Sunday, June 28, 2015

Deconstructing GOP budget lies pt. 1- we weren't broke in 2011

The Number 2 guy in the State Assembly really stepped in it on social media this month, and it allows us a chance to revisit the first days of the Age of Fitzwalkerstan, when bombs were dropped and everything started to go wrong in this state. This incident relates to a whinefest of tweets and claims from GOP Rep. Jim Steineke on June 18 relating to the Bucks arena issue and related budget issues. You may recall that it included this race-baiting classic (since erased from Steineke's page).

MN also has a first class city that isn't a drain on the rest of the state. #DemLeadership #MKEinCrisis

— Rep. Jim Steineke(@jimsteineke) June 18, 2015

I suppose former mulleted deadbeat and DUI convict Jim Steineke might know something about what a "drain on the state" is, but that's beside the point. What I want to discuss is another tweet Steineke sent out in that meltdown, where he stated "WI was literally broke when [the GOP] got here [in 2011]." The right-leaning Journal-Sentinel's Politifact looked at this claim, and with Steineke refusing to answer Politifact's request for follow-up information on why he said that, they gave Steneke's claim a "false," . Here is part of their reasoning why.
When we cracked a dictionary to look up the word "broke," we found listing that included: "having no money; bankrupt" and "without money, penniless."

But numerous experts told us the state wasn't teetering on the brink of bankruptcy or insolvency and, under federal law, could not make such a declaration. In January 2011, Moody's -- which studies and rates debt issues by governments and corporations -- had said Wisconsin fared well when compared with other states.

What's more, the state had numerous tools available to deal with any shortfall -- even if some of the options, such as tax increases, were declared off-limits by Walker and Republicans.
And with that in mind, let's go back to the Legislative Fiscal Bureau's revenue estimates that came out in January 2011, which showed that there were sufficient revenues to handle the current-year expenses as they stood on January 31. Sure, there were likely extra expenses that had to be handled, such as $176.5 million of Medicaid expenses that hadn't been budgeted for, but notice how that was handled in the actual budget repair bill that later became Act 10. It was NOT done by lowering the expenses the state paid out for benefits (those savings came in the 2011-13 budget), but instead came from kicking the debt down the road.
Provide $165,000,000 of general obligation refunding bonding for the purpose of restructuring $165,000,000 in outstanding principal on GPR-supported, general obligation debt that would otherwise be paid off in May, 2011. The bill would authorize this bonding by increasing a current refunding authorization from $309,000,000 to $474,000,000 (an increase of $165,000,000) of state public debt that may be issued to refund any unpaid indebtedness relating to tax-supported or self-amortizing facilities. These bonds cannot be issued after June 30, 2011.

Although this bonding could be used to restructure both tax-supported and self-amortizing bonds, the administration indicates that only GPR-supported bonds would be restructured. Based on information from the administration on the potential structure of these refunding bonds, this provision would: (a) increase GPR-Lapses by $165,000,000 in 2010-11 from GPR debt service appropriations to reflect the reduced GPR principal payments to be made from those appropriations in that year; and (b) increase anticipated GPR debt service costs in the 2011-13 biennium by $29,570,000 to reflect the initial principal payment ($15,560,000) associated with the expected ten-year amortization of the $165,000,000 in deferred principal and the initial interest payments ($14,010,000) due on that principal.
Those who voted for Act 10 also reduced lapses to the General Fund by $79 million, meaning those cuts didn't have to take place, and the budget was still in balance for the rest of the fiscal year without those lapses taking place.

And as we found out later, the State Legislature didn't even need to take those steps. The state's economy had been improving as Gov Walker came to power in January 2011, and the state's budget reaped the benefits of that strength with higher revenues that were revealed in May 2011.
Based on our review of the collections data and the new economic forecast, we now believe that general fund tax revenues will be higher than the previous estimates by $233 million in 2010-11, $204 million in 2011-12, and $199 million in 2012-13. The three-year increase is $636 million, or 1.6%. Over the three-year period, the income tax estimates have been increased by $910 million, and the sales tax and corporate tax projections have been reduced by $240 million and $68 million, respectively. Smaller revisions have been made to the estimates for other taxes....

In the months since the January estimates were released, total income tax collections have increased by approximately 28% over the same four-month period last year, and year-to-date growth through April has improved to 12.3%. The main source of strength has been in amounts collected with income tax returns filed this spring for the 2010 tax year. In the last four months, payments remitted with returns have increased by almost 35% compared to last year, and refunds are 7.3% lower. Together, this has resulted in additional revenues of $228 million over the amount collected during the same period last year. The most likely reasons for this strength are the large gains in the stock market since early 2009 and improved business profits of pass-through entities (partnerships, limited liability companies, and subchapter S corporations) that are taxed under the individual income tax.
So that increase of $233 million in revenue for 2010-11 would have taken care of all of those extra Medicaid expenses, without having to kick that $165 million in borrowing (and extra debt payments) into the future budgets. But Walker and WisGOP had to pretend there was a budget crisis in order to try to justify the union-busting of Act 10.

This shows that the budget situation Scott Walker and the Wisconsin GOP inherited in 2011 wasn't nearly as dire as right-wing GOPper-ganda tried to portray it as at the time, or as GOP Majority Leader Jim Steineke falsely claimed it to be earlier this month. As Scott Walker tries to peddle to out-of-state rubes that he somehow saved Wisconsin from fiscal disaster, the facts and events of the future show that many of the fiscal issues for 2011 and the 2011-13 budget was going to be fixed by the Obama Recovery regardless of what Scotty did, which means the severe, crippling cuts that have damaged schools, local government and infrastructure in the four years since could have been minimized if the Fitzwalkerstanis would have chosen to do so.

It's those irresponsible policy decisions that Walker and his WisGOP minions in the Legislature made that has put Wisconsin into the budgetary mess with slow growth that we have today, and I'll discuss that part of the equation in Part 2 of this post.


  1. Pretty much the same thing that happened in Milwaukee County.

    There was no "fiscal crisis" until Scott Walker created it.
    Once he had the problem he could push his anti-worker, privitization agenda and then skip out of town into a higher political job before the shit hit the fan and the taxpayers were left with the bill.

  2. Greg- Classic "Starve the beast" cynicism, isn't it? Same thing the GOPs did in DC for the 2000s, then tried to blame the deficit on Obama.

    It's also why I wouldn't be shocked to see Walker quit as Guv to cash in on the campaign trail and the Faux News bubble-world. He doesn't want to deal with the mess he caused