Bruce Murphy
Murphy’s Law

The Not-So Fiscally Conservative Governor

Scott Walker hasn’t solved the state’s longterm fiscal deficit. He may actually make it worse.

By - May 16th, 2013 11:17 am
Gov. Scott Walker

Gov. Scott Walker

When Gov. Scott Walker proposed to slash public worker benefits in 2011, he famously said the state was broke and he had to take these measures to balance the budget. And in his first biennial budget he did indeed cut the state’s long-term deficit. But all signs suggest he will throw away most of those gains in his new budget, while greatly increasing the state’s bonded indebtedness.

A report by the non-partisan Wisconsin Taxpayers Alliance does an analysis using generally accepted accounting principles, or GAAP, to look at the overall state deficit. Walker cut it from $2.99 billion to $2.21 billion in 2012 and by this summer that is expected to drop to $2.06 billion.

But under the governor’s new budget, that figure is expected to increase to $2.36 billion by 2014 and $2.64 billion by 2015.  Meanwhile he wants to greatly increase bonded debt. WisTax noted he is asking to issue an additional $2.1 billion in bonds, equal to 16% of all outstanding state debt.

Perhaps most alarming is Walker’s approach to funding transportation, which could leave the transportation fund so in debt that 25 cents of every dollar would be spent on debt service by 2023, as my colleague Dave Reid has reported.

A report from the bipartisan Transportation Finance & Policy Commission, alarmed by the growing transportation fund deficit, had recommended increasing the gas tax, which hasn’t been hiked since 2006, and comes nowhere near paying for the cost of roads in Wisconsin.

“They (commission members) were very nervous” about the growing transportation fund shortfall, notes Todd Berry, executive director of the taxpayers alliance. “Our revenue raising structure (for transportation) is very narrow.” The gas tax, which has been set at 32.9 cents since 2006, “doesn’t adjust for inflation as the sales tax does,” Berry notes. “I think inevitably Wisconsin will have some kind of quasi-toll tax. Transportation in other states is becoming very much like a utility where you are metered and sent a bill.”

Nor has this been the only commission to express nervousness about the state’s growing indebtedness. “Two years ago the state Building Commission told the legislature of ‘the concerns of the governor and the Building Commission over the state’s level of outstanding debt,’” the WisTax report noted.

Meanwhile, there seems to be little interest among Republicans to consider road tolls or raising the gas tax. Instead, Walker and Republicans intend to lower the income tax, which Berry has questioned. He notes all the controversy and recalls Republicans faced for slashing worker benefits and education funding.

“When you expend that much political capital and encounter that much difficulty in cutting the budget, it’s surprising you’d be so quick to give that up.” The income tax cut, he notes, is a key contributor to dissipating the progress Walker had made in reducing the state’s GAAP deficit.

In the longterm, the apparent progress Walker made on the GAAP deficit may turn out be a small footnote to a longterm trend that suggests Wisconsin is underfunded and under-taxed. Throughout the tenure of Republican Governor Tommy Thompson, the income tax was not indexed for inflation and poured in a regularly increasing stream of revenue. In 1999, the legislature finally put a stop to this. But by then Thompson had greatly increased spending on highways, prisons and local schools and governors have struggled ever since with this level of spending.

Thus, since the income tax was indexed the GAAP or “structural” deficit, as some refer to it, has steadily risen, from just $830 million in 2000 to just under $3 billion in 2011. Doyle campaigned against Republican Scott McCallum for ballooning the structural deficit and Walker campaigned against Doyle on the same issue.

“During Doyle’s tenure, you had state legislators talk about one-time deals that will hurt us, like a transfer of money from the transportation fund,” Berry recalls. “The Legislative Fiscal Bureau made it look worse than it was, and I said that on a number of occasions.”

The reality is that these kind of one-time fixes have always been done. Thompson’s “deputy governor” James Klauser was often hailed as a magician for pulling off these murky, one-time deals. And while Doyle raided transportation for the general fund, Walker’s budget simply reverses that, raiding the general fund for transportation.

The bonded indebtedness of the state has also risen steadily since the income tax was indexed. The WisTax report doesn’t go back to 1999 but does show the state debt has risen from $5.8 billion in 2002 to $13.6 billion in 2013, and that will jump to $15.7 billion if Walker’s budget is approved in this regard.

From a GAAP analysis, the WisTax report noted, Wisconsin had the third-highest deficit in 2011, trailing only California ($19.9) million and Illinois ($8.1 million), two states that serve far more people. The reality is that no governor has solved the mismatch between spending and tax revenues in Wisconsin, and Walker looks like he will be the next governor to fail.

