Whether they’re conservative or liberal, Wisconsinites can all agree on one thing:  We LOVE being from Wisconsin.  We love playing cardiac Russian roulette by gorging on cheese curds.  Nobody bats an eye when someone wants to be buried in a Packer jersey.  And we’re proud of the fact that the sub-zero weather gives us thick skins and warm hearts.

In fact, when our nation’s founders wrote the U.S. Constitution, this sense of regional pride may have been what they had in mind.  Our federalist system rewards state sovereignty, making each state what U.S. Supreme Court Justice Louis Brandeis dubbed a “laboratory of democracy.”  If we think (or know, as the case may be) Illinois is a cesspool, we don’t have to live under their laws.  Better yet, now that we’re done renting their quarterback, we can go back to pretending Mississippi doesn’t exist.

However, over the years, state sovereignty has begun to erode as the federal government grows in scope and reach.  Each Congress births more federal programs for the states to implement, and more mandates for them to obey.  And at an alarming rate, Wisconsin has been drunk-dialing Congress at 3 AM, begging for more federal aid to keep the state’s programs alive.

Until this year, Wisconsin’s loss of independent governing authority has been a slow process.  But the creeping hand of the federal government has grown steadily for a quarter century.  Between 1984 and 2009, federal funds as a percentage of the Wisconsin budget grew from 18% to 25%. However, this year, the floodgates have been opened.

Governor Doyle’s proposed 2009-11 budget, on the strength of a $4.5 billion increase in federal funds, increases the federal share of the state budget from 25%to 30% in one year.  Commensurately, state general purpose revenue (GPR) drops from 50% of state spending to 45%.  In many cases, such as school aids, Doyle merely plugs federal money in where state general fund revenue had previously been used:

The skyrocketing use of federal funds to run our state’s budget is troubling on several fronts.  If the feds turn the “stimulus” spigot off after this biennium, Wisconsin is on the hook for billions of dollars that will likely be raised via tax increase.  Conversely, if Congress keeps pumping money into our state budget to prop up our spending, we will have ceased to be our own sovereign entity.  We might as well just shut down state government and declare ourselves the newly-created federal “Department of Wisconsin.”

The more federal funds Wisconsin accepts, the more it opens itself up for blackmail and micromanagement by Congress.  We all remember the feds threatening to pull transportation funding unless states changed their minimum drinking age and minimum drunk driving standard.  All this federal funding makes Wisconsin the federal government’s marionette.  Whoever holds the purse strings wields unlimited coercive power.

Think about your job.  If you didn’t get a paycheck from your boss, and he asked you to go through the office files and re-sort them in reverse alphabetical order, you’d probably graciously invite him to reproduce with himself.  But since you need the income, you glumly put your head down, mutter to yourself, and suffer through the paper cuts.

The erosion in sovereignty exacerbated by the Legislature this session hasn’t been limited merely to the use of federal funds.  A week before he introduced his current budget, Doyle signed a fiscal appetizer into law, known as the so-called “budget repair” bill.  This bill contained a provision known as the “Streamlined Sales Tax Act,” which increases sales taxes on goods and services in Wisconsin by forcing our sales tax exemption code to conform to other states.  Essentially, Arkansas and other member states will be determining the goods on which we can and can’t charge sales tax.  If our Legislature wants to promote the sale of a certain Wisconsin-made product by granting it a sales tax exemption in the state, too bad – the Interplanetary High Court of Sales Tax Exemptions must all agree to the changes.  And thus, we’ve sold our sovereign right to decide what’s best for Wisconsin in exchange for a few extra bucks.

In the early 1990s, Wisconsin was perhaps the most admired laboratory of democracy in America.  Wisconsin had the first school choice program, giving poor parents the right to send their children to better schools.  Welfare reform in Wisconsin was so successful, the state’s plan served as the model when Congress overhauled the federal welfare system.

In the ultimate irony, Wisconsin itself has now transformed itself into a welfare recipient.  Unwilling to do the hard work to balance his budget, Jim Doyle now sits at home all day in sweatpants, working on his correspondence art school Tippy the Turtle drawing, waiting for that federal check to come through.  And as long as our elected officials are willing to sell off the sovereignty that made our state great, this disturbing trend will continue.

At least until Nancy Pelosi tries a cheese curd.

Ever since he was first elected to the State Assembly in 1998, Representative Mark Pocan has had a soft spot in his heart for the Wisconsin Taxpayers’ Alliance.  In May of 1999, Pocan charged the WTA with being a shill for Republican interests, earning him a nice little article in the Wisconsin State Journal, which printed his charges verbatim.

A full decade later, Pocan is still at it, despite not having contradicted a single statement made by the Taxpayers Alliance over that period.  Recently, the WTA’s President, Todd Berry, earned the scorn of Democrats in state government by pointing out that a large chunk of the state’s then-$5.7 billion deficit was actually comprised of agency requests that had not yet been granted.  Fast forward to last week’s budget announcement, when Governor Doyle’s very own budget summary (p. 9) admitted that Doyle “cut” the deficit by $1.8 billion merely by rejecting new departmental spending requests.  (The line to apologize to Berry forms on the left.)  

