|Wisconsin State AFL-CIO|
Losses to Working Families Under Governor Walker
WISCONSIN STATE AFL-CIO
Losses to Working Families Under Governor Walker
This summary covers some of the major losses for middle income and working class families during the administration of Governor Scott Walker. It details how the public policies promoted by the Walker administration represent a radical departure from Wisconsin values and traditions.
Most of the losses were included in the 2011-2013 Biennial State Budget offered by Governor Walker and supported by the Republican-controlled legislature. The State Budget represents much more than cold statistics—it is an expression of priorities and values. It reveals what matters most to an administration and it represents policy choices that have consequences for the people of Wisconsin. In addition to policies in the State Budget, some of the losses are the result of separate legislation signed into law, or the result of executive decisions made by Governor Walker. The source of the information is documented at the end of the report.
Loss of Fundamental Freedoms
Loss of the Freedom to Bargain Collectively. As of June 29, 2011, it is illegal for approximately 175,000 Wisconsin public employees to engage in real collective bargaining with their employers on wages, benefits and working conditions.1 This action destroyed over 50 years of solid relationships built between public employees and the state, local governments and school districts for which they work. For private sector employees, the democratic right to bargain is guaranteed under federal law since 1935, but public employees rely on state law to protect their freedom of association which is an essential principle of American democracy. This freedom is now denied in Wisconsin.
Barriers to Voting.2 Wisconsin has enacted the most restrictive voter eligibility law in the country. New barriers include: requiring an official photo ID, making voter registration and absentee voting more complicated, and shortening by half the period allowed for early voting, among other obstacles. These barriers will essentially deny the right to vote for many seniors, people with disabilities, students, people of color and lower-income voters, especially because studies indicate they are much less likely to have the official photo ID required. The new barriers to this core democratic right could disenfranchise approximately 200,000 voters. Since the groups mentioned above tend to vote Democratic in higher percentages, the voting law changes will benefit Republican candidates. In response to lawsuits filed against the photo ID requirements, two federal judges have issued separate injunctions that prohibit enforcement. Judge Richard Niess wrote: “A government that undermines the very foundation of its existence—the people’s inherent, pre-constitutional right to vote—imperils its legitimacy as a government by the people, for the people, and especially of the people. It sows the seeds for its own demise as a democratic institution.”
Loss of Family-Sustaining Jobs
Job Statistics. The final report from the federal Bureau of Labor Statistics for 2011 paints a bleak jobs picture in Wisconsin. Our state lost around 12,500 jobs during Governor Walker’s first year in office—the worst of any state in the nation. This stands in stark contrast to consistent job growth at the national level during the same period. According to the Center on Wisconsin Strategy, our state has an enormous jobs deficit of 220,400. This is the number of jobs needed to match the jobs which existed in December 2007 (prior to the economic crisis caused by Wall Street), plus the additional employment needed for growth in population.3 The Federal Reserve Bank of Philadelphia issues an economic index based on non-farm employment, average hours worked in manufacturing, the unemployment rate, and wages and salaries. As of January 2012, this index increased in 48 states, but not Wisconsin. 4 Our state may begin to see some job creation in spite of Governor Walker’s policies, given the signs of economic recovery in every other state in the nation.
Rejection of $810 Million in Federal Rail Funds. Immediately after he took office, Governor Walker rejected $810 million in federal funds to construct a passenger rail system between Milwaukee and Madison, which would connect to a larger Midwest rail network. The Wisconsin DOT estimated that the following number of construction and engineering workers would be employed to build the rail network: (2011) 2,792 jobs; (2012) 3,794 jobs; and (2013) 1,231 jobs.5 Talgo Inc. had established a manufacturing plant in Milwaukee specifically to produce passenger rail cars for Wisconsin, as well as other states. As a result of the Governor’s decision, Talgo announced that it would shut down its Milwaukee train manufacturing operations in 2012, leaving only a maintenance facility. However, as of March 20, Governor Walker joined with Republican legislators to halt planning and funding for the maintenance facility as well.6 All of this represents a substantial loss of jobs in the construction and operation of the rail network—along with the loss of economic development and jobs that would have been created along such a rail line, based on experience in other states.
