State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.
Wisconsin has a moving problem. Too many are voting with their feet.
Our state’s high level of taxation is forcing too many residents to pack up and leave. During November 2005, the Wisconsin Taxpayer Alliance issued a very troubling report entitled, "Moving In, Moving on: Migration in Wisconsin." During the five years prior to the 2000 census, almost 669,000 people either moved to or out of Wisconsin. However, the net in-migration into Wisconsin was a meager 7,282.
Individuals with college or advanced degrees were more likely to leave, while those with less education tended to come. Individuals with household incomes above $75,000 left Wisconsin. Those with incomes of $200,000 or more had the highest rates of leaving.
The huge exodus of wealthy Wisconsinites leaving the state caused a loss of an estimated $4.72 billion in net worth and a loss of $455 million in income over the five years of this study. That means far fewer in-state bank deposits, less stock in Wisconsin firms, less investment capital for in-state ventures, and less money given to local charities.
Arthur Laffer, president of Laffer Associates and Stephen Moore, senior economics writer for The Wall Street Journal editorial board confirmed that high taxing and spending have had a negative impact on Wisconsin’s ability to compete and cause many people to relocate elsewhere.
Laffer and Moore write in the Wall Street Journal, “Five of the states near the bottom of our competitiveness ratings -- Illinois, Maryland, Michigan, New Jersey and Wisconsin -- have enacted major tax increases.” Laffer and Moore say the record movement of citizens across America has little to do with the weather. They say the states with the most dynamic and desirable economies are generally the states with the lowest tax, spending and regulatory burdens. These states win the battle for the prized commodity of human capital. The big losers are high taxing and spending states in the Midwest and Northeast.
New evidence suggests the disturbing pattern continues.
The Woodrow Wilson School of Public and International Affairs at Princeton University released a study during September 2008 examining migration trends in New Jersey. The authors compared New Jersey to states that tend to attract low‐income individuals, while seeing a relative outflow (or much smaller inflow) of wealthy individuals. The study said Wisconsin is a good example, being one of the five states in the country with the most negative correlation between income and net migration. The list includes Wisconsin, Arizona, Delaware, North Dakota and Arkansas.
The study says the following about Wisconsin:
“At low income levels, there is strong net in-migration into Wisconsin; however, at higher income levels, in‐migration is small or negative. Hence, one can say that Wisconsin is more attractive to low‐income individuals than high‐income earners.”
Authors concluded that in New Jersey, “poor people leave, but rich people do not.” In Wisconsin, “on average, poor people move in, but rich people do not.”
Why is Wisconsin so enticing to so many poor? University of Wisconsin-Madison economics professor provided an answer in his presentation to a Federal Reserve Bank of Minneapolis conference on the Midwest economy during June 2008. Kennan displayed graphs showing Wisconsin dishes out the highest welfare benefits in the Midwest. You thought we ended welfare as we know it? Time limits have been placed on benefits and there are more stringent work provisions. But the size of benefits remains generous.
Factor in other benefits like child care, BadgerCare, the earned income tax credit, and low income housing, and the incentives for low-income residents to flock to Wisconsin are quite evident. The term, “welfare magnet” may have disappeared for some time in Wisconsin, but this new data seems to suggest there could be an entirely new welfare migration taking place.
This migration is clearly putting a strain on our finances. Just how much it is costing in taxes is unclear but my guess is that it is substantial and needs further study.
Meanwhile, our wealthiest leave Wisconsin, taking with them their tax revenues, spending, savings, investments, and charitable contributions. To stop people from voting with their feet in Wisconsin, we must stop the hemorrhaging of taxing and spending.
Amidst the various newspaper sale ads, television offerings, and never-ending assortment of trimmings on the table, please remember the true, and yes, religious significance of Thanksgiving. As we reflect on our own blessings after a year about war, terrorism, natural disasters, and negative campaigning, those blessings certainly seem very clear. Pause and appreciate what we have: family, friends, individual liberties and freedom, and for those truly fortunate, rewarding employment and fine health. The most joyous season we are about to enter should be a reminder to all not to take any of what we enjoy each and every day for granted.
