Governor Walker and the Unions

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Learn To Research has been asked its first question:

Did Governor Walker of Wisconsin destroy a budget surplus by giving tax cuts to businesses?

So...who is Governor Walker?

I've already heard a lot about this, so I'm going to go with news from CNN. It's a reasonably reputable source, in my opinion. To do that, I type

cnn governor walker

into Google. The first link is here and gives me this:

February 28, 2011|By David Ariosto, CNN

Wisconsin protesters geared up for a third week of demonstrations on Monday as Democratic lawmakers were again missing from the state capitol, protesting a bill that would curb collective bargaining rights for most public workers.

Okay. So Governor Walker is the guy in the middle of Wisconsin's battle with unions.

Did he actually start with a budget surplus?

I kept it simple, and typed

wisconsin budget surplus

into Google. Right up front is this: http://climbingmtlyell.tumblr.com/post/3351212353/wisconsin-has-a-budget-surplus It looks like a blog. It has .tumblr.com as part of its name...just like this one has .blogspot.com. It wouldn't, in itself, be a reputable source. I read through it, but take every bit of information on it with a grain of salt. The information APPEARS well-researched, so I scan it until coming to its first cite. That cite leads to a PRIMARY source...and you can't beat that. I go to the primary source and close out the blog. At this point, the blog is dead to me and nothing on it matters anymore. It was bridge to a primary source, and that's it.

The reason? A blog can mix fact and opinion with impunity. The blog owner can be mistaken, or flat out lie. The actual financial report handed to the Wisconsin Legislature, on the other hand, is what we call a Primary Source.

What's a Primary Source? It's the original person, paper, study, or event that everything else is based on. You know how you're always told to "dig deeper?" Well, when you hit a Primary Source, you've hit bedrock.

Here is the link given from the blog: http://legis.wisconsin.gov/lfb/Misc/2011_01_31Vos&Darling.pdf Notice the .gov ending to the website. That tells me that this is, most likely, exactly what it claims to be--a report from the Legislative Fiscal Bureau in Wisconsin.

This website paints a complicated picture...which is good, really, as the reality of state budgets is quite complicated and anything that sets it forward as simple is bound to be misleading, intentionally or not, if you look deep enough.

According to this report, Wisconsin did, indeed have a surplus. Wisconsin has a required statutory balance--a certain amount it must put aside each year--of 65,000,000. For 2010-2011, this report projects that there will be enough money to meet that requirement and still have 56,362,800 surplus.

HOWEVER, front and center is the warning that this represents 12.9 million dollars less in tax revenue than the year previous, and the prediction that 2011-2012 would generate 139.7 million LESS than 2010-2011.

The big question is, WHY is the tax revenue projected to drop so dramatically? Was it, as the questioner posited, because of tax cuts Walker gave to businesses? This is from our primary source:

QUOTE:
Our estimates include the impacts of all law changes enacted in prior years and three of the January 2011 Special Session bills: (a) SS SB 2, which federalizes the treatment of health savings accounts; (b) SS AB 3, which would create an income and franchise tax deduction or credit for businesses that relocate to Wisconsin; and (c) SS AB 7, which would create an income and franchise tax deduction for businesses that increase employment in the state. SS SB 2 has been enacted into law as 2011 Act 1. The other two bills have passed both Houses of the Legislature, and the Governor has indicated that he will sign them. It is estimated that, together, these three bills will reduce general fund tax collections by $55.2 million in 2011-12 and $62.0 million in 2012-13.

Only 55 million of the projected 139.7 million drop in projected revenue is due to Governor Walker's tax cuts for businesses.

So let's go back to our original question:

Did Governor Walker of Wisconsin destroy a budget surplus by giving tax cuts to businesses?

The answer:
When Governer Walker came into office, there WAS a budget surplus--but it was dwindling, and Wisconsin was projected to have a budget shortage during Walker's term. So no, he didn't personally destroy the budget surplus, and no, he wasn't lying when he said that the state was facing budget shortfalls. HOWEVER, his tax cuts for business are projected to GROW the deficit rather than shrink it, even while he goes after public employee unions. Whether his tax cuts will result in more jobs, and therefore more future revenue, is unverifiable at this point.

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