Public Policy Forum
McCallum Watch
By Joe Murray
In September 2001, Republican Governor Scott McCallum was feeling pretty good about his political future. Several polls, including his own, had him comfortably ahead of all his potential democratic opponents, the public approved of the way he handled security issues in Wisconsin after the attacks of September 11, and voters clearly understood the recession that was taking its toll in Wisconsin was not of his making.
Now, fast forward to May 2002. As Scott McCallum prepares for the most difficult and expensive campaign in his career, he finds himself in a precarious political position. With seven months to go before voters head to the polls to elect a governor for the next four years, McCallum has retooled his office and campaign staff in an effort to improve his sagging political fortunes. So what happened?
Deficit Politics
Faced with a $1.1 billion state budget deficit, McCallum introduced his plan to erase the deficit in January. The four main components of McCallum's plan included no tax increase, no cuts to K-12 education funding, retention of the state's financial commitment to senior citizens and the truly needy, and major cuts in state spending and state aid to local governments known as shared revenue.
It was the proposed elimination of shared revenue (state aid to local governments to help pay for local services like police and fire) that backfired on McCallum. The governor's plan called for the total elimination of this 90-year old program within three years, to be replaced by a new system of local financing-ostensibly one based less on state aid and more on locally-generated revenues. Despite their acknowledgement that the current system needs reforms, local officials went ballistic.
McCallum's plan, they said, placed too much of the burden of eliminating the deficit on their shoulders. Local officials and others who opposed McCallum's plan mounted a statewide media campaign to kill the governor's proposed cuts in shared revenue. They also made it a point to show-up at every budget hearing scheduled to outline the dire consequences of passing the governor's plan.
After three months of severe criticism of his deficit reduction proposal, McCallum's poll numbers began to fall. When local officials and public employee unions bought television and radio time to kill the governor's plan, Team McCallum responded with a low budget media buy that couldn't possibly compete with the drumbeat of criticism coming his way.
The governor's failure to adequately respond to his critics and promote the virtues of his plan was a serious political error. McCallum allowed opponents of his plan to define him to voters in a negative way. This violates one of the cardinal rules of politics: define yourself and your priorities before your opposition defines you. McCallum and his staff seemed ill-prepared to wage this fight.
Staff Changes
When early April polling showed McCallum behind two of his four democratic primary opponents, the governor decided he needed to overhaul his top advisors-both in his office and in his campaign. He replaced his chief of staff and campaign manager. Within days, his campaign consultant and top fundraiser left the campaign as well.
The new McCallum team of advisors are battle tested and highly experienced professionals. In addition to new staff, Governor McCallum has also reached out to former key strategists to Tommy Thompson. This group of Republican talent had felt ignored since the former governor handed over the keys to McCallum. Their experience in government and past gubernatorial campaigns should provide valuable counsel to the new campaign team.
But staff changes alone will not solve the problems McCallum has with Wisconsin voters. Some of the governor's own mistakes have hurt his image. Taxpayer financed commemorative coins bearing his picture, ill-advised plane trips for short distance travel, and off-the-cuff comments thought to be private that were not, have not strengthened the governor's image. Many of these "mistakes" are of the governor's making and can only be fixed by the governor himself.
A New Direction?
With a retooled staff, a few experienced advisors and a new sense of urgency, McCallum must find a way to control the debate over the outcome of the budget deficit reduction plan. Instead of responding to the latest barrage of interest group criticism over his plan to eliminate the red ink, the governor must get back on offense and make it clear to the legislature what is acceptable and what isn't.
Even though McCallum's plan to eliminate the deficit is controversial, it's the only real plan on the table. With the possible exception of the state Senator Gary George (D-Milwaukee), none of the four democrats running for governor have produced a specific plan to address the current fiscal shortfall. Jim Doyle, Tom Barrett, Kathleen Falk and to a lesser extent Gary George all defend the same programs McCallum has (K-12 education, seniors and the needy) and oppose McCallum's plan for elimination of shared revenue. The one McCallum priority they do not address is his no-tax-increase demand. Without a plan to reduce spending one can only assume tax increases would be their preferred method of filling the gap between spending and taxes.
For better or worse, the unmistakable truth is that the budget debate has in many ways defined Scott McCallum. What remains to be seen is whether voters in November judge him as a competent reformer or an inept bungler. Let the campaign begin!
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Budget Resolution Could Guarantee Future Tax Increases
By Michael Theo
With the legislature now in the final stages of resolving the state's budget deficit, the debate has now expanded from how to balance this budget, to how to avoid tax increases in the next budget. Bottom line: Hold on to your wallets!
The good news is Governor McCallum's core principals for balancing the budget have thus far been supported by both the Republican-controlled Assembly and the Democrat- controlled Senate. These principals include: no tax increases; no cuts in K-12 education spending; and no cuts for senior drugs or medical assistance for the poor. The governor and both Houses of the legislature also agreed to use substantial portions of the nearly $800 million of one-time tobacco settlement money to help balance the books. The WRA supported McCallum's budget in large part because of these core principals. The legislature should be given credit for agreeing with the governor on these points.
However, the governor had one other major "pillar" in his budget plan and that was to propose significant government reforms so that future budget deficits or tax increases are avoided. These reforms included some significant cuts in state spending and a brand new system of state aid to local units of government. These reforms were not embraced by the legislature, particularly the Democratically controlled state Senate.
The Republican-controlled Assembly did not completely approve the governor's proposed reforms for shared revenue, but they did make deeper cuts in state spending in order to balance the budget. The Democrat-controlled Senate prolonged the budget debate by holding weeks of public hearings to highlight the spending cuts proposed by the governor and the Assembly Republican budget. This proved to be a good public relations move. However, in restoring a substantial portion of the cuts proposed by the governor and the Assembly, the Senate package merely postponed the difficult budget decisions into the next biennium, which comes after the November elections.
According to non-partisan Legislative Fiscal Bureau (the legislature's budget office), the Assembly Republican budget would end the current biennium with a $190 million surplus. In dramatic contrast, the Senate Democratic budget would end the current budget with a $863 million deficit! By criticizing, then restoring large portions of the Republican spending cuts to the university, local units of governments and other areas of the state budget, Senate Democrats scored significant political points but also prolonged and exacerbated the state's fiscal problems.
Why is the Senate Democratic plan bad? Because next year the state will not have the tobacco settlement money, which is being completely depleted to balance the current budget. Without this one-time money, the deficit gap in the next budget will be too big to close through spending cuts alone, necessitating an almost certain tax increase.
It is also important to note that the silence on alternatives from all the Democratic candidates for governor has been deafening. By design, Tom Barrett, Jim Doyle and Kathleen Falk, have remained silent as to what they would specifically do as governor to address the state's budget deficits. (The fourth Democratic candidate, Gary George, has offered substantially greater detail of his plan to balance the budget.) Like the Senate Democratic plan to postpone these difficult budget decisions until after the elections, this strategy by the gubernatorial candidates may be politically wise, but it certainly exacerbates the state's serious budget problems and denies the public valuable insight in to how these candidates will handle the next budget should they become the state's chief executive. Come October, voters will be reminded that our current budget system is in need of serious reform and candidates for governor will be forced to detail how they plan to deal with the problem.
The next several weeks will write the final chapter of this complex and politically potent state budget. The final report of the eight-person conference committee will be sent to both houses for an up-or-down, no amendments, vote. With that vote, the 2002 elections will be off and running and voters will have to decide who acted responsibly in this crisis and who didn't.
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