Here a Loophole, There a Loophole...

...everywhere a loophole.

We wanted to pass a property tax freeze, badly. And that’s what we did: we passed a property tax freeze, badly. Perhaps it’s Governor Doyle’s fault – the freeze that finally became law was his, after all the changes he made. But things wouldn’t have been much different, had the Republican freeze passed instead.

The problem with a property tax freeze is that it freezes property taxes (with some loopholes), and not other sources of revenue. As a colleague of mine put it, this is like squeezing a balloon. You make one part of the balloon smaller, and another part gets bigger.

If it gets too big, it pops.

All over the state, governments are creating new fees and increasing existing ones, often shifting existing costs to the new fee revenue. Why? Because fees aren’t affected by the freeze. Taxpayers are paying for things like snow removal, trash pickup, leaf pickup, water hydrant maintenance, and recycling (and the list grows), which once were funded through the property tax.

Have property taxes gone down, because that funding has moved to a fee? Nope.

And new fees are popping up. One favorite, the “stormwater runoff” fee, popularly known as the Rain Tax. Communities are putting new fees for fire hydrants on your water bills.

The state isn’t innocent of this, either. Governor Doyle was elected in part on his promise not to raise taxes, so he squeezed the balloon and found other ways: shift, borrow, and fee. In two budgets, the state (Governor Doyle and the Legislature) increased fees by nearly $500 million.

People are frustrated. Taxpayers have had enough. Just read through this Milwaukee Journal Sentinel story – the frustration seeps through. Can’t ignore it.

This is why the drive for a Taxpayer Bill of Rights (TABOR) continues to grow. The promises are wearing thin faster than taxpayers’ wallets. People want a change.

Sen. Glenn Grothman (R-West Bend) is expected to release his new version of TABOR anytime now. He’s actually calling it the Taxpayer Protection Amendment (TPA). Okay by me. As long as it works, call it whatever you want.

As long as it works – that’s the key. It has to actually restrain the growth of government. Keep it within the taxpayers’ ability to pay. Give the voters the right to decide how much they’re willing to pay for their government.

Back to the Property Tax Freeze: it had loopholes, which local governments have used to continue spending more. If there are loopholes in the TPA, there’s no doubt government will use them.

Leadership in both houses of the Legislature have promised a vote. Tax and spending limits – the TPA – were front and center at this week’s announcements about the Assembly agenda. We have an opportunity now.

There are lessons to be learned from the property tax freeze, from other states, and from Wisconsin’s experience with K-12 revenue limits and referendum requirements. Hopefully we will be wise enough to use them in our TABOR, or TPA, or TASC (as it is known in Arizona).

I will let you know how close to a winner for the taxpayers we have.


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Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.

The Road to Serfdom

A colleague of mine once said “we’re all heading toward Socialism – Democrats take big steps, Republicans are taking little ones.” The demand for more and more public services, and the demand for more and more government intervention in our daily affairs, is pushing us further and further into a centrally planned – socialist – state.

Many of us understand intuitively that socialism doesn’t work. Half a century ago, an Austrian-born economist wrote a book that explains why.

Friedrich A. Hayek, while living in England during World War II, realized that the increased government control during wartime would eventually pose a threat to the basic freedoms of the Western world.

In response to that potential threat, Hayek wrote “The Road to Serfdom.” Although paper was in short supply in 1944, the book went through 6 printings in 16 months, and was translated into several different languages.

Fifty-five years later, Heritage Foundation President Edward Fuelner wrote “it is no exaggeration to say that ‘The Road to Serfdom’ simultaneously prevented the emergence of full-blown socialism…and planted seeds of freedom in the Soviet Union.”

The book’s point is simple: a society based on individual decision making works, because the very nature of that society creates efficiency and protects freedom. A controlled economy does neither of those things.

In our society, individuals make decisions. Individuals making decisions (in seeming chaos) is what makes up the market. The market drives our economy. It’s messy, but it works.

In a centrally planned society, a central planner takes over the decision-making power which, in a capitalist society, belongs to individuals. This central planner decides how many people make what kind of shoes, how many buildings of certain types are needed, etc.

Hayek wrote: “When all the means of production are vested in a single hand, whether it be nominally that of ‘society’ as a whole of that of a dictator, whoever exercises this control has complete power over us.” It doesn’t matter what the individual wants: what matters is what the central planner thinks we need.

Why won’t central planning work? Because it’s not possible for one person or a group of people to be aware of local conditions in Green Bay, Los Angeles, and Miami all at the same time, much less those in Europe and Asia.

In a capitalist society, the kinds and numbers of shoes that are made is determined by the people who buy the shoes. That creates efficiency – individual shoemakers get the message faster that they’re making a product nobody wants. Central planning will never get it right.

Capitalism also protects freedom, by removing the controls a centrally planned society places around individual choice. “It is only because the control of the means of production is divided among many people acting independently that we as individuals can decide what to do with ourselves,” Hayek wrote.

