Wisconsin’s economy is strong; both Republicans, Democrats want to take credit | National
SOMERS — Peter Barca, the Kenosha native, former congressman and state representative now leading the Wisconsin Department of Revenue, has spent recent months speaking with state economic leaders and spreading one message: Business is good.
Here’s why:
- As of February, Wisconsin was among 13 states with unemployment rates below 3%, and all 13 of Wisconsin’s metro areas (from Milwaukee to Kenosha to Wausau) have unemployment rates below the U.S. average.
- Before the pandemic sparked a never-before-seen spike in job loss, Wisconsin’s unemployment rate was at an all-time low: 2.9%. Now, that record has been broken, reaching 2.8% in December 2021, a rate the state is nearing again as employers now struggle to find workers.
- Rating agencies Standard & Poor’s and Kroll Bond Rating Agency have given Wisconsin AA+ and AAA bond ratings, respectively. That makes it cheaper for the state to borrow, and thus save tax dollars on projects like highway repairs and repairing UW System buildings. The reasons given by the rating agencies for raising Wisconsin’s ratings? Among them: Budget reserves having tripled, revenue growth continuing while tax burdens fell and a fully-funded pension fund.
- In 1999, Wisconsinites’ tax burden (i.e., the average percentage of income spent on taxes) was the fourth-highest in the country. By 2019 — following years of Republicans and Democrats taking turns in the governor’s office and in control of the Legislature — the tax burden was 23rd. According to WalletHub, as of 2022, Wisconsin ranks 20th.
Chief Economist John Koskinen speaks during an economic and business outlook roundtable organized by KABA and hosted at University of Wisconsin-Parkside on Friday, March 25.
“To go from fourth to 23rd is very strong,” Barca said in a recent interview before presenting the state of the state’s economy to the Kenosha Area Business Alliance. “I don’t think we’ll ever be 43rd because in Wisconsin we believe in quality schools and maintaining infrastructure is more expensive in the north with freezing and all that kind of stuff, but being in the middle is a great place to be.”
During a presentation to the Racine County Economic Development Corp. on Jan. 10, Department of Revenue Chief Economist John Koskinen said: “We are in the strongest financial position we have ever been in.”
Department of Revenue presentation: Wisconsin in Recovery, a look at Kenosha County (dated March 25, 2022)
Tax cuts, and paying it back
One of the biggest election-year splits between Gov. Tony Evers and the Republicans looking to unseat him is who deserves credit for Wisconsin’s economic status, particularly the record-breaking tax cut tied into the 2021-23 state budget.
“We’ve had the largest tax cut in state history under Gov. Evers, in nominal dollars,” Barca said.
Republicans have cried foul on Evers trying to take credit for that. The $2 billion tax cut signed into the 2021-23 budget, they say, came from GOP legislators’ rewrite of Evers’ proposed budget, not from Evers himself, although he still signed the budget.
“Evers wanted to raise your taxes by $1 billion in a pandemic. Republicans stopped him and delivered the largest tax CUT in state history,” state Sen. Alberta Darling, R-River Hills, tweeted after the budget was signed, a statement rated “Mostly True” by PolitiFact, which noted that while Evers’ proposed budget had $1 billion in tax increases, many in the middle- and working classes would still have seen their taxes go down — the taxes from the proposed hike that Republicans rejected would have been largely paid by businesses and wealthy residents.
Of the tax cut, “I would cite that as a bipartisan victory,” Barca said, while adding “the governor would have configured that tax cut a little bit differently, because the governor really likes to focus on the middle class.”
Barca criticized the Republican legislature for refusing to hold special sessions every time Evers has called them, most recently when Evers asked lawmakers to approve spending some of Wisconsin’s “unprecedented” amount of cash on hand; the general fund is projected to have $5.8 billion in it by by July 2023.
Evers had wanted to use some of that money (in a $1.8 billion plan) to send $150 to every Wisconsinite, while also increasing education funding by $750 million and spending $130 million on child care. Republicans shut that down.
They lambasted it an election year move through which Evers wanted to curry favor with voters. Just four years ago, Republicans had supported an election year move from then-Gov. Scott Walker — although for a much smaller cost of around $150 million — by sending $100 per child to every Wisconsin family with school-age children and also pausing sales taxes for five days statewide. Evers defeated Walker by 29,227 votes on Nov. 6, 2018.
“Our rainy day fund is completely full. There’s no reason for us to sit on the money,” Barca said of Republicans immediately gaveling out the special session Evers called. Republicans have shown they are waiting until next year to formally consider what to do with the projected $5.8 billion surplus, as they hope a Republican will be in the governor’s office then.
The Republican co-chairs of the state’s budget committee, Rep. Mark Born, R-Beaver Dam, and Sen. Howard Marklein, R-Spring Green, said in a joint statement in January the projected surplus could be largely attributed to “a decade of responsible budgeting and significant tax cuts by Republicans.”
Reporting by Mitchell Schmidt of Lee Newspapers is included in this article.
Read More: Wisconsin’s economy is strong; both Republicans, Democrats want to take credit | National