McCallum's Last Laugh
By Christian Schneider
They called him a nitwit. A moron. A boob. A lightweight. And that was just his supporters.
Seven years ago, Scott McCallum walked out of the Capitol a defeated man. After serving 14 years as Tommy Thompson’s Lieutenant Governor, McCallum finally got his chance to run the state as Governor for two years, beginning in 2000. During his brief tenure, he presided over a mild recession that forced him to make choices which euthanized his chances at re-election. What McCallum did to fix the deficit, however, provides a stark contrast to the current administration’s budgeting practices, and serves as a warning to future politicians that back up their words with action.
We know what ended up happening – Jim Doyle won the Governorship in 2002, eventually facing a $6.6 billion deficit in 2009. This followed years of the Governor and Legislature raiding funds to plug budget holes, increasing taxes and spending, starting new programs, and using questionable gimmicks to balance the budget. Even Doyle’s solution, which relies heavily on new taxes and one-time federal stimulus funds, creates a $2.3 billion structural deficit in the next biennium.
What’s interesting to imagine is what could have ended up happening had 32,000 people (the size of the City of Beloit) decided to vote for McCallum instead of Doyle in 2002, sending the incumbent back to Madison. Or had Tommy Thompson’s brother, Ed, decided not to run, which siphoned off 185,000 votes – nearly three times Doyle’s margin over McCallum.
During his brief tenure, McCallum proposed a number of items that, had they passed, would have made the current recession infinitely easier to deal with. In his initial budget, in which he faced a $600 million deficit, McCallum proposed capping general fund spending to the same rate that tax revenues increase during a biennium. Even though it didn’t help him in that particular budget, McCallum looked ahead and saw the potential for large deficits in the future. In order to restore some fiscal discipline, he merely suggested that spending match up with revenues – a concept that would be ignored over the next eight years, forcing the state into deeper and deeper deficits.
In the final version of the budget, the Legislature kept McCallum’s suggestion for an expenditure cap, but riddled it with massive loopholes, rendering it worthless. For instance, school aids (around 45% of the state budget) were exempted from the cap, as were payments to the University of Wisconsin System.
In the same budget, McCallum proposed depositing 50% of any unintended revenues into a budget stabilization fund, in the event tax receipts fell short in the future. Generally, states set aside between 5% and 10% of their budgets for an emergency, yet Wisconsin had never put aside any money to plan ahead for bad times. This provision passed, creating a funding mechanism for a state “rainy day fund” for the first time. In 2007, Governor Doyle transferred $55.7 million to the stabilization fund (of course, taking credit for the fiscal responsibility mandated by McCallum’s law six years earlier – the money has since been spent, leaving the state once again with virtually no rainy day fund.)
Perhaps most importantly, McCallum made real cuts to real ongoing state programs – a decision which may have cost him his governorship. In the 2002 budget repair bill, McCallum proposed phasing out the state’s Shared Revenue program, in which the state sends $1 billion per year to local governments. Had McCallum’s plan passed, the state would today be in an infinitely more tenable position than it cuurently finds itself.
Laughably, Governor Doyle is still trying to sell a line that his budget “cuts” government, when in fact it actually increases total spending 6.3% on the strength of federal stimulus money – leaving the state with a massive 2.3 billion deficit in the next biennium. Yet it was Doyle who savaged McCallum for his proposed cuts during the 2002 campaign.
In announcing his plan to phase out aid to local governments in 2002, McCallum indelicately referred to local elected officials as “big spenders.” This turned a lot of local officials, many of them Republicans, against him. It was clear he had none of the political skill of his predecessor, Thompson, and served as a stern warning to future elected officials that dared to cut an entrenched government program.
Of course, not every move McCallum made was gold-plated. He is open to criticism for using the state’s ongoing tobacco settlement to help balance the budget – a one-time funding source that began the ball rolling in future bienna. However, in his budget adjustment bill, McCallum essentially used the tobacco settlement to fund the remaining years of the Shared Revenue program – meaning, he wasn’t using it for an ongoing program, he was using it for a program that was disappearing. Instead, the Legislature kept the cash and kept the Shared Revenue program, blowing the hole wide open in future budgets.
Since his years in the East Wing, McCallum has gone on to start a successful non-profit business that matches corporate contributions to people in need of aid. In doing so, he is demonstrating the business acumen that would have served the state wonderfully over the past eight years, and made the economic downturn much more manageable. He's also showing that you can do a great deal of good outside the realm of government - a lesson our Legislature should take to heart (but ultimately won't.)
Instead, we are stuck with a disastrous budget that raises taxes, increases spending during a downturn, and drives the state further into deficit. It could have been so much better.
And now Scott McCallum, you may have your last laugh.
-June 15, 2009