Leftist canards, troubling GDP trends, taxpayers win with choice Celebrating 35 years of advancing freedom in Wisconsin Tracking the Trillions Local pols filling old budget holes with massive COVID aid Enormous fiscal cliff on horizon By Mark Lisheron Using billions of emergency pandemic bill dollars to plug gaping holes in their budgets, local governments across Wisconsin and the country are setting themselves up to ask for tax increases or slash services as basic as police and fire protection when the federal funding runs out. Just how steep this fiscal cliff will be is only beginning to be realized. Early research indicates that at least half of the more than $350 billion in State and Local Fiscal Recovery Funds (SLFRF) allocated in the American Rescue Plan Act is eligible to be used to provide government services, award salary increases or even pay down employee pension debt. A review of the few progress reports available through the U.S. Department of the Treasury shows that six of the seven Wisconsin cities and counties reporting, including Milwaukee, made SLFRF money available for use in propping up their budgets, more than $700 million of it. Milwaukee expects to use $245 million of its $394 million SLFRF grant to close gaps in the 2022-24 budgets. After that, without help from the state, city Budget and Management Director Nik Kovac told the Badger Institute, the city will have little choice but to lay off perhaps hundreds of employees “across all departments.” “This fiscal cliff, precipice, whatever you want to call it, we want to put it front and center,” Kovac said in an interview. “Using ARPA funds for this purpose is not a best practice, but the alternative is worse.” In an issue paper released in April, Beverly Bunch, a public management and policy professor at the University of Illinois-Springfield, said poor documentation of the ground-level spending was obscuring what could be a significant problem for local governments. “The fiscal cliff is real,” Bunch told the Badger Institute. “State officials need to be concerned about it.” Read more Viewpoint A leftist canard shot down – and why Wisconsin should worry about its GDP By Mike Nichols There’s this canard that comes from some on the left that Gross Domestic Product doesn’t really matter much because it doesn’t say anything about inequality or sustainability or our common humanity or, I suppose you could add, whether dithering leads to true happiness. And while it’s true GDP doesn’t measure the value of home-baked oatmeal cookies – which I think we can all agree are very important in life – I also agree with the perspective of Andrew Hanson, our visiting fellow and author of the first chapter in our Mandate for Madison. GDP is the still the number one, kick-ass (or depressing in Wisconsin’s case) statistic that economists and the rest of us should consider to see if we are measuring up to our neighbors. The way Hanson puts it in the book, actually, is it’s the “go-to, top-line statistic to measure the health of an economy.” “Productivity ultimately leads to income, and that leads to prosperity, so that’s kind of the first cut that an economist would look at on a big picture to see what does the economy look like.” That’s why Wisconsin’s per capita GDP in comparison to other Midwest states is so troubling. Right now, Wisconsin ranks 29th in the country (including the District of Columbia). Even more troubling: we’re trending in the wrong direction. In 2011, Wisconsin was the 4th most productive of seven Midwestern states per capita. We’re now second from the bottom. “That’s not the trend you want,” said Hanson. Read more Free Exchange Podcast Wisconsin’s Economy: A Comparative Study Thanks to advances in technology and changes in the marketplace, interstate mobility is easier today than it ever has been. So how is Wisconsin doing in its effort to attract and retain citizens in search of fruitful opportunity? In this episode, economist Andrew Hanson discusses his findings published in our Mandate for Madison. From GDP to population growth and income migration, hear how Wisconsin compares to its closest Midwest neighbors — and don’t miss Andrew’s recommendations to set the state on a path for growth. Listen in At a Glance Weekly Survey: Are you concerned that Wisconsin is falling behind nearby states’ economic productivity? Answer below! 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