Wisconsin's Future Debt under Governor Walker - part 2

In my last post I talked about the budget and how the math just does not fully match with the claims by Governor Walker and Senator Fitzgerald.  Sure they balanced the budget, that much of their claim is true. But let’s not forget that they had a legal obligation to do so.  The real question should center on “how” they balanced it. Let’s talk about the “how,” but let’s do so without all of the smoke and mirrors or political spin.  If the GOP wants to win me back, then I want emphasis on clarity and true transparency in lay terms that average people (like most of us) can understand when talking about this budget.  Frankly, I firmly believe that the smoke and mirrors are intentional for the purpose of confusing us and preventing us (the citizens of Wisconsin) from fully understanding or questioning the budget. 

Do not take my word for this as being the Gospel, ask your friends and neighbors about the budget and see what you come up with for responses. When talking about the budget being balanced, specifically ask them “how much of the current budget was pushed into the future through the purchase of bonds and other forms of borrowing or credit.”  No matter how intelligent or open minded they are, I am willing to bet (figuratively) that most of your friends and neighbors will struggle to answer with much if any detail or comfort on the subject. Again, it isn’t because they lack intelligence or common sense, it is almost guaranteed that those who struggle to answer are actually victims of the intentional political spins that the GOP is using to hide the whole truth on the budget.

If I am starting to sound like a conspiracy theorist, then let’s talk facts and sources to back this up. According to the WI Legislative Fiscal Bureau (LFB), the 2011-2013 budget pushed a lot of debt into the future by delaying debt service payments until 2013 and well beyond.  Debt structuring through the sale of bonds and other means of borrowing into the future are not limited to Scott Walker or the Republicans, it is a practice used by both parties. It was bad enough that Governor Doyle did this as much as he did. We now have a governor who campaigned against doing those things, only to be demonstrating otherwise. On top of that, Governor Walker is talking about covering the $143.2 million deficit (that was supposed to be a $306 million surplus) by borrowing even more money so that we do not have to raise taxes or issue another Emergency Budget Repair Bill for the budget that we are only ten months into. What impact will this move have on our state’s existing long term debt service and our ability to keep up with the payments?

The state standard for debt-to-revenue ratio is no greater than 4%, with a target debt ratio of 3-3.5% of General Program Revenue. When Governor Walker took office, Wisconsin’s debt ratio stood at 2.28%. That is not a plug for the former governor or a jab at the current governor, they are simply the numbers according to the June 14^th 2011 LFB memo from the state. Under the 2011-2013 state budget, our debt ratio is expected to grow to almost 5% next year. In 2013-2014, it will grow to over 5%, and it could easily be much higher if we do not see a generous 4% growth in revenue.  Forget about asking how close we are to 4% growth because currently our revenue is actually declining, according to recent LFB figures.

I do not believe that Wisconsin has ever seen a debt-to-revenue ratio of 5%, much less higher. Furthermore, I do not feel confident that we will see a 4% growth in revenue anytime soon, but I will be very happy to be wrong about that. As a taxpayer, I am deeply concerned about the amount of debt that we took on and the delayed interest that we will be paying on over the next ten years so that we can say that we have a balanced budget today. Furthermore, I am not appreciative of the seemingly half truths and lack of transparency on display by Governor Walker and Senator Fitzgerald.

Essentially, saying that this budget is balance without any accounting tricks or gimmickry is not demonstrating the integrity or transparency that I expect from my key political leaders of the state - nor should you.  This budget being balanced is essentially equivalent to a homeowner using a home improvement loan or borrowing against other lines of equity just to keep up with their mortgage payments and eventually every day bills. Figuratively, I feel that the GOP balanced this budget by maxing out a whole lot of credit cards that they do not want us to know about or understand.

Yes I am a Republican, but that does not mean that I have to buy into everything that my Governor or my Senator are doing, especially when it comes to the handling of my tax dollars. My confidence in the two of them has been shaken and I am deeply worried about our financial future as a state if we continue balancing budgets in this manner.  More people need to start asking questions about this budget and the future debt payments created by the GOP through ACT 10.

I would love to hear from others who are also questioning Governor Walker and Senator Fitzgerald’s math on all of this.  It sure seems like we are intentionally being played for fools by the very people who took an oath to represent us.  

Sincerely,

Gary