The capitalist system is messy, imperfect, and does need constraints to protect individuals. It requires the rule of law to make it work.

The rule of law, while not always perfect, is at least impartial. The rule of man (central planning) is subjective and subject to corruption, therefore inherently unfair.

Like the decision-making process, the rule of law is also something better done locally. Just like economic decision-making, a central planner can’t know the conditions everywhere. That’s why the Founding Fathers reserved power for the states.

States which have more sensible (not necessarily weaker) regulation, including lower tax rates, have better economies. Their citizens have higher rates of pay, which broadens their individual decision-making ability. Like an economy that places all the authority in its bureaucracy, a state with high taxes and lots of regulation will suffer for it, as more economic activity moves to those states which don’t.

Click here for some select quotes from the book.
Click here for a pdf version of “The Road to Serfdom.”

I urge you to read it. It’s a quick and easy read, and you’ll be amazed at how valid it still is today.


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Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.

Unaffordable Agenda

Governor Doyle is changing his stripes. Now he wants “affordability.”

That’s what he said in his State of the State Address last week: his “affordability agenda” will help the ever-squeezed middle class afford life in Wisconsin.

The state’s going to make sure you’ve got health care, that your kids go to college, that your home is heated and that you’ve always got a good-paying job.

And we’re going to pay for all that by…squeezing the middle class, I suppose. Or more accurately, their kids.

Someone is going to have to pay for it, after all.

Remember when then-Attorney General Doyle was a candidate for Governor? He was adamant that Wisconsin’s budget process had to be cleaned up. No more accounting gimmicks. No more kicking spending down to future budgets. No more relying on excessive borrowing to pay for today’s spending. No raising taxes. He specifically ruled out raising the fees for drivers’ licenses. He was furious that the state had raided the tobacco settlement to pay for current spending, because that money was supposed to be used for something else.

He wanted an honest government we could all afford.

Then he got elected, and in the grand tradition of politicians who say one thing and do another, he broke all those promises.

He has made frequent use of accounting gimmicks, which has left us with a $2.1 billion deficit. He shifted money from revenue-funded accounts (transportation, conservation, recycling) to pay for current spending, and increased borrowing to make up the difference. His administration has worked overtime to find new ways to tax our citizens. He raised fees.

All the things he said he wouldn’t do, he’s done.

This reduces our hope of reversing a troubling trend: the trend of people with money, assets, and/or earning potential leaving the state.

You may have seen this story a few weeks ago. The non-partisan Wisconsin Taxpayers Alliance did a study, which shows how Wisconsin lost $4.7 billion in net worth during the years 1995-2000.

Why? High taxes, fewer economic opportunities, less incentive to invest in our state. Retired people are picking up and moving, and they’re taking their property and their money with them. College grads are leaving, because there are more and better job opportunities elsewhere. Investors are looking to states which offer higher and faster growth.

Granted, Governor Doyle wasn’t governor during those years, so that’s not his fault. But he was elected in large part because he promised an agenda to reverse that trend.

Instead, he gives us an “affordability agenda” which promises more taxes and fees to pay for it, more bureaucracy to administer it, and more regulations to enforce it.

Great idea.

The reason Governor Doyle’s “affordability agenda” isn’t affordable is: it expands the power and scope of government. Far from being affordable, this is certain to be unaffordable in the long run.


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Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.

How about an Accountability Agenda for Governor Jim Doyle?

Budget Deficit: How can Doyle say that “our budget is balanced” when the official recap of the state’s finances for 2004/2005 shows that Wisconsin ended the past fiscal year with a $2.12 billion general fund deficit according to generally accepted accounting principles (GAAP).

Taxes: How can Doyle claim that he “solved the worst fiscal crisis in history…without raising taxes” when the non-partisan Legislative Fiscal Bureau reports that taxes and fees went up $368 million in his last budget?

Property Taxes: How can Doyle claim credit for a tax freeze when his vetoes left major holes in the freeze and when he claimed last summer that the average tax bill would go down $5 and yet it went up this year?

School Choice: How can he claim that “I’ve asked the Legislature to increase the cap in the Milwaukee school choice program…protecting families already enrolled…while providing basic accountability” when he vetoed the legislation (three times) to lift the caps and vetoed legislation to increase accountability?

Health Care: Why did it take Doyle three years to recognize that health care is a huge issue and why did he not explain why is the only Governor in the country to veto the removal of the state tax on Health Savings Accounts (HSAs)?

Higher Education: Why did Doyle talk about affordable higher education and not explain why tuition in the UW system went up more than 50% during his term?

Ethics: Why did Doyle claim that he demands “the highest standards of integrity” and not mention anything about the second ranking official in his Department of Transportation hosting a fundraiser for his campaign with executives who do business with state government? Why did he fail to commit to prohibitions on those seeking to do business with the state giving to his campaign while contracts are bid?