Private Sector Jobs Lost from Attack on Unions and Cuts to State Budget. The negative effect on private sector jobs from Governor Walker’s policies is often overlooked. The Institute for Wisconsin’s Future projects a loss of $700 million to local economies and businesses from the ripple effects of reducing the take-home pay of public employees.7 The same study indicates that in just a one-year period, the following full-time job loss in the private sector is projected: about 5,400 jobs from budget cuts to state and local services; about 1,200 jobs from the cuts directed at individuals; about 6,900 jobs from the cuts in public employee compensation; and about 4,700 jobs from the various forms of federal aid rejected by the Governor.
Eliminating Support for Jobs Related to Energy Conservation. The Green to Gold Fund was eliminated, which offered $100 million in lower cost state loans to manufacturers to retool and expand production related to clean energy. It required specific wage standards as a condition of the loan to help create family-sustaining paying jobs. The Office of Energy Independence was abolished as well. One of its directives was to “become a national leader in groundbreaking research that will make alternative energy more affordable and create new, good-paying jobs in Wisconsin.” The goal of these initiatives was both to save money and reduce Wisconsin’s reliance on foreign oil by generating 25% of its electric power and transportation fuels from renewable resources by 2025. But a new national report by the American Council for an Energy-Efficient Economy states that Wisconsin is losing ground on energy efficiency. In a comparison among 12 states in our region, commercial customers in Wisconsin have the highest energy costs per kilowatt-hour, and energy costs for residential customers are the second highest.8 The report also states that Wisconsin energy costs are above the national average.
Apprenticeship Opportunities Limited. Former Governor Doyle signed Executive Order #108 which required the employment of more young apprentices on state-funded construction projects. This was to encourage the skill training of future workers in the building and construction trades. Enforcement of the Order was suspended by Governor Walker.9
Governor Supports Unfair International Trade Agreements That Send More Jobs Overseas. Governor Walker signed a letter to Congress from various governors urging approval of the trade agreements between the U.S. and Colombia, Panama and South Korea.10 The letter also urged Congress to restore fast-track authority for all future agreements, which prohibits amendments such as those to protect labor rights. The agreements with Colombia and South Korea are projected to eliminate or displace another 214,000 U.S. jobs.11 (In addition to concerns about job loss, 51 union activists were murdered in Colombia in 2010.12) The U.S. Labor Department documents that Wisconsin lost 82,000 net manufacturing jobs due to the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO).13 The labor movement supports global trade but the rules of that trade are negotiated. Trade agreements should be balanced and protect labor standards, not promote only the interests of multi-national corporations.
Loss of Employment Protections & Benefits
New Waiting Period for Unemployment Insurance. As of January 1, 2012, there is a one-week waiting period before an unemployed worker is eligible for unemployment benefits.14 According to the Legislative Fiscal Bureau, workers are expected to lose approximately $41 million to $56 million in benefits due to the waiting period. Wisconsin experienced the most job loss of any state in 2011, yet unemployment benefits are made more difficult to access.
Child Labor Exploitation. Wisconsin had a tradition of strong child labor laws to protect minors from abuse by employers, and prevent work schedules from interfering with a good education. These laws have been weakened by eliminating most of the protective limits on the hours, number of days per week, and times of day that employers can schedule minor 16 or over to work (except when they are in school), essentially treating them no differently than adults. The time that employers can schedule minors under 16 to work are expanded as well.15
Denying Workers Paid Sick Days. It is now illegal for a local government to pass an ordinance that requires private sector employers in its jurisdiction to provide better leave benefits than the state Family & Medical Leave Act.16 Though this prohibition applies to all communities, it is in reaction to a City of Milwaukee sick leave ordinance which required employers to provide a certain number of paid sick days. The ordinance was approved by 69% of voters in a 2008 referendum, but it is now null and void. The state Family and Medical Leave Act does not require any paid sick days.
