From NBC's John Bailey
Wisconsin Gov. Scott Walker’s (R) Budget Repair Bill, and the ongoing fight over its provisions, was prompted by a large, looming state budget deficit. Wisconsin has an immediate budget shortfall of $137 million, projected to grow to $3.6 billion by mid-2013. The lion’s share of the blame for Wisconsin’s budget woes falls on the receding economy, but other factors such as tax cuts, rising health care costs, and expiring federal aid have contributed as well.
Wisconsin's budget problems
-- Falling tax revenue resulting from the recession is the greatest culprit of Wisconsin’s budget woes -- between 2008 and 2009, state tax revenues fell over 7%.
-- Since July 2009, there has been an estimated dip in revenues of $200 million annually; the state saw little growth in tax revenues in 2010.
-- Unemployment rose more than 4 percentage points between 2007 and 2010, forcing more Wisconsin residents on Medicaid and causing state Medicaid costs to rise.
-- A series of tax cuts passed since 2003 that cumulatively represent $3.7 billion and, by 2013, make up a $800 million-per-year reduction in tax revenues.
-- In addition, this year agency budget requests will rise $2.9 billion -- nearly two-thirds of which is for Medicaid, with much of that amount associated with replacing one-time federal Medicaid revenues the state received from the American Recovery and Reinvestment Act of 2009.
What is the real budget gap?
-- Walker's Democratic predecessor, Jim Doyle, estimated that in June of 2011, Wisconsin would still have a $10 million surplus, but Walker has said the state is facing a $137 million deficit today. Why the discrepancy?
-- Walker made a number of adjustments to Doyle’s estimates, mainly accounting for higher-than-expected Medicaid costs.
-- Walker also pushed through three tax cut bills negatively impacting projected tax revenues by $117 million -- the tax cuts went toward health savings accounts, deductions for relocated businesses, and exclusions for hiring new employees.
-- The pension system in Wisconsin is actually quite healthy. In fact, it was one of only four states (FL WA, and NY are the others) that entered 2008 fully funded.
-- State employees do not pay into their pensions.
Gov. Walker’s Budget Repair Bill
-- Pensions: Requires employees who pay into the Wisconsin Retirement System to contribute 50% of their annual pension payment an estimated 5.8% of salary; currently, employers make all pension contributions.
-- Health insurance: Requires state employees to pay at least 12.6% of the average cost of annual premiums—about double what they pay now.
-- On collective bargaining, it:
1) removes rights to bargain collectively for most of 175,00 state employees;
2) exempts most law enforcement, firefighters, and Wisconsin State Patrol;
3) does not allow employers to collect union dues in paychecks.
Political power in Wisconsin
-- State House is Republican controlled 57-38-1
-- State Senate is Republican controlled 19-14
-- AFSCME (American Federation of State, County and Municipal Employees) started in Madison in 1932.
-- Wisconsin was the first state to give local government workers and teachers collective bargaining rights with the Public employee Collective Bargaining Act in 1959.
-- State government workers got collective bargaining in 1970s.