What are the best ways to invest surpluses?

Jim Baumgart  Sheboygan County Supervisor

The Wisconsin State Budget, as received by Governor Walker, has been worked on, modified and recently completed by the legislature’s Joint Finance Committee. It now will go to the state Assembly, state Senate, a conference committee if needed, and back to the governor for his review and any vetoes he feels are necessary. No doubt, the Republican controlled legislature and Republican governor will like to have everything in place by July 1st when the new state budget year begins.

One of the things the present legislature’s Joint Finance Committee did was to cut the state income tax and modify and lower tax brackets. This will be a popular move and enjoyed by most tax payers. But, it’s not the first time it has been tried and it is worth a review..

Having been around the budget block for years, I’ve seen a number of state budgets developed and passed; so it may be helpful to provide a cautious perspective to what was done. A common desire of past legislatures, as in this one, is to “cut taxes” or provided “rebates” to the people paying the bills. After all, goes the argument, why should the state government keep my money.

Two good examples of “tax breaks” signed into law were by former Governors, Martin Schreiber and Lee Dreyfus. They were facing what looked like budget surpluses but, within a couple of years, they ran into major budget problems. It might be enough to say here that neither of these governors stayed on for another term in office.

Most people would agree that if the state is taking in too much in taxes, some modification should take place. But is this the appropriate time? Here are some present concerns:

- The goal of many within and outside the legislature is for Wisconsin to have a strong “rainy day fund” that would protect it from and during major economic swings. Without question, having a financial buffer in the private sector works well because it is good sound business. The same should also be true for state government. It is a major Wisconsin weakness.

- Many businesses could use an aggressive well planned state program to financially promote and support large numbers of new small start-up businesses. The present state program that is in place thus far, as an audit has shown, has not been a good example of success.

- Business in Wisconsin depends on good roads and infrastructure to move product to market. As is the case in Sheboygan County, both it and the state are getting behind in road and bridge repair. We need to find ways to invest and better take care of our transportation system.

- Wisconsin has high unemployment. Jobs and job training are key to improving that situation. Fixing our roads and bridges would put many construction people back to work. And, the money invested in such construction jobs goes around something like seven times within the state’s economy thus improving overall employment even more. As for job creation, we are not leaders.

- Lastly, training in the state’s technical schools would go a long way to improving our long-term employment and provide for higher paying skilled jobs that would have a lasting positive effect on the whole Wisconsin economy.

It is good to provide a tax breaks when appropriate But are we using seed money that, if wisely used, would benefit the whole economy of the state and its people. Like in the cases of Governors Schreiber and Dreyfus, we may have to wait to see what happens. But, passing up on a good rainy day fund, job training/technical schools, road and bridge repair, and small business financial support does raise some questions. Is it Instant gratification or long-term benefits?

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