Having apparently already solved the state’s budget deficit, Pocan yesterday sent out a glib press release instructing the media to refrain from calling the Taxpayers Alliance “nonpartisan.”  Recognizing that the media likely wouldn’t appreciate being lectured on how to label certain groups, Pocan made his request vapid and lighthearted, at one point joking about his likeness to Brad Pitt.  Conveniently, Pocan seems to forget about the “nonpartisan” label given to lefty front groups like the League of Women Voters, the Wisconsin Democracy Campaign, etc.

This release apparently infuriated Representative Steve Nass, who fired off an angry press release accusing Pocan of being anti-American, or something.  Then Rep. Leah Vukmir issued a release that invoked Orwell’s “1984” to defend Berry.  (I have to sheepishly admit that someone had to explain the press release to me for me to understand it.)

Responding to Pocan serves two ends, neither of them desirable.  It makes it appear as though legislators have nothing better to do.  Also, since it will likely  be exclusively Republicans running to Berry’s aid, it almost appears to strengthen his previously nonexistent point.

Todd Berry is a big boy.  I think he does an excellent job of defending himself, as he has had to do for years.  The work he does in explaining the budget to regular dopes like me is invaluable.  Responding to Pocan is merely taking his bait, in his attempt to get the GOP to talk about anything other than the disastrous budget his caucus is about to ram through.

Yesterday, the Milwaukee Journal Sentinel ran a column I wrote about the disastrous state of Wisconsin’s finances, and how both parties were to blame for our fiscal collapse.  This piece was intended to be a counter-argument to another column, written from the liberal perspective, which attempted to explain that our taxes really aren’t very high, after all.

This editorial, which apparently it took seven people to write,  made a couple claims that popped out:

However, some argue for reduced spending, falsely claiming that profligate public outlay is the cause of today’s economic crisis. This analysis is wrong. Wisconsin has been careful in its overall taxing and spending. Between 2000 and 2006, total state taxes per person decreased from $2,740 to $2,475, when adjusted for inflation. In fact, there have been $12 billion in state tax cuts since 1999, more than twice the current deficit.

Apparently, in arriving at the fact that “total state taxes per person” have decreased, the authors used a Brookings Institution website that draws on census bureau data.  When you look at the “total state taxes” numbers they use, it contradicts the state’s own data as reported on the Department of Administration’s Comprehensive Annual Financial Reports (CAFR).  According to the Brookings Institution, the state brought in $14.7 billion in “total state taxes,” in 2000, and $13.8 billion in 2006 – thus, the drop in the per capita number.  There is no explanation as to what “total taxes” includes. Furthermore, the population in Wisconsin grew by 3.7% between 2000 and 2006, which alone would have contributed to the appearance that per capita taxes were dropping.

Yet when the state reports its General Fund taxes, the numbers are drastically different.  The state CAFR says that in 2000, sales, income, corporate, and other taxes collected $10.9 billion.  Due to a combination of tax cuts signed into law by Governor Thompson in 1999 and the 2001 recession, tax receipts dropped to $10.2 billion in 2001 and 2002, steadily climbing back to 10.4 billion in 2003.  By 2006, tax receipts had climbed to 12.4 billion, or a 9.9% increase over taxes collected in 2000.  And keep in mind, this is in the midst of a recession in 2001 that it took the state several years from which to recover.  The shrinking revenue was due, in large part, to people losing their jobs and buying fewer goods, not necessarily because the Legislature was being “careful” in our taxing and spending.

In fact, if you bypass the Brookings Institution website (which purports to use Census Bureau data) and go straight to the Census Bureau, the numbers look much different.  In 2000, the Census Bureau reported Wisconsin taxes at $2,344.51 per capita.  In 2005 (the most recent number available,) per capita taxes had increased to $2,375.77.  And again, this is after the state suffered a 4-year lag in collections due to the 2001 recession (which may be why they only chose these specific years to make their point.)

But let’s say, for the sake of argument, they’re right.  Let’s concede their point (that seems to be flatly incorrect) that somehow taxes are falling.  According to the CAFR, state general fund spending increased 13.3% percent (from $11.3 billion to $12.8 billion) during this time that our taxes were supposedly dropping.  This is exactly the point of my last report and subsequent column.  The state is spending more money than it is taking in.

So how did we increase spending by 13.3% while our revenue was supposedly dropping by $1 billion (according to their numbers)?  Our governor and legislators dumped in $2.4 billion in one-time money to balance the budget, blowing a hole in future budgets.  They artificially made it look like we were spending less by offloading general fund expenses to program and segregated revenue.  (Think cutting general fund aid to the UW by $250 million and replacing it with increased tuition – which makes it look like we’re cutting general fund taxes, while instead, we’re just offloading those expenses to students.)  They issued debt to plug holes in the budget, committing taxpayers to decades of paying those bonds off.

As for the $12 billion in tax cuts they claim we’ve had since 1999, I have no idea where they came up with the number.  But I can assure them of one thing – had the state collected this mythical $12 billion and spent it, the budget deficit would be much worse than it is now, as the spending base would be much higher.  If there’s something the state has proved, none of that money would have gone to a “rainy day” fund to ameliorate recessionary budget downturns.

As an aside, it should also be noted that almost all of the authors of this column are frequent contributors to Democratic campaigns, including UW-Madison economist Andrew Reschovsky, who has contributed $7,850 to Democrats since 2000 – including Governor Jim Doyle.  At one point (2002), Reschovsky was a vocal critic of structural deficits, yet now he says nothing about the current imbalance.  I wonder why?