Saturday, December 29, 2007

Water solution in Brown County. Really?

Recently, the Business Journal ran an article highlighting a just-completed 65-mile, $80 million pipeline that delivers fresh Lake Michigan water to the suburbs of Brown County from Manitowoc, WI. In the article, the Business Journal states that "what happened in Brown County could serve as a prototype for southeast Wisconsin," implying that the Milwaukee region could learn something from Brown County in addressing the water demand in its suburban communities.

Based on previous reporting in the Milwaukee Journal Sentinel (JS), this implication is puzzling. The JS article reports that instead of utilizing the existing City of Green Bay pipeline, an entirely separate pipeline had to be constructed because negotiations broke down between the city and its suburbs.

How can the construction of redundant infrastructure - two parallel pipelines stretching from Lake Michigan to Brown County) - be good public policy?

In addition to the apparent fiscal inefficiencies of the Manitowoc/Brown County pipeline, this project may have also cost the Green Bay region a chance at building regional trust, goodwill and cooperation. So state the major players in the pipeline negotiations...

From the suburbs: "Think of the old days, when people fought over water out West. Those days are still here. It just boggles the mind that you can't get people to cooperate on something as basic as water."

From the city: "This was a failure of business, a failure of government, a failure of the media. A failure by everybody. We're taking $20 million to $100 million out of the Brown County economy . . . for no other reason than we can't get along."

From the suburbs: "We all went into this with the idea that we had a regional problem and we were going to come out of this with a regional solution. Unfortunately, it didn't work out that way."

From the city: "It (the pipeline) puts a dollar figure on urban-suburban hate."

These statements from those close to the negotiations question whether this $80 expenditure should be hailed as a prototype for regional cooperation.

It looks as though the Milwaukee Common Council may have been following this debate closely, as they have decided, instead, to negotiate with their thirsty suburban neighbors. Here's hoping these negotiations don't also end up placing a dollar figure on urban-suburban hate. I'll drink to that.

Thursday, December 27, 2007

We're gray here at the Forum

Attention policy wonks--here's a new word for you: "Gray literature" is the term of art for publications from sources like the Forum, which produce reports that are not easily found from centralized indices or catalogues. Here's a more official definition:
"Gray or grey literature has long been considered the proverbial needle in the haystack. It is commonly defined as any documentary material that is not commercially published and is typically composed of technical reports, working papers, business documents, and conference proceedings. The greatest challenges involved with these items are the process of identification, since there is limited indexing, and acquisition, since availability is usually marred with uncertainty. Added to this is the absence of editorial control, raising questions about authenticity and reliability."

For public policy analysts, gray literature is where new, sometimes outlandish, policy ideas can be found; where independent analyses can reveal alternative results; or where partisans can highlight favorable statistical outcomes while ignoring inconvenient ones. The burden is on the reader to decide whether the source is reliable. (Although it should be noted that in today's world this burden is the reader's even if the content is from a mainstream publishing house, newspaper, or peer-reviewed journal.)

Because there's rarely anything black and white about policymaking, the value of gray literature outweighs its limitations for those of us interested in public policy. There are a few online resources where gray literature producers are catalogued. A good place to start is Britain's Grey Literature Network Service. In addition, the New York Academy of Medicine's library website list hundreds of organizations that publish reports. Finally, DocuTicker offers a selection of publications from government agencies, NGOs, think tanks and other public interest organizations.

For our part, until the late 1990's the Forum provided our reports to the Milwaukee Public Library and are catalogued there. Since 1997 we have made most reports available on-line via our website. To ensure you don't miss out on any new findings, become a member; members of the Forum receive copies of our printed reports and are emailed notices when on-line reports are released.

Wednesday, December 19, 2007

Election Issues '08: Revenue challenges for city and county

On April Fools' Day 2008, Milwaukee citizens will elect people to four-year terms in city and county public offices. Candidates for those offices have an obligation not to fool voters with shallow promises but rather to provide answers to critical questions facing local government. Among those questions, none is more important - and more rarely addressed - than this one: How do you plan to ensure the long-term financial stability of the government with which you will be entrusted?

