Public Policy Forum
Scandal Clouds the Capitol
By Joe Murray
Will voters re-elect most of the incumbents running for re-election to the state legislature this November, or will they decide that doing "business as usual" is unacceptable and change the political landscape in Madison?
That's the million-dollar question buzzing around political circles in and around the state Capitol these days. If past is prologue, the end result of the legislative elections is fairly predictable. Incumbents running for re-election win about 97 percent of their races. Incumbents enjoy huge advantages, which in most cases, their opponents can't overcome. Advantages such as strong name identification, free media exposure, and taxpayer-financed legislative staff and franking (mailing) privileges.
But there are strong indications that voters are not happy this year. Spring election returns and polling from around the state illustrate a strong and growing frustration with incumbents who many voters feel have turned a deaf ear to the constituents who elected them in the first place. Consider these examples:
- Former Milwaukee County Executive F. Thomas Ament was forced to resign in February for his role in approving pension changes that granted huge payouts to himself and his closest aids. In a follow-up special election, Milwaukee County voters elected conservative Republican State Representative Scott Walker to replace Ament in this Democratic stronghold. Walker ran on a "reform" agenda. And it's not over yet. Recall elections are now underway for several Milwaukee County Supervisors who voted for the pension sweeteners.
- A recall campaign in Door County ended with voters removing 15 of 20 county board members from office in February. The issue that enraged voters was a proposal to build a new $30 million courthouse. Not surprising, the plan to build a new courthouse has stalled.
- According to the Wisconsin Counties Association, the average turnover statewide on county boards was 25 percent in April. A quarter of county officials gone in one election! But four counties had over 50 percent turnover and five counties had turnover between 20 and 30 percent.
- Nearly half (45 percent) of county boards elected new chairpersons for the next two years.
- In April, Milwaukee Mayor John Norquist announced he would not run for re-election due to the fallout from a sex scandal.
- At the state level, polling indicates strong voter dissatisfaction with the direction of state government. When voters were asked, "generally speaking, would you say that things here in Wisconsin are going in the right direction, or have they pretty seriously gotten off on the wrong track?" 40 percent said the right direction and 50 percent the wrong direction. Ten percent were undecided. Voters are clearly agitated with the unresolved budget deficit and growing caucus scandal.
With a little more than five months to go before voters go to the polls, legislators from both parties are preparing to run for re-election in a Wisconsin political landscape marked by John Doe investigations, new legislative districts drawn by a three panel federal court, and spring election results that sent a clear message: voters want change. Incumbents defend the dysfunctional status quo at their own political peril.
The scandal cloud hanging over the state Capitol in Madison involves a year-long John Doe investigation into allegations that legislative aids employed by the four partisan caucuses (now defunct) conducted campaign work on state time, a clear violation of state law if true. The investigation has now expanded to include allegations that certain legislators used their position and traded political favors in return for campaign contributions.
The outcome of this ongoing investigation, in and of itself, could significantly alter the political landscape and defy conventional wisdom. As UW-Madison Political Science professor Don Kettl noted, "Indictments, should they occur, would be nothing short of an earthquake in state politics ... we've already seen signs of what could happen in Madison because of what happened in Milwaukee County. It turned Milwaukee politics inside out. Indictments would take what happened in Milwaukee and spread it statewide."
Legislative leaders from both parties could also find themselves (and their colleagues) in political trouble because of their decision to use taxpayer money to pay legal bills for themselves and staffers caught up in the Caucus scandal. So far, taxpayers have paid $666,800 in legal fees to top-flight law firms to defend five legislators and dozens of current and former legislative staffers.
The scandal has, in fact, already claimed its first casualty. Former attorney general candidate Brian Burke, a long-time Democratic state senator from Milwaukee, was a clear front-runner for attorney general before he withdrew from the race. With approximately $400,000 in the bank and virtually all the major endorsements heading into the September primary, Burke was regarded by many as the next attorney general.
But once the state released information on Burke's taxpayer financed legal bills, and it became known that authorities conducting the John Doe investigations searched his legislative office in Madison, Burke abruptly quit the race. His reputation as a serious policy wonk and all around good-guy vanished (it didn't help when he went on statewide television in March and stated that taxpayers should not pay legal fees for legislators caught-up in the investigation). He also announced his intention to retire from the Senate.
So, will voters return most incumbents running for re-election to the state Assembly and Senate? Conventional wisdom inside the Capitol says they will. Others point to the scandal cloud hanging over the legislature and suggest that significant changes could turn conventional wisdom on its head on Nov. 5. Stayed tuned.
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Charging The Hill on Banking
By Michael Theo
Over 50 Wisconsin REALTORSŪ joined seven thousand of their colleagues from across America in Washington, D.C. in mid-May to personally lobby members of Congress to support federal legislation prohibiting the Federal Reserve Board and the Treasury Department from authorizing banks to offer real estate brokerage and management services. In just two days, small groups of
REALTORSŪ made 535 congressional visits, resulting in five new co-sponsors in the House and four additional Senate sponsors-bringing the total sponsorship in the House to a majority (240 of 435)! The drive for Senate sponsors has just begun but the total is now 14 of 100, with many more expected.
Under the legislation, (HR 3424 in the House and its Senate companion S.1839), the Fed and Treasury are prohibited from granting real estate powers to banks. The Treasury attempted to do just that a year ago, but in response to overwhelming
REALTORŪ opposition and pressure from Congress, Treasury Secretary Paul O'Neill recently withdrew the proposal and said he would not consider reintroducing it until next year. Passage of the legislation will prohibit him trying again.
