Politics

Scott Walker’s Corporate Tax Breaks Come Back To Haunt Him

CREDIT: AP

With the deadline to pass a budget drawing closer, Wisconsin Governor Scott Walker and his allies had been counting on increased tax revenue from a rebounding economy to help them avoid painful cuts to the state’s public primary schools and universities. But the nonpartisan Legislative Fiscal Bureau dashed those hopes this week, telling lawmakers that can expect no new revenue at all.

One of the biggest contributors to the crisis are Governor Walker’s 2011 tax cuts, which disproportionately benefit wealthy property owners and corporations, and have cost more than twice as much as originally predicted. New data shows the credits will cost the state at least $275 million in additional lost tax revenue over the next two years.

This is almost exactly the amount that Governor Walker wants to slash from the University of Wisconsin system, a threat that has already led several campuses into laying off hundreds of professors and staff.

The tax cuts are a major cornerstone of Governor Walker’s tenure — one he brings up in nearly every speech he’s made as he “explores” a bid for the White House.

But the singular focus on slashing taxes has taken the state from a billion dollar surplus to a nearly $2 billion deficit.

The budget Walker sent to the Capitol in February to try to address this deficit has gotten bogged down in debate, slammed by Democrats and Republicans alike for digging the state deeper in debt, and spending generously on tax breaks and a new sports stadium while cutting hundreds of millions of dollars from public universities.

More than $120 million in K-12 school funding is also on the chopping block. Lawmakers are scrambling to find ways to avoid cutting primary education, suggesting everything from increasing vehicle registration fees to delaying road repairs to abandoning the controversial plan to funnel hundreds of millions of tax dollars to build a new pro basketball stadium in Milwaukee. Even if they manage to find funding, the schools will almost certainly be facing the same steep cut two years from now.

As for the state’s universities, Republican leaders have admitted there is little hope of avoiding the deep proposed cuts.

But student activists, including United Council of UW Students President Amanda McGovern, are not giving up.

“This is a manufactured deficit crisis,” she told ThinkProgress. “This budget cut does not need to happen. There are other solutions that do not involve gutting valuable public institutions.”

Though they are currently juggling finals, UW students from across Wisconsin have been meeting with state legislatures to lobby for a compromise between the funding increase the schools originally demanded and the deep cut the Governor has requested: keeping the funding flat. When school lets out for the summer in just a few weeks, she predicts the protests will escalate.

More importantly, McGovern said, many students will be returning home to their small towns and organizing their communities against the cuts, which are already taking a toll on several campuses. The UW’s 2-year colleges have said they will be forced to ‘regionalize’ their administrations, so that three or four campuses would have to share one dean as well as library and HR staff.

“The two-year campuses are by far the most diverse. They’re really why the UW system exists in the first place,” said McGovern. “If you’re struggling academically or financially but you want to get a degree, that’s where you go. It’s even in their mission statement to connect with and serve the community, so it’s really problematic that they could lose their community aspect.”

The state’s Democrats have pleaded with Governor Walker to save the university funding by delaying the roll out of the next phase of corporate tax breaks, but he has so far refused.

“They’re saying it’s a priority but they’re not prioritizing it,” asked McGovern. “They say they don’t want to cut, but what does that look like?”

It’s a question lawmakers in many states are asking right now, as deep tax cuts passed by Republican governors have led to ballooning deficits and similar plans to raid public university funding.

In Kansas, Governor Sam Brownback’s tax cutting overhaul left the state coffers so low that public school districts will close down early this year.

In Louisiana, Governor Bobby Jindal — another likely candidate for president in 2016 — has chosen to preserve corporate tax breaks and cut the budget of the Louisiana State University system so deeply that the schools are exploring bankruptcy. Students and their supporters have descended on the Capitol to protest the proposed cuts, which seems to have moved some state lawmakers. On Thursday, the House of Representatives passed a budget that got rid of more than $200 million in corporate tax breaks — but Jindal has vowed to block the move with his veto pen.

And in Illinois, Governor Bruce Rauner’s budget that seeks to cut both income and corporate taxes and funding for the state’s universities is running into trouble this week. The Civic Federation, a budget watchdog, officially came out against the plan this week, calling it “unrealistic” and “unachievable.” In the state House of Representatives, the budget failed to get a single “yes” vote.

Despite these examples, Republican governors’ enthusiasm for slashing taxes, particularly corporate and income taxes, continues apace.

Amidst the current budget chaos, Governor Walker’s other major policy efforts have failed to win support, even from his own party. A plan to make the University of Wisconsin an independent “public authority” controlled by a Board of Regents appointed by the Governor died in the state legislature this week. A Walker-backed proposal to repeal wage protections for construction workers also came up several votes short.

Walker says he won’t officially launch a bid for the White House until legislators in Madison pass a two year budget — which must happen under state law by the end of June. Debates on the budget will continue in Madison over the coming weeks.