Tabor Pains

Voters fight for control of government spending

But will construction feel the pinch?

By Jeremy Harrell

Thomas Whowell, Fontana's village president, finds it all a little ironic.

Outraged over a plan to pump $10 million of public money into a private $100 million lakefront development project, citizens in Fontana rallied to collect signatures and ultimately approve a new village ordinance requiring referendums on all public expenditures of more than $1 million. The direct-legislation ordinance, like others passed recently around Wisconsin, is based on the idea that elected officials don't always have their constituents' best interests in mind, at least when it comes to spending their tax money.

But on the same April day voters approved the ordinance, they elected three people to the Village Board even though those candidates opposed the ordinance.

"You had people voting for candidates they don't trust," said Whowell, who also campaigned against the ordinance. "There were some people who gasped at the idea that a small village would be involved in spending $10 million in a retail property. Now we're sort of saddled with something we didn't really want."

Village leaders will soon find out if there will be saddle sores. The Village Board has put a measure on the September ballot for a $2 million project to repair and relocate a wastewater lift station. Normally, for these kinds of projects, the village would hire an engineer to collect boring samples, prepare site plans and generate a sound cost estimate, all of which the village's Planning Commission would then approve and put out to bid, Whowell said.

But because of the referendum requirement, village leaders can't invest too much money upfront since there's no guarantee there will be a project to build. Instead, the village will likely take out advertisements in a local newspaper, hold at least one town meeting and generally hope an electorate unaccustomed to thinking about these kinds of intricate municipal matters will take the time to become informed, Whowell said.

The village of Fontana's president predicts that the quality of water in Lake Geneva will suffer if voters don't approve a $2 million project to repair and relocate a wastewater lift station on the shores of the lake. The project is the first test of a recently adopted ordinance requiring villagewide approval for projects of more than $1 million. Photo by jeremy harrell

What's happening in Fontana isn't an isolated incident. On the same day Fontana voters approved their direct-legislation ordinance, citizens in nearby Lake Geneva passed an identical measure.

And providing a backdrop, or centerpiece, for all of this is the so-called Taxpayer Bill of Rights, a proposed amendment to the state constitution that would tie state and local government spending to increases in inflation, population or some combination of, or variation on, similar measures of growth.

Like its local direct-legislation cousin, TABOR would require a referendum before government could open its pocketbook for any tax increase or spending that went beyond the rigidly applied growth formula. That would cover everything from the automatic yearly increases in the state gas tax to bonding for local building projects.

Depending on who's talking, TABOR is either the end of public construction as the industry knows it or the last salvation for a state whose taxes are spiraling out
of control while its business climate is withering.

In a recent newsletter, Joe Wineke, political coordinator for the statewide International Union of Operating Engineers Local 139, predicted TABOR would cost his union "hundreds if not thousands of jobs." Faced with pinched budgets, state and local governments won't trim police departments or medical assistance but instead target discretionary spending. "Guess what that is: roads, bridges, sewer and water projects, maintenance and building," Wineke wrote. "Yep … all our work!"

Andrew Reschovsky, a professor of applied economics and public affairs at the University of Wisconsin-Madison, recently completed a study analyzing the effects of TABOR on the state's budget. According to his calculations, if the state had adopted TABOR in 1986, at the dawn of former Gov. Tommy Thompson's era, by 2003 the state budget would be 68 percent of its current size. Faced with such a dramatic downsizing, state lawmakers would have to contemplate a cascading series of difficult choices, Reschovsky said.

By far, public education and medical assistance make up the lion's share of the state budget. And if, for instance, legislators cut too heavily into public schools to bridge the TABOR-induced budget gap, the state would certainly face lawsuits charging it with abandoning public education, Reschovsky said. If, on the other hand, lawmakers took an axe to medical assistance, the state would run the risk of shutting down federally mandated programs and spurring an enormous outcry that it's sticking it to the neediest citizens, Reschovsky said.

"Which are the things that are easiest to cut?" he said. "Certainly building projects would be one of them. Those are the things most likely to be cut, and sooner rather than later."

Nonsense, said state Rep. Jeff Wood, R-Chippewa Falls, who co-wrote the most extensive TABOR proposal this year. First, he said, Reschovsky's numbers are off the mark. Citing a study by the Legislative Fiscal Bureau, if the state had enacted TABOR in 1992, by 2002 there would have been a 3 percent, or $1.5 billion, reduction in the state budget, nothing as dramatic as the picture Reschovsky paints, Wood said.

