Wisconsin taxpayers should be very, very scared

Last week we reported about new revenue projections that Wisconsin will have a record surplus at the end of the fiscal year, almost $6.6 billion.

At the time, we talked about the tax implications. Some conservatives want to repeal the state income tax, and, besides ourselves, that idea has some heavy-hitting supporters, such as former Gov. Scott Walker, not to mention the state's largest business association, Wisconsin Manufacturers and Commerce.

Other Republicans are a little shy about replacing the whole caboodle, so they are lining up for a flat tax, and that seems to be the way the GOP leadership in the legislature is leaning.

Even Gov. Tony Evers seems ready to get in on the tax-cutting act. While he's keen to spend most of the money, he's talked about a middle-class tax cut, too, aka throwing some bones to the masses as he spends wildly to grow the size of government.

But before everybody breaks out the champagne, there are some somber realities to consider, namely, that if everyone would just focus on cutting unnecessary government spending, the tax cutting would take care of itself. A government that spends less can tax less.

The truth is, no one in power - not Democrats, not Republicans - wants to cut the spending side of things. Oh, Republicans talk a lot about it, but they never actually do it. Not even when Republicans controlled the entire Legislature and the governorship did they cut state spending.

Indeed, sometimes our Republican friends can act like foxes guarding the henhouse. That is to say, they are masters at tax cutting but have a hard time cutting spending to pay for those tax cuts.

As a wise observer once said, Democrats are the party of tax and spend, while Republicans are the party of borrow and spend. Spending is the common denominator - the honey in the pot for politicians of both major parties - and, of course, what's borrowed today is ultimately paid back in the form of higher taxes on future taxpayers.

Take Scott Walker's last budget in the 2017-19 budget cycle. The Republican budget borrowed $771 million, and, even without the borrowing, it kicked general fund spending upward by 2.1 percent, or $1.5 billion more than the previous budget, according to an analysis by the MacIver Institute.

Indeed, while we hear about Walker's and the Republicans' heroic tax cutting during those years - and it was significant - we hear little about overall government spending during the same time period. So let's look a little: In 2013-15, spending totaled $70.1 billion; in 2015-17, $72.7 billion; in 2017-19, $76.5 billion. In general fund spending, which is where the taxpayer needs to pay close attention, spending grew from from $30.5 billion in 2013-15; to $32.9 billion in 2015-17; to $34.6 billion in 2017-19.

But that was then and this is now, and Evers and the Democrats want to spend a whole lot more than that. This week the Evers administration released the 2023-25 agency budget request reports and they included some eye-popping numbers, as we report in today's edition.

For example, in general fund expenditures (essentially, the amount taxpayers would pay), agency spending would increase from $19.665 billion to $20.808 billion for fiscal year 2023-24 and to $22.148 billion in fiscal year 2024-25. That's an increase of 5.8 percent in 2023-24 over the current year and an increase of 6.4 percent in fiscal year 2024-25 over 2023-24.

Overall, general fund agency spending would be 12.6 percent more in 2024-25 than they spent in 2022-23. Total agency GPR spending over the biennium would amount to about $3.6 billion, or 9.2 percent, more than if current spending levels were maintained.

To be sure, the agencies won't get all they want, but, on the other hand, as the DOA cautioned, to its credit, that's not all the agencies will be spending. Agency budget requests do not generally include funding for possible increases in debt service, fuel utilities, state employee compensation and fringe benefits, or University of Wisconsin faculty pay adjustments, and state agencies' capital budget requests are not included.

So the Democrats want to go on a wild spending spree, and one might be tempted to ask: What's the problem with that, given that big surplus sitting in the bank?

Well, there are a lot of problems with that. The first is that embedded in the spending are social justice and other policy initiatives that would poison our communities. The budget proposals would legalize marijuana, expand Medicaid coverage, and let school districts spend excessively without voter approval, among other things.

And just generally, increased spending increases government control over our lives. It's a myth that government bureaucrats exist to serve. Elected officials exist to serve, but unelected bureaucrats exist to regulate. That is their reason for being, make no mistake about it, and given a blank check, regulate you is exactly what they will do.

Indeed, embedded in those swollen expenditure proposals are requests for hundreds and hundreds of new positions for state government: The UW-System wants 783 new positions; DHS wants to add 248 positions; the Department of Safety and Professional Services wants 72 new positions, and so on and so on.

So what do you think those newly hired bureaucrats will spend their time doing? We're just asking.

Beyond that, with new spending comes new policies. Hidden in the budget proposals are plans to legalize recreational marijuana, and to loosen levy caps in school districts so they can raise your taxes without going to referendum as much, among other things.

Perhaps all of the policy proposals are good ideas. Perhaps none are. But they should be debated and decided on their own merits.

Lastly, spending all that money to create new positions and programs are not just one-time pay-outs. Those positions and programs will continue far into the future and will have to be paid for far into the future, long after the surplus is gone.

In other words, taxpayers should be very, very scared.

Taxpayers should be afraid because we have leaders who love special interest spending and who are afraid to call for bold tax reduction. Add to that a massive surplus of nearly $6.6 billion, and we have a perfect storm. The truth is, big surpluses and politicians don't - or shouldn't - mix.

We have a better idea. Of course, we always do, but this idea is even better than most. Rather than spend our way to hell - which means tax and spend if Democrats are in power, and borrow and spend if Republicans are in power - why don't we go the other way and reduce spending?

Why give the Department of Public Instruction $2.5 billion more in the next biennium when enrollment is declining? That can only mean most dollars are headed into the bureaucracy and not into the classroom, and it's why education standards are bottoming out.

Instead, let's blow up government school monopolies and embrace universal school choice, which not only gives parents control over their children's education but offers the same quality education - or better - at a fraction of the cost.

The truth is, all core government functions can easily be fully funded - including social services, law enforcement, education, highways, and a robust but responsible safety net - and the state income tax can be eliminated, too, if we just have the courage of conservative convictions and dare to slash and eliminate non-core government programs.

It's billions and billions and billions of dollars.

A long time ago, the iconic economist Milton Friedman showed us what a conservative budget looks like. It actually has nothing to do with taxes. You can cut taxes all you want, but if spending keeps going up, it's not a conservative budget because government keeps growing and the day of reckoning will sooner or later come.

"Keep your eye on one thing and one thing only: how much government is spending, because that's the true tax," Friedman wrote. "... If you're not paying for it in the form of explicit taxes, you're paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt."

And you can stop worrying about taxes, too.

Neither Republicans nor Democrats should be fooled by this whopper of a surplus. The big spending budget of Evers and the Democrats should be shot down, and we should let our legislative Republicans know we expect them to return that money to taxpayers.

But we should also let Republicans know we demand that they do more: We demand that they cut spending, at long last.

That is the way to economic heaven. We don't have to say where the other direction leads.