Governor Scott Walker signed the biennial state budget into law this past Sunday, using his substantial line item veto power to eliminate 58 items from the document.
That being said, most of the $68 billion package remained intact from the form passed easily by the state assembly and narrowly by the senate.The budget includes an income tax cut, a limit to property tax increases, a freeze on state university tuition, and an expansion of the state’s voucher program for private schools.
Rob Henken is president of the Public Policy Forum, a nonpartisan Milwaukee-based organization. Two years ago, he described the governor’s previous budget as a living experiment: reducing taxes while attempting to stimulate economic growth.
So far, Henken says the results of Walker’s living experiment are unclear.
“In terms of the economy for the state as a whole, frankly I think it’s too early to tell,” Henken says.
He acknowledges that “clearly, our state economy is lagging,” but questions whether that should be attributed to state budget policy or other economic factors.
While income tax cuts were awarded and property taxes reduced, Henken says these measures have been “accompanied by some significant cuts in compensation for public employees.” Henken describes the budget as a “balancing act:” attempting to offset tax breaks with cuts to public sector pay and benefits.
While recent budgets have resulted in lower property taxes, Wisconsin still faces declining property values, and Henken says that's a big issue for local governments that depend on property value growth for revenue.
“The Governor, whether you love him or you hate him, [is] pretty open about what his views are and where he’s going to go, and I think this is a continuation in terms of his state budget policies: cutting taxes, putting limits on the growth in revenue streams for local governments and school districts; putting lots of capital dollars into transportation infrastructure,” Henken says. “These are all things we expected.”
Henken says the budget also includes some unexpected policy items, particularly those related to education.
The ultimate economic impact of both the previous budget and the recently approved budget has yet to be determined. Henken predicts “this is going to be a multi-year analysis.”
