DHS Report Provides Mixed News on Wisconsin’s Medicaid Finances

Cost-savings Initiatives Appear to Be on Track to Balance Medicaid Budget

A quarterly report released late Friday afternoon by the Department of Health Services (DHS) provides both good and bad news about Wisconsin’s Medicaid budget. At first blush, the numbers look worse than those contained in the last quarterly report, but upon closer inspection the state still seems to be on track to close the Medicaid deficit.

Wisconsin Adding Jobs at Half the National Rate

Are you ready for another twist in the saga of Wisconsin jobs figures?

Governor Walker has placed a great deal of emphasis on job creation in Wisconsin. But month-to-month jobs figures released by the federal Bureau of Labor Statistics (BLS) have shown that job growth in Wisconsin is flat.

In May 2012, the Walker Administration released jobs figures from a different source, called the Quarterly Census of Employment and Wages (QCEW). These figures showed that Wisconsin made modest job gains in 2011. At the time, Department of Workforce Development Secretary Reggie Newson said that the administration had released the figures ahead of schedule because “employers, job creators and job seekers need to know the truth about the actual job picture in Wisconsin so they can make informed decisions.” With the figures available at the time, it was not possible to make comparisons between Wisconsin and other states using the QCEW.

That changed today, when complete figures were released. It turns out that Wisconsin ranked 41st in job growth among the states in 2011, according to the QCEW. The number of jobs in Wisconsin grew by 19,600 in 2011, or 0.7 percent. That was half the rate of the national job growth of 1.4 percent. Wisconsin’s job growth in 2011 was the lowest in the upper Midwest, as shown in the chart below.

DOR Expects Wisconsin to Fall Far Short of Governor’s Job Goal

Last week, with little fanfare, the Department of Revenue (DOR) finally issued a new installment in the series of documents Formerly Known as the Quarterly Economic Outlook Reports. The new report reinforces the conclusion that Wisconsin has experienced lackluster growth over the last 18 months, and regrettably the forecast for the next few years isn’t much better. The anemic economic progress is illustrated by the following numbers from the report:

• From Nov. 2009 through May 2012, Wisconsin recovered only 10.6% of the 172,000 jobs lost in the past recession.
• DOR expects private nonfarm employment to grow by 138,500 jobs from 2010 to 2014, which is less than 55% of the 250,000 private sector jobs that the Governor pledged would be created during his first term.
• The preliminary figures on state Gross Domestic Product (GDP) show real (inflation-adjusted) growth of just 1.1% in Wisconsin in 2011, compared to 1.4% in the Great Lakes region and 1.5% growth nationally (and 4.0% in Wisconsin in 2010).
• DOR expects Wisconsin employment to grow 1.0% in 2012, compared to 1.5% nationally.

New Legislative Council Committee Should Examine Income Tax Loopholes

Despite Alternative Minimum Tax, Two Billionaires Don't Owe State Income Taxes

An interesting article in the Milwaukee Journal Sentinel Sunday examines the state income tax liability of several of the richest Wisconsinites and finds that two of the state’s billionaires paid no state income tax in 2010.

I have no reason to doubt their assertions that they were abiding by state tax laws, but that’s of little consolation. As I noted in that article, the fact that a couple of the richest Wisconsinites have no income tax liability suggests that “policy-makers need to take a much closer look at the loopholes in state tax laws, and particularly in the alternative minimum tax. Highly paid CEOs should be contributing to the public expenditures that make it possible for their corporations to prosper."

I hope that closing tax loopholes will be one of the topics considered by a new Legislative Council committee that holds its first meeting on Tuesday, although the direction of that committee is unclear. A couple of the many options mentioned by the committee’s chair, Rep. Robin Vos, include eliminating the corporate income tax and expanding the reach of the individual income tax so no one is exempt. You can find a few comments by Rep. Robin Vos in a brief Wisconsin Public Radio story about income tax reform on Wisconsin Public Radio.

The Price and Pitfalls of Privatization

Does New Jersey experience offer lessons for Wisconsin?

A column by Paul Krugman in the June 22nd New York Times offers some interesting perspectives on the growing push to privatize public services.  Although the impetus for the column (Prisons, Privatization, Patronage) is a recent series of articles on the effects of privatizing halfway houses in New Jersey, Krugman’s commentary is worth pondering as Wisconsin moves closer to fully privatizing administration of the Wisconsin Works (W-2) program. (See our June 8 blog post.)

