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EDITORIAL: Hold spending to last year's levels
Tough decisions for government? Well, not yet.
GOV. JIM DOYLE and the Wisconsin legislature are locked in what has become a never-ending struggle to balance the bloated state budget. Billion-dollar budget holes have become commonplace.
One of the ways the state has trimmed its costs has been to limit the amount of money shared with municipal governments. That puts the squeeze on a primary source of revenue for the city of Beloit, one of the largest recipients of aid in Wisconsin.
Coupled with levy caps, the flat state aid is bringing Beloit to “a year of reckoning,” according to City Manager Larry Arft. Hard decisions lie ahead for the administration and city councilors.
MEANWHILE, GOVERNMENT in Wisconsin continues to rank among the most generous nationwide in spending for public employees, while personnel costs comprise the lion's share of budgets.
Last fall it was announced that 5 percent raises would be approved for thousands of state employees, including University of Wisconsin faculty and staff, nonunion executive branch employees and elected officials. A 2 percent raise went into effect in November, leading to another 2 percent in July and an additional 1 percent in April 2009.
Predictably, UW President Kevin Reilly complained that it's not enough to be competitive.
The state's union employees' Web site reported on April 4 that, “Any rumors regarding money being taken from the table or language being removed are just that - rumors with no foundation.”
Beloit's municipal employees will be receiving raises of about 3 percent.
Meanwhile, health care costs are rising rapidly for governments, just as they are for other employers. The main difference is that government generally pays a significantly larger share of those costs for its employees than the private sector does. Likewise, generous defined-benefit pensions are typically funded 100 percent by taxpayers for public employees, whereas the private sector largely has moved to defined-contribution benefits such as 401(k) accounts.
THE WEEKEND BROUGHT consensus economic reports that America has entered a period of recession. Late last week it was reported that the economy had lost about 80,000 jobs the previous month. One of the few sectors which expanded, hiring more workers, was government. Forecasters are predicting up to 2 million job losses before growth returns. In tough times, managing personnel levels is the fastest and most effective means for controlling costs.
So, is government really prepared to make the hard decisions? The kind of decisions being made every day in the private sector, like job eliminations, hours reductions, pay freezes and/or cuts, benefit rollbacks, outsourcing, and more? Consider, for example, the case of Beloit's United Industries' announcement last week, eliminating manufacturing in the city and consolidating jobs to a Tennessee facility.
Look, it's not good when anyone loses a job or faces other traumatic cost-cutting.
The point is, when government officials talk about hard times, such situations are often mild compared to conditions encountered during downturns in the private sector. It's not uncommon in the business sector for decision-makers to order spending held at or below previous-year levels. When government does that, it really will be “a day of reckoning.”
Until then, not so much.
GOV. JIM DOYLE and the Wisconsin legislature are locked in what has become a never-ending struggle to balance the bloated state budget. Billion-dollar budget holes have become commonplace.
One of the ways the state has trimmed its costs has been to limit the amount of money shared with municipal governments. That puts the squeeze on a primary source of revenue for the city of Beloit, one of the largest recipients of aid in Wisconsin.
Coupled with levy caps, the flat state aid is bringing Beloit to “a year of reckoning,” according to City Manager Larry Arft. Hard decisions lie ahead for the administration and city councilors.
MEANWHILE, GOVERNMENT in Wisconsin continues to rank among the most generous nationwide in spending for public employees, while personnel costs comprise the lion's share of budgets.
Last fall it was announced that 5 percent raises would be approved for thousands of state employees, including University of Wisconsin faculty and staff, nonunion executive branch employees and elected officials. A 2 percent raise went into effect in November, leading to another 2 percent in July and an additional 1 percent in April 2009.
Predictably, UW President Kevin Reilly complained that it's not enough to be competitive.
The state's union employees' Web site reported on April 4 that, “Any rumors regarding money being taken from the table or language being removed are just that - rumors with no foundation.”
Beloit's municipal employees will be receiving raises of about 3 percent.
Meanwhile, health care costs are rising rapidly for governments, just as they are for other employers. The main difference is that government generally pays a significantly larger share of those costs for its employees than the private sector does. Likewise, generous defined-benefit pensions are typically funded 100 percent by taxpayers for public employees, whereas the private sector largely has moved to defined-contribution benefits such as 401(k) accounts.
THE WEEKEND BROUGHT consensus economic reports that America has entered a period of recession. Late last week it was reported that the economy had lost about 80,000 jobs the previous month. One of the few sectors which expanded, hiring more workers, was government. Forecasters are predicting up to 2 million job losses before growth returns. In tough times, managing personnel levels is the fastest and most effective means for controlling costs.
So, is government really prepared to make the hard decisions? The kind of decisions being made every day in the private sector, like job eliminations, hours reductions, pay freezes and/or cuts, benefit rollbacks, outsourcing, and more? Consider, for example, the case of Beloit's United Industries' announcement last week, eliminating manufacturing in the city and consolidating jobs to a Tennessee facility.
Look, it's not good when anyone loses a job or faces other traumatic cost-cutting.
The point is, when government officials talk about hard times, such situations are often mild compared to conditions encountered during downturns in the private sector. It's not uncommon in the business sector for decision-makers to order spending held at or below previous-year levels. When government does that, it really will be “a day of reckoning.”
Until then, not so much.
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The following are comments from the readers. In no way do they represent the view of beloitdailynews.com.
