Archive for April, 2009

PECFA Slush Fund

Gas Tax Slush Fund Known as PECFA  Serves as Piggy Bank for Pork

LFB Paper Here

Summary:
The PECFA fund continues to take in money it doesn’t need.

Rather than end the fee and thus lower the price of gasoline for Wisconsin families and businesses, the Governor is proposing cutting the clean up awards by five million dollars per year and the Legislature will further consider transferring 25 million dollars from the fund to cover general state expenses.

“This is another glaring example of how there is no such thing as a temporary tax or fee,” said MacIver President Brett Healy. “Rather than finish the jobs for which these funds were intended, lower the price of gas or pay off previous borrowing, the state wants to keep siphoning more money out of the gas tanks of Wisconsin consumers.”

Background
The petroleum environmental cleanup fund awards (PECFA) program was originally established to reimburse owners for a portion of the cleanup costs of discharges from petroleum product storage tank systems and home heating oil tank systems. PECFA awards are funded from the segregated petroleum inspection fund, which receives revenue from a 2¢ per gallon petroleum inspection fee assessed on all petroleum products that enter the state, including gasoline, diesel and heating oil.

Declining Need
According to the Fiscal Bureau: While new PECFA sites continue to be identified, the number declined from an average of over 100 new sites per month during the mid-1990s, to approximately six per month currently. The monthly average of claims received by the program declined from over $15 million per month in 1997, to $4 million in 2005, to $900,000 per month currently.

Slush Fund

According to the Fiscal Bureau: Over the years, the Governor and the Legislature has used PECFA as a slush fund, transferring funds to cover general expenses and bonding to cover this shell game. The state is paying debt service costs of approximately $31 million annually for the minimum required principal and interest payments on long-term obligations and interest-only payments on short-term obligations. Under current debt payment practices, the outstanding principal balance would be approximately $185.7 million at the end of 2010-11.

The Joint Finance Committee is scheduled to debate and vote on this taxing measure today.

Close The Achievement Gap By Following Florida’s Lead

[New Berlin, Wisconsin...] Wisconsin’s educational system could see dramatic improvements if the state were to follow Florida’s education reform lead, according to a new report issued by the MacIver Institute.

“Wisconsin has long prided itself on being a progressive state; however, in K-12 education Wisconsin needs much more progress,” said Matthew Ladner, the report’s author. “Florida’s decade of education reform demonstrates just how much progress could be achieved.”

On Wednesday, the Wisconsin-based free market, pro-liberty think tank, issued a report authored by the Goldwater Institute’s Ladner, which compared Wisconsin and Florida’s position on three key issues: Academic Standards, Alternative Certification and School Choice.

Wisconsin lags the sunshine state in all three areas.

“Florida students are improving academically at a significantly higher rate than Wisconsin students,” the report concludes. “In addition, children from minority populations are making the greatest improvements, demonstrating that Florida is making progress in the reduction of the achievement gap.  The aggressive education reforms implemented by Florida policymakers over the past decade appear to be having a positive impact.”

The gap between the achievement of minority students in Wisconsin and their counterparts is among the widest in the nation. To close the achievement gap, the MacIver Report suggests Wisconsin follow Florida’s lead in three areas:

  • On School Choice, the comparison between Florida and Wisconsin actually involves what Florida did right, rather than what Wisconsin did wrong. Both states have pursued expanded parental choice options, but Florida has simply done more.
  • Alternative certification opens whole new pools of talent for entry into the profession. When judging the racial and ethnic composition of the teaching workforce compared to that of their population over the age of 21, Florida, which has embraced genuine alternative certification for teachers, has one of the most racially integrated public school teaching forces in the nation. By contrast, Wisconsin schools have only half the number of minority teachers as there are minority adults, aged 21 and older, in the population.
  • The report finds the largest gap comes when comparing the states’ academic standards. In fact, Wisconsin’s accountability standards are embarrassingly far off from Florida’s; with what might be the most lax academic standards in the country.

“When we commissioned this report, we had hoped to find results that would spur debate and lead to real efforts to improve education in Wisconsin,” said MacIver President Brett Healy. “It is clear that policymakers from Wisconsin and across the country should study Florida’s model and implement similar systemic reforms.”

The John K. MacIver Institute for Public Policy is a Wisconsin-based think tank that believes in free markets, individual freedom and responsible government.

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Find the paper here: MacIver Report Wisc./Fla.

Library Not So Fine

The Governor has found a new revenue source to exploit: Your phone bill.

