When the dreaded "budget fix" lands on Scott McCallum's desk (probably in April or May 2002), the details are unlikely to look anything like his original proposals, which have been derided, dumped and rejiggered not just by the Democrats but by his Republican colleagues in the Wisconsin Legislature.
Still, expect him to take the credit for any final fixes. And he deserves it - in the same manner that the top dogs at Enron deserve credit, for opening many eyes to what executives can get away with when we trust people like them.
You can also expect municipalities to think they've dodged a bullet when they see the changes, which probably will retain their shared revenue for now. But they haven't escaped anything. They're looking left when the car is coming from the right.
What McCallum can take credit for is making everyone focus in the wrong direction. The atmosphere has been trim, hedge, flinch, accuse, operate out of fear, make decisions for election advantage. The public and much of the media remain deflected from the real causes of the state's fiscal problem and, even worse, from any solid long-term solutions.
McCallum's entire presentational technique with the deficit was a shell game. It did divert attention from his own responsibility, as he looks ahead to an election that he hopes will take the "acting" or "appointed" from in front of the title "governor." It's been politics of the most calculated order, ignoring or misrepresenting the important facts.
And you know, he just might get away with it.
The governor has a bully pulpit. He can have a President fly in to raise money for him, just as George Bush once had Enron's Kenneth Lay raise money for him. He has big campaign coffers to tap for a television sales job that paints any opponent as a tax-happy fiend, TV ads that even fudge remarkably on the actual tax burden carried by Wisconsin citizens.
In news coverage, well, he's the gov. He can always get the TV cameras to give him a minute away from the noise to make a statement, while lesser officials or angry protesters are lucky to get five seconds or are forced to shout their concerns.
And of all the governors in the United State, Wisconsin has given him the strongest line-item veto pen, which translates into final mischief making. That enables him to coerce trims and changes beyond what is agreed to in compromise sessions between the GOP controlled Assembly and the Democratic controlled Senate. And those folks face re-election, so they have to calculate not just what should be done but what the governor can do with what they've done, and how he can pound them politically in the process.
With all that power, though, McCallum has proved far clumsier and less believable at the game than such predecessors as Tommy Thompson. Certainly he badly underestimated the outrage when, in announcing his plan to close the projected $1.1 billion state revenue gap on the backs of municipalities and other local governments, he labeled them "big spenders" and suggested that everyone could find something like worker benefits to get rid of.
As it turned out, he didn't know his own proposals. News story after story demonstrated how thoughtlessly strung together were his original deficit-reducing ideas - and how, as one example, he was hurting worst the municipalities that had been the most frugal.
He caused both elected officials and newspapers to examine the facts and conclude, as one newspaper stated, that the big spenders are "in Madison, and they not only spend big, but they can't save a dime, either."
Indeed, it was the behavior of the administration he has been part of, coupled with his own politically-calculated decisions to find scapegoats, that put us in this mess in the first place - not, as he originally and rather shamefully suggested, all the fault of 9/11.
Whatever effects that horrifying event had, whatever added expenses it put on state services, the root problems pre-existed those hijackers. This nation is proving itself fully capable of rebounding from tragic loss and from terrorist expectations that we would fold and huddle. So surely citizens should be strong enough to face economic facts of life, not be coddled as simpletons.
Last year's downturn jeopardized many economic sectors and states, but it stemmed from multiple factors. In Wisconsin, in particular, it hit at a time that exposed the vulnerability of the state's past practices. Not just unions but economic experts, bond-rating agencies, taxpayer organizations and a slew of elected officials have been defining the problems for some time with such blunt terms as "reckless fiscal policy," "spend now-worry later," and "evading the state's core responsibility."
McCallum in one swoop tried to switch the blame to the municipalities that have, in many cases including Milwaukee, been toeing the line on expenditures. His theory must be that misery loves company, because his assault actually wound up jeopardizing some of those municipalities' hard-won high ratings with the financial community. Now they were being as questionably viewed by investment firms as the state is.
McCallum then threw the state legislature into a messy, overly partisan, chaotic special session with a deadline that allows no real handle on the future and forces slash and burn tactics with uncertain consequence.
All that, of course, we can give McCallum strong credit for.
Not that his mistakes take the rest of us off the hook. We all share some of the blame, the way blind trust in the intentions of executives did in workers and investors at Enron. The economic growth of the 1990s made us giddy and careless. We forgot that boom times are precisely the times corporate and governmental excess can escape notice, because people aren't paying attention or really don't get incensed with a little rip-off here and there. That reality is reflected in the Milwaukee County recall elections.
Wisconsin failed to slow down despite a number of warning voices and warning signs. In a perfect world, the whistle-blower would be our elected officials, especially the governor, first Thompson and the McCallum. In the real world, the hoped-for whistle-blowers become the chief creators and the cheerleaders.
As a result, we have swollen state spending in areas where there are no measurable returns. We have let the Republicans invite private companies in to grab more tax dollars. We wasted rainy day funds so that only $49 was left; we accepted some bizarre accounting practices and revenue projections, we spent much of the tobacco settlement money in 2001 to make the government tax balance look good.