The Forum releases today the first of a series of reports highlighting government finance issues vital for local voters to understand. A challenging revenue picture for Milwaukee local government lays out the recent trends in municipal and county general purpose revenue and concludes stable long-term financing is in jeopardy for both the City of Milwaukee and Milwaukee County governments.

The key findings:
- Intergovernmental support – mostly in the form of state shared revenue – for both the city and the county has declined sharply in real terms over the past 10 years.
- Both the city and the county have relied most heavily on service fees to fill the gap, although in the county’s case that is primarily due to an accounting change.
- Property tax revenue to support both governments has outpaced inflation even though the taxpayers’ resources to pay have not.
- Spending for city government has kept pace with inflation whereas county spending has exceeded it.

The city and county governments of Milwaukee are the two largest governments in Wisconsin other than the state itself. Their financial viability affects the surrounding region and the state as a whole. Candidates for mayor, county executive and the legislative bodies of county and city governments need to address this fundamental issue. Where are they going to get the revenue to run local government?

Note: Future reports in this series, covering capital expenditures and employees benefits, will be released over the next two months.

Monday, December 17, 2007

The Orwellian world of public opinion

Advocacy groups, no matter what they advocate, often provide survey research that isn't very useful. That rule of thumb is evident in a recent report that Wisconsinites overwhelmingly oppose universal health insurance. This may be the case, but the finding that City of Milwaukee residents are opposed 86% to 8% sent me to seek the source of the survey.

According to the web site of the sponsoring organization, the Wisconsin Policy Research Institute, this was the question posed to survey respondents:

Do you think the best way to reform health care in Wisconsin is by replacing the current private health insurance system with a new universal health insurance system that is run by the Wisconsin state government? ~ or ~ Do you think the best way to reform the current private health care system is to cut costs and provide more choices by increasing competition among private insurance companies and by requiring health care providers to publicly release their actual costs?

Let’s count some of the ways the question begs respondents to choose the second option:

  1. Cut costs – The question presumes the second idea would cut costs whereas a universal health insurance system wouldn’t. That’s an opinion.
  2. Choices -- Everybody likes choice; that’s why abortion advocates call themselves pro-choice, that’s why the school voucher program is called school choice, and that’s why the survey designers used the word in their preferred response.
  3. Competition – It’s the American way. Wouldn’t there be competition in a universal plan? Maybe yes, maybe no, but survey researchers usually let the respondents be the ones offering the opinions.
  4. Accountability (“requiring health care providers to publicly release their actual costs") -- Would there be accountability under a universal plan? Maybe there would, maybe not, but if you want my opinion, let me offer it.

To appreciate the bias, imagine the findings with different wording:

Do you think the best way to reform health care in Wisconsin is by replacing the current private health insurance system with a new universal health insurance system that would cut costs, provide more choices, increase competition and hold health care providers accountable? – or -- Do you think the best way to reform the current private health care system is to trust private insurance companies and health care providers to reform themselves?

Neither wording provides true insight into public attitudes, which raises a question: If surveys like this aren’t useful, why do them? If the intent is to mislead policymakers about the views of the electorate, that’s anti-democratic.

So why should we care if an organization wants to spend money on useless surveys? Well, we all pay a price for propaganda posing as research if it sways policymakers. One example: Milwaukee’s school choice program (for which Wisconsinites have spent more than $600 million since the late 1980s) began with public opinion research designed to create the impression that people wanted it. At the time, maybe people did want it. Maybe not. We'll never know.

Thursday, December 13, 2007

Would you invest in something with a 14 to 1 return?

Factors associated with high-quality early childhood education -- higher earnings, less use of welfare, and lower crime rates -- have been found to contribute to higher government revenues and lower government expenditures. Such are the ingredients of a cost-benefit-analysis predicting nearly 14 times the benefit compared to cost in the long-term for high-quality early childhood education. Economist Robert G. Lynch is the latest researcher to attempt to quantify the costs and benefits of high-quality early childhood education in his new book, Enriching Children, Enriching the Nation, published by the Economic Policy Institute.

