponents.

What few people are asking is, “Is it working for kids?” The Wisconsin Council on Children and Families is exploring this issue by devoting a series of blog posts to outlining the effects recent changes have had on children and families in Wisconsin.

Several of the posts in WCCF’s new series examine the effects of changes made in the state budget, including:

• Is it Working for K-12 Students?
• Is it Working for Children in Working Class Families?
•  Is it Working for Kids Who Don’t have Private Insurance?

The entire series can be found here.

Tamarine Cornelius

Negative Numbers for Wisconsin Metro Areas in New Jobs Analysis

Madison and Milwaukee Areas Have Second and Third Largest Job Losses Nationally

Recently-released figures from the Bureau of Labor Statistics (BLS) contain some additional worrisome news for Wisconsin – and specifically for our state’s two largest metropolitan areas. The Business Journal analyzed the change in jobs from March 2011 to March 2012 for the nation’s 100 largest metro areas and found that both of the Wisconsin areas on that list are near the very top in terms of job losses.

Their analysis found that the Madison area had the second highest job loss over that 12-month period (-4,600 total non-farm jobs) and the Milwaukee-Waukesha-West Allis area was third largest at -4,300 jobs. Measured in percentage terms, Madison was 98th out of 100 on job creation (-1.34%), and the Milwaukee-Waukesha area was 95th (-0.54%).

800 Years to Reach Jobs Goal?!?

Or Will It Take a Mere 11 Years (Based on the Data the Governor Now Recommends)?

Bad news, Wisconsin.  According to new jobs figures that were released today, Wisconsin lost 5,900 jobs, including 6,200 jobs in the private sector, between March 2012 and April 2012. However, the bad numbers got scant attention in the Dept. of Workforce Development's press release today, which contends that we should be using a different measuring stick.

Governor Walker has pledged to create 250,000 new jobs in the private sector during his first term. In pursuit of that goal, state policymakers have increased taxes for working families and cut taxes for the well off, made changes that will throw thousands of Wisconsin residents off health insurance, and increased university tuition.

Regardless of what measuring stick one uses, those changes haven’t yielded anything close to the kind of positive job growth that Wisconsin is seeking. Using the latest Bureau of Labor Statistics (BLS) data for the period December 2010 through April 2012, employment in Wisconsin’s private sector grew by a paltry 400 jobs. The chart below shows how little progress Wisconsin has made towards Governor Walker’s goal (measured according to the widely used BLS data).

A Reversible Fund Raid

"Wisconsin’s budget is broken due to an overreliance on one-time fixes, illegal transfers, unsustainable federal funding and economic weakness.” – Governor Walker’s Budget Summary, March 2011.

Those don't sound like the words of a Governor who would use money from a one-time mortgage settlement to plug a budget hole. Nevertheless, back in February 2012, Governor Walker used $26 million from a one-time mortgage fraud settlement to address a gap that had opened in Wisconsin’s budget, a gap rooted in lower-than-expected tax revenues.

Now, new, higher, revenue estimates give Governor Walker an opportunity to live up to his ideals about the importance of avoiding fund raids and one-time money to address the deficit.

In February, federal and state officials brokered a $26 billion settlement with big banks and mortgage companies. Wisconsin’s share of that settlement was $140 million, of which $26 million was used to address the budget gap.

If You Can’t Move the Goalposts, Reposition the Football

Column in Forbes Critiques New Approach for Measuring Wisconsin Jobs 

Governor Walker has said innumerable times that his goal is the addition of 250,000 private sector jobs in Wisconsin during his first 4 years in office. Yet, based on the commonly used measure of employment, Wisconsin experienced the highest job losses in the nation over the last 12 months (March 2011 through March 2012).

At this point there’s no way the Governor can scale back his job creation goal. But instead of moving the goalposts, the Walker Administration has announced that they are embarking on a plan the Governor’s chief economist calls “challenging the spot of the ball.”  That’s football jargon for a coach’s decision to throw a challenge flag and ask the referee to review whether the ball was positioned correctly after a play. There’s a significant twist, however, because the Governor’s strategy is to use new rules for assessing where to spot the ball – or more specifically, for deciding how many jobs the state has gained or lost. (For more on “challenging the spot,” see the DOR video of a recent presentation by state economist John Koskinen.)

A commentary in Forbes by Rick Ungar critiques the game plan of changing the rules for assessing the state’s job creation progress, or lack thereof.  It’s interesting reading.

Yes, Virginia, There is Occasionally Positive Budget News

Wisconsin got some very good fiscal news last week. In a May 10th memo to the Governor, Department of Administration (DOA) Secretary Mike Huebsch said that the Department of Revenue (DOR) now estimates that state tax revenue will be $265 million higher in the current biennium than the February estimate by the Legislative Fiscal Bureau (LFB).