Many states are suffering, but many have options we have already frittered away.
AFSCME and other workers confront McCallum in Racine, photo by John Heckenlively
The governor didn't deal with the problem directly when he approved the fiscal budget last August. In fact, longstanding criticism of how the state projects income was ignored. It is these estimates of what consumers and businesses will spend, and hence pay in taxes, that form the basis of the state's two-year budget. We banked too much on those forecasters. They may not even be as good as Miss Cleo.
The state has been told for a long time that all it was doing was sending the wolf around to the side door. The same month of August the budget landed on McCallum's desk, a leading bond company, Moody's Investor Services, was issuing a report downgrading the state because of "persistent structural deficit imbalance." The Moody's report said that though many states with manufacturing bases would be affected by the economic downturn, "the situation in Wisconsin is more acute because of the state's traditional policies of maintaining minimal reserves and paying relatively little planning attention to recurring spending commitments."
Even as that report lay there, McCallum approved a two-year $47 billion budget and even predicted that there would actually be a surplus of $25 million to handle it.
Three months later, that same projection system indicated a $300 million deficit. Three months after that, that underestimation of $325 million had turned into a $1.1 billion deficit projection.
And brace yourself. All those "fixes" they're working on right now don't take into account the state experts' own projections that there is a new $1 billion gap on the horizon (even double that in some accounts). Both sides would love to keep that out of the news until after the November election.
When McCallum realized he would start facing an ever-growing deficit, he pointed to the terrorists publicly while privately he began to orchestrate a political response. Careful leaks began after the New Year about what he wouldn't touch (schools, safety nets), then came the plan to eliminate shared revenue and the stern finger-wagging at local "big spenders." Simultaneously came the Bush-senior type pledge of no new taxes and those TV ads prepared in advance by the GOP, looking like official McCallum declarations. The ads claimed the tax burden on citizens was the state's greatest problem and actually inflated the statistics to make that case.
It quickly became clear that governmental operations were far more intertwined that McCallum seems to have realized. Even the areas he promised to protect were under the ax. He was indeed increasing school costs, he would eliminate programs that protected the elderly and gave the poorest families a leg up. He certainly caused panic in higher education. And where he wasn't taking essential services away directly in state aid, he would be forcing other governments to do it.
McCallum continued to offered a blizzard of inaccurate statistics, such as shared revenue was only 4% of the budget for a city like Milwaukee, while the actual figure turned out to be around 45% of city revenue. He said we have too much government (who could disagree?) but he didn't mean the size to which the state government had grown, or the fact that it now costs half a million dollar for each state legislator to do his or her job.
Instead, he said, surely all the problems lay in the hodge-podge of municipalities, counties and school districts that dot our state. Of course, to many people, those are precisely the local government units they can get response from and have control over, not to mention that localities tend to embody many people's sense of community identity. The folks in Prairie du Chien, Hales Corners, Franklin or St. Francis were not ready to give up their names or their control of schools.
What McCallum didn't share was the harder facts. For instance, even leaving aside school funding and shared revenue, the state's budget jumped 26% in five years. The city of Milwaukee, as one "for-instance," faced frozen shared revenue and imposed frugality measures that kept its growth below the rate of inflation, under 12% in the same time period.
But surely, you think, McCallum makes some sense in suggesting that regions consolidate services. Selectively that's possible, but consolidation is not an overnight budget fix. Real, effective consolidation of services has to be thought through, offered for valuable purpose, rejected where unwieldy and then sold community by community. There is too much evidence that hasty consolidation leads to poorer services for more money.
What about letting private companies run more municipal services? Did we just say poorer services for more money? That's certainly the frequent result. Add to that less control for and accountability to the taxpayer. You can look at several states for examples, or just peek inside Wisconsin's own W-2 problems, or the failures combined with overruns by private firms operating everything from prisons to child welfare.
Sure, there are solid fixes to the state's problems, including both cutbacks in expenditures and facing up squarely to the issues of state revenue and whether "revenue streams" - no one likes to say taxes anymore -- need considerable sharp adjustment and rethinking. But to make hard choices, first you must tell the truth. McCallum just plain hasn't.
Consider the conclusions of Prof. Joel Rogers, director of the Center on Wisconsin Strategy at the University of Wisconsin-Madison and a noted expert on public policy. In a multiple-part analysis of the state budget deficit written for the Capital-Times in Madison, Rogers concluded in mid-March:
"It turns out that our governor has repeatedly been lying to us about the dimensions of the problem, and the distributive burden and long-run consequences of his proposed solution. He's lied about our tax burden, lied about where it falls, lied about where the budget deficit comes from, lied about its real size, lied about the effects of ending shared revenue, lied about who'll bear the burden of that, lied about his other cuts in spending and lied about the longer-term fiscal position the state will be in if we enact his package of reform. . . .
"The important point is that we're not working with the truth if we base ourselves on what the governor says. We're flying blind."