Second, TABOR is not as inflexible as critics make it sound, he said. The amend-ment accommodates a community's growth, and if its population and tax base are on the rise, "spending increases will reflect that," Wood said.

Most important, TABOR injects a sense of responsibility that's been lacking in government, he said. If, say, a road needs fixing, voters will elect people who will get it done, or they'll prove themselves shrewd enough to approve spending increases to make it happen. "People will always vote in their interests," Wood said. "Eventually, you're going to replace your elected officials if they're not spending money in the right place."

Then, placing himself in a position of local government leadership, Wood continued: "If we have a cap, I can short Medicaid or the road budget to protect special interests. Right now, I don't have to make the tough choices. It forces us to make those choices today. It will require challenging interest groups."

The bottom line, he said, is that "we have a government that's growing beyond people's ability to pay."

or now, TABOR is dead, or at least in a long hibernation. The pro-posal saw life this spring, but neither house of the GOP-controlled Legislature could muster enough support to bring any one of the many competing amendment concepts to a floor vote.

Then, for less than a week in July, it looked as though it might awaken. Senate Majority Leader Mary Panzer, R-West Bend, suddenly found herself fighting for her political life after a fellow Republican, Rep. Glenn Grothman, also from West Bend, challenged her in the fall election. Grothman pronounced Panzer's failure to pass TABOR a slight to taxpayers, and in a move widely viewed as a cool political gesture, Panzer reconvened the Senate, which was in recess until January, to vote on a version of TABOR that hadn't been written.

But less than a week after Panzer recalled the Senate and quickly put together a plan, the proposal died, again because Senate Republicans couldn't gather the necessary votes. Still, even those who denounced the Legislature's hasty rush to amend the constitution in 2004 promise that the subject will be the first measure lawmakers take up in 2005. In other words, the battle will continue, and advocates on both sides will surely take up arms once again.

For some, TABOR represents a paradox. Legislators are asking voters to admit that the people they elect can't control their own spending habits.

"We seem to be edging closer and closer to direct democracy and away from representative democracy," former GOP Gov. Lee Dreyfus wrote in a June open letter to state legislators. "If any of you in either party aren't up to the task of meeting your constitutional responsibility to control taxes, then you should leave office and let someone replace you who can and will."

Why would lawmakers choose now to abdicate their elected duties?

"Looking at the last 10 years, I would say they already abdicated," said Todd Berry, president of the Wisconsin Taxpayers Alliance. "At a time (the 1990s) when you had tax collections rising as fast as incomes, they managed to end the decade with a $1 billion to $3 billion deficit.

"People see the inability to practice sound fiscal management. People see the inability of the government — local government, state government, all collectively — to plan and manage its finances with any apparent plan over the last five to 10 years."

Whether it's TABOR, direct-legislation ordinances, last year's failed attempt to institute a statewide property-tax freeze or actually putting money into the state's rainy day fund, "we have to come up with some mechanism of putting rationality back into spending," Berry said.

This movement is gaining traction at the local and state levels because government is generally held in low esteem. Recalls of local officials seem to be at an all-time high, Berry said, and there's dissatisfaction with both the state budget deficit and the billions of dollars of debt federal lawmakers are racking up in Washington, D.C.

"People don't distinguish between levels of government," Berry said. "It tends to trickle up and down. There's this sense that elected officials don't have (voters) best interests in mind."

Which brings things back, in a way, to Whowell's sense of irony. The Fontana Village Board is unusually competent and boasts one member who holds a master's degree from Oxford University and another who's a retired comptroller and vice president with General Electric. These are people who can be trusted with the people's money, who can make decisions about important construction projects without breaking the bank, Whowell said

So what happens if the voters don't see the need to replace a lift station that was designed to handle 1,400 gallons of water a day and now sees as much as 6,000 during wet weather?

"If it doesn't pass, we'll shut off everybody's sewer for 10 days," Whowell said, with only a hint of humor in his voice. "The potential for the (sewage) to go into the lake is high."

He said he knows where the blame will be cast, and it won't be at the voters who failed to approve the project.

"I don't want to be the subject of an interview with the guy who closed Lake Geneva," Whowell said.