Conservatively Speaking

Wisconsin has a moving problem. Too many are voting with their feet.

Our state’s high level of taxation is forcing too many residents to pack up and leave. During November 2005, the Wisconsin Taxpayer Alliance issued a very troubling report entitled, "Moving In, Moving on: Migration in Wisconsin."  During the five years prior to the 2000 census, almost 669,000 people either moved to or out of Wisconsin. However, the net in-migration into Wisconsin was a meager 7,282.

Individuals with college or advanced degrees were more likely to leave, while those with less education tended to come. Individuals with household incomes above $75,000 left Wisconsin. Those with incomes of $200,000 or more had the highest rates of leaving.

The huge exodus of wealthy Wisconsinites leaving the state caused a loss of an estimated $4.72 billion in net worth and a loss of $455 million in income over the five years of this study. That means far fewer in-state bank deposits, less stock in Wisconsin firms, less investment capital for in-state ventures, and less money given to local charities.

Arthur Laffer, president of Laffer Associates and Stephen Moore, senior economics writer for The Wall Street Journal editorial board confirmed that high taxing and spending have had a negative impact on Wisconsin’s ability to compete and cause many people to relocate elsewhere.

Laffer and Moore write in the Wall Street Journal, “Five of the states near the bottom of our competitiveness ratings -- Illinois, Maryland, Michigan, New Jersey and Wisconsin -- have enacted major tax increases.” Laffer and Moore say the record movement of citizens across America has little to do with the weather. They say the states with the most dynamic and desirable economies are generally the states with the lowest tax, spending and regulatory burdens. These states win the battle for the prized commodity of human capital. The big losers are high taxing and spending states in the Midwest and Northeast.

New evidence suggests the disturbing pattern continues.

The Woodrow Wilson School of Public and International Affairs at Princeton University released a study during September 2008 examining migration trends in New Jersey. The authors compared New Jersey to states that tend to attract low‐income individuals, while seeing a relative outflow (or much smaller inflow) of wealthy individuals. The study said Wisconsin is a good example, being one of the five states in the country with the most negative correlation between income and net migration. The list includes Wisconsin, Arizona, Delaware, North Dakota and Arkansas.

The study says the following about Wisconsin:

“At low income levels, there is strong net in-migration into Wisconsin; however, at higher income levels, in‐migration is small or negative. Hence, one can say that Wisconsin is more attractive to low‐income individuals than high‐income earners.”

Authors concluded that in New Jersey, “poor people leave, but rich people do not.” In Wisconsin, “on average, poor people move in, but rich people do not.”

Why is Wisconsin so enticing to so many poor? University of Wisconsin-Madison economics professor provided an answer in his presentation to a Federal Reserve Bank of Minneapolis conference on the Midwest economy during June 2008. Kennan displayed graphs showing Wisconsin dishes out the highest welfare benefits in the Midwest. You thought we ended welfare as we know it? Time limits have been placed on benefits and there are more stringent work provisions. But the size of benefits remains generous.

Factor in other benefits like child care, BadgerCare, the earned income tax credit, and low income housing, and the incentives for low-income residents to flock to Wisconsin are quite evident. The term, “welfare magnet” may have disappeared for some time in Wisconsin, but this new data seems to suggest there could be an entirely new welfare migration taking place.

This migration is clearly putting a strain on our finances. Just how much it is costing in taxes is unclear but my guess is that it is substantial and needs further study.

Meanwhile, our wealthiest leave Wisconsin, taking with them their tax revenues, spending, savings, investments, and charitable contributions. To stop people from voting with their feet in Wisconsin, we must stop the hemorrhaging of taxing and spending.

I congratulate Marsha Grutzmacher and her students at St. James School in Mukwonago for winning the Midwest Regional Land category in the Lexus Eco Challenge.  This marks the first time a Wisconsin school has won in any division.

Mrs. Grutzmacher and her students entered the second annual Lexus Eco Challenge, a national contest that encourages middle and high school students to develop and implement environmental programs that have a positive impact on their communities. The Lexus Eco Challenge was established to teach young people about the environment and to inspire them to create a better world.

St. James in Mukwonago has been invited to participate in the Final Challenge and a chance to win a grand prize of $50,000 in grants and scholarships. Should the school accept the Final Challenge, I wish St. James the best of luck in the competition during February and March of 2009.

Again, congratulations to Marsha Grutzmacher and all of her St. James students on winning the Midwest Regional Land Category in the Lexus Eco Challenge.  I am very proud to have this award winning group in my Senate district.

A few weeks ago I blogged about the impact of rising road salt prices on Wisconsin.

