On Friday, April 30th, Milwaukee County Executive Scott Walker agreed to meet with El Conquistador to discuss issues that pertain to his candidacy for governor. Among some of the issues we discussed were Harley Davidson's recent announcement, Arizona's new immigration bill, rumors of Mark Neumann changing to an Independent, and Tom Barrett's job creation plan. This will be the first of two articles concerning Scott Walker's interview.
The state of Arizona recently passed a law that makes illegal immigration a "state" crime rather than just a federal crime currently administrated by federal agents. The new law empowers local police officials to check the immigration status of citizens when there is probable cause or reasonable suspicion. Walker believes however, that Arizona went too far stating that "Immigration is fundamentally a federal issue." According to Walker, Arizona's law impedes on the inherent right of the federal government to do its job and to protect her borders.
Interestingly, Walker noted that some in the media have tried to make Arizona's law into a dispute between conservatives and liberals. He said that conservatives are quick to invoke the 10th amendment when they fear that the inherent rights of states are infringed. As an example, Walker used the right of states to run their own health care programs rather than being at the mercy of federal mandates such as Obamacare. According to Walker, just as the Constitution does not support federal mandates on health care, the Constitution does not support the right of states like Arizona to enforce its own immigration law.
Walker also believes that some conservatives who now support Arizona's new law largely ignore the fact that the Constitution lays out the specific obligations of the local and federal governments. He said that state government shouldn't have such "broad powers" to target anybody or to pull over anyone requiring proof of their country of origin.
Harley Davidson recently announced it was weighing options on whether to keep some their plants in Wisconsin. Due to a slumping economy, Harley Davidson is looking to cut $54 million a year in manufacturing costs. At best, this means they will renegotiate employee contracts and reduce their wages or benefits. At worst, Wisconsin could lose up to 1,700 jobs if Harley decides to close operations in Menomonee Falls and Tomahawk.
When asked why Harley Davidson is considering such options, Walker noted that fewer and fewer people have disposable incomes because the marketplace has been driven downward dramatically. But Walker said that without a doubt, Wisconsin's tax climate, specifically Combined Reporting, has added to the cost burden of Harley Davidson.
Combined Reporting is a 125 million dollar corporate tax increase passed last year by a Democrat-controlled legislature and signed by Governor Doyle that targets larger businesses for the work they do in other states. For example, the location of Harley Davidson's headquarters is in Milwaukee, but they also have subsidiary plants in Pennsylvania and Missouri. Combined Reporting is designed to retrieve extra tax revenue from businesses like Harley for the income they earn in other states. The Republican Party of Wisconsin has characterized Combined Reporting as the result of "revenue-hungry governments" that reach outside their jurisdictions for money in order to patch up otherwise deficient state budgets. Either way, this Combined Reporting is estimated to have cost Harley Davidson $22.5 million last year alone.
Logically, if the new Combined Reporting law cost Harley $22.5 last year, and Harley recently issued a statement that they intend to cut $54 million a year in costs, then it can be rationally inferred that Combined Reporting played a role, perhaps a significant role, in their recent decision to consider closing down plants in Wisconsin.
As governor, Walker says he would reduce the tax burden on businesses like Harley in an attempt to keep jobs in Wisconsin. Promulgating a corporate tax increase during a tough recession may be an effective way to increase tax revenue for the state, but it forces businesses like Harley to renegotiate contracts with employees who may lose their wages and benefits as a result. Walker said that the best way to create jobs in the state is by "getting government out of the way" so employers can lower the costs of doing business and ultimately put that money into more people working.
When asked if Barrett had out-performed him by producing a $23 million surplus in Milwaukee, Walker made it clear that the city of Milwaukee typically runs surpluses every year because of big tax increases and by dipping into their Tax Stabilization Fund.
The Tax Stabilization Fund is a reserve of cash kept by the city of Milwaukee to prevent substantial swings in property taxes each year. According to the Milwaukee Journal Sentinel, each year the mayor and aldermen pull money out of the fund to hold down the next year's property tax levy. Interestingly, by law, Milwaukee County does not have a cash reserve to hold down large swings in property taxes, and therefore Walker and the County Board much show more fiscal prudence when creating annual budgets.
Recently, Alderman Jim Bohl accused Mayor Barrett of distorting his surplus numbers for his gubernatorial campaign by using the cash reserve in the Tax Stabilization Fund to claim a $23 million surplus. Bohl, who used to work for Tom Barrett, issued a press release stating that Barrett's Administration previously announced that the Tax Stabilization Fund, at the end of 2009, would have a balance of $28.5 million. Currently, the balance is at $33 million, which means that Barrett's actual surplus is about $4.5 million, not $23 million as announced earlier. This would mean that Barrett's surplus for Milwaukee is about half of $8.9 million surplus for Milwaukee County.
Walker said that regardless what Barrett's real surplus numbers are, it's based on 4 to 5% tax increase. In contrast, Walker said his surplus for the county is based on streamlining government to run more efficiently, not resorting to taxing people more to make budgets work. Every year, for the past 8 years, Walker has proposed a 0% property tax levy increase. And when the County Board marks up the budget with a tax increase, Walker vetoes it back to zero. When considering the overrides by the County Board, Milwaukee County's budget had a tax increase of just over 2%, whereas the city of Milwaukee's increase was nearly 4.5%. Walker's inference is that Barrett, if elected to governor, will not hold down the taxes like Walker..