Grafting the State Budget

by Mike McCabe, Executive Director

August 15, 2003

If you work for a company and are caught taking money on the side from vendors, you are fired. If you are a judge and it is discovered you accepted an envelope full of cash from a defendant before ruling on a case, you are removed from the bench.

If you are a state legislator and you take money from special interests with a big stake in your budget decisions while you are working on the state budget, you are . . . well, virtually guaranteed reelection.

Wealthy interests looking for preferential treatment in the state budget gave $1.9 million to legislators’ campaigns, leadership committees and the governor in the first six months of 2003 while lawmakers were smack dab in the middle of crafting a state budget that left major special interest contributors virtually unscathed despite the state’s $3.2 billion deficit.

You would think donors would be pooped after spending a record $25 million on contributions and campaign ads in the 2002 election. You would think that lawmakers would have less leverage with contributors because there are fewer ornaments to hang on the tree when you’re over $3 billion in the red. You would think the indictments of five top legislative leaders on criminal charges – many of which allege political favors were traded for campaign donations – would give current legislators pause.

You would think wrong. The newest batch of legislative leaders continued to use the same fundraising playbook as their predecessors, and the four legislative campaign committees the leaders control raised 73 percent more than they brought in during the last budget process.

Assembly Speaker John Gard, for example, held at least two fundraisers while he controlled the budget’s fate. One was in Minneapolis and the other was held at the home of a Janesville road builder within days of Gard’s announcement of the Republican budget plan to spend $800 million more for short- and long-term road building than the governor’s proposal (which itself called for spending a third more than the national average on road construction).

Lawmakers’ habit of shaking down special interests for campaign donations when they are in the process of making budget decisions that affect those interest groups is a flagrant conflict of interest for the lawmakers and creates a gravy train for wealthy donors.

The new state budget is a perfect illustration. This is a three-lie budget. Promises that the state budget would be balanced, taxes would not be increased and the pain of solving the fiscal crisis would be universally shared were all broken because the Legislature and governor felt the need to spare their wealthy donors any pain.

Despite the massive budget shortfall, special interests kept $5 billion in breaks they already had and were given at least $203.8 million worth of additional tax breaks, pork barrel spending and other policy favors. The budget and other legislation approved by the Legislature and signed by the governor will increase the annual cost of special interest perks to $1,358 for each Wisconsin taxpayer. The "pain" inflicted on special interests was a paltry $1 million-a-year reduction in state subsidies to ethanol producers – equivalent to a savings of about 25 cents a year for each Wisconsin taxpayer.

The lesson is clear. If you make big campaign donations, you are protected. If you don’t, you aren’t. The road-building lobby got a slew of new highway projects. Big business got a new $45 million a year corporate tax break. The paper industry got a $1 million subsidy for removing toxins from the Fox River that they put there in the first place.

Meanwhile, UW students will pay as much as $700 more in tuition. Seniors and poor families will pay $73 million more for prescription drugs and health insurance coverage. Autistic children and the chronically ill will face tougher eligibility requirements and pay nearly $1 million for state treatment programs. Ordinary taxpayers will pay $411 million in higher taxes disguised as “fees.”

And the state still will be left with a $711 million structural deficit because the state continues to rely on Enron-style accounting to make the books appear to be balanced. That will cost taxpayers $184 a piece assuming policymakers lean on regular folks rather than wealthy donors to pay for the cost of this year’s accounting gimmick in the next budget.

Opponents of campaign finance reform insist taxpayers should not pay for election campaigns. Their opposition to public financing of campaigns is based on the false but seductive premise that taxpayers somehow can get off scot-free. In truth, taxpayers will pay for political campaigns one way or the other.

The choice is simple. Either continue to tolerate a system where political favors are traded for campaign donations and pay through the nose for that system, or put another system in place that ends the policy auctions and makes lawmakers beholden only to the taxpayers. For the individual taxpayer, the tab for the former is at least $1,358 a year and growing. The latter’s cost is $5 a year tops.

We all pay for politics whether we like it or not. Why not pay discount prices?

WDC Executive Director Mike McCabe
Mike McCabe
WDC Executive Director
2000-2014

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