A Wisconsin transportation official says salt will be used as a last resort this winter. Wisconsin is one of the states hit hardest by the high cost of salt. Here’s an update from stateline.org. 

I congratulate the Muskego Water Bugs for their successful trip to China this fall where the multi-talented group participated in the 2008 Sino-American Water Ski Competition. The Water Bugs represented the United States against two of the very best professional Chinese water ski show teams.

The Muskego Water Bugs left for China on September 26 and returned on October 6. The Muskego water skiers believed the most important element of their trip was the chance to build U.S./China relations through the avenue of entertainment.

Family oriented, the Muskego Water Bugs feature parents and children performing on the shores of beautiful Little Muskego Lake at Idle Isle. This was definitely their most successful season, as the group celebrated its 50^th anniversary, culminating in their trip to China.

The Water Bugs performed four times in two days. At the first site of competition, Dongguan, the group came just a few points shy of victory, but captured the best male skier, Terry Roslawski, and the most original act awards. The second site of the competition took place outside Shanghai in a city called Wuxi, and this time the Water Bugs won the team award along with the best male skier, Jeremy Armstrong.

You can read more about the Muskego Water Bugs and their trip to China and see video here. 

Again, congratulations to the Muskego Water Bugs for their successful journey to China. Thank you for sharing your gifted talents with the world and for bringing immense pride and joy to our great state! 

Governor Doyle will announce this afternoon that the state budget deficit is worse than expected. The deficit is $5.4 billion. More details later.

UPDATE from Milwaukee Journal Sentinel

Two weeks ago, I blogged about a great program run out of New Berlin that helps send movie kits to our soldiers. OPERATION Take a Soldier to the Movies needs your help. 

The Milwaukee Journal Sentinel ran a nice feature article about the program in Sunday’s edition. You can read the article here.

State wildlife biologists will be in 17 northern counties collecting deer heads during this year’s deer hunt. Officials are hoping to collect as many as 500 to test Wisconsin deer for chronic wasting disease.

Here’s how the program will work. Biologists will ask successful hunters for a tissue sample or possibly the entire deer head to be tested. The DNR is specifically looking for samples from Polk, Barron, Washburn, Douglas, Bayfield, Ashland, Iron, Rusk, Taylor, Sawyer, Price, Lincoln, Langlade, Oneida, Vilas, Forest, and Florence counties.

Here is more information from the Department of Natural Resources.

Whenever a new economic report surfaces about Wisconsin, the news usually isn’t very good, whether it be about taxes, our business climate, per-capita income, or Tax Freedom Day. I have blogged extensively about these reports and the latest also shows some critical shortcomings.

The “2008 State New Economy Index” has been released  by the nonpartisan groups, the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation.

According to stateline.org,  “The groups used 29 indicators to rank each state on how well its economy is structured to compete regionally, as well as globally. States at the top of the list tend to have a high concentration of workers in ‘knowledge jobs’ that require at least a two-year college degree, are at the forefront of the information technology and Internet revolutions and have institutions and residents that embrace the digital economy.”

When it comes to the New Economy, Wisconsin ranks number 33 among the states. The report defines the New Economy as, “a global, entrepreneurial, and knowledge-based economy in which the keys to success lie in the extent to which knowledge, technology, and innovation are embedded in products and services.”

More specifically, the New Ecomony is:

Knowledge-dependent.  Knowledge workers have become the largest occupational category.

Global. More goods and services are being traded and exported.

Entrepreneurial. Most, if not all of the job growth in America is derived from companies that are less than five years old.

Rooted in information technologies. IT’s are every where, the most important technology engineering our economy, a key component in almost every sector.

Driven by innovation. Competition is heavily based on the ability to create and adopt new products and business models. As the report states, “Innovative capacity (derived through universities, Research & Development investments, scientists and engineers, and entrepreneurial drive) is increasingly what drives competitive success in the New Economy.”

The Midwest has failed to catch on to the New Economy with the exception of some our neighbors: Illinois (rank number 16), Michigan (rank number 17), and Minnesota (rank number 14).

Why is the “2008 State New Economy Index” important?  The report says, “How closely do high scores correlate with economic growth? States that score higher appear to create jobs at a slightly faster rate than lower-ranking states. Higher New Economy scores were positively correlated with higher growth in state per-capita incomes between 2002 and 2006….states that embrace the New Economy can expect to sustain greater per-capita income growth for the foreseeable future.”

Solutions?  We must keep our best and brightest here in Wisconsin and we must dramatically improve our business climate. 

Here is the complete “2008 State New Economy Index.”

Reports indicate the state is headed for a disastrous $5 billion state budget deficit. The worst way to get out of a hole is to keep digging, i.e., increasing taxes and fees. And yet, it seems Wisconsin will continue its fiscally irresponsible practice of increasing taxes and fees at a time when they are least affordable.