Congress rewrote the nation's banking laws several years ago under the Gramm/Leach/Bliley Act. This act retained the separation between commercial and banking activities. In doing so, Congress allowed banks to offer insurance and securities services, but specifically refused to grant them real estate powers. Having lost in Congress, the banks turned to the Fed and Treasury. This angered not only
REALTORSŪ, but also many in Congress who concur with NAR that only an act of Congress can grant such new authority to banks.
The REALTORŪ response nationwide to this effort has been substantial, sustained and successful-but this is no time to relax. NAR continues to seek additional co-sponsors for the legislation. In Wisconsin, Senator Russ Feingold and Representatives Tammy Baldwin (D-Madison), Tom Barrett (D-Milwaukee), Mark Green (R-Green Bay), Jerry Kleczka (D-Milwaukee), and Tom Petri (R-Fond du Lac) have signed on the bill. They deserve to be contacted by every
REALTORŪ and thanked for their support.
The following members of Congress have declined our invitation to co-sponsor this important legislation and should be contacted by every
REALTORŪ in Wisconsin and strongly encouraged to do so: Senator Herb Kohl, Congressmen Ron Kind (D-LaCrosse), Dave Obey (D-Wausau), Paul Ryan (R-Janesville) and James Sensenbrenner (R-Menomonee Falls).
For talking points on why banks in the real estate business is a bad idea, log onto the WRA Web site at www.wra.org/government/bankers_in_real_estate.htm.
Contact
Michael Theo with any questions.
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Wisconsin's Continuing Property Tax Problem
By Michael Theo
It's springtime in an election year and political talk is once again turning to the issue of property taxes. Property taxes remain one of the most vexing political and legislative issues for both state and local governments throughout Wisconsin. And despite Herculean bipartisan legislative efforts and hundreds of millions of dollars, local property taxes in Wisconsin remain among the nation's highest. So what gives?
A recent report by the respected Wisconsin Taxpayers Alliance (WTA) provides a superb historical and analytical view of why our property tax problems persist.
First, let's dispel any confusion about whether our taxes in Wisconsin are high or not. They're high-period. Some lawmakers and others have been trying to spin that we're not that bad. We are. And we are bad in large part because of our high local property taxes. A recent U.S. Census Bureau report stated that Wisconsin ranks 14th highest nationally in tax burden relative to income. Unfortunately, this report fails to take into account local property taxes. When our high property taxes are included, Wisconsin's total state and local taxes combined is the third highest in the nation.
The WTA report shows that statewide property taxes will increase approximately 7.2 percent this year-the same substantial increase we saw last year. That is more than double the rate of inflation (which is about 3.4 percent) and dramatically outpacing the growth in personal income (which is 4.4percent). The net property tax levy for 2002 will be about $6.57 billion (up from the $6.14 billion last year).
These sizable increases come despite the fact that school costs, the major driving force behind property taxes, have been limited by state law for the past nine years in an attempt to slow the rate of tax increases. What happened?
According to the WTA report, in the early 1990s property tax levies were out of control, increasing between 8.1 percent and 9.4 percent annually. School taxes during that period grew at a rate of 8.1 percent in 1989 to 10.7 percent increase in 1993. Public anger grew into legislative action and new laws were enacted to place fiscal restraints on school revenues and teacher compensation. The state also committed to paying two-thirds of school costs. The combination of state controls and new state money drove the school levies down 16.4 percent and total net property taxes dropped 9.4 percent according to the WTA analysis. School tax increases slowed to 5.1 percent in 1995 and dropped to just 1 percent in 1996.
Since the school related limits were enacted, school property taxes have grown an average of 4 percent per year-or about half as fast as they grew before the limits were in place. To an extent, one could argue the cost control measures have worked from the standpoint of controlling school property taxes. So if school costs are "controlled," why are property taxes going up so much? You guessed it-the "uncontrolled" costs that remain on the property tax for all the other levels of government are increasing at a much higher rate.
Gross property taxes (i.e., before state tax credits are counted) rose this year by 6.6 percent. Schools costs increased the least at 4.9 percent. Technical colleges on the other hand, increased 9.7 percent, counties increased an average of 7.9 percent and municipalities (i.e., cities, towns and villages), increased 6.6 percent. Various other "special districts" (like lake and sanitary districts) also grew by 13.8 percent according to the WTA analysis.
This distinct trend of levy increases for schools versus other property tax "users" has resulted in a noticeable shift in the composition of the gross property tax levy since 1987 according to the WTA. In 1987, school taxes accounted for nearly 55 percent of the total. By 2002, they have dropped to just 43.6 percent. Conversely, counties have risen 5.2 points to 20.2 percent of the total this year, municipalities are up four points to 24.3 percent of the total, and technical colleges are up two points to 7.3 percent of the total levy.
So it can be said that state-imposed controls have succeeded in keeping school spending down. But schools are the only local unit of government under such caps, (and schools will argue this has dramatically hurt education in Wisconsin). The other units of government have no similar controls and their costs have increased substantially as a result. Local governments argue that soaring health insurance costs, increased state mandates, and less revenue from the state because of dramatic increases in state school funding, has caused their property tax reliance to increase, ergo the increase in property taxes.
The state's current budget deficits have brought into sharper focus the entire scheme under which Wisconsin funds schools, local governments and state government. The fact that the state's dismal fiscal picture is not likely to change any time soon, means the next governor (whomever is elected in November), and the next legislature, (whichever party is in the majority), will have to enact major reforms in our state and local taxing and spending formulas. Given Wisconsin's high property taxes, these changes will likely directly impact key
REALTORŪ issues like housing affordability, quality schools, transportation funding, public safety and the provision of other local services.
For more information, contact Michael Theo.
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