Sunday, June 21, 2009

Up Front on the State Budget

The June 14th show featured a discussion of the budget with a variety of perspectives. Worth watching here.

How can the state raise sufficient revenue to pay for services while not discouraging business investment in the state or individual incentives? Do policies that encourage businesses benefit the citizens generally or do they provide private gains primarily to company owners? Should the state subsidize business in either case?

The left argues that state services must protect the needy and provide valuable public goods, such as health care, education and environmental protection. How can the left provide revenue for such policies when the growth in costs outstrip the growth in revenue sources? Is it possible to base taxes on out of state interests (e.g. gas companies) to shield state taxpayers? Or can minority interests (e.g. smokers, who make up only 22% of Wisconsin citizens) be taxed at high rates while majority interests (e.g. sales or general income taxes) are shielded?

"Interest Groups" dominate lobbying at the capital. The also provide the bulk of campaign contributions. There is much talk of limiting that influence by public financing of elections. But these groups also represent crucially important constituencies in the state-- teachers, manufacturers, construction companies, agriculture, taverns (<;-) ). When is an interest group a "special" interest, and when does it represent a critical component of the state's economy and population which deserves to influence legislation? How would state government look if legislators were free to ignore all interest group activity? Would representative government be better, worse, or essentially the same?


  1. specifically pointed at the issue of minorities being taxed, there are some cases, such as smoking, where I think it would be more beneficial then taxing the majority. People call into the office and say 'if you keep taxing us, we aren't going to buy anymore and you will be out that revenue.' True, we might not have the revenue from the cigarette tax, but the amount we will save on health care that the government has to pick up the bill on will be enormous. Though it is unfortunate to tax only certain areas, there is often a better reason than simply taxing to make money from that tax.... This is one thing that I feel many do not consider.

    - Luke D

  2. To the first question posed, I don't believe there is a clear cut answer, some businesses should be subsidized, when not doing so means a drastic leap in unemployment for instance, yet at other time these businesses need to be held accountable for their own downfall, when it is demonstrated that the downfall could have been reasonably avoided through better decisions by business management. IF the downfall is a product of outside factors, then I think the government may need to step in.

    In regards to the second issue of providing public goods, I think once again we must look at the issue of accountability. Make those who are most in need of these services pay for them. For healthcare, let those who make poor health choices, the obese and smoking community pay (no universal health care). Of course when illnesses are te product of misfortune such as cancer (not lung cancer) then I believe that everyone should be responsible for caring for unfortunate members of our community, because we are all at (relatively) equal risk. Just look at the way insurance works, you purchase your own insurance policies, based off of what you perceive as a potential danger, and at the same time the insurance companies have to evaluate your level of risk and create a rate that reflects this. In auto insurance if you drive a safe car, and have a clean driving history you pay a lower premium than certain athl...uh I mean people who drive sports cars and have a DUI or two. I think this type of system is perfectly fair an simply doesn't exist with Universal health care.

    Interest groups are a healthy means of gaining political leverage as a citizen in my estimation. You never truly have any rights if you don't exercise those rights as they are intended to be used. If a group wants to organize on behalf of dairy farmers or any other group then good for them, other citizens have the same right to organize on behalf of what ever issue they choose. The only real downfall to these groups is that some are going to have access to greater resources than others, however without the opportunity for these groups to form, it would be very difficult for legislators to feel the pressure of constituents on many important issues.

  3. I think that the taxes in this budget such as the capital gains tax negatively affect consumers and businesses alike. Therefore I agree with James Buchen of Wisconsin Manufacturers and Commerce that it may be a good idea to put a sunset on these taxes in order to not worry or scare away investors. I think that in the climate of recession that we now have, when businesses are hurting from taxes or unfair laws, regular citizens also will feel the burden of these taxes. Businesses still need to make a profit so with an increase in taxes aimed at businesses I fear that there may be more unemployment in order to cut the costs of inputs. Or on the other hand, may scare away businesses that our economy desperately needs in order to rebuild.

    However, I do not think that the state should subsidize businesses, I think that creates a moral hazard. If businesses have the option of getting financial help and can be subsidized by the government, they might not develop the best business practices if they have a "safety net" from the government. I think, in general, government subsidies are a slippy-slope to possible future problems.

    I think making taxes according to out of state industries- like the oil companies, people are immediately opposed to this because state legislation and the state budget should be based on state interests. At the same time if there was an increase in the oil profit tax, as it was originally proposed to be, Wisconsin would lose out of business endeavors that may help our economy rebound. With business endeavors present we might not need to find new ways of taxing and cutting costs if outside companies are infusing our economy with money from their businesses and investments. Therefore it is a fine line between being too lenient and too strict with businesses; but I trust the state legislatures are doing their best to try and find balance for businesses. Afterall they did take out the liability insurance provision in the budget which would have greatly hurt businesses.