Lynch estimates that a high-quality pre-kindergarten program in Wisconsin targeted to at-risk children would begin to pay for itself in 6 years. The annual cost of a fully phased-in program in 2008 would be $126 million. Total benefits in 2050 would be $5.1 billion, and costs in 2050 would be $375 million. The ratio of total benefits to costs in 2050 is 13.6 to 1. This represents savings to Wisconsin individuals from crime reduction in 2050 of $1.2 billion.

Estimates for a high-quality universal program in Wisconsin show higher costs due to being open to all children (i.e., untargeted), but still have significant long-term benefits. Lynch estimates that such a program would start paying for itself in 8 years, with a 2008 annual cost of $527 million. Total benefits in 2050 would be $13.4 billion, and costs in 2050 would be $1.4 billion. The ratio of total benefits to costs in 2050 is 9.5 to 1. This represents savings to Wisconsin individuals from crime reduction in 2050 of $2.5 billion.

Evidence continues to build predicting long-term payoffs for early childhood education investments that exceed the return on most private or public investments. Using the well-known research on the Chicago Child-Parent Center as a foundation, Lynch builds on past studies by producing cost/benefit estimates for the nation as a whole and for each individual state.

Lynch concludes, “Policy makers should consider a national pre-kindergarten initiative a sound investment on the part of government that generates substantial long-term benefits and not simply as a program requiring expenditures.” Results like Lynch’s are pushing many who research on regional levels to gather more local-level data to analyze what a high-quality program would really look like and cost.

Wednesday, December 12, 2007

The "tax-hell" obsession

"Wisconsin is a tax hell." We've had it drilled into our heads that Wisconsin's tax climate is amongst the worst in the country. Furthermore, we are told by some experts that this burdensome tax environment is responsible for slowing job and population growth in our state.

An opinion piece in this week's Wall Street Journal adds kindling to the tax-hell fires by highlighting a report which links "high-tax" states (New York, Wisconsin, Ohio, etc.) to their comparatively slower rates of population, job and income growth.

Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, have half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states. In 2006 alone 1,500 people each day moved to the states with the highest economic competitiveness from the states with the lowest competitiveness.
A recent study by the Public Policy Forum confirms the migration of households from Midwestern metro areas (Milwaukee, Minneapolis, Chicago) to warmer climates (Florida, Arizona). In our report, we speculate that the Milwaukee region's sustained losses of households are driven chiefly by retiree's migrating to retirement hot-spots like Phoenix and Palm Beach.

So, who's right? Are households leaving our state to seek shelter from Wisconsin's snow or Wisconsin's taxes?

Unfortunately, we don't know the motivations of those that leave the Midwest for points south. Absent perfect data, we can only infer as to who these people are and why they choose to leave the snowy environs of the upper Midwest and Northeast.

We know people are leaving, we just don't know why.

If we don't exactly know why people are leaving, why the obsession with taxes? The reason is that it fits a particular ideology.

Like it or not, political ideology plays a central role in the crafting of economic development policy. Those on the left push for "investment" while those on the right advocate for "cost reduction" as the proper economic stimulus. Truth is, you need both. Economic development needs investment in land, labor and capital while simultaneously keeping a watchful eye on costs.

In a recent article in the Rocky Mountain News, the Forum suggests that investment into our economic infrastructure as key to our ability to expand and attract employers and their workers. We do not arrive at this conclusion lightly.

A survey of 177 manufacturing employers in the Milwaukee region conducted for the M7 in 2006 had respondents rate the average importance of 14 specific "business climate" elements. The following were the top seven most import factors according to area manufacturers:
      1. Workforce quality
      2. Workforce availability
      3. Health care expenses
      4. K-12 education
      5. Technical education
      6. State taxes
      7. Universities/colleges
Note that five of the top seven elements concern investment, while two are associated with costs.

Just cutting taxes won't automatically result in a thriving community. Instead, both Wisconsin and Milwaukee need to pull up their collective sleeves and do the hard work to control costs (taxes, fees, health care, regulation) while simultaneously making critical investments in our economy (workforce development, brownfield cleanup, K-12 education, quality early childhood education, the development of a sustainable transportation system, university and corporate R&D, etc.).

