Local op-ed: Walker balances the budget by borrowing $4 billion

2013-04-03T10:18:00Z Local op-ed: Walker balances the budget by borrowing $4 billionby Dennis Brault La Crosse Tribune
April 03, 2013 10:18 am  • 

In Matt Johnson's interview of Mike Huebsch, Secretary of the Department of Administration, (Broadcaster, March 21) Huebsch repeated the often-made Walker Administration claim of balancing a $3.6 billion deficit upon assuming office. What Secretary Huebsch doesn't talk about is that, by the end of Governor Walker's first term, Wisconsin could be $4 billion deeper in debt.

The expenditure side of the Wisconsin State Budget is like a giant pie, filled with the projected revenue of the coming two-year budget cycle. The Wisconsin Constitution requires that the state budget be cash balanced; expenditures cannot exceed projected cash revenues. Thus, there is only so much filling for the pie.  How one slices that pie is what the political budgeting process is all about.

If the pie being baked is not big enough to fill the state's spending hunger, then the state can borrow extra cash filling for the pie. The state constitution allows the state to borrow cash for the budget, as long as the state can afford to make the appropriate cash and interest payments. Unfortunately, however, when the state borrows money like this, it adds to the state's long-term debt.

When Governor Walker took office, Wisconsin's long-term debt was about $10 billion. By the end of Walker's term, Wisconsin's long-term debt will be nearly $14 billion.

During the first two years of Gov. Scott Walker's term, the choice made was to borrow one billion dollars. In an email exchange with me, Senator Kathleen Vinehout wrote, "Long Term Debt for Governmental Activities as calculated by the Legislative Fiscal Bureau has grown from $9,938,655,000 in 2010 to $10,593,140,000 in 2011 and $11,046,487,000 as of June 30, 2012." Add this billion to Walker's proposed 2014-15 state budget, which borrows yet another billion, and the total becomes $2 billion. Add another $1.5 billion for the Walker administration's proposed new capital improvement budget, and we reach $3.5 billion.

But we're not done adding debt yet: Senator Vinehout points out that "in the last budget, $560 million in debt payments were not made. "Add this half a billion in unpaid debt to our total and our current debt increase under Walker's governance is four billion dollars.

With billions more in state budget pie filling, Walker has been able to craftily slice the pie in deceptive ways that support his narrative of being a tax-cutting, budget-balancing, surplus-creating conservative, all the while doing it with the complicity of the state press and media, whose silence belays their bias.

This filling of borrowed money has allowed Governor Walker to brag that he has achieved "a complete 180 degree turn to true prosperity with a budget surplus."  But, is it really surplus and true prosperity when the state has had to borrow billions to fund it? In his Vernon Broadcaster interview, Secretary Huebsch says, "we can now put $125 million in the rainy day fund." So, the state borrows billions to put $125 million into a rainy day fund? Secretary Huebsch goes on to say, "and for the first time in 15 years the governor is proposing an income tax rate cut." A tax cut? The state borrows billions, so that a family of four earning $80,000 yearly can save $106 in state taxes. Really?

While Walker supporters can correctly claim the borrowed money was not officially used for a tax-cut or rainy day surplus, and instead used to fund projects such as the Zoo Freeway, the fact remains, however, that the budget pie is only so big, and that without borrowing additional cash, both Walker's tax-cuts and freeways are not possible.

When the Walker Administration repeats their claim of balancing a $3.6 billion deficit, they're hoping we aren't thinking about the borrowed billions. In the end, the Walker Administration has borrowed away the $3.6 billion deficit and turned it into $4 billion in debt."...That's really the turn around that we've been able to accomplish." said Secretary Huebsch. Indeed it is.

The next step in the budgeting process is legislative. There are upcoming legislative public hearings and meetings on the budget in April. Unfortunately, though, the real legislative portion of the state budget is crafted behind closed doors during closed partisan caucuses. Partisan caucuses are exempted from the state's open meeting law. These caucuses take place locked away from the prying eyes of the people, whose taxes are being spent.