While we take into account what we truly are thankful for, we should take time to also hope that those not as blessed may find whatever it takes to make their lives better and happier. Far too many in our country and abroad have suffered great hardships this past year. They should not be forgotten. They need to be remembered in our thoughts and prayers.
Watch TV. Enjoy all the sports. Eat and eat some more. But carve out some time to gather as a family, ponder your many blessings, and give thanks, for that is the true meaning of this wonderful holiday.
Last week, Governor Doyle made a grim announcement that resulted in this headline on the Milwaukee Journal Sentinel’s website:
State deficit forecast rises to $5.4 billion by mid-2011
Stop the presses!
Todd Berry, president of the nonpartisan, non-profit Wisconsin Taxpayers Alliance believes the governor’s math is off, way off.
On one of its blogs, the Milwaukee Journal Sentinel reports, “(Berry) says Gov. Jim Doyle's new estimate of a $5.4-bllion budget deficit between now and mid-2011 is ‘unreal’ and based on ‘double counting.’ In an interview, Berry said the $5.4-billion number assumes that state agencies will get an additional $2.8 billion in spending they requested for the next two years -- a ‘fictitious’ assumption.
And, Berry said, Doyle's scenario also assumes that the so-called ‘structural balance’ -- the long-term imbalance between spending commitments and tax collections - remains at $800 million per year for each of the next two years. That's about $1.6 billion of Doyle's $5.4-billion deficit. Berry said.”
Berry then spoke to the Eau Claire Area Chamber of Commerce, as reported by the Eau Claire Leader-Telegram that quoted Berry saying, "A little bit of fear is not necessarily a bad thing if you're trying to run the show. (The $5.4 billion figure) presumes spending requests will be OK'd next year. And it's difficult to predict revenue." The newspaper also reported, “Berry said a more accurate number would be ‘in the neighborhood’ of $2 billion, figuring there will be some spending cuts and tax increases.”
So what is the governor up to? I have to wonder if the governor isn’t purposely sounding like Chicken Little, painting the dire picture of the worst budget crisis in Wisconsin history, whipping state residents into a collective depression of epic proportions.
Why the bearer of such bad news? Think about it. The governor overstates the budget debacle by a country mile, allowing him to offer dramatic, headline-grabbing spending cuts as solutions. If a Republican posed such measures, the press would label them, “draconian.” Editorial boards will rave, though, about Doyle, calling the governor and his moves, “courageous.” Undoubtedly, the governor and legislative Democrats will also salivate at the opportunity to seek new revenues, i.e., raise taxes.
At the end of the day, when the dust clears and the true budget deficit is actually much smaller, the governor and Democrat lawmakers will claim victory and come off as fiscal conservative heroes. For Governor Doyle, creating the illusion that he’s fiscally conservative is critical because he’s up for possible re-election in two years. If the Democrat-controlled Legislature hammers home a heavily liberal agenda as expected, the governor needs something to separate himself and run on in 2010. Riding on a white horse as a fiscal conservative could be his ticket.
I trust Todd Berry and the outstanding work done by the Wisconsin Taxpayers Alliance. Undoubtedly, the state’s fiscal matters are in need of repair, but it seems not to the extent the governor, who has drawn up a script that crowns him the hero who saves the day, would have us believe.
Governor Doyle has announced the state budget deficit is the highest in Wisconsin history: $5.4 billion. Now the question is how the governor and the Democrat-controlled Legislature will propose the state get out of this fiscal mess. Their early response is not very promising.
