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UW Struggle: Sales Tax Redux (“Help!” Edition)

Fact: 1 in 4 Beatles is the Taxman

Fact: 1 in 4 Beatles is the Taxman

Like many, one of the concerns I have about shifting the UW to a funding mechanism based on sales tax is the disproportionate effect it has on lower earners.

Now, I directly asked my Chancellor at Friday’s town hall meeting, “How do you personally feel about shifting to a funding stream that is based on sales tax?”

His response, almost verbatim, That’s not true. The money is appropriated from a variety of different taxes. Then he turned to another question.

To be clear, I’m not criticizing my Chancellor. I just want a definitive answer on this (and thus, we’re back to criticizing System). In short, help! Does anyone know the answer? If so, why is this something that is presented as simple (“The system will be based on sales tax revenue”) until you ask about it (“It will pull from a variety of tax sources”)?

Why do I want to know? I have moral questions about who such taxes would burden with the responsibility for funding a UW system that would likely become less available to the non elite.

So, here’s a round up:

The UW’s own FAQ: “It will be funded by the state’s sales tax, and increases will be based on the Consumer Price Index (CPI) increases in the previous calendar year, beginning in 2018-19.”

Tom Still in yesterday’s Milwaukee Journal Sentinel: “Similar to the state transportation fund, which is walled off to prevent ‘raids’ on its dollars, the UW System Authority fund would come from a dedicated source — the state sales tax. Beginning in 2018-’19, it would come with Consumer Price Index changes tied to the previous year.”

The Badger Herald in an article titled “UW System state revenue source could shift to sales tax under Walker’s budget proposal”: “Currently, the system’s state grants come from the government’s General Fund, which accumulates primarily from state income taxes, but a line in Walker’s proposal last week suggested ‘earmarking’ a portion of the sales tax to fund the UW System.”

That all seems pretty clear to me. But then the above article includes:

Andrew Reschovsky, a professor of public affairs at UW, said while the mechanics of the change have not yet been released, he expects the government would earmark a portion of the sales tax to be used only for higher education.(emphasis mine)

If I spend time close reading, and even over-reading, as I am trained to do, I could interpret the above as a portion of the sales tax would be earmarked for the UW, but that is not the only source of tax revenue that will go to the system. I think that’s a generous reading. Everything I’ve read says it’s a shift to sales tax only, but everything I’ve read also indicates that the budget cuts and the PA are some kind of bargain or exchange, so there’s that.

Yet when my Chancellor tells me with absolute certainty, when asked about being funded solely by a sales tax, that “that’s not true,” I feel like he believes that. He’s also working on this stuff every day.

Am I being thickheaded on this? (It wouldn’t be the first time.) So what is it?

1.) State appropriations will come from earmarked sales tax revenue only?

2.) State appropriations will come from sales tax revenue as well as other taxes (as my Chancellor seemed to indicate—it could be I didn’t communicate the question well).

3.) The shifty way to answer this question is that it is not funded entirely by sales tax, as students pay tuition, receive aid, scholarships, etc, etc. [Note: this answer is awful, as it is conveniently ignored when crying “taxpayers!” and implying state taxes cover 100% of the system budget, including my yacht and collection of exotic, endangered animals.]

President Cross, Joint Finance, one of my three readers, someone…

True or false: under the Public Authority, the overwhelming majority of state’s contribution will come from sales taxes.

Update: Someone from UW-Stout reached out and provided video of their latest budget forum. Their Chancellor was asked the same question. He seemed a little surprised but answered to the effect of, “Look, the sales tax is going to be collected anyway, so it’s a no brainer for me that some of that money should go to the UW.” That is definitely a point worth considering. Also worth considering: this question is being answered in different ways.

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2 Comments

  1. Jasmine March 11, 2015

    What you said Chuck, and also Jim. The budget proposal clearly states that Wisconsin’s meager portion of funding for the system will come from the sales tax. It’s not a mystery and I’m not sure why your Chancellor would make is seem more complicated than it is, unless he doesn’t want a reason to question the public authority’s ethics. So what has already become a regressively funded “public” mostly in name higher ed system, will become completely regressive if this proposed budget passes. College students will shoulder even more of the burden of the expense and if the public authority goes through and the system eventually has control over tuition, the university’s only real way to increase revenue will be to raise tuition. I’m one of three readers? That makes me feel special. Thanks Chuck.

  2. Jim Perry March 8, 2015

    Herein lies the reason why the question of whether the System should become a PA requires more discussion than will ever takes place within the budget process. And friendly readers, that is going to take place because several organizations have decided this is too large of an issue for the future of Wisconsin to not have it, whether UW System or the Governor, or the Legislature wants it or not. The citizens (recall them?) deserve it. Will anyone listen? Who knows? The smartest legislators, regents, chancellor and citizens will.

    Not only does funding from the sales tax shift undue burden to lower income citizens, it can also be as volatile as the Transportation Fund. And why bother? Why not just legislate guaranteed funding from all state revenue sources, which includes not only what people pay, but also what businesses pay? Afterall, the beneficiaries of college educated workforce (whoops, that’s a WW [Walker Word]) is business.

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