Short Takes

-I have long argued that state constitutional offices like treasurer and secretary of state are antiquated and unnecessary and simply waste tax dollars. Republican Kurt Schuller ran for treasurer and won with a pledge to serve only one term and work to eliminate the office. He has gotten little interest from Republicans. Worse, they have now proposed to remove the state’s unclaimed property from the Treasurer’s office and fold it into the Department of Revenue.

This is Schuller’s main duty and the money made from the unclaimed property program pays his salary.  Odds are this will require more staffing in the Department of Revenue to run this program, costing taxpayers more money. One sign of this is that state Sen. Glenn Grothman (R-West Bend), a hard-core fiscal conservative, opposed the move. There is clearly more to this story; the proposal doesn’t pass the smell test.

-The five county supervisors pushing a petition calling for the resignation of Milwaukee County Board Chairwoman Marina Dimitrijevic and requesting a special meeting of the Milwaukee County Board to elect a new chairperson have failed. The supervisors needed to get seven more board members to sign the petition and failed to get even one additional supporter. In a way, the passage of the state legislation downsizing the salaries and budget of the board members eliminated the major reason to dump Dimitrijevic. Her opponents on the board felt she had hurt their cause with state legislators by misleading them as to whether the board was negotiating with unions.

But now that the legislation has passed, the point is moot. Dimitrijevic still appears to have strong support from board members, who now face a reduction in their staff and powers, and may feel they need someone in charge who has strategically united them in their battles with County Executive Chris Abele.

Categories: Murphy's Law

16 thoughts on “Murphy’s Law: The Not-So Fiscally Conservative Governor”

  1. Dohnal(Wis. Conservtive Digest says:

    At least there are some honest supervisors. The county, along with MMSD, Wisconsin Center, MATC have been pits for Left wing hacks to get jobs for years, that is why Milwaukee is laughingstock of state and cannot get any money.

  2. Joanne Brown says:

    In my experience, very little from the Republican legislature has passed the smell test lately. I’m thinking about the changes to Milwaukee Co. governance that includes little input from the City of Milwaukee, Sheila Harsdorf’s “anti-Bloomberg” insert into the budget bill, the SNAP stuff, cutting the stewardship fund, the outrage about a UW System surplus without similar outrage and payback for WEDC’s poor stewardship of taxpayer dollars, and so on and so forth. The Tea Party/ALEC legislators have forgotten that they are supposed to be working for the people of Wisconsin.

  3. dohnal(Wis. Conservtive Digest says:

    I believe that the legislature is going to drop some of the bonding but since Doyle grabbed all the money in the fund, now the Left cannot do that, we need these Zoo interchanges done. It is a mess. also the new money will help.

  4. Duke says:

    Left Wing hacks which should never be confused with Right Wing hacks. Sigh… Wisconsin has become a laughingstock because the “middle 99%” haven’t been represented for years. Anytime your state is led by a conservative team that gets fooled by a pot smoking blogger….. I won’t even finish. Of course, the liberals give us deep thinkers too. Meet Gwen Moore.

  5. Tom W says:

    Bruce, you just don’t understand. Scott has fallen under the tutelage of the NY Times and the rarefied air in Madison and become a KEYNESIAN!! The government will create those 250,000 come hell, high-water or peanut butter! Or in this case, a new rail system which would have done almost the same thing with much, much less state dollars.

  6. STACY MOSS says:

    I don’t understand……

    Walker has been adamant about lowering taxes while diminishing many government services (the UW system for example).

    So something has to give. Right. What’s left except raising the debt?

    This doesn’t seem at all inconsistent.

    Am I crazy?

  7. STACY MOSS says:

    PS…. one can be a fiscal conservative and still raise the debt. Sometimes even creating debt is the conservative thing to do.

  8. MilwMike says:

    I know the highway lobby had/has both Doyle and Walker in their back pocket but I fail to see the $$$$$ need of I-94 expansion. We needed some or all of those dollars for highway repair. This is a bipartisan disgrace.

  9. David Ciepluch says:

    Walker, his political hacks, and fellow Republicans are nothing more than corporate stooges and lackeys with “the midas touch in reverse” fortunes for our future just like he did for Milwaukee County. We have fast become a worst in class state.

    Some facts as summarized by Rep. Shankland:

    • Wisconsin ranks 50th in short term job growth (U.S. Chamber of Commerce)

    • Wisconsin ranks dead last in the Midwest for job growth (U.S. Bureau of Labor Statistics)

    • Wisconsin ranks 49th in job growth through 2016 (Forbes)

    • Wisconsin ranks 45th in wage growth (U.S. Bureau of Labor Statistics)

    • Wisconsin ranks 44th in job growth (U.S. Bureau of Labor Statistics)

    • Wisconsin ranks 42nd in best state for business

    • Wisconsin ranks 10th in top states with people fleeing (Forbes)

    No amount of political spin can fix this failed jobs agenda, Governor. No amount of political spin can account for the laws Walker’s WEDC — his self-created job creation agency — has broken. No amount of political spin can account for the 22,600 jobs Wisconsin lost last month — the worst job loss in a single month Wisconsin has experienced since the height of the recession in April 2009. No amount of political spin can excuse the governor’s failed leadership.

