It's Morning Again in Wisconsin

Dear Gov.-elect Walker (Scott):

Welcome back to Madison.

While you were busy convincing us to elect you, most Wisconsinites were scratching their heads, wondering who would want to be governor. After all, state government is awash in red ink and riddled with partisan bickering. Oh, and in spite of the many people who just voted you into office, most of the public love their elected leaders about as much as they love the flu.

But you don’t see it that way, do you? You only see the upside, the possibilities. In that, we are all behind you. Right now Wisconsin is hurting. We are a state with limitless possibilities and a huge upside, yet we are smarting from years of broken promises and missed opportunities.

Successful leaders can see things that others cannot. They unravel problems that befuddle the rest of us. They map a course of action, and they stay true to it. That visionary quality and tenacity of purpose is what Wisconsin needs from you now more than ever.

It is the quality that sent Ronald Reagan charging headlong toward the collapsing Soviet empire. It is the quality that allowed Mitch Daniels and Chris Christie to strike a new course for Indiana and New Jersey, respectively.

Over the past several months, the Wisconsin Policy Research Institute has been talking to Wisconsin residents about what is wrong with our state government. People fall into two competing camps. The first camp — let’s call that the camp of the people — is full of residents who know that things are not right, but they have little idea what should be done to fix state government.

The second camp — we’ll call it the insider camp, or the problem camp — has a jaded view of state government. Its residents fully expect that, even though the voters are pushing back hard against the status quo, the new cast of partisans in the Capitol will return to form, issuing a flurry of predictable press releases while hammering out deals behind closed doors. They’re confident that within a year state government will look no different than it looks today.

People in the second camp — the problem camp — will reflexively finger the state budget as your biggest challenge. We’d expect that, since the state budget is their livelihood. However, at WPRI we don’t agree with their assessment, and we are guessing neither do you.

Budget dysfunction is only symptomatic of what is wrong in Madison. The underlying problem is that state government has lost its sense of direction and its values. Wisconsin state government routinely overpromises, underperforms and has worn out the path of least resistance. Solving the budget deficit without addressing the root problem is what government has been doing for decades.

Two years ago, a frustrated America bought into a vague promise of hope and change. Now America has turned to the conservatives for answers, and we are ready with fistfuls of serious, meaty ideas.

This past year, WPRI scoured the countryside tracking down the best thinkers to explain what needs to be done to restore our quality of life. They were not shy.
This all-star cast prescribed strong medicine for our ailing state. They called for a new, energized and accountable government, and they detailed a radically different approach to education. For those doubters who believe that no progress can be made without more money, take note: These ideas do not cost a dime.

The Refocus Wisconsin team prescribes a new progressivism for Wisconsin government. They show us how to scrape away layer after calcified layer of laws and programs and practices. People across Wisconsin are willing to do the hard work they call for. Your leadership can take us to this new vision for Wisconsin.

As you traveled the state, Scott, you saw that the people understand Wisconsin’s predicament. They know that the party’s over. As former Indianapolis Mayor Stephen Goldsmith wrote for Refocus Wisconsin, “We have entered a new era of big, muscular government. Political leaders believe that no problem is too complex or costly for government to address.” Democrats and Republicans alike have subscribed to this faulty thinking.

The party is definitely over. Fit us for that hair shirt; give us a heaping spoonful of castor oil. We can take it. But please, no more false promises. Better still, how about no promises at all? It’s the promises that get us in trouble.

No, this is a different era in Wisconsin — an era that calls for a lot less flash and a lot more competence. If Wisconsin were a football team, we’d be looking for a coach who is good at the basics — blocking and tackling.

No more razzle-dazzle. No more plans to eliminate poverty or to reinvent our economy or to save the environment. Just blocking and tackling.

Our outgoing leader, Gov. Jim Doyle, was the poster boy for the old way of thinking. It is little wonder that his popularity is lower than the December pollen count. Upon signing his last budget — the budget that sent the deficit soaring to $2.7 billion — surrounded by fellow Democrats and public employee union reps, the governor pronounced, “When times are better, we can restore what is necessary, and we can make new investments to make our state stronger.”