Although I don’t think all of the Krugman critique of the New Jersey privatization and “halfway house hell” is relevant for W-2, some of it strikes me as very pertinent – including his argument that privatization often has little to do with cost-savings; instead it may be about deferring or shifting costs. As the column notes:

Nuns on a Bus Challenge Paul Ryan Budget

A group of nuns rolled through Wisconsin yesterday as part of a nine-state bus tour highlighting the damage federal budget cuts could do to working-class communities. In particular, the nuns criticized the budget drafted by U.S. Rep. Paul Ryan (R-WI), which would give sizeable tax cuts to high earners and roll back programs serving vulnerable residents.

Rep. Ryan has defended the budget he drafted for the U.S. House of Representatives as consistent with Catholic principles, saying “Our budget offers a better path consistent with the timeless principles of our nation's founding and, frankly, consistent with how I understand my Catholic faith.”

The nuns see things differently. They offer an alternative, the Faithful Budget, which promotes a “compassionate and comprehensive vision for the future.”

How GOP and Obama Approaches to Bush Tax Cuts Would Affect Wisconsinites

Federal tax cuts enacted in 2001 and 2003 are scheduled to expire at the end of 2012, and lawmakers must decide how much of that tax cutting the nation can afford to continue, and how the extended tax cuts will be distributed.

Competing plans have been offered by President Obama and Congressional Republicans, and both proposals would extend most of the so-called “Bush tax cuts.” Although wealthy taxpayers are the primary beneficiaries of either plan, a new analysis released today by the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ) finds that the GOP plan would give high-income Wisconsinites a much larger share of tax cuts than the President’s proposal, and would add $1 trillion more to the national debt over the next ten years.

The analysis reveals that middle-income and low-income Wisconsinites would pay slightly less in taxes under President Obama’s approach than under the GOP plan, while high-income Wisconsinites would pay far less under the Republican approach. Under President Obama’s plan, the poorest 20 percent of Wisconsin residents would receive an average tax cut of $280 in 2013, while the richest one percent would get an average tax cut of $18,410. Under the Congressional Republicans’ approach, the poorest 20 percent of Wisconsinites would receive an average tax cut of $150 next year, while the richest one percent would receive an average cut of $56,790.

Fiscal Cliff vs Fiscal Slope

Have you heard about the “fiscal cliff”?  This term refers to a number of tax and spending changes that are set to go into effect at the federal level at the end of this year, which when combined have the potential to significantly slow the nation’s economic growth.

The changes slated to go into effect at the end of 2012 include:

• Across-the-board federal spending cuts (also known as the “sequester”) approved in the aftermath of last year’s agreement to raise the debt ceiling;
• Expiration of the Bush tax cuts;
• The expiration of the payroll tax cut, which would increase the amount of payroll taxes workers pay from 4.2 percent of their wages to 6. 2 percent; and
• The end of all federally-funded unemployment benefits.

We should be concerned about these changes – but some have pointed out that the economy will not be devastated if the changes do go into effect for a short period.  In that way, the end of the year represents less of a “fiscal cliff” than a “fiscal slope.”  Jared Bernstein of the Center on Budget and Policy Priorities describes the difference between the terms this way: “Go over a cliff, and you're pretty much toast, like at the end of Thelma and Louise. Start down a slope and if you turn around soon enough, you don't have to go down too far.”

Two WI Health Care Organizations Awarded about $7 Million to Pilot Cost-saving Initiatives

The federal health care reform law (aka the Affordable Care Act) includes many components that are designed to help improve the efficiency of the health care system and reduce costs. Among those parts of the law is funding for grants to test innovative ways of lowering costs and improving care.

Last week the Center for Medicare and Medicaid Innovation awarded a total of $772 million of grants to 81 organizations across the country, including two grants for 3-year pilot programs in Wisconsin:

• Children's Hospital of Wisconsin is receiving a $2.8 million grant to help families in its 45,000 member Medicaid HMO find health homes and reduce avoidable hospital visits. 
• The Pharmacy Society of Wisconsin will receive a grant of $4.1 million grant to expand across the whole state to a pilot program now in Dane County that pays pharmacists to advise patients about their medications.

Revenue Growth Continues to Look Strong Compared to 2010-11

The Department of Revenue issued a new monthly report on tax collections this week, and the numbers look pretty good.  Although revenue growth slowed a bit in May, to 3.4% over the comparable month of 2011, tax collections for the first 11 months of the fiscal year are still up by 4.2%, which is good news.

Recent Pattern of Sluggish Job Growth in Wisconsin Continues

The Bureau of Labor Statistics released new jobs figures for Wisconsin today, showing a continuation of the recent pattern of sluggish job growth.