Transfer of More Wealth to the 1%
Governor Walker insisted the state was broke and justified denying public employees their fundamental freedom to collectively bargain in order to address the deficit. It is now clear that the deficit was exaggerated for political purposes, because massive new tax breaks for corporations and wealthy investors passed since January 2011 will cause an additional loss of nearly $2.4 billion in revenue to state government over the next 10 years.17 These new tax breaks were enacted despite the fact that two corporate-funded studies show: (1) that businesses in Wisconsin already pay less in taxes (income, property and sales taxes) than the national average; and (2) Wisconsin has the 4th lowest effective tax rate (taxes actually paid) in the country for new business investment.18 The following are some examples of new tax breaks for wealthy investors and corporations:
Re-opening a Corporate Tax Loophole. The Las Vegas Loophole was closed by former Governor Doyle by changing the way the corporate income tax is calculated. A system of “combined reporting” prevents multi-state firms from hiding profits in subsidiaries in states with no corporate income tax, like Nevada. Governor Walker modified combined reporting to partially reopen a loophole for corporations to use pre-2009 losses to offset profits for 20 years. This will cost taxpayers $46.4 million in fiscal years 2011-13 alone. This new corporate tax loophole does not require that a company create or retain a single job in order to qualify. The Department of Revenue is also prohibited from challenging certain corporate tax avoidance strategies.
Breaks for Rich Investors. There is a new exclusion from the income tax for capital gains reinvested in Wisconsin businesses within 180 days. (Capital gains are already taxed at a special lower rate than income earned through work. Most capital gains tax breaks benefit those with $200,000 or more in income.) This will cost taxpayers $36.3 million in fiscal years 2011-13 alone. Though this is an investment in Wisconsin firms, the tax break does not actually require that a company or investor create or retain even one job in order to qualify.
Still another new capital gains tax break is created for the rich who invest in Wisconsin-based businesses and hold those investments for at least five years, which will cost taxpayers $79 million in annual loss to the state’s treasury when it is fully phased in after 2017. This break does not require any job to be created or retained.
Manufacturer & Agribusiness Income Tax Phased Out. A new production activities tax credit is created that will essentially wipe out the corporate income tax on manufacturing and agribusiness in Wisconsin when it is fully phased in. It represents a loss to taxpayers of $359.7 million over the years 2012-2017 and will cost $128.7 million each year after that. This massive give-away of taxpayer funds to corporations does not require that even one job be created or retained.
Tax Break for Junk Mail. A new sales and use tax exemption for advertising and promotional direct mail is created, which will be a loss to taxpayers of $500,000 per year
Earned Income Tax Credit. While the rich get still more breaks, taxes are increased on 145,000 low-wage workers with children by cutting $55.6 million from the Earned Income Tax Credit.19 The EITC is an anti-poverty program that was originally created with bipartisan support because it rewards work, supplements a minimum wage that is inadequate for survival and helps families stay off public assistance.
Homestead Tax Credit. Thousands of seniors will pay higher property taxes because the annual adjustment of the Homestead Tax Credit based on inflation is repealed. 20 This reduces the tax credit by $13.6 million in just the first two years. Nearly a third of people receiving this credit are at least 66 years old, and more than half of all recipients have less than $15,000 per year in income. More than 75,000 older Wisconsinites rely on the Homestead Tax Credit to help them afford to stay in their homes. This credit was pioneered in Wisconsin in 1964 to offset the cost of property taxes for modest-income residents, particularly the elderly and renters. Seniors—particularly those living solely on Social Security—will suffer the most from this cut.
Loss of Quality Public Education
Extreme Cuts in Funding of Public Schools.21 Total revenue for Wisconsin’s public schools is cut by $1.6 billion over two years. This is the largest loss of K-12 funding in Wisconsin’s history and one of the deepest cuts per student in the nation. The loss comes from the combination of a $794 million cut in direct state aid, plus the strict controls on property tax revenue that can be raised by local communities to fund their schools. As a result, about 9 in 10 Wisconsin school districts experienced a loss in staff. Some 59% of districts increased class sizes and 71 percent of school districts reported cutting pupil services in at least one area. The harm to public education caused by these massive funding cuts will only increase over time.