In other words, he was saying that once we get past this annoying recession, we can get back to the business of growing government and spending more money. Months earlier he had pronounced, “The choices we make will clearly reveal who we are and what we value.” Without knowing it, Doyle clearly articulated all that is wrong with state government.

Here are five things that Wisconsin wants:

1. Restore confidence in government.

You have lived here all of your adult life, so you know that Wisconsinites really don’t hate government. But they can’t recognize the government they have today. It is a lumbering behemoth.

In the 16 years between 1992 and 2008, state and local government spending grew at twice the rate of inflation. Had government spending been held to the Consumer Price Index growth, state and local spending per person would have been $6,700 instead of the $8,700 it actually was.

What did we get for that extra $2,000 spent per person? The public sees little benefit. It sees a government that has failed to produce results.

Refocus Wisconsin polling showed the depth of our disappointment. Done well before the blizzard of negative campaign ads began, the polling showed that 61% of us are either frustrated by or angry with our state government. We (63% of us) believe taxes are higher here than in other states, and we (61%) do not think we are getting value for the taxes we pay.

It is telling that this sour mood came from a population who describe themselves (70%) as being quite happy.

Most disturbing of all, WPRI found that, as a state, our self-confidence has been shattered. With the melancholy of a 19th-century Irish family having to send its sons and daughters away to find their future, Wisconsin families know that their children will have to leave Wisconsin if they hope to fulfill the American dream.

Fully 62% told us that they believe the best and brightest leave Wisconsin. Worse, 86% of the graduating seniors from the UW-Madison Business School — our economic future — said they know the best and brightest leave Wisconsin. We suspect that polling of 19th-century Ireland, at the height of the potato famine, would have yielded similar results.

It is little wonder that Wisconsin does not see a shimmering future. For 30 years, Wisconsin incomes have fallen below the national average. In state after state, children have surpassed Wisconsin children on standardized tests. Meanwhile, our state government routinely fudges the books, looking the other way on the constitutional requirement to balance the budget.

By nearly every measure, our quality of life is fading, and platitudes from politicians ring hollow. We know the truth.

The tip of the spear might just be public pensions, for that one issue embodies all that is awry in our state. While most people have put their retirement plans on hold, they see their public-sector neighbors retiring before their 60th birthday with a generous monthly check.

What really riles the bees in the hive of public opinion is the fact that public employees pay almost nothing toward their retirement. It is all taxpayer funded. Add it up, and the public sees its leaders serving up an extra helping of unfairness in the form of generous, free public pensions.

2. Reestablish a healthy relationship with business.

“The state is looking for me all the time. You’d think the state would be on your side, but they’re looking for me.” This was not a bank robber speaking, but a small-business owner from Milwaukee during a recent focus group. There was more colorful language from these job creators:

•           “They hate my guts.... They have no concern for what it takes to run a business.”

•            Wisconsin is “just a negative place to do business. We want your money, but we don’t want you here.”

•           “It’s ridiculously hard to do business here.”

I’ve heard you say, Scott, that these are the people we depend on to create the jobs that will pull Wisconsin out of the recession. Yet businesses have seen nothing coming out of state government to suggest that they should add jobs here. They feel harassed by a government that they believe is inefficient and unaccountable.

You need not be a classical economist to know that this is not a healthy situation, particularly in an era when the public psyche is fixated on jobs.

Economists on the left and right agree that the number-one condition to maximize growth is this: It must be easy to start and grow a business. But Wisconsin’s toxic business climate stands in the way.

Because of its anti-business culture, state government has bizarrely ignored the complaints of business, ostensibly because it makes for good politics among the Democratic majority. Why else would Gov. Doyle and his party continue to push environmental standards that destabilize the economic playing field for Wisconsin business?

Moreover, why did they ignore what business was telling them about the looming disaster that is Obamacare?

Can you explain to me why redistribution always trumps economic growth with this crowd? Politicians love to celebrate Wisconsin’s progressive tax system even though many scholars warn that successful economies are devoted to creating wealth rather than redistributing it.

