1. CESA 10 ▪ 04.04.2014 $ Madison, Money & You. CESA 10 ▪ 04.04.2014

2. Overview Long view ’14: Jobs and taxes Looking back: Old history and 2011-13 budget Recent developments: — 2013-15 budget — Tax cuts: Multiple rounds Speculating about ‘tomorrow’ — Tax reform and school finance  About WISTAX (SchoolFacts, text, consulting)

3. CESA 10 ▪ 04.04.2014 Monthly job growth: Wis. vs. US The long view: Job trends in Wisconsin >~=<=

4. CESA 10 ▪ 04.04.2014 State-local taxes as pct. pers’l income – and % Wis. > US (FY 2011) The long view: Taxes in Wisconsin #10

5. CESA 10 ▪ 04.04.2014 Taxes... second look, tax reform? (Census, FY11)

6. CESA 10 ▪ 04.04.2014 Old! history: Decade of dysfunction Boom-bust budgeting 1995-2010: Dig a hole, file a hole, dig... Tricks, transfers, gimmicks, borrowing 2011-13: Inherited deficit, big Medicaid hole; Cut everything, add $1b+ to Medicaid Tax changes? Composting & increasing

7. CESA 10 ▪ 04.04.2014 July ’13 surplus ~$760 million Total 13-15 spending: $68.3b, $33+b/yr ▪ vs. $64.3b budgeted in 11-13, +6.2% Gen’l fund net spdg: $30.24b (13-15) ▪ $14.84b (13-14) vs. est. $14.30b (12-13), +~3.8% $2.05b bonding vs. $1.73b (11-13) Income tax cut Bottom line: Mid-2015 surplus/deficit? Expenditures > revenues Latest: 2013-15 state budget

8. CESA 10 ▪ 04.04.2014 Gen. fund two-year spending increase ($m) Budget detail: Squeeeeze continues

9. CESA 10 ▪ 04.04.2014 Economy & tax projections (Let’s party!) May 2011: Corporate tax cut, approach? March/May 2013: Income tax cuts ▪ Proposals: Gov. vs. legislature ▪ Size? Approach? Who gets? Downside? Romeo and... tax cut in four acts

10. CESA 10 ▪ 04.04.2014 The real meaning of revenue estimates May 2011: Corporate tax cut, approach? March/May 2013: Income tax cuts ▪ Proposals: Gov. vs. legislature ▪ Size? Approach? Who gets? Downside? October 2013: School tax “buydown” 2014: ▪ Revenue reestimates (good/bad) ▪ Gov’s proposal: Elements/details Inc. tax, withholding, prop. taxes ▪ Long-term finances (Sen. anxiety) Issue? ▪ Political grease? Opp’ty missed? Tax cuts in four acts, pt. 2

11. CESA 10 ▪ 04.04.2014... is K-12 as a priority? Shifting priorities, 1990 – State fiscal problems, 2001 – 12 The new priorities, 2011 -  State tax cuts vs. “aided” local tax cuts  Local property tax ‘relief’ by state control  Transportation finance (gum and rubber bands)  M-E-D-I-C-A-I-D

12. CESA 10 ▪ 04.04.2014 K-12 aid trends, gen’l and categorical

13. CESA 10 ▪ 04.04.2014 The real issue: Revenue limits

14. CESA 10 ▪ 04.04.2014 Aid programs specifically ( after -8.1% & +1.4%) — +1.5% ($75m), +2.8% ($140m); 2-yr = +$290m — Total. growth: +$276m (K12); +$87m (choice/charter, $14m from aid appropriation) Rev. limits –tighten ‘09/5.5% cut+freeze ’11-’13 New revenue limits, 2013-15 +$75/year under caps + $75/year in categorical Careful: Net +$100/student in ‘14 and $150 in ‘15. K-12: Cuts and after

15. CESA 10 ▪ 04.04.2014 Policy directions in 2015-17? The 2016 lb. elephant in the room — goal? Real tax reform? Have we had it? What is it? Principle of “grease” Income tax elimination? $7-8 billion Sales tax implications, 13+%? or... Major property tax reform? Tech. college “buy-down”– first step, second step? Alternative: Tot. “rebalance” (Recall ranks) Did you forget school finance? Ah, no.

16. CESA 10 ▪ 04.04.2014 Thank you! Questions? Critique? Wisconsin Taxpayers Alliance (WISTAX) Facts about government, taxes and spending Serving taxpayers, business, community leaders, and the press for over 82 years www.wistax.org

17. CESA 10 ▪ 04.04.2014

19. Gov. $343m - marginal rates Missed opportunity? ▪ Cash as “political grease” ▪ Tax law as regulation Broader base/cut rates Incr. May rev. est’s: Opp’ty? JCF response/final ($650m) ▪ All rates, brackets reduced ▪ Streamline: credits, checkoffs, Fed-state differences. Modicum of real reform?

20. CESA 10 ▪ 04.04.2014 The budget’s tax cut: Who got what?

21. CESA 10 ▪ 04.04.2014 Gov’s spending focused (two-year totals) Programs w/ Largest Increases, One/Both Years Over ’ 13 Base ($m) for Tot. Biennium (14+15 vs. 13) Total = $731.7 m Big 2 = $717.6m ! Net incr.   All increases JCF? DHS +$179.3m DPI +$127.4m

22. CESA 10 ▪ 04.04.2014 Final question: GAAP deficit (TBD)  Political incapacity to save, and the value of saving in today’s economy & the GAAP world -2.06 -2.36 -2.64 G.A.A.P? 13 14 15 Gov. Proposed ?