More Taxpayer Funding of Private Schools. At the same time that public schools are starved for resources, the private school voucher program is given a blank check from taxpayers to subsidize an unlimited number of students who live in the City of Milwaukee. It is also expanded to Racine.22 Taxpayers pay $6,442 per voucher for a child to attend a private school, including religious schools. A family of four can earn up to 300% of the poverty level ($67,050) and still receive taxpayer-funded vouchers. Wisconsin taxpayers have already spent $1.14 billion to fund vouchers covering fiscal years 1990-91 to 2010-11.23 Despite this 20-year experiment, national studies show “no clear academic benefit for voucher users” over the public school system. A specific study based on Milwaukee found that voucher students overall did not score higher than Milwaukee Public School students in either reading or math. 24
Cut in Aid for Wisconsin Technical College System. Technical colleges are facing higher enrollment at the same time state aid is being cut. The 2011-13 State Budget cut $71.6 million (a deep 30% cut) in funding for Wisconsin’s technical colleges at a time when this vital and respected workforce training system serves 400,000 students and is essential to any economic recovery. The technical college levy was also frozen, which denies tech colleges the flexibility they need to serve growing demand. Wisconsin employers are warning about a lack of skilled workers for the technologically sophisticated manufacturing jobs that are currently available.25 Technical education budget cuts of this magnitude will only make the skill shortage worse and drive more manufacturers out of the state to find the labor they need.
UW System Cut. State aid to the University of Wisconsin System is cut by $250 million and tuition increases of 5.5% in each of two years are authorized.26 Based on this increase, undergraduate tuition and fees at UW-Madison are $9,672 for Wisconsin residents in 2011-2012 and $25,421 for non-residents. This does not include books, lodging and other costs. The current level of financial aid is frozen. Students from middle class and working class families are being squeezed out of higher education. The state once paid for two-thirds of educating a student in our publicly-supported UW System; now students pay two-thirds of the expense.27 They will need more help from their already financially-stressed parents, and will incur even more debt. The cuts to the UW System are some of the largest in the nation for higher education—and an additional $46 million cut was to be implemented in 2012.28
Access to Education. The Wisconsin Covenant Program, created under Governor Doyle, is phased out as of September 2011.29 This program allowed young people who maintained at least a “B” average in high school and took college prep courses to apply for grants ranging from $250 to $2,500 per semester in financial assistance for higher education. More than 71,000 students had been inspired to sign up.
In addition, the children of undocumented immigrants had been allowed to pay the resident tuition rate to attend the UW System or a technical college—if they were graduates of a Wisconsin high school, lived in the state for at least three years, and proved they applied for a visa. This right did not cost taxpayers a dime, but it is repealed. These students must pay non-resident tuition which is significantly higher.30 This will deny deserving youth access to a technical college or university education—a mean-spirited policy change with no savings for the state.
Funds Cut to Communities. Local communities will feel the effects of $76.8 million in state aid cuts to the Shared Revenue Program.31 Since 1911, Wisconsin has made it a priority to share with local communities a portion of the taxes collected by the state. This helps local governments provide quality community services while holding down property taxes. Cuts in Shared Revenue will cascade into cuts in local public services.
Regional Transit Authorities. All of the newly-created Regional Transit Authorities (Dane County RTA, Southeastern Wisconsin RTA, Chippewa Valley RTA and Chequamegon Bay RTA) are repealed. 32 They were authorized under the Doyle administration to modernize Wisconsin’s transit systems.