The gulf between government and business is as troublesome as it is wide. Yet as former Gov. Tommy Thompson showed 23 years ago, the business climate is fixable. Here are steps you can take to get state government back in the economic growth game.

• Shut down the state Department of Commerce and create an independent, private-sector-driven organization held accountable for catalyzing economic growth.

•           Change state government’s attitude toward business. From top to bottom, state government should give business owners the same deference and service given to the penthouse guests at the Four Seasons.

•           Hold listening sessions to take the pulse of business. Listen, listen, listen.

•           Change Wisconsin’s tax mix. This will mean reducing the income tax, the property tax and, most important, the corporate income tax. Rick Chandler’s contribution to Refocus Wisconsin shows that this last change will add billions of dollars of investment by Wisconsin businesses. The long-term benefit to all
of Wisconsin should be obvious to all but the uniquely dim.

3. Set a new measure for success in government.

In the Refocus Wisconsin project, Stephen Goldsmith wrote that we have been living in an era in which “political leaders believe that no problem is too complex or too costly for government to address.” Our leaders surmised that if they did not swaddle every ugly problem in the comforting blanket of government, they had failed.

We saw this under Gov. Scott McCallum when he enthusiastically signed into law a prescription drug program for seniors when the state bookkeepers told him there would be no money to support the big new program.

We also saw Gov. Doyle’s empty commitment to pay college tuition for high-schoolers with a B average. It was a noble concept, a terrific message for our children, but it was nearly unfunded from day one.

Why do our political leaders feel obligated to start so many new programs? Quite simply, all those programs — Family Care, BadgerCare, SAGE, Healthy Wisconsin, Grow Wisconsin — are taken as a measure of a governor’s success.

You can change that. As of today, state government is a turnaround project. As is true of any turnaround, there first needs to be a solid financial platform before the enterprise can move forward. The new measure of success will be restoring state government to a healthy financial position.

And while you’re at it, why not squeeze the fat out of the budget process? Madison is accustomed to a state budget consuming six months. Your first budget should be done in far less time because, when you close the pay window, there is really very little to discuss.

Yes, the insiders will be upset by a budget steeped in reality. However, when you explain what is being done and why, the rest of Wisconsin will be with you.

4. Produce a real budget.

If we had been listening to business leaders, we would have heard them telling us is that Wisconsin’s dysfunctional state budget is costing jobs. The uncertainty that frames the future — the uncertainty that springs from a lack of trust in the state’s financial acumen — makes business leaders pause when they consider expanding here.

Where do you begin to chop this overgrown hedge? The reality is that you need to trim it nearly to the ground if we hope to see healthy growth in the future. This will take time. We would like to believe that you could produce a complete fiscal plan by February, when new governors traditionally deliver their budget address to 264 sweaty legislative palms.

That is probably not realistic this year. Instead, consider dividing the task into two steps. First, get on top of things with a one-year spending freeze. The focus of your first budget should be public employee pension and health insurance reforms. Employees have to begin paying a fair share of their benefits. You will hear the howls, but the more the insiders howl, the more the public will be with you.
This will provide a solid platform for your second budget. As David Cameron took over as British prime minister, he and George Osborne, the Chancellor of the Exchequer, took time to develop a strategy for reining in government spending. You will need to do the same.

You will also need to practice saying, “Yes, that is a very important program, but we cannot afford it.” You might even think about embossing it on your business card.
Beyond that, the state budget would benefit immensely from introducing an outside perspective. First, convene a temporary group, akin to the Expenditure Commission from the 1980s, to set a long-term spending goal for state government. The commission should be tasked not only with getting government spending back in the box, but also with determining just how much of the Wisconsin economy should be allocated to government.

This will provide a critical element that has been missing: a map for state government’s fiscal future.

Second, establish a permanent Economic Council. Many states have them to give government a perspective from the world of business and finance when shaping state government’s fiscal plan.

