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The Mechanics
« A Solution for Social Security Stratification and Silver Linings: Chicago's Population Drop »

Thu Feb 17 2011

Governor Walker, perhaps not so conservative after all...

I think at least one part of Governor Walker's proposal is actually very bad conservative policy.

The idea that pay raises outside the cost of living need to be approved by voters via a referendum is actually bad conservative policy. Why...

Imagine the economy begins to improve and unemployment goes down. Wisconsin has traditionally had lower unemployment than the national average so it will likely happen in Wisconsin before other states in the midwest. This produces pressure on wages that outstrips the CPI, so wages in general in the state start going up faster than general inflation. This would normally be a very good thing for a state, they would see increased tax revenues without the corresponding increase in costs. Now however since the state would not be able to easily adjust pay rates for state and local government workers, those workers start to fall behind private sector salaries for similar work.

Traditionally the benefits that employment from the state (such as a pension, employment stability) would be able to mitigate those issues to some degree. But with the other proposed changes the state as an employer loses those advantages over the private sector as well.

So you end up with a state that is behind on wages and unable to adjust wages without going to the voters. Imagine if McDonald's had to go to their shareholders to give raises and while you are making that argument to the shareholders you end up losing people to Burger King. The same thing is going to be true for government as well, the state has to compete to some degree in the private sector for workers, not in all roles, but in a majority of them and it is going to lose the flexibility to do so.

To use a more relevant example, Nurses. With the aging population and constrictions on nurse education you are going to have increased demand for nurses in Wisconsin. So non state run hospitals can chose a host of ways to address those issues including increasing compensation, the state will not have that flexibility to adjust to market conditions. So the next logical response for the state will to be contract the work out, ironically to those paying higher wages resulting in greater costs to the state.

But then again you would be known as the guy who went after the unions, so you would have that going for you.

 
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Tim Bowen / February 18, 2011 1:33 AM

On January 31, 2011, the state of Wisconsin had a modest budget SURPLUS:

http://legis.wisconsin.gov/lfb...

As of January 31, 2011, Wisconsin's budget was balanced and it had no financial crisis.

Following that, Governor Walker passed $140million in special interest legislation - $25million to add to a "job creation" fund which hadn't spent the first $73million still sitting in it; $48million for health savings accounts for persons with incomes over $139,000/annual who were using them primarily as tax shelters and did not withdraw money for health expenses; and a $67million tax shift scheme.

http://host.madison.com/ct/new...

Governor Walker now claims the state of Wisconsin has $137million budget shortfall, which is $3million under the $140million he spent.

Until Walker came in to office, there was no budget crisis in the state of Wisconsin.

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Feature

Parents Still Steaming, but About More Than Just Boilers

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It's now been 11 days since the carbon monoxide leak which sent over 80 Prussing Elementary School students and staff to the hospital. While officials from Chicago Public Schools have partially answered some questions, and CPS CEO Forrest Claypool has informed that he will be visiting the school to field more questions on Nov. 16, many parents remain irate at the CPS response to date. More...

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Substance, Not Style, the Source of Rahm's Woes

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It's not surprising that some of Mayor Emanuel's sympathizers and supporters are confusing people's substantive disputes with the mayor as the effect of poor marketing on his part. It's exactly this insular worldview that has gotten the mayor in hot... More...

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