Richard wrote on Apr 9, 2008 9:00 PM:
" Let's be clear on the raises approved for state employees as 5% might be viewed as the raise for one year. It is a 2% raise for the first year of the biennium (7/1/2007 through 6/30/2008.) That is followed by a 3% raise for the second year of the biennium (7/1/2008 through 6/30/2009) with 2% effective for the first 9 months of the fiscal year and the final 1% effective for the last 3 months of the fiscal year. It is a total increase of 5% over the course of 2 years. I don't think that 5% over two years will keep up with the rate of inflation. "
JG wrote on Apr 10, 2008 9:28 AM:
" DP - The editor is trying to point out that with the exception of property taxes (now subject to levy limits) and shared revenue (flat/declining for a dozen years) city revenue streams are extremely limited. In Wisconsin, cities can't raise sales taxes. I can see your frustration that state and local government employees are competing for the same scarce resources. However, state revenue streams are much more diversified and are climbing at a rate much greater than inflation every year.
The reason Beloit gets a large shared revenue payment is that it is unable to raise enough property taxes to support the basic services its residents need (unlike Madison). Our state constitution provides protection for all Wisconsin residents and legislators wisely recognized this when they devised the formula to distribute state funds to local governments. We have to take care of Beloit no matter what their means - similar to your theory on Healthy Wisconsin.
Note, the City of Madison gets a large payment for municipal services ($8.6 million this year) whereas Beloit only gets $20,000. In addition, Madison enjoys the immeasurable economic benefits of having thousands of state and university employees there. "
The reason Beloit gets a large shared revenue payment is that it is unable to raise enough property taxes to support the basic services its residents need (unlike Madison). Our state constitution provides protection for all Wisconsin residents and legislators wisely recognized this when they devised the formula to distribute state funds to local governments. We have to take care of Beloit no matter what their means - similar to your theory on Healthy Wisconsin.
Note, the City of Madison gets a large payment for municipal services ($8.6 million this year) whereas Beloit only gets $20,000. In addition, Madison enjoys the immeasurable economic benefits of having thousands of state and university employees there. "
jg wrote on Apr 10, 2008 10:36 AM:
" DP - The editor is trying to point out that with the exception of property taxes (now subject to levy limits) and shared revenue (flat/declining for a dozen years) city revenue streams are extremely limited. In Wisconsin, cities can't raise sales taxes. I can see your frustration that state and local government employees are competing for the same scarce resources. However, state revenue streams are much more diversified and are climbing at a rate much greater than inflation every year.
The reason Beloit gets a large shared revenue payment is that it is unable to raise enough property taxes to support the basic services its residents need (unlike Madison). Our state constitution provides protection for all Wisconsin residents and legislators wisely recognized this when they devised the formula to distribute state funds to local governments. We have to take care of Beloit no matter what their means - similar to your theory on Healthy Wisconsin.
Note, the City of Madison gets a large payment for municipal services ($8.6 million this year) whereas Beloit only gets $20,000. In addition, Madison enjoys the immeasurable economic benefits of having thousands of state and university employees there.
"
The reason Beloit gets a large shared revenue payment is that it is unable to raise enough property taxes to support the basic services its residents need (unlike Madison). Our state constitution provides protection for all Wisconsin residents and legislators wisely recognized this when they devised the formula to distribute state funds to local governments. We have to take care of Beloit no matter what their means - similar to your theory on Healthy Wisconsin.
Note, the City of Madison gets a large payment for municipal services ($8.6 million this year) whereas Beloit only gets $20,000. In addition, Madison enjoys the immeasurable economic benefits of having thousands of state and university employees there.
"
lefty wrote on Apr 10, 2008 2:52 PM:
" Can and should government tighten its belt? Certainly. But where to make the cuts? It is easy to say cut employees, benefits, etc. but let us take just one state agency--the University of Wisconsin.
Anyone remember the $250,000,000 cut UW took a few years ago with about half of that being made up in tuition increases? Take a look at all the UW campuses and you will find faculty positions being eliminated or being filled with part-time and adjunct faculty. I know of faculty searches on several UW campuses that have failed. Perhaps the most egregious case is an opening in accounting that has gone unfilled for 3 years because the campus in question is offering about $15,000 less than the going market rate. UW Madison lost a politicla sciencfe professor to Minnesota last year because Minnesota offered about $40,000 more than he was making in Madison. I know of several searches in a department of Criminal Justice that have failed because salaries and benefits are not competitive. I could go on and on. Think what you will of UW, but it is the economic engine of this state. IF UW (and not just Madison) fall into mediocrity (and some suggest it already has)the entire state suffers. "
Anyone remember the $250,000,000 cut UW took a few years ago with about half of that being made up in tuition increases? Take a look at all the UW campuses and you will find faculty positions being eliminated or being filled with part-time and adjunct faculty. I know of faculty searches on several UW campuses that have failed. Perhaps the most egregious case is an opening in accounting that has gone unfilled for 3 years because the campus in question is offering about $15,000 less than the going market rate. UW Madison lost a politicla sciencfe professor to Minnesota last year because Minnesota offered about $40,000 more than he was making in Madison. I know of several searches in a department of Criminal Justice that have failed because salaries and benefits are not competitive. I could go on and on. Think what you will of UW, but it is the economic engine of this state. IF UW (and not just Madison) fall into mediocrity (and some suggest it already has)the entire state suffers. "
rprp wrote on May 16, 2008 9:06 AM:
" According to Doyle agriculture is the economic engine of this state not the UW. The farmers receive hugh tax breaks all the time. I believe the education system is bloated and I really can't see where the schools in Wisconsin is so great according to Doyle especially with all the money they spend. This state has to make taxes fair to seniors and regular working people to shed it's reputation as being among the highest taxed state in the nation. "
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dp wrote on Apr 9, 2008 10:21 AM: