The head of Forward Analytics says limited housing availability and the high cost of child care are top affordability challenges as lawmakers gear up for the next legislative session.
Economist and researcher Dale Knapp discussed these and other topics during a recent Newsmakers interview on WisconsinEye, focused on potential areas of legislative action in the coming years. Forward Analytics is the research-focused division of the Wisconsin Counties Association.
The interview was recorded before the Evers administration yesterday projected the state will finish the 2023-2025 budget with a $4 billion budget surplus, above the $3.5 billion that was previously expected.
Knapp touched on the possibility of state policymakers leveraging the surplus for tax relief, noting property tax reductions “might have the biggest chance” to get bipartisan support.
“A tax cut can provide a little bit of money in people’s pockets, so that could help,” he said, adding “the bigger issues in terms of household finance, I think of the cost of child care, I think of the cost of buying a house, those kinds of things that the state can help address to some degree.”
For a family with two children, the cost of obtaining child care can exceed one-third of annual income, Knapp noted. He added the market for these services is largely young couples who are just getting started in their career and often don’t have much money. But at the same time, child care workers are “some of the lowest paid workers” in the state.
“So it’s this real challenge, that I think is a case of the private market, in and of itself, can’t solve this,” he said. “A lot of times, we want the market to solve this, but I think this is one case where in some form, the public sector has to come in and help to some degree.”
Knapp said one solution, though likely an unpopular one, would be for the state’s K-12 school system to take over child care.
“That would be the extreme of an almost total government takeover, and I don’t think that works. But I think in some ways, there has to be a funding stream for this that comes from the public sector,” he said, adding the child care challenge could be contributing to a decline in labor force participation among women aged 30-45 in Wisconsin.
Meanwhile, Knapp said “I think there’s a good chance we’ll see more” legislative efforts to improve housing availability in the state. He’s previously said the state needs to build between 130,000 and 200,000 more housing units this decade alone, while also making housing more affordable.
“We’re seeing some work at the local level on this; Washington County has been doing a lot on housing and been very successful, and we’re seeing municipalities begin to address this, so I think it’s trickling down and everybody understands that housing is a big issue, and we’ve got to figure that out,” he said.
Watch the video, read an earlier story on housing affordability ideas and see an overview on Washington County’s approach.
See WisPolitics coverage on the new budget surplus projections.