Transportation Aid. Local governments have lost millions in general transportation aid. This state aid is vital for communities to help maintain and repair local streets and roads, absorb rising fuel costs and cover snow removal. According to the Legislative Fiscal Bureau, the actual effect is a reduction in state aid to local governments of $29.4 million in each calendar year of 2011 and 2012.33 Aid for mass transit systems in communities is also cut by $9.6 million statewide.34
Recycling Aid. State aid for popular recycling programs run by local communities was cut $24.2 million over two years.35 These constructive programs not only conserve resources and protect the environment, but they save communities money by reducing costs for landfill waste disposal.
BadgerCare & Medicaid.36 Some 775,000 Wisconsinites rely on BadgerCare for their health coverage. Nearly two-thirds of the Medicaid budget covers health care for the elderly and disabled. Republican legislators gave the Walker administration unprecedented authority to cut millions of dollars from these programs, with little opportunity for public involvement. A final decision on the depth of cuts is pending at this time. Due to pressure from the federal government, the Walker administration has dropped proposals that would have denied about 26,000 children coverage under BadgerCare. Yet, the revised state plans would result in more than 22,000 people losing their coverage, and at least 305,000 more would pay higher premiums or significantly increased co-pays.
Family Care.37 The Walker administration capped enrollment in the popular Family Care program. This program serves about 43,400 elderly and disabled people in over 50 counties who receive long-term care in their homes rather than in institutions. Approximately 6,700 individuals were on a waiting list as of November 2011. The Obama administration directed Governor Walker to remove the cap on enrollment since Family Care receives about 60% of its funding from the federal government, and the lid on participation conflicted with the terms of the last federal waiver. Legislation repealing the enrollment cap was signed into law in March, but it doesn’t provide any additional funding. The state Department of Health Services plans to make cuts of more than $71 million in the state share of long-term care spending in order to offset the cost of removing the cap.
Women’s Health Care. State aid to women’s healthcare centers run by Planned Parenthood has been effectively eliminated.38 Over 12,000 uninsured women in small communities across the state receive their preventive health care from these centers, including cancer screenings, birth control and treatment for sexually-transmitted diseases.
Federal Health Care Funds Refused. The Walker administration announced that it will reject a $38 million federal grant to help create a “health insurance exchange” in Wisconsin.39 This is a step that must be taken by the state to implement the federal Affordable Care Act and give consumers more affordable health care options. The Governor actually suspended all state planning for the Affordable Care Act as of December 2011.
Loss of Citizen Access to the Courts
Victims Denied Their Day in Court. People who are seriously injured by a defective product or corporate disregard for safety will find it much more difficult to get beyond the courthouse steps. Changes have been made in the liability laws (called tort reform) that will protect business interests over victims: (1) Nursing homes and health care facilities can deny families certain reports about the neglect and abuse of patients and residents so the documents cannot be used in court. (2) The amount of damages that a jury can award to punish a corporation for intentionally disregarding the rights of a person is capped at one of the lowest amounts in the country. (3) Victims who are severely injured by defective products are allowed to sue the seller of the product only if they can prove that the manufacturer cannot be found—a complicated procedure given global production. (4) Corporations are presumed not liable for products that cause injury if the company followed current regulations, even if their own research indicated a serious problem, or current regulations are far out of date. (5) Those harmed by unlawful acts will find it more difficult to obtain legal counsel due to new limits placed on court-awarded attorney fees.
These are just five examples of numerous new limits to corporate liability.40 Governor Walker received a special award from the U.S. Chamber of Commerce for his sweeping tort reform success.41 The Chamber has bankrolled a nationwide effort to limit the right of Americans to a jury trial and limit the liability of corporations for harm done to workers and consumers. 42
Loss of Honest, Clean and Open Government
Integrity of Civil Service System Eroded. Wisconsin’s landmark civil service system was one of the first in country. It was created in 1905 in response to political corruption and to protect against cronyism and exercise of arbitrary, unaccountable power by an executive. Under the civil service system, government employees are hired based on competitive recruitment, objective criteria and qualifications, and cannot arbitrarily be fired. Governor Walker has removed 38 top-level state agency positions from long-standing civil service protection and will fill the jobs with his political appointees.43 Some of the positions are involved in responding to public requests, including those made under the Open Records Law for information on government decisions and policies. The general counsel to the Wisconsin Employment Relations Commission has been removed from civil service protection as well. This agency makes the sensitive, final decisions on disputes between public employees and the state as an employer. These positions will be politicized because individuals can now be fired by the Governor. This does not save the state money, but it does concentrate more power in the hands of Gov. Walker.
