By Matt Pommer
Republican gubernatorial front-runner Scott Walker is vowing to cut state employee wages and benefits to help reduce state taxes on the wealthy.
State employees already are feeling a pinch – all are being required to take eight days of unpaid furloughs in each year of the current biennium. That adds up to about a 3 percent reduction in pay.
“There are just benefits that are woefully out of balance” with the private sector, Milwaukee County Executive Walker told reporters.
Direct salaries totaled $3.6 billion or almost 59 percent of the $5.2 billion in annual compensation costs for state workers, according to the latest report by the state controller’s office. Health insurance costs $731 million, according to the report. Pension costs, including payments on pension obligation bonds, totaled $504 million, the report indicted.
One option to reduce personnel costs would be to require state employees to pay half of the annual pension contribution. That would shift about $252 million to the workers. Across the state about 97 percent of pension contributions to the Wisconsin Retirement System are paid by state and local governments. Local government workers will be interested spectators.
Other fringe costs include unemployment compensation, workers’ compensation, life insurance, and wage continuation insurance. But those are tiny issues compared with pensions and health insurance.
Walker said he wants to cut the wages and benefits so the state can restore a 60 percent capital gains exemption and eliminate the new 7.75 percent tax on income above $300,000 for married couples and $150,000 for single taxpayers. Wisconsin’s capital gains exemption (which reduces tax liability) would again be the highest in the nation among states with an individual income tax.
Those two tax increases are expected to raise $278.5 million this year, helping balance the state budget, according to the nonpartisan Legislative Fiscal Bureau.
To pick up enough from state workers using only pay reductions, Walker would need to cut state employee salaries by 7.5 percent across the board. That would be on top of the 3 percent being saved by the current furlough days.
A Republican gubernatorial candidate vowing to slash state employee compensation could affect numerous legislative races in 2010.
Matt Pommer worked as a reporter in Madison for 35 years. He comments on state political and policy issues.