Here, he eliminates GPR funding for libraries, and instead uses the Universal Service Fund:

The USF was created in 1993 when the telecommunications industry was partially deregulated. Its purpose is to ensure equal access to technology like 911, devices for the hearing impaired and the Internet. In recent years, the Governor and the legislature has raided the fee to partially fund libraries.

But now the Governor is proposing even more of it be used to fund your local library, thereby freeing up the general tax revenues for more spending elsewhere.

Now, you may ask what the difference is if the money comes from your right pocket or your left pocket; you are still out the money. First, there is the principle of honest budgeting and keeping segregated fees for the purpose for which they were intended. Then there is also a neat little item regarding this newest shell game…

The Governor’s recommendation also includes a nonstatutory fiscal change provision to delete $11,297,400 General Purpose Revenue in 2008-09 and instead provide $11,297,400 Segregated Fees (From the Universal Service Fund) in 2008-09. However, because this amount was not appropriated originally in the 2008-09 fiscal year, assessments on telecommunications providers (which will be passed through to you, the consumer) this year are insufficient to cover the additional payment. That is, there is not enough money in the USF to make this year’s payment.

According to the Legislative Fiscal Bureau: Because the USF would have insufficient funding for this provision, the PSC would use interfund borrowing authority, provided to the Secretary of DOA under current law, to reallocate available balances from eligible funds in the state investment fund in order to cover the additional outlay in 2008-09. The PSC would then be responsible for levying sufficient charges on telecommunications providers, in 2009-10 or future fiscal years, in order to repay the borrowed funds. Funds that borrow money through temporary reallocations are charged interest at the earnings rate of the state investment fund. In February, 2009, this annualized rate of return was 0.88%.

To sum it up: The Governor is proposing to raid yet another segregated fund to pay for something other than which it was intended, and since the new fees on businesses that feed the fund (which will eventually be assessed and passed on to consumers) have not been imposed yet, he’ll borrow the funds in the interim.

Senator Mike Ellis said it best, here.

Once again, the governor has shown that if you give him an inch, he’ll take a mile,” Ellis said. “He’s not only opening the door he and the legislature cracked in 2003, he’s tearing it completely off its hinges. This is not a fee. It is a $12.6 million tax hike.”


The Joint Finance Committee is scheduled to debate and vote on this tax hike measure Wednesday.

The Growing Cost of Wisconsin’s Drop Out Rate

MADISON – Everyone pays when someone drops out of school. That is the sobering conclusion of a study jointly released today by the Friedman Foundation for Educational Choice and the MacIver Institute for Public Policy. The newly released study details the impact dropouts have on tax revenues, Medicaid costs, and incarceration costs. All told, the report concludes that Wisconsin could save $395 million each year by improving graduation rates.

“High School dropouts dramatically impact Wisconsin’s finances,” said the study’s author, Emily House. “Each student who fails to graduate from high school produces direct costs to taxpayers through lower tax revenues and greater social costs.”

The report finds that dropouts cost the state of Wisconsin $121 million in tax revenue each year due to lower wages. Because the average dropout earns approximately $10,000 less per year than a high school graduate, the report estimates that if all the high school dropouts did graduate from high school, earnings in Wisconsin would increase by almost $4.5 billion.

“This increase in earnings could be reinvested in the Wisconsin economy, resulting in job and wage growth, as well as increased productivity and revenue from taxation,” said House.

In addition, because high school dropouts are much more likely to rely on public programs such as Medicaid, social costs are increased. Approximately 40-percent of high school dropouts receive Medicaid benefits, as opposed to about 15% of high school graduates. The difference, according to the study, is an extra $120 million each year.

Higher incarceration rates also put an added financial burden on taxpayers. Because dropouts are statistically much more likely to be incarcerated than high school graduates, the study estimates that there would be 5000 fewer inmates if Wisconsin’s graduation rate was 100 percent. Such a drop in the inmate population would save an additional $154 million in incarceration costs each year.

“While most people understand the personal consequences of dropping out of school, less emphasis has been placed on the public cost of decreasing graduation rates,” said MacIver Institute President Brett Healy. “Our hope is that once people understand the tangible costs on each taxpayer, efforts at reform can move forward.”

The author of the report, Emily House, is a Fellow with the Friedman Foundation for Education Choice, a non-profit organization established in 1996 and founded upon the ideals of Nobel Laureate economist Milton Friedman and economist Rose Friedman

The MacIver Institute is named after John K. MacIver, who was a sterling example of the public spirited citizen. The MacIver Institute is a 501 c3 charitable foundation. For more information on this research report – or to view the entire report – please click the link below.

Drop Out Study PDF


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