    Although I see Luke D.'s points that many people would stop smoking as a result of this cigarette tax increase; I would like to see a cigarette tax deposited into the cost of healthcare rather then the GPR. Yes, the cost of smoking, according to the Wisconsin Department of Health Services, costs Wisconsin $3 billion in healthcare costs and loss of productivity. However, it seems unfair that this cigarette excise tax (user fee) is aimed at people with an addiction. Maybe rather then the money collected being put into the GPR which funds a wide variety of state projects, instead it could contribute to the healthcare costs of smokers. That way not only would it deter new smokers from beginning this addiction since the cost would be so high, but it also helps the stubborn and elderly smokers with their healthcare costs. For me, I have heard calls just like Luke D.'s but I have also taken calls that are promises from cigarette smokers that they will not stop smoking but instead will cut out some other expenditure included in their everyday budget. During a time of recession where people already have little money to spare I think it is unfair to aim higher taxes at minority interests as a way to bail out government debt.

    -Lauren C.

  4. Recently, I had the opportunity to research a program currently in place in the state of Louisiana in my internship. This program, called Louisiana FastStart, is a program that was implemented in the state to attract companies and business owners to the state and encourage them to invest their time, effort, and money into the area. This program provides screening, recruiting, training, continuing training/education, and many other services to the businesses that promises to create at least 50 new jobs in the area (permanent positions), and in exchange, receive these services that help a business employ trained/qualified employees, taking some burden off of the companies and providing more incentive to bring their services into the area. In turn, the surrouding citizens have more opportunities to apply for jobs within this company. While this example by no means addresses the entire problem of finding revenue to support services needing in the state, I think there is something to be said about this "give/take" mantality. In exchange for the Louisiana Economic Development FastStarrt service, a new company is able to plant their roots in the area without starting from scratch--it gives them a little head start. I wonder if the state invested a little more time into programs, such as these, that have this idea of "give/take" and "you scratch my back, i'll scratch yours," possibly we might be better able to swing these needed revenues. Of course, this would not work in every situation, but I certainly think it couldn't hurt, and then maybe that would provide a little more leeway with other areas that need slightly more funding than they are receiving.
    On the topic of lobbying, I strongly believe that if legislators were to ignore lobbyists, it would most certainly shed a negative light on representative government. While I think that sometimes strong lobbying groups that overshadow other people/problems/other lobbying groups, I think it is CRUCIAL to the state and to the legislators. I think it is obvious that throughout our state's history, lobbying has helped to take constituent concerns, assemble them, and create a group of people with similar interests/feelings in order to get the results they want. There is most definately strength in numbers. That being said, just as a lobbying group may want to push for legislation or something of the sort, I think it is only natural that when there is a candidate that hold's a lobbying group's interest at heart, that they would want to support/push for that win as much as possible. Therefore, I do not think that it would be a good move to prevent lobbying groups to help contribute to campaigns. Just as it is their right to lobbying for a change in legislation, it is their right to lobbying for the next candidate they want in office!

  5. As the above comments have previously stated, there is no clear cut answer to the first question. It is the essence of the struggle between the left and the right. In watching the program, I thought it was interesting how James Buchen defended his statement that Wisconsin should aspire to be more like Alabama in regards to government interaction with business. While he lauded their tax breaks and growth in business, he didn't address the moderator's comments about lower academic achievement that has been prevalent in Alabama and many other southern states. This is just one example of the tight rope that must be walked in regards to incentives for businesses (leading to job growth, improved economy, etc) and providing quality public services.

    I do believe that there are many potential problems that arise from interest groups. Obviously there is no sense of equal access, and groups with more money and resources are able to better influence the government. Yet, as Bethany said above, these groups are a reliable means of voicing the concerns of a constituency. They have the means to convey the feelings of a large group of people with similar interests. They are extremely important in giving politicians an idea of what that subset of the population thinks about certain issues. I believe that if legislators were to ignore special interest groups our government would be less informed and less productive as a result. There would be more actions based on self-interest and less accountability to one's constituency.

    -Paul L.

  6. This reflects the capital gains tax and the oil tax issue. How does Wisconsin keep their investors interested while keeping them happy$ as well? Apparently an oil tax would be imposed on oil companies for selling their fuel within the state. This would help to offset the tax on fuel for consumers, where previously the oil company would tax higher if prices were higher in an effort to cover their taxes. Governor Jim Doyle also feel there could be legal ways of restricting oil companies from creating tax increases.
    So a whirlwind of taxes seems to be the answer to our question. Maybe in this situation, a session could be called to discuss topics like constituent capability, or the ability to pay a percentage of income towards fuel costs, thereby understanding what prices work and which ones do not. This would help to minimize the necessity for fuel across the state. I understand that if people cannot drive or be mobile, then the state loses out to a degree,sometimes a significant degree I am sure. (could be possible anyways).
    Investors kind of have the driver's seat in this respect. If the state runs off of investors,then tokeepthem happy is the dominating precursor to any government field. What if the state encouraged small investments, ones that collectively helped the state, and individually were worthwhile too? Promoting small, affordable rates for consumers? Just some thoughts...


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