Democrats, as reported by the Milwaukee Journal Sentinel, are stunned by the enormity of the deficit. If they had paid attention during the past several years when caution was urged about taxing and spending beyond our means, they wouldn’t be suffering sticker shock. Tax and spenders ignored the warnings and kept using the state’s credit card over and over again. The bill is now due and it’s a whopper.
Some legislative Democrats have been quoted saying the state needs to find new ways to increase revenues. That translated, of course, means tax hikes.
Governor Doyle had instructed his department heads before the latest deficit news to make modest cuts in their agencies. They reacted that they couldn’t come up with the cuts. Now the governor has made another request, asking for even deeper cuts. What will their response be this time if their earlier reaction was that certain cuts were impossible?
The governor has suggested he may resurrect two measures he tried unsuccessfully to include in the last state budget: a hospital tax and a tax on oil companies. The state Assembly, at that time controlled by Republicans, was able to block the inclusion of the taxes in the budget. Democrats control both houses of the Legislature.
A hospital tax will merely drive up health care costs. The tax will ultimately be passed on to patients. In essence, it is a tax on the sick that will make health care more expensive and less accessible in Wisconsin.
The last state budget proposed by Governor Doyle included what he called an “assessment on oil companies.” That is just another way of calling the plan what it really is: It’s a tax, but a tax that won’t be paid by oil companies. Those paying the freight will be motorists who will see the tax passed onto the price paid at the pump.
The non-partisan Wisconsin Policy Research Institute (WPRI) reported during 2007 that the Governor’s tax would have amounted to a five-cent increase in our state’s gas tax, already one of the highest gas taxes in the country, and it would have been paid directly by consumers. In its report entitled, The Truth Behind Wisconsin's Oil Company Tax: Why You'll Pay More at the Pump, the WPRI wrote:
“The oil company gross receipts tax and its no-pass-through provision as proposed by Governor Doyle is the latest in a series of questionable fiscal maneuvers. But no one should be fooled; the proposal is a gas tax increase of five cents per gallon. The legislative consideration of the Governor's transportation budget must be based on this premise. Any thought of acquiescing to the Governor's proposed tax must be considered an endorsement of a five-cent per gallon increase in the tax on gasoline.”
The WPRI correctly came to the conclusion that oil companies will do less business in Wisconsin and do more business in states that don’t have the tax Wisconsin would have. The result could be a damaging reduction in oil supplies to Wisconsin leading to fuel shortages, not to mention higher prices.
Here's the complete WPRI study.
The Governor’s attempts to bar oil companies from passing on the increased cost to consumers by creating criminal penalties including jail time for oil company executives if their company passed the tax on would surely be fought in court. There’s not a guarantee the Governor’s punitive efforts against oil companies would meet Constitutional muster. The non-partisan Wisconsin Legislative Council has warned that a proposed tax on oil companies is probably unconstitutional.
The public understands how problematic such a proposal would be and has rejected the idea.
I have said it many times in the past and will continue to say it. The current budget crisis calls for dramatic decisions that will be difficult, but necessary. Wisconsin must refrain from raising taxes to try to correct this major problem. Raising taxes will only make a drastic situation even worse.
I congratulate Marsha Grutzmacher and her students at St. James School in Mukwonago for winning the Midwest Regional Land category in the Lexus Eco Challenge. This marks the first time a Wisconsin school has won in any division.
Mrs. Grutzmacher and her students entered the second annual Lexus Eco Challenge, a national contest that encourages middle and high school students to develop and implement environmental programs that have a positive impact on their communities. The Lexus Eco Challenge was established to teach young people about the environment and to inspire them to create a better world.
St. James in Mukwonago has been invited to participate in the Final Challenge and a chance to win a grand prize of $50,000 in grants and scholarships. Should the school accept the Final Challenge, I wish St. James the best of luck in the competition during February and March of 2009.
Again, congratulations to Marsha Grutzmacher and all of her St. James students on winning the Midwest Regional Land Category in the Lexus Eco Challenge. I am very proud to have this award winning group in my Senate district.