Why do we allow this? Be silent no more, because your silence is your consent.

Dennis Brault is a Vernon County Supervisor and chairman of the Vernon County Democratic Party.

Copyright 2015 La Crosse Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(8) Comments

  1. Dennis Brault
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    Dennis Brault - April 22, 2015 2:51 pm
    From $10 billion to $14 billion at the end of Walker's first term. Just like I predicted: "Wisconsin owes a lot of money. The state budget proposes that we borrow even more money. The nonpartisan Legislative Fiscal Bureau (LFB) reported in January that the state owed about $13.8 billion. This is slightly less than the previous year, but almost $600 million more than when Governor Doyle left office."

  2. Jon B
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    Jon B - October 20, 2014 5:27 pm
    The CAFR (Comprehensive Annual Fiscal Report)is written by Walker appointees in the DOA. The DOA was already caught lying about the actual debt/deficits by FORBES magazine. See: Will Gov. Scott Walker Ever Come Clean On Wisconsin's Budget Deficit? And the DOA "accidentally" over stated revenue by an extra $1 billion in 2013, which is why the DOA CAFR mysteriously shows $500 million less in debt than the LFB's State Level Debt Issuance report from 12-15-2012. The LFB (Legislative Fiscal Bureau) is considered the "Gold Standard" for Wisconsin's finances by both parties.
  3. Jon B
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    Jon B - October 20, 2014 5:21 pm
    The "Budget Surplus" is based on Cash Accounting principles, which only means the balance in the bank account that day and doesn't take into account any of the State's future debt obligations including Walker's $2.6 billion in 30 year loans. In short, there really isn't a surplus. It's borrowed money.
  4. Jon B
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    Jon B - October 20, 2014 5:19 pm
    Walker lied when he said he inherited a $3.9 billion deficit. In reality, he inherited a $1.8 billion deficit. So where did he get the $3.9 billion figure? It's money the state department heads requested from the 2011/12 fiscal year. And 6 months into Walker's first term these people were Walker appointees.
  5. es1999
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    es1999 - January 26, 2014 9:01 pm
    On January 22, 2014, Wisconsin’s nonpartisan Legislative Fiscal Bureau indicated that Wisconsin’s budget surplus will grow by $911 million by the end of the 2014-2015 two-year budget, which ends on June 30, 2015. According to the actual data up to now, and if the projections are correct, Governor Walker’s policies seem to be having a positive impact on Wisconsin’s financial situation.
  6. es1999
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    es1999 - January 26, 2014 9:00 pm
    First, this article compares apples to oranges. It implies that Governor Walker would balance the $3.9B budget deficit that he inherited only by borrowing the additional money over 4 years. A budget deficit is the amount of shortfall in ONE YEAR. Thus a $3.9B annual deficit would add up to $15.6M over 4 years. This article predicts (wrongly) that Wisconsin debt will increase from $10B to $14B over the 4 years of Governor Walker’s first term. This could not come close to covering a 4-yr deficit of $15.6M.

    Next, the facts. Governor Walker took office in Jan 2011, well into fiscal year 2011. These are the outstanding debt levels at the end of the fiscal years according to the Wisconsin CAFR: FY2011 $12.9B, FY2012 $13.5B, FY2013 $13.7B. A total increase of $0.8B over 2 years with a significant downward trajectory. Unless something dramatically changes, it is apparent that the increase in debt will not be near $4B over Governor Walker’s first term.
  7. Southside Jonny
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    Southside Jonny - January 24, 2014 10:05 am
    Geezer: I have no doubt that you have suffer a head injury as most conservative load mouths have. So it is with my understanding that you think people going with out is a good thing? It must be nice to have all that you need and not want to give up anything to help others. You say the word greedy, those bus drivers drive your kids to school so they can (hopefully but doubtful under Scott walkers regime.) get a job and take care of arm chair arse in retirement. Hey geezer it's not working and neither are you.
  8. Geezer
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    Geezer - May 01, 2013 10:53 am
    Well at least those greedy "Haves" Westby bus drivers might lose their health insurance! It's working!
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