Budget follow-up, what will Walker borrow, steal or lapse?

I had a couple of other items to discuss about the LFB's recent paper showing Wisconsin's new $208 million deficit under the Walker budget. (read the whole thing here if you want to). There was a lot I could take apart in my initial analysis, but a few other things slipped through the cracks that also deserve attention.

The deficit would have been much worse had it not been for a $63 million drop in debt service costs. Why did this happen? We'll the LFB tell you, with me adding some emphasis.

First, the state has sold its general obligation bonds at a premium and applied most of these premium proceeds to current year debt service in lieu of using thwe budgeted amounts to pay those costs. A bond that sells at a premium does so because the interest rate on the bond [which taxpayers have to pay off eventually] is higher than the market rate, making the bond worth more to the buyer. Most of these up-front premium payments were used to reduce GPR debt service, with the remainder being applied to the capital improvement fund in lieu of future bonding. Second, GPR debt service is estimated to be lower because current projected interest costs on the funds borrowed under the state's commercial paper program are significantly less than the amounts budgeted in Act 32 for these short-term obligations.

In other words, the state has benefitted from the Federal Reserve's easy-money, low-interest policy and low interest rates on bonds in general (thanks, Bernanke!) and that we'll have to pay more in future budgets than we should have because we offered these bonds at a higher rate. Sure, we got more money for them up front (hence the lower deficit this year), but it'll cost us more in future years than we could have had, and you'll see that with bigger costs in future years.

Also mentioned in the LFB report, a $20 million decrease in "compensation reserves". Well, what is this? "lower premium costs of the state's health insurance program." Gee, another Walker Admin. overestimation (albeit a relatively small one) on health insurance costs, creating more budgetary alarm than what actually existed. And since they're reducing the amount of reserve compensation that's owed to employees, you think they'll use that $20 million to give back some of the money they took from state employees through Act 10? HELL NO, and in fact, they raised the pension contributions by another 0.1% to 5.9% for this year, despite the fact that the pensions are 100% funded and among the most solvent in the nation. Sure makes you wonder if the Walker boys are going to use some of that fully-funded pension to fill in their inevitable budget holes, doesn't it? You know, kinda like how Tommy Thompson tried to do to the teachers in the '90s? (AND FAILED, forcing the money to be paid back later)

Lastly, if you check out the summary on Page 2 of the LFB paper and the General Fund Condition statement, I bring you this line item.

Less lapses-
2011-2012- $306,093,000.
2012-2013- $593,034,800.

That's right, there are nearly $600 million additional lapses expected between July 2012 and June 2013. So could we expect a replay of the disgusting moves done this Fall when the Walker Administration singled out the UW System for 40% of the lapses on top of a $250 million cut to the System in the budget. So are they going to arbitrarily single out the UW or some other "undesirable" type of program to defund with the lapses built into this unbalanced budget? Remember, this $593 million in lapses is on top of the $208 million they already have to fix due to the low revenues resulting from the bad economic performance of Wisconsin under the Fitzwalkerstani reign.

And Walker claims that this time he won't ask for a budget repair bill because they'll find "administrative savings." Seems interesting that now there's no crisis in WalkerWorld when the alleged budget deficit that led to Walker dropping the bomb was smaller than what we have now. (That alleged 2011 deficit was later proven to actually be a budget surplus, in case you forgot)

You think they've got a "screw the UW, screw schools and local services, privatize the hell out of things and steal the pensions" plan all ready to go, and they're looking to break it out if they somehow survive the recall elections? You bet your ass they do. And it's why we have to be all over every one of these moves, and get these bastards out as soon as we can.