    Wisconsin is behind every state in the nation under the governor’s watch.

  10. After Doyle lost us 150,000 jobs the last four years, ran the budget 3.6 billion into debt, raised taxes on everyone and chased out 7500 high paid people, it takes a while to recover from that mess. Take a look at how you leftwingers have run Milwaukee. the businesses have escaped to Waukesha county, only 30% of the kids in tenth grade can read, there is 57% unemployment amongst the youth and the only thing that Milwaukee is worried about is putting a ball and chain around their employees and building a silly choo choo train. The Mayor even wants to leave, he keeps running for other jobs. Has anyone ever seen a leader, Barrett, with so little gravitas? Name me his accomplishments the last ten years??? Even one???
    Notice how Walker turned a big deficit into a surplus? without raising taxes?

  11. Jesse H. says:

    Walker needs to take responsibility for his record.

    Dohnal, you can’t hide behind pointing fingers at Milwaukee. If you had any integrity or ethics, you wouldn’t try to convince us the sky isn’t blue.

  12. dohnal(Wis. Conservtive Digest says:

    Walker is happy to take responsibility for his record, he has a surplus without reducing services and is on the path of improving education. Doyle and company left us with big mess, deep in debt, big tax increases, big cuts to programs, and lost 150,000 plus jobs, plus screwed up the deer season.
    I do live in Milwaukee county and have unhappily watched the stupid leftist governments run the county,a bunch of liars and crooks, MMSD, totally inept, poop pushers, Wisconsin Center, cannot do anything right, MATC, over priced and poorly run and finally city of Milwaukee, where nothing has happened in the last ten years except for Tom Barrett trying to get out asap.
    Excuse me, Barrett has spent ten year trying to get a silly choo choo train that goes around in a circle, turning left all the time naturally. he has been unable to even get that done.

  13. Chris Jacobs says:

    Criticize Walker all you want, but there is no Wisconsin governor in recent history that comes close to balancing a budget, or maintaining fiscal responsibility. New revenue options are not needed. $5.9 billion to $6.4 billion is nothing of an increase in the transportation fund. Natural increase in overall tax revenue through taxes every year will more than cover that. We already know that the UW system has a huge surplus. The state is already expected to take in $500 million more than expected.

    Doyle, in the same position, would take even more out in debt and spend money at every liberal choice while he was at it. He even raided $200 million from all state physicians malpractice (Patient Compensation) trust fund illegally to do so. To even keep a straight face and suggest Walker putting us in debt worse than governors in the past is quite amusing.

  14. Bill Kurtz says:

    As you say, “there clearly is more to the story” of taking the unclaimed property out of the State Treasurer’s office. I don’t know what the story is, but I can think of at least two possibilities:
    1. Maybe it’s just an attempt to create positive, feel-good linkage for Walker. You know how the newspaper advertising sections with lists of unclaimed property holders, the related website and a booth at the State Fair all carry the name of the State Treasurer. Now it will be GOVERNOR SCOTT WALKER who wants to help you find forgotten bank accounts.
    2. Schuller lives in the 6th Congressional District, currently represented by Tom Petri, who is in his 70s. Sometime fairly soon, this will be an open seat. Maybe Schuller might want to run for the GOP nomination. Maybe some Republican legislators (Grothman and Scott Fitzgerald to name two) might also want to run.
    (Also, when the Congressional lines were redrawn two years ago, Ozaukee County was added to the 6th, along with River Hills. No other Milwaukee County community was moved to the 6th. Guess who lives in River Hills? Is Alberta Darling a wannabe congresswoman?

  15. Dohnal(Wis. Conservtive Digest says:

    Bill, as usual you are hallucinating. Tom barrett is going to run for that seat unless he gets appointed to a federal judgeship or head of AMTRAK. He will do anyhting to get out of Milwaukee.

  16. NewWisGov says:

    Blaming Doyle for 150,000 jobs lost in 2007-09??? It would be interesting to hear how Governor Doyle crashed Wall Street & can be blamed for all the effects of the national crash.

    Scott Walker uses the same technique when he says “Don’t Go Back” to the statistics of the Wall Street crash & then he blames local Democrats as if they crashed Wall Street. Intentionally misleading Wisconsin voters.

    Wisconsin fell from 11th to 44th place for job growth since the Tea Party took office.

    Time for a NewWisGov

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