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Graphic by Joe Timmerman Data courtesy of Institute on Taxation and Economic Policy
The above graph shows estimated savings for married couples of various incomes under the proposed tax changes.
From a student perspective, the highlight of the budget is a $181 million increase in funding for the UW system over the next two years. According to UW System spokesperson David Giroux, this investment will help keep tuition increases “very modest.” This is certainly a welcome change from the past two years, and we are grateful for it.
However, when viewed in light of the $315 million in cuts the UW System endured as a result of Walker’s first budget, this funding increase is not as impressive. After Walker’s first term ends in 2015, the UW System will have seen its state funding decrease by a net $134 million. Expecting praise from UW students for this budget’s funding increase is akin to expecting thanks from a person for cutting off their leg and then giving them a cane.
The rest of the budget is similarly a mixed bag. Several changes are worthy of praise, like increased funding for transportation and mental health services. Other aspects of the budget, however, are more worrisome. Take, for example, the proposed $343 million tax cut. On the surface, this sounds like a great idea — why not put money back in the pockets of hard-working Wisconsinites? However, the tax cut is likely too small to have a significant impact on the finances of an average Wisconsin resident or the state’s economy as a whole — a family of four making $80,000 a year would see their taxes decrease by roughly $106, according to the Wisconsin State Journal. While this is not a huge number, it is certainly better than nothing.
More worrisome, however, is who will see the greatest benefit from this plan. According to a report prepared for the Wisconsin Budget Project by the Institute on Taxation and Economic Policy, the lowest 20 percent of earners would see an average tax cut of two dollars — not very much help for those who need it the most. Further, the lowest fifth of earners would receive only 1 percent of the total tax cut, while the top fifth would receive 54 percent of the cut.
Unsettling for Madison residents is the freeze on levels of shared revenue — the portion of taxes paid by city residents that ultimately ends up in city’s hands (like property taxes.) After heavy cuts in previous budget cycles, a freeze at current levels could make it very difficult for the city to keep up its current level of services.
While far from perfect, Walker’s latest budget is a significant improvement over last cycle’s, and he deserves credit for the improvement. However, it is important not to let current events overshadow history.
As a nation, a state and a university, we will almost surely be better off in two years than we are now —
partly as a result of this budget. The important question, though, is will we be better off in two years than we were in 2010? We certainly hope so, but the answer is still far from clear.
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