Governor to Determine Implementation of Laws. One of the most alarming examples of how Governor Walker has consolidated power in the executive branch relates to his takeover of the “administrative rules process.” After a law is passed there remain many details concerning how the law will be implemented and enforced. These decisions are made through the rules process which has been a national model in providing legislative checks and balances. Under the long-standing process, a state agency would draft a proposed rule, hold a public hearing and often revise the rule based on public input. It would then be referred to the legislature for further review, public input and possible revision before it was sent to the Governor. Administrative rules have the force of law.
Governor Walker used the cover of his so-called “Special Session on Jobs” to pass legislation that radically changes the respected rules process.45 Approval of the Governor is now the first step in the rules process before any further action—beginning with approving the scope of the rule the agency will develop. Nothing requires the Governor to actually move forward on a proposed rule sent to him by an agency. By simply sitting on a rule, the Governor can prevent the effective implementation of a law. Corporate lobbyists will be able to influence any rule with just one stop in the Governor’s office.
Government for Sale. The availability of public financing for qualified candidates for State Supreme Court, Governor, Lieutenant Governor, Attorney General, State Treasurer, Secretary of State, Superintendent of Public Instruction, State Senate and State Assembly has been repealed.46 The purpose of the Wisconsin Election Campaign Fund and the Democracy Trust Fund was to reduce a candidate’s reliance on wealthy special interests, as well as help make it affordable for ordinary people to run for office. Candidates will be denied these public financing options at the same time the U.S. Supreme Court, through its decision in the Citizens United case, has allowed corporations to flood elections with mega-millions to influence the outcome.
Democrats filed a lawsuit in federal court before a three-judge panel to challenge the rigged redistricting maps. A judge criticized the lack of transparency in the redistricting process and fined lawyers for the Republicans around $17,500 for filing frivolous motions in an attempt to keep information secret. Judge J.P. Stadtmueller (who was appointed by President Reagan) said: “Appearances are everything, and Wisconsin has prided itself one generation after another on openness and fairness in doing the right thing. And to be frank, we have seen everything but that in the way this case has proceeded.”50 A decision was rendered on March 22, 2012, that did order Assembly Districts 8 and 9 redrawn, but left other districts intact. The panel of judges declared: “As for the other claims, we find that although the drafting of Act 43 was needlessly secret, regrettably excluding input from the overwhelming majority of Wisconsin citizens, and although the final product needlessly moved more than a million Wisconsinites and disrupted their long-standing political relationships, the resulting population deviations are not large enough to permit judicial intervention under the Supreme Court’s precedents.”51
Governor Grabs Settlement Funds Meant for Distressed Homeowners. Governor Walker boasted that his 2011-2013 State Budget was balanced, but the state now projects that at least $200 million more is needed to cover a shortfall and restore the reserves as required. To help plug the budget hole, the Governor will keep $25.6 million of the settlement money coming to the State of Wisconsin from Bank of America, J.P. Morgan Chase, Citigroup, Residential Capital and Wells Fargo as part of a 50-state settlement negotiated by the Obama administration in response to mortgage abuses and foreclosure fraud by the banks.52 Governor Walker’s action just compounds the hardship homeowners have suffered at the hands of the banks. The people deserve their money.
[For further information on this report, contact: Stephanie Bloomingdale, Secretary-Treasurer, Wisconsin State AFL-CIO at 414.771.0700, ext. 10 (email@example.com) or Joanne Ricca, Legislative Research & Policy Director, 414.771.0700, ext. 22 (firstname.lastname@example.org).
1 Summary of Wisconsin Act 10 (2011) Budget Adjustment Act, prepared by the Wisconsin Legislative Council, May 9, 2011
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