Case in point: The Wisconsin Division of Emergency Management wants to increase the fees for businesses that are required to file emergency planning notifications or that store hazardous chemicals by a whopping 35 percent. Wisconsin hasn’t increased the fees since they were first implemented in 1990 and now is not a good time to start.

More than 7,000 facilities in Wisconsin would be affected by the fee increases. Currently, the emergency planning notification fee is $800 per facility and would increase to $1,080 under the proposed rule. The inventory form fee would increase across all levels of reporting requirements, ranging from $205 to $1540. The emergency planning notification fee is a one-time fee. The inventory form fee is an annual fee.

The additional fees are expected to increase revenues by $471,000; however, there is a larger issue to consider. If this is any indication how the state, in general, is going to address its fiscal crisis, as compared to other states that are cutting rather than increasing taxing and spending, Wisconsin’s economic problems will only become more severe.

One of Wisconsin’s great traditions, the annual deer hunt season that opens this Saturday is critical this year because a huge reduction in the deer herd is needed. Wisconsin has too many deer, but thinning the herd will be easier said than done.

Sadly, the number of hunters is on the decline. And the deer hunt starts later this year meaning the deer have finished mating and are less active, a prospect hunters would rather not think about. The Department of Natural Resources (DNR) has also announced there are herd control rules that hunters don’t like.

Here are more details from the Associated Press.

The economic impact of this yearly rite of passage is an incredible $1.5 billion according to the DNR.  The state of Wisconsin owes every hunter a huge thank you!

 
WTMJ-TV

I am thrillled that my friend and Assemblyman, state Representative Mark Gundrum has arrived tonight at Mitchell International on a Midwest Airlines flight, having completed his tour of duty in Iraq and will now be able to spend the holidays with his wonderful family. Welcome home, Mark, and God bless you for your service to America!

Here are my previous blogs on Mark's deployment to Iraq:

January 2, 2008

March 28, 2008

July 2, 2008

Now that Democrats control the governor’s mansion and both houses of the state Legislature, it is a pretty safe bet that there will be a serious effort to repeal the Qualified Economic Offer (QEO) when the Legislature reconvenes in January 2009. In the past, Governor Doyle has said the QEO (opposed by the state teacher’s union that strongly backs Governor Doyle) “isn’t working.” The governor needs a history lesson.

The QEO was instituted by the Legislature in 1993 after angry taxpayers statewide demanded action be taken to stop the tidal wave of huge property tax increases. Since its inception, the QEO has helped keep property taxes from being even higher than they already are.

Under the QEO, the compensation package for teachers including salaries and benefits is to be limited to a 3.8 percent increase. Prior to the implementation of the QEO, settlement packages with teachers were much larger, forcing a tremendous burden on taxpayers.

According to data from the Wisconsin Association of School Boards (WASB) that used figures from the Wisconsin Department of Public Instruction, the average total teacher salary and benefit package increase in the years before the QEO was 8 percent during 1984-85, 8.4 percent during 1985-86, 7.7 percent during 1986-87, 7.4 percent during 1987-88, 7.1 percent during 1988-89, 7.3 percent during 1989-90, 7.4 percent during 1990-91 and 6.9 percent during both 1991-92 and 1992-93.

Enough was enough. Taxpayers protested. The Legislature heard and listened, and the QEO was adopted.

In reality, most school districts do not stay within the QEO, agreeing to settlements that surpass the 3.8 percent limit. The WASB reports that the average total package of salaries and benefits was 4.29 percent during 2006-07, 4.25 percent during 2005-06, and 4.31 percent during 2004-05. The percentages are higher than the rate of inflation, and more than likely are greater than increases provided in the private sector.

Watch for state Democrats from the top on down to prioritize the repeal of the QEO at a time when property taxpayers are already overburdened. The nonpartisan Tax Foundation in Washington D.C. writes, “Wisconsin Property Taxes: Among the Nation's Highest: Wisconsin is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Wisconsin's localities collected $7,324,843,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Wisconsin collected $104,158,000 in property taxes during FY 2004, making its combined state/local property taxes $7,429,001,000. That brings its per capita collection to $1,350, which ranks 11th highest nationally.”  Here is the full report

The governor and Democrats in the Legislature will be bound and determined to increase your taxes even higher, and that is exactly what will happen with elimination of the QEO.

The QEO must stay intact. Without the QEO, spending and taxes will rise substantially, more people will leave their homes, more people will leave the state, and more jobs will be lost. We cannot afford to lose the QEO.

Wisconsin has 22 state symbols, the most recent addition to the list being the official state tartan.