Clipping the governor’s control of federal funds

Originally published in Wisconsin Examiner on February 3, 2022

A proposed amendment to the Wisconsin Constitution giving the Legislature broad control over spending federal funds sent to the state is a step closer to an Assembly vote.

Republican authors of the proposal contend it would restore the Legislature’s rightful place in deciding how the state spends the money, now largely controlled by the governor.

At a public hearing this week, an additional impetus for the measure became clear, however: To give lawmakers an opportunity to redirect — or, perhaps, block — federal spending funneled back to the states.

“The intent is very clear, is that the Legislature should be involved in overseeing how federal funds are spent,” said Sen. Dale Kooyenga (R-Brookfield), the lead Senate author of the proposal, as he testified at Tuesday’s hearing before the Assembly Constitution and Ethics Committee.

A recurring drama in the 2021-22 legislative biennium has been the Republican majority’s attempts to tell Gov. Tony Evers how to spend Wisconsin’s $2.5 billion share from the American Rescue Plan Act (ARPA).

GOP lawmakers have passed several bills appropriating ARPA funds for a variety of purposes and introduced many more. The handful that made it all the way through the Legislature passed on mostly party lines, and the governor has vetoed all of them.

Evers has been able to decide largely on his own how to spend the ARPA money thanks to a state law first enacted in the 1930s and expanded in subsequent decades. Underscoring how he has made use of not just ARPA funds but other federal relief to the state since the pandemic began two years ago, Evers on Wednesday released a summary of the $4.5 billion his administration has spent so far.

The proposed amendment won’t give current GOP lawmakers a chance to override his ARPA spending. But it would rewrite the relationship of future governors and the Legislature when faced with such decisions.

“This joint resolution would be the first in the process to restore the balance in how we manage money coming in from the federal government, and take us back to the ‘30s, when we actually changed this because of the Great Depression,” said Rep. Robert Wittke (R-Racine), the lead Assembly author.

Senate Republicans go first

The proposal has already passed the state Senate on a party-line vote, and the measure is expected to go to the full Assembly within weeks. To be enacted, it will have to pass both houses of the Legislature again in the 2023-24 biennium, then gain the approval of Wisconsin voters at the polls. Because it’s not a bill, but instead a joint resolution — AJR-112 in the Assembly and SJR-84 in the Senate — it does not require the governor’s approval.

In the debate Jan. 25 before the Senate vote, Democrats who spoke against the amendment portrayed it as a partisan Republican maneuver aimed at the Democratic governor, which Kooyenga denied. The critics also suggested involving the Legislature would require a laborious process and slow down the distribution of the relief money.

Sen. Jon Erpenbach (D-West Point) depicted a future pandemic with federal relief money coming to the state and the state Constitution requiring the Legislature to weigh in on how it would be spent. “That is going to take time,” Erpenbach said. “And for those of us who talked to our small businesses in our districts, which was all of us, they didn’t have time. Or if they did, they were quickly running out of time.”

At Tuesday’s Assembly hearing, Kooyenga acknowledged that argument. He suggested that the amendment addressed the concern, however, in a manner that was similar to the Joint Finance Committee’s role in giving follow-up approval on spending items in the budget after the budget is passed.

“You can kind of think of it as a process where the Joint Finance Committee can do a passive review process,” Kooyenga said.

The proposed amendment consists of two sentences: “The legislature may not delegate its sole power to determine how federal moneys shall be expended. No executive branch officer or department may make an initial allocation of federal moneys made available to this state without the approval of a joint committee of the legislature designated by legislative rule.”

Targeting federal spending

Rep. Gary Hebl (D-Sun Prairie) questioned Kooyenga about how broad the amendment was intended to be. The University of Wisconsin receives “over a billion dollars in research grants and competitive awards,” Hebl noted, adding that subjecting individual grants to the approval process would create a competitive disadvantage for the university in pursuing them. “Is it your intention to include those billions of [dollars in] grants?”

“It’s not our intention,” Kooyenga replied, adding that laws to “wrap around” the amendment would be one way to “make that intent more clear” after the amendment is enacted. “The intention is not to have the Legislature get involved with each individual grant.”

Hebl was not satisfied with that response, or the amendment. “It’s very ambiguous. It’s a skeleton,” he declared. “There’s no meat on the bones, there’s nothing to tell me what your intent is, other than what your testimony is today. I would like the actual constitutional amendment to contain what your intent is.”

The intent, Kooyenga said, was to reinforce the Legislature’s “duty — and that duty’s in the [state] Constitution. The duty is to oversee this money that is being sent to us.”

“This doesn’t do that,” Hebl interjected.

“Yes it does,” Kooyenga retorted.

And at that moment, his argument pivoted — no longer centered on the roles of the Legislature and the governor, but instead pitting the state Legislature against the federal government.

“This money that our country is spending, both at the federal level and the state, is absolutely not sustainable,” Kooyenga said. “And that is putting the republic in jeopardy by being absolutely financially reckless. And all this is saying that we, as legislators, should be ashamed of ourselves for collecting a paycheck and getting state benefits, when we should actually be better advocates for taxpayer dollars that are spent.”

Without offering specifics, he claimed that in the pandemic relief spending there have been “billions of dollars in fraud,” that the federal funds were responsible for inflation that “is jaw-dropping.” Calling expressions of caution about the effect of the amendment on the UW system “some sort of…decoy,” Kooyenga added: “You know what’s going to hurt the UW is if there’s insolvency in the state or the federal government.”

False alarm?

While the alarm Kooyenga expressed at the federal pandemic relief spending has become a stock-in-trade in conservative and Republican circles, it is far from economic consensus.

Menzie Chinn, an economist with the Robert M. LaFollette School of Public Affairs at the University of Wisconsin-Madison, is skeptical of the idea that federal pandemic relief spending is the primary cause of recent inflation.

“It’s certainly part of the explanation – but other economies (UK, Euro Area) have also seen an acceleration of inflation,” Chinn says, with higher oil prices, continued supply disruptions and other factors being the main contributors. “One could argue that part of the inflation is due to too little spending, say, on childcare support, which would enable parents to work.”

Mark Copelovitch, a La Follette School political scientist whose work looks at the intersection of economics and politics, says that the ability of the U.S. to finance its debt at virtually no interest shows that the marketplace — essentially, the world’s lenders — isn’t worried about the sustainability of the economy.

On inflation, he considers shortages such as in semiconductors, a key component of cars, or the spike in energy prices, not pandemic relief aid, as leading culprits for rising prices. “Most of what’s driving the inflation is global supply chain issues during a pandemic,” Copelovitch says.

He credits pandemic relief, in the form of direct aid to households as well as other forms of support as well as directly to the state, for preserving incomes, keeping businesses going in the pandemic, and enabling the economy to recover much more quickly than it might have otherwise.

“The reason we have this big surplus now in Wisconsin and elsewhere is because all the other things basically prevented people’s incomes from going down — which meant tax revenue didn’t crater like we worried it was going to,” Copelovitch says.

The alternative could have been no money to support people or businesses, and likely prolonged, and higher, unemployment, he adds. “Then people’s incomes would be a lot lower. And we would have been facing the big revenue hole at the state level that people were worried about.”

Correction: An incorrect reference to a scheduled vote for AJR-112 has been removed from this article. The vote has not been scheduled.

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