State Budget Amounts to ‘Fiscal Feudalism,’ WDC Says

Watchdog calls on Doyle, lawmakers to go back to drawing board

June 18, 2003

Madison - Both Governor Jim Doyle’s proposed budget and the alternative version crafted by Republicans who control the Legislature are fatally flawed because they leave Wisconsin in a precarious financial position in order to protect $5 billion worth of political perks for special interest campaign donors, the Wisconsin Democracy Campaign said today.

Both budget plans saddle Wisconsin with a large structural deficit in future years because they continue to rely on irresponsible budgeting practices that got the state into trouble in the first place - the extensive use of one-time money to pay for ongoing expenses and the habit of spending money in one budget but putting off payment of the expenses until the next budget.

Majority Republicans in the Legislature and the Democratic governor must depend on the accounting tricks because they steadfastly refuse to consider scaling back tax breaks and loopholes, pork barrel spending, and other special interest favors identified in the Democracy Campaign’s “Graft Tax” reports. The $5 billion worth of items WDC flagged benefit wealthy donors who have contributed $52.6 million to candidates for state office since 1993.

"With a deficit well over $3 billion, the times demand responsible, fiscally conservative budgeting. Instead, our state lawmakers are engaged in fiscal feudalism," WDC executive director Mike McCabe said. "They’re cutting funding for schools and basic local services, raising college tuition, hiking fees on everyone from hunters to motorists and asking poor seniors to pay more for prescription drugs. But they continue to expect ordinary taxpayers to pay billions in homage to the lords of Wisconsin politics. They are not asking their big campaign donors to sacrifice anything."

McCabe said Governor Doyle sent the Legislature a special interest protection plan, and the state budget produced by legislative Republicans remains a donor protection plan - with a few new special interest perks added.

Both budget blueprints leave untouched what amounts to a system of legalized tax evasion for special interests that are among the state’s most generous campaign donors - $2.5 billion worth of sales tax exemptions, $717 million worth of property tax loopholes and $840 million worth of corporate income tax breaks. Maintaining this two-tiered system of taxation requires ordinary taxpayers who don’t benefit from special interest tax breaks to pay an average of more than $900 in additional taxes every year. Business, manufacturing, agriculture and other powerful interests that benefit from these breaks have contributed $42.2 million to candidates for the legislature and statewide office since 1993.

Not only did the Legislature’s budget writers follow Doyle’s lead in keeping existing tax breaks off the budget cutting table, they added a $1 million fee exemption for paper companies for waste disposal under an agreement to clean up toxins they dumped into the Fox River decades ago. The paper industry has contributed $488,608 to candidates’ campaigns since 1993.

In addition, legislative Republicans cut by 50% the taxes paid by real estate and agricultural interests on forest and swamp land. This is over and above the drastic property tax cut for workable farmland that has already occurred under the state’s use-value tax system. Agriculture, developers and the real estate industries have contributed $9.4 million to candidates since 1993.

Legislative Republicans also gave the Wisconsin Health and Hospital Association a $750,000 no-bid contract to collect confidential patient medical information now handled by the state. The hospital industry has contributed $469,242 to candidates since 1993.

Majority GOP legislators also resurrected four long-term highway projects worth $500 million that were deemed unnecessary last December by the Transportation Projects Commission, and revived 99 road construction projects worth $250 million that were scheduled to be delayed under the Doyle budget. Road builders and related unions have contributed nearly $2.1 million to candidates since 1993.

Meanwhile, the Republican budget reduces aid to schools and local governments by $411 million, including cutting state support of 4-year-old kindergarten programs. College tuition is increased by as much as 19 percent. Recipients of high school equivalency degrees will have to pay a new fee.

The governor already was proposing increasing fees and deductibles for the elderly who rely on the state’s SeniorCare program for help paying for prescription drugs. Legislative Republicans increased the hike to $33 million.

McCabe called on the governor to veto the Legislature’s version of the budget in its entirety. But rather than resubmitting his own budget proposal, Doyle should renounce the fiscal feudalism embodied in both current budget plans and propose a budget that puts the state on solid long-term financial footing by ending the tax breaks and other political perks benefiting big campaign donors, he said.

And Doyle should then call the Legislature into special session to deal with Senate Bill 12, the comprehensive campaign reform legislation sponsored by Senators Mike Ellis (R-Neenah) and Jon Erpenbach (D-Middleton), McCabe added.

"Taxpayers will continue to be treated like serfs as long as we have a broken campaign finance system that allows state lawmakers to trade political favors for campaign donations," McCabe said.

The Ellis-Erpenbach bill would cost each taxpayer roughly $1 a year, he noted, adding that the $5 billion worth of political perks identified by the Democracy Campaign cost taxpayers an average of $1,305 a year.

Graft Tax Scorecard