Then, when you prepare a budget for your second full year in office, make sure it is honestly balanced, puts funds in a rainy-day account and only spends money on programs that demonstrate quantifiable results, just like every successful business in Wisconsin.

This fresh approach will let the citizens of Wisconsin know that government is under control and that their voice has been heard in Madison.

5. Get serious about education.

Who knows better than you that Wisconsin’s education system is in serious trouble? Metaphorically, it is akin to thousands of children being trapped inside a burning schoolhouse. The alarm has sounded, and politicians have come running, just as they promised they would.

There is the latest “leader,” Jim Doyle, tossing a Dixie cup of water on the inferno and standing back, astonished that his efforts have made no difference. He complains to anyone still listening that we need more Dixie cups.

Such is the sad state of our once-fine public school system. There is widespread acknowledgement of a serious problem. Yet there is no urgency, only a continued call for more Dixie cups, i.e., more money.

Why so little action? One answer rests with the education power base. Government leaders in Madison have proved incapable of making a move without appeasing the education special interests. They have shown little or no motivation to change. They are vested in vigorously defending the status quo.

The second answer is that the editorial writers and the citizenry wrongly equate money with performance. When we polled the public, asking if they believe more money would lead to better learning, 57% of respondents said yes (41% said no). However, we also asked how much they thought their school district spends per student. The most common answer was about $6,000, less than half the actual amount. Hmm, if the public knew how much they are already funding schools, they might not see the need for more money.

You can start putting out the fire by funding results, rather than hopes. WPRI has argued that “state government can no longer distribute [school] aids with a stony indifference as to whether the money will improve the performance of students.”
We referred to school finance as “Wisconsin’s version of ‘don’t ask, don’t tell.’” Wisconsin needs to focus not just on inputs, but also on outputs. Overwhelmingly, the public says it is with us.

Sixty-seven percent of the public support using state aid to reward school districts that do a better job of improving student performance. Even two-thirds of Democrats think this should be done!

Our polling also showed that the public is far ahead of the education insiders in its appetite for other big changes. We asked if high school students should pass a test to graduate, and 82% said yes. We asked about tenure for teachers, and 60% felt a three-year waiting period is not enough — 50% wouldn’t mind seeing tenure abolished altogether. In Madison, there is almost no talk about a graduation test and not a peep about tenure.

Similarly, the public says it would support expanding school choice, charter schools and online learning. Wisconsin residents are also fine giving tax credits to low-income families who send their children to private schools.

The list of education reforms supported by the public — but opposed by the insiders — is a long one. With that in mind, here is a list of reforms that our Refocus Wisconsin experts say must be done if we’re to move beyond the usual half-measures. Oh, and none of these changes would cost a dime.

•           Build a true education marketplace for families by erasing the unjustified limit on charter schools, online schools and school choice. Also, rather than doing charter and choice schools on the cheap, let’s be honest and have all of the state dollars follow the students.

•           Take Colorado’s lead and create an independent state board to authorize charter schools. Parents and teachers should no longer have to go hat in hand to their local school boards asking for permission to start charter schools.

•           Expand private-school choice statewide and offer a tax credit to families who send their children to private schools.

• Restore meaning to the high school diploma by requiring students to pass a graduation test.

• Get the best people into teaching by hiking the grade-point requirement at schools of education. Also knock down the teaching barriers that keep out smart people who come from non-teaching backgrounds. And drop the antiquated residency requirement in Milwaukee.

•           Do what President Obama suggested and get serious about classroom accountability. Use the best student test data available (we’d suggest the value-added system developed at UW-Madison) to evaluate and pay teachers and principals. To make this real, it will be essential to differentiate pay between top performers and the not-so-good teachers and principals.

Scott, I think you will agree that our Refocus Wisconsin project is forthright and provocative. It is also a healthy reminder that Wisconsin’s most valuable resource is its people — hard working, honest and eager to try innovation. They are also slow to anger, but what we see in our polling is telling: Patience has its limits.

In one unified voice, the people have said they’ve had it. It’s time to get back to the basics. It’s time to move forward.