Milwaukee Biz Blog: How will Gov. Walker finish his term?

Wisconsin is average or lagging on a range of economic metrics

Gov. Scott Walker has hinted at running for a third term in 2018, but he has not hinted at his agenda for the rest of his second term, much less for a third four years.

He shot to the top of the early presidential polls on the strength of his push-back on public employee unions. He wore Act 10 like a crown. He found in the debates, though, that there is only so much mileage in being “unintimidated” while taking on unions amidst the many big issues facing a president.

Scott Walker
Gov. Scott Walker

Looking back, his first six years as governor center on the politics of taking on and diminishing the political clout of unions, his arch enemies. In addition to Act 10, he and his Republican allies in the legislature installed a right-to-work law, introduced civil service reforms and cut funds to left-leaning university campuses. These can be viewed as political strategies.

That agenda has only indirect effects on job creation, which was the center piece of both of Walker’s successful campaigns.

The relative inattention to the job creation agenda can be explained in part by the resurgence of the national economy and the concurrent sharp drop in Wisconsin’s unemployment rate. It is great news that more people are working. And the job improvement turned down the political heat generated on that score during the Great Recession.

Still, the state is average or lagging on a range of economic metrics, including pay levels, household income and the brain drain of college graduates. There’s work to do, and some of it falls on the governor’s desk.

In his five years in office, Walker’s team has made strides on lowering taxes, small bites for individuals and a big phased in future reductions for manufacturers and agri-business, our two major economic clusters. The state has finally moved out of the Big Ten for personal sales and income taxes.

His tort reform and a return to common sensible regulation have also helped the business climate.

But average economic performance is not good enough. Gov. Walker has a chance to finish his term on an upbeat note if he addresses a range of issues that could make the state more competitive. Here are some agenda items that come to the front:

• Get after bloated health costs for state employees and Medicaid. His team has been timid about introducing reform concepts like self-insurance, consumer-driven incentives and disincentives, on-site primary care and value-based purchasing. As a result, out-of-control health costs are crowding out investments in education at all levels, environmental advances and deeper tax cuts. Potential savings are in the hundreds of millions of dollars. Just going self-insured for state employees would garner $41 million.

• Reform workers compensation. The medical side for covering workers injured on the job is $700 million, but could be a lot less. Employers pay at rates two to three times market rates for each case. Medical providers love this sweet business niche and fight to keep it, but the state’s workers and businesses can’t afford the high rates. Savings of at least $200 million per year are there for the taking.

• Stimulate the startup economy. Entrepreneurs are by far the best bet for reinventing and goosing the state’s economy. We lose more than 10,000 college grads every year. They will stay for jobs in high-growth technology companies. The state’s small pledge for early stage investing has yet to get off the ground. The modest Act 255 investment credits for startups work well, but Wisconsin needs to be much bolder in this critical arena.

• Reorganize the University of Wisconsin System on a regional basis. The Madison-centric model works famously for Dane County, but not that well for the rest of the state. Some of the campuses already work closely with the regional economic development organizations. It’s been four decades since the last UW shake-up.

• Take our range of existing and emerging economic clusters seriously. Insurance, for example, is showing strength across the state, from NML’s huge expansion in the M7 Region to Secura’s headquarters expansion in the Fox Valley. Meet with its leaders, and give them what they needed. More business graduates with insurance minors? You got them! The IT cluster is also leading the way. So is health care.

In short, Gov. Walker has the opportunity to match the bold leadership in the business world with bold leadership from his office. He stands a better chance for a third term if uses the final time of his second term to get some important things done.

John Torinus is chairman of Serigraph Inc. in West Bend. He is involved with several business and civic organizations and is the author of “The Company That Solved Health Care.”

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John Torinus is the chairman of Serigraph Inc. in West Bend. He is involved with several business and civic organizations and is the author of “The Company That Solved Health Care.”

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