Between April and May 2012, the Wisconsin economy added just 2,600 jobs, 900 in the private sector and the rest in government. The unemployment rate increased from 6.7 percent to 6.8 percent. (This CNN Money article gives an explanation of how the unemployment rate can increase even when the number of jobs goes up.)

Wisconsin is far off the pace needed to create 250,000 new private sector jobs in four years, as pledged by Governor Walker. Since December 2010, Wisconsin has added just 3,200 private sector jobs, as shown in the chart below. In fact, if Wisconsin added private sector jobs at the same rate that it has since December 2010, it would take us over 100 years to create 250,000 new private sector jobs, according to the BLS data.

Phase-out of Federal Unemployment Benefits Hit Wisconsin

Thousands of Wisconsin workers who have been unemployed for the past year will begin losing their unemployment insurance benefits later this month because of a change approved by Congress earlier this year, according to a new policy brief issued by the Wisconsin Budget Project.

Those jobless workers, who have been actively seeking employment for 60 weeks, will lose 13 weeks of eligibility for federal unemployment benefits. Those benefits average about $250 per week in Wisconsin.

Losing about $1,000 a month will be a blow for the thousands of Wisconsin workers struggling to find jobs and feed their families. It will also be a blow to the state economy, since those families will have $1,000 less to spend at local businesses. With the state economy still stuck in neutral, it is a poor time to take money out of circulation.

Is Wisconsin Getting Its Money’s Worth on Economic Development?

The State of Wisconsin spent nearly a quarter of a billion dollars on economic development over the last biennium, according to a new report from the Legislative Audit Bureau. Unfortunately, state agencies administering the economic development programs did not track or report complete information about program results. The result is that it is difficult to track the state’s return on investment for some economic development programs.

Economic development is big money in Wisconsin. In the 2009-11 biennium, Wisconsin spent $227 million on economic development, including $91 million from federal sources. To put this amount in context, it’s about 60 percent of what the state spent on the entire technical college system over those two years. The Milwaukee Journal Sentinel’s article on the report can be read here.

Should Wisconsin Privatize W-2 Administration?

WCCF Urges Governor to Slow Down Plans that Would End County Role

Actually, the question of whether Wisconsin should privatize W-2 administration is a bit misleading. The more precisely worded question is whether the state should completely privatize it.  Since the inception of Wisconsin Works, counties have had the option of whether to administer it themselves or allow W-2 to be managed in their area by a private entity.  However, that may soon change because the plan developed by the Department of Children and Families (DCF) for  administering W-2 regionally would make it virtually impossible for any county or consortium of counties to administer the program in their area.

Mixed News for Wisconsin in New Economic Data

Yesterday the U.S. Bureau of Economic Analysis (BEA) released its estimate of the state-by-state change in 2011 in real gross domestic product (GDP), which measures economic growth adjusted for inflation.  The new numbers aren’t exactly great news for Wisconsin, but they’re more encouraging than the national labor data for our state.

The BEA statistics show that Wisconsin’s real GDP grew by 1.1% last year, compared to a national average of 1.5%. Measured on a per capita basis, our state’s real GDP was 7.7% below the national average.  On the more positive side, our state’s GDP growth ranked in the middle, at 26th and our per capita GDP grew at a slightly faster rate that the national average (0.78% for WI in 2011 vs. 0.73% nationally).

Spring Swoon Drops U.S. Jobs Growth to the Rate Walker Extols

The new U.S. jobs numbers that are causing so much angst provide an interesting and important perspective on the debate about jobs growth in Wisconsin. Analyzing the figures that Governor Walker says we should be using, it turns out that the growth rate Wisconsin achieved last year (when most other states were doing considerably better) is the same as the percentage increase nationally during the “spring swoon.”

In other words, let’s put aside the arguments about which set of Wisconsin numbers to use, and assume the validity of the 2011 jobs numbers that the Governor’s ads point to with such pride. If we compare those figures with the latest national numbers during the worrisome economic deceleration, here’s what we find:

• The national economy added an average of just 96,000 jobs per month from March through May, compared to 267,000 per month in the first two months of 2012, and 153,000 per month in 2011.
• The increase of 96,000 per month amounts to an average monthly increase of 0.07 percent (i.e., less than one-tenth of one percent), and it’s barely enough to offset population growth.
• The jobs survey now endorsed by the Walker Administration indicates that Wisconsin gained 23,608 jobs in 2011, an increase of 0.86 percent for the year.
• That was an average 1,967 jobs per month, which amounts to a growth rate of 0.07 percent per month – almost exactly the same as the national rate that is causing so much concern.