Recovery & Reinvestment ActIt’s Time to Talk!

Sponsored by The Alliance for Strong CommunitiesAugust 4, 2010

Tonight’s AgendaWelcome and introductionsOverview of national debate on the Recovery ActRecovery Act Funding in WisconsinVideo on Local Recovery Act ImpactsSummary of National Policy Options

Alliance for Strong CommunitiesGreater Eau Claire Area

Our OrganizationThe Alliance is a non-partisan regional network of organizations in the greater Eau Claire metropolitan area united to strengthen public services and public infrastructures in all local communities so that families and businesses can thrive.

Alliance for Strong CommunitiesGreater Eau Claire Area

Members• Altoona School Board• Chippewa Valley Technical

College• City of Altoona• City of Eau Claire• Eau Claire Area School

District Board of Education• Eau Claire Association of

Educators

Members Eau Claire Chamber of

Commerce Eau Claire County Eau Claire Schools Classified

Staff Federation, AFT Local 4018

Greater West Central Area labor Council, AFL-CIO

Realtors Association of Northwestern Wisconsin

Alliance for Strong CommunitiesGreater Eau Claire Area

Purpose Fortify community awareness about

the public sector Engage diverse community

organizations in advocacy Change state fiscal policies to

expand the revenue base and ensure tax fairness

Alliance for Strong CommunitiesGreater Eau Claire Area

Table Discussion: Question 1

• What is your perception of the American Recovery and Reinvestment Act’s impact on you?

There is a National Debate Going On

• Extending all or parts of the Recovery and Reinvestment Act (Stimulus Money)

• The magnitude of federal and state debt• Extension of the Bush tax breaks• Regulation of Wall Street and the Banking

Industry • What we need to do as a nation to recover

from the recession

Partisan politics is prevalent and rhetoric from each camp hinders meaningful

deliberation on the real issues

What is at stake?

The public structures that make theChippewa Valley a great place to live, workand raise a family.

• We all live here, in part, because we enjoy the public structures that so many people have worked so hard to build.

• Our community is safe, our schools and libraries excellent, we have beautiful parks and trails and we care for our most vulnerable citizens.

What can we agree on?

1. The recession is bad, people are hurting, and Wisconsin has not been spared.

Supplementary Nutritional Assistance Program

2. State, municipal and school revenues have been impacted significantly.

Combined State Revenue Loss from 1996 to 2010 = $40,430,000

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

State Shared Revenues have been cut drastically

3. Our prosperity depends on strong public structures.

• Our quality of life is highly dependent on the strength of our public structures

• The economic prosperity of a community is closely connected to the public structures we create.

• We do not want a temporary economic downturn to destroy what the community has created.

4. The federal government plays a very significant role in shaping the economy

• Monetary policy

• Fiscal Policy

• Regulation of Markets and Industry

5. The recession is a national problem that demands a national response

• During difficult times in U.S. history the federal government has invested in its people.

6. To be good stewards of the public structures we all depend on, there needs to be constructive deliberation to

achieve a balanced, thoughtful solution.

“Let us not seek the Republican answer nor the Democratic answer but the right answer.“ - John F. Kennedy

Fighting for Wisconsin Families

June 2010

Big Banks Crashed the EconomyBig banks, the Fed Reserve and mortgage companies brought down the economy by inflating the housing market, creating riskier loans and marketing them as safe investments

The years leading up to the recession saw an enormous bout of real-estate speculation.This was fueled by the invention of many financial instruments designed to keep the bubble growing.Federal financial regulators failed to intervene. The bubble burst in 2007.The recession ‘officially’ began in December 2007.

The Great Recession spread like an oil slick

$15 trillion in personal wealth was gone Almost $50,000 for every man, woman and child in America

$6.1 trillion in housing value disappearedAs if a hurricane destroyed every house in every state on the Atlantic coast from Maine to Florida

Pension funds dropped a trillion dollars in value Enough to purchase ExxonMobil, Microsoft, Wal-Mart and General

Electric

Unemployment is over 10% (15 million people) Every man aged 50-59 loses his job

39.8 million people in poverty – the most since 1960 All the people living in the thirty largest US cities including New

York, Los Angeles, Chicago, Houston, Phoenix, etc.

State budgets collapsed due to lost revenues

• Property taxes (property values declined)

• Sales taxes (depressed)• Income taxes (job loss and wages

cut)• Corporate taxes (businesses

contracted)

• Wisconsin’s 2009-2011 deficit was $6 Billion

The fiscal crisis in state and local governments is the worst in U.S.history

$800 billion Recovery Act for 2009-2010

• Prevent More Job Loss• Stimulate Private Spending

– Tax Cuts, Cash for Clunkers, Unemployment Benefits

• Help Businesses Grow• Stimulate Public Spending

on Highways, Energy and Schools

• Prevent Major Cuts to Education and Public Services

The Recovery Act prevented a full-fledged depression in America, using millions of economic sandbags to hold communities together

Road Repair

School Rehab Funds

for DAs

Food Stamps

More UI for 99 Weeks

TaxCuts

Funds for Teachers

BusinessLoans

BusesandTrains

EnergySavings Rehab

River Clean Up

Health Care

Cash for Clunkers

Farm Aid

Aid forElderly

Medical Research

SchoolLoans

ImproveAirports

ChildProtection

Vet’s Aid

$$ forPolice

Housing for Disabled

2009-10: Recovery Act helped reduce job loss

Slowly, the tax cuts and Recovery Act funding to states prevented the job losses from getting worse.