It appears as though the Governor is hoping that voters will not hold him accountable for the questions left unanswered in his speech or for explaining how he plans to play for all of the new government spending announced in his speech. Therefore, we need an Accountability Agenda to hold Governor Jim Doyle accountable for his actions (or inaction).

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Scott Walker, Candidate for Governor

The Spending Gap, the Promise Gap

What if your paycheck this month was only half the size you expected?

You’d ask your boss about it, of course. He promises that you’ll get the rest next month. But next month comes, and you are paid that month’s salary, but not the other half owed to you.

Your boss says don’t worry, I’ll take care of it next month. But he doesn’t – in fact, your paycheck is still smaller than it’s supposed to be. This happens again, any time your employers’ cash gets a little tight.

How long would you put up with that?

What would your bank say if you tried that with your mortgage? Maybe, for one month, they’d let you put off part of a payment. But you’d better make up for it the next month.

We don’t to expect the private sector to accept it, but it’s routine for our state government. For example, local governments and schools get the money the state promises them just after the New Year begins. Yet we make them pretend they get it before the New Year.

According to the Wisconsin Taxpayers Alliance, our state government spent $2.12 billion more than we actually had last year. That’s a $2.12 billion deficit over that 12-month period.

But wait – Wisconsin’s Constitution requires a balanced budget! True, and the budget was balanced. In fact, according to the way the state handles its books, the budget was $4.1 million in the black.

In the private sector, accountants use “generally accepted accounting principles,” or GAAP. Generally, the rule is: don’t spend what you don’t have, either in hand or on credit.

A CPA who ignores GAAP rules could lose his/her license, be fired, even go to prison. It’s very serious.

The state uses what are called “budgetary/statutory” (B.S.) standards, which means the budget is balanced as long as the statutes – thus the Legislature and the Governor – say it’s balanced (I wish my bills were paid just because I say they are).

So: Wisconsin was $2.1 billion in the red, or $4.1 million in the black, depending on how you look at it.

GAAP deficits aren’t unusual for the state. Throughout the 1990s, we had GAAP deficits ranging from $743 million to $1.5 billion.

Then the recession hit, and our deficit exploded to over $2.3 billion. Then-AG Jim Doyle made it a campaign issue – no more accounting tricks!

And yet, that’s exactly what he gave us. More accounting tricks, more borrowing against the future to spend now, more spending what we don’t have, and a GAAP deficit that is poised to get even bigger over the next two years. Budgeting by Ponzi scheme.

The promises to stop this practice come every couple of years, but it never does stop.

The definition of insanity is to do the same thing over and over, expecting different results.

According to that definition, we’re all insane. We keep sending people to Madison on promises of responsible budgeting, but those promises are never kept.

Time to try something new.


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Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.

Kicking the Spending Can

Governor Jim Doyle has very flexible shoulders.

He must, considering how much he’s been patting himself on the back lately.

The source of his pride: property taxes, which have grown at a historically-slow rate this year, thanks (according to him) to his property tax “freeze.”

He says property taxes are up by only 0.8% statewide. The Wisconsin Taxpayers Alliance says it’s more like 2%, which is still about half the average annual increase of the last 10 years.

A lower-than-average statewide increase, but that doesn’t mean everyone got a nice surprise in their property tax bills this year. There are wide disparities of increases and decreases in individual tax bills. Some are much smaller, others much bigger, still others unchanged.

This is to be expected – local conditions mean a lot to our property tax bills. But even if your bill is lower than last year, don’t be too pleased. It’s not going to last.

We have to keep several things in mind. First, our state government paid for the “freeze” by playing games with taxpayer money. The recently-passed state budget shifts $427 million from the Transportation Fund, and makes up the hole with greater borrowing.

Then, Governor Doyle uses that money to spend $330 million more on schools – this “buys down” property taxes. The dirty little secrets: it all comes from the same place: the taxpayers. And it will cost the taxpayers even more in the long run.

Second, many local governments are enacting new “fees,” like the Rain Tax, to generate more revenues. In many cases, these new fees are offsetting and surpassing any decreases in property taxes.

Third: even the success of holding statewide property taxes to a 2% increase won’t last.

As the Wisconsin State Journal’s Scott Milfred writes:

“…smaller property tax increases during or soon after an election year inevitably lead to larger property tax increases.”

For example, after school revenue caps were put into place in 1993, property tax growth slowed for four years, and even fell for one of those years. But then:

“After that, property taxes grew faster again. The levy increase was more than 4.5 percent during six out of the next seven years, and as high as nearly 10 percent in 2001.”

That’s what will happen in this case, too. The “freeze” is only law for two years. After that, property taxes will begin to rise again, possibly even faster than they would have without the “freeze,” as local governments try to “make up for” the frozen years.

Bottom line: this is the same old, same old. Higher taxes (in the form of higher “fees”), accounting tricks, and kicking the problem – government spending that grows faster than our ability to pay – down the road for another budget to solve.

All the things Governor Doyle and the Legislature promised to stop two years ago. And people are surprised when I vote against the budget every two years.

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Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.