Even with the increase, total revenue will be $65.5 million below the amount assumed in the 2011-13 biennial budget bill. Nevertheless, the increase in projected tax revenue and a decrease in projected spending mean that the state is now expected to finish the biennium with a balance of about $154.5 million (which is $89.5 million above the required cushion of $65 million, known as the required “statutory balance”). Those figures assume that the state proceeds with plans to lapse $51 million from agency budgets to the General Fund in the second year of the biennium.

In a departure from the typical practice, the new figures were released by DOA prior to the development of a consensus revenue estimate with the LFB. With the recall election looming, I suspect that the Walker Administration wanted to release the positive fiscal news as quickly as possible, so it bypassed the normal timetable and the usual process of coming to an agreement with the LFB on the new revenue estimates. That decision has caused some of the Governor’s critics to question the objectivity and accuracy of the new estimates.

Where the Jobs Aren't

Remember 1999?

Bill Clinton was president, the world was bracing for Y2K, Star Wars enthusiasts were lining up to watch The Phantom Menace in the movie theaters, and the Dot Com boom was in full swing.

Wisconsin looked different in 1999. There were about half a million fewer people living in the state in 1999 than there are now, including about 200,000 fewer people living in poverty. There were 26,000 fewer full-time equivalent students attending the University of Wisconsin System.

Despite all the differences between 1999 and 2012, there is one similarity: the number of jobs in the public sector in Wisconsin. The number of jobs in local, state, and federal government in Wisconsin has fallen to its lowest levels since – well, since before the first Apple iPod was released.

5 Ways Budget Cuts Risk Widening the Student Achievement Gap

Decades of investment in Wisconsin’s public schools have built a system that we can be proud of. Wisconsin students have the highest graduation rate in the country, the third highest ACT scores, and the highest Advanced Placement success rate of any Midwestern state.

But at the same time, deep disparities exist in the Wisconsin public school system. The state’s achievement gap between poor and non-poor students is larger than the national average. Students in high-poverty districts are one-third as likely to score at the most advanced level in state reading tests as students in low-poverty districts. And black eighth-grade students in Wisconsin read at about the same level as black students in lower-achieving states like Mississippi.

In this most recent budget, Wisconsin turned away from its historic investment in public education. Measured on a dollars per student basis, Wisconsin’s cuts to education were the second largest in the country. The lack of investment in public schools will diminish academic opportunities across the public educational system, but worst-off students will suffer the greatest impact, according to a new report from the University of Wisconsin-Madison.

Here are five ways the budget cuts hurt efforts to make sure that every Wisconsin student has an opportunity to succeed:

Tax Collections on Track

Wisconsin is on track to meet or exceed the revenue forecast for this fiscal year, according to new figures released today by the Wisconsin Department of Revenue. General Fund tax collections from July 2011 through April 2012 were 4.3 percent above collections for the same period in fiscal year 2011.

Back in February 2011, the Legislative Fiscal Bureau projected that 2012 General Fund tax collections would be 2.2 percent higher than in 2011. Given that there are only two more months in the state’s fiscal year, and that the first ten months have outpaced the projection, it’s possible that total tax collections for the year could exceed the forecast. However, as Jon Peacock noted in a blog post about last month’s revenue collections, the monthly figures bounce around a bit, so it’s probably best to wait to count the fiscal chickens until they hatch.

Here are year-to-date revenue collections compared to the same period in 2011:

• Individual income tax, up 4.5 percent (when adjusted to take into account a late posting in withholding due to the last day of the month falling on a weekend or holiday);
• Sales tax, up 4.8 percent;
• Corporate income tax, up 5.4 percent;
• Excise taxes, down 3.6 percent;
• Other taxes, up 9.5 percent;
• Total General Fund taxes, up 4.3 percent.

Tamarine Cornelius

The Fight over Continuing Student Loan Subsidies

Seldom has there been stronger public support for the notion that higher education is a critically important route for achieving the American Dream.  A recent study by the Pew Center on the States reports that Americans believe access to a quality education is the most important way the government can help people get ahead.

Despite that public support, the future of federal subsidies for student loans is at risk, and the student loan interest rate could soon double to 6.8 percent – compounding the problems caused by state-level cuts in funding for higher education and student financial aid. Although both parties in Congress have said they want to maintain the lower interest rate, they remain very far apart on how to find the $6 billion annually to continue the loan subsidies.

A post today by OMB Watch examines the competing proposals for maintaining the subsidies for the Federal Guaranteed Student Loan program. It provides a nice summary of the program’s history, information on the exploding cost of college education, and a discussion of the consequences to students of not continuing the loan subsidies.

A new report from the Center for Postsecondary and Economic Success examines the potential return on investments in higher education.  See their Wisconsin fact sheet.  

Jon Peacock