But job growth and economic recovery are still tenuous.

Wisconsin Recovery Act Funding 2009-2010

Energy 5%

Transportation 6%

Medical care 7%

Schools 9%

The Recovery Act helped Wisconsin families

Gave almost every employee a $500 tax break in 2009 and 2010

Saved 59,000 jobs

Supported health care for 1.3 million elderly, disabled and low-income families

Provided $153 million in support for laid off workers

The stimulus money for states is almost gone and communities are heading for a funding cliff

in 2011-2013 Wisconsin faces a $3 billion deficit for 2011 which means reduced investments in cities, counties and schools

The state has almost no added revenue sources for the next budget cycle. This could short circuit recent economic growth.

Some people don’t think we should invest in public structures -- Be careful what you wish for

Things can get much worse…

In Colorado Springs, every third streetlight is dark. Buses nolonger run at night or on weekends.

Neighbors are encouraged to bring their own lawn mowers to local green spaces …Water cutbacks mean most parks will be brown turf by July; the flower and fertilizer budget is zero. City recreation centers, indoor and outdoor pools, and a handful of museums closed March 31. The city won't pay for any street paving ….

The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops — dozens of police and fire positions will go unfilled. Parks workers removed trash cans, replacing them with signs urging users to pack out their own litter.

Why should public sector workers care?

Clearing the roads of snow, providing health care or ensuring public safety, public sector union members provide vital services to make communities work. BUT, states are facing an estimated $260 billion shortfall in 2011 and 2012 causing the loss

of nearly a million public and private sector jobs.

What’s in it for private sector workers? $696.5 million for road building and construction, boosting production of materials and equipment

Airport Improvement Program $23,637,434 Broadband Infrastructure Buildout $22,978,367 Build America Bonds $97,367,700 University of Wisconsin System $5,106,373 State Broadband Development Grant Program $1,717,684 State Highway, Local Road and Bridge Program, $519,226,021 Transit Capital Assistance $20,130,095 WI Army National Guard $6,370,000

Total: $696,533,674

Why is this important for senior citizens ?

Meal sites for senior citizens

Independent living services for elderly blind persons

Senior community service employment

Home delivered meals for the elderly

Home health care

Why does this matter to our families?

Federal funds are vital to keep day care programs operating

Federal funds are needed to maintain school programs for disabled children

Without more federal aid, Wisconsin schoolswill lose over 2000teachers and staff

Wisconsin Recovers Website

Table Discussion: Question 2

• What was notable to you in the information provided about the ARRA funding?

Where do we go from here?

Summary and Options

The national crisis• Overinflated mortgage

investment market crashes taking $15 trillion in home, pension and savings wealth away from Americans.

• Resulting unemployment and business failures cause further damage to economy.

• Economic crash shrinks tax revenue to state and local governments causing the worst fiscal crisis in US history.

The national response

• Recovery Act injects $800 billion into economy through tax cuts, business loans, infrastructure construction and aid to state and local government

• Wisconsin receives $13 billion

• Eau Claire receives $86 million

Eau Claire County has received $86 million in federal recovery aid

$- $10,000,000 $20,000,000

Tax cuts

Education

Direct aid

Small biz

Transport

Housing

Other

Recovery funds spent – now what? • Economy not fully healed

• Unemployment still high

• Tax revenue still down

• State faces multi-billion dollar deficit

• Communities need services and framework for rebuilding economic growth

What are the basic options?

Option 1) Stop Federal Recovery funding to states:

Impact on Wisconsin: State has a $3 billion deficit but must balance budget so this would require cuts in programs, services, staff and shared revenue for local communities. Possible increase in fees and taxes.

Impact on Eau Claire: Cut city, county and school district staff and services. Maybe raise property taxes and local fees.

Other options…

Option 2) Continue Federal Recovery funding for 2011-2013.

Plan A. Use national credit card and increase federal deficit until economy recovers and pay back the debt.

Plan B. Increase federal revenue to cover the cost of state aid so there is no long term debt.

Potential revenue proposals for continued Recovery funding for communities

1. “Speculation tax” on stock trades raises money and cuts hyperactive investing.

2. Sunset tax cuts for the wealthiest 5%.

3. Renew the estate tax on inheritances over $1 million.

Table Discussion: Question 3

• What is the best national policy option for the greater Eau Claire community and what should we do about it?