See "Doyle bets on innovation: He will push tax, regulation changes to spur economic growth" in today's Journal Sentinel which picks up on the theme of coupling cost reductions measures with specific investments to spur economic growth.

Friday, December 7, 2007

Put your money where your agenda is

Among Milwaukee's claims to fame is our status as "ground zero" for the school choice movement. No other city has as large or as long-standing a school choice program as Milwaukee's, which enables over 20,000 low-income students to attend private school using taxpayer-funded vouchers.

The Forum has had much to say over the years with regards to the intent, design, and function of the voucher program, but we have not weighed in as either pro- or anti-school choice. (Our survey work has shown that it is generally supported by a majority of the public and that parents are satisfied with the program.)

We are just about the only policy organization in our state that can say we have not taken a position on this issue.

A new study by the National Committee for Responsive Philanthropy reveals why the Forum is unique in this respect...advocacy on behalf of school choice is big business. In one year (2005), over $65.5 million in grants to pro-choice groups were made.

While those of us paying attention to education reform have known for a long time that certain foundations are playing an extremely important role in policymaking, this report is the first to delineate and enumerate the power of the foundations and the advocacy groups they support. You shouldn't be surprised to learn Milwaukee's own Bradley Foundation is the second-most generous supporter of pro-choice advocates and researchers, giving 37 grants totaling over $6.3 million in 2005 alone.

The unique coordination and collaboration among the various foundations and the groups they support is the focus of the study. As the author states,

"This report shows how philanthropic capital from small and large foundations
has helped build political support for the school privatization agenda. It can
serve as a case study for other foundation and nonprofit leaders who are
interested in effective, strategic movementbuilding grantmaking."
The children receiving vouchers in Milwaukee do so because a school choice movement was built and strengthened in a strategic and systematic way, with supporters putting their money behind their ideas and ideology. The National Committee for Responsive Philanthropy considers this history a blueprint for future social movements. I expect this model will be tried, with varying degrees of success, across many policy issues. Where does this trend leave an independent, non-advocacy research organization like the Forum? I guess we'll be the ones, ten years down the road, telling those foundations whether they've spent their money wisely.

Wednesday, December 5, 2007

Transit referendum could have steep hill to climb

As you may have heard, the Wisconsin Alliance of Cities has recently crafted legislation that would allow, by referendum vote only, the creation of regional transit authorities with taxing powers. However, a recent article in the Daily Reporter announces that some transit advocates would rather it be left up to elected leaders in each region to implement taxing authority for transit.

The Milwaukee Journal-Sentinel voices support for the referendum proposal in this morning's paper. In their editorial, they state:

"'s up to the business community to start pushing for referendums and to get behind a sales tax that can pay off big in economic development."
Naturally, strong business support would be needed to pass any sort of tax increase. Public sector support probably wouldn't hurt either. In fact, support and leadership would have to be garnered from many different constituencies if advocates expect eventual passage.

However, "needing support" is not a very intriguing point. It's a given.

A more compelling analysis is to weigh the actual chances for support in southeastern Wisconsin for funding a transit authority. So, what are the chances?

Based on what I've seen in other regions, referendum passage could pivot on the following three issues:
  • What transit referendum? Oh, you mean the "livability" referendum. The saying goes, "he who frames the issue determines the outcome of the debate." And, so it is with transit. Framing an improved transit system beyond just "moving people" - but, instead, connecting transit to land-use, economic development, quality of life and other livability issues.
  • Has the train already left the station? Many regions find that having a system component already in place makes it easier to gain voter approval. The reasoning is that voters generally abhor change and that envisioning a "system expansion" is much easier to swallow than voting for "a whole new system."
  • Is this your first time? Transit referendum typically don't pass the first time out of the gate. The reasoning is that it takes time to build coalitions and conduct adequate public engagement in the lead-up to the vote.
Based on these observations, southeastern Wisconsin could have an uphill climb in persuading the public to support passage of a regional transit authority with taxing powers.