Tuesday, September 20, 2016

Walker debt shuffle eases next budget, but screws future ones?

I was digging into the topline numbers for the recently-submitted budget requests from agencies in the state of Wisconsin, to see what kind of budget hill we’re going to have to climb for 2017-19. And some of the requests include sizable jumps in cost, despite orders from Gov Walker’s office to try to keep to a zero-increase request, and despite the fact that the Department of Public Instruction’s request for additional teacher retention funds won’t come in until after November.

Largest proposed GPR increases from Wis agencies
Health Services +$455.5 million
Corrections +$122.1 million
UW System +$42.5 million
District Attorneys +22.5 million
Wis Tech College System +$20.6 million

These added increases total just over $700 million over the 2-year budget….until you get to one last department, the Department of Administration. And this number put my jaw on the floor.

DOA Budget Request, GPR funding
2016-17 adjusted base doubled $1,559.05 million
2017-19 budget request $802.63 million
Change- DOWN $756.42 MILLION

The obvious question is “What the hell is happening at DOA asking where their budget is cut almost in half?” And most of the answer can be found back in page 206.

The department requests a decrease of $(382,960,200) in the first year and $(355,140,300) in the second year to adjust the annual appropriation bond authority to the amount required for State of Wisconsin General Fund Annual Appropriation (Pension Obligation) Bonds debt service.
So how do we get $738 million reduced off of our pension bonds over the next 2 years? That goes back to something I noticed a few weeks ago, when the state sold nearly $600 million in new debt designed to avoid a huge balloon payment from previously-sold bonds that were due to mature in 2018. The move is nice if you’re concerned with taking pressure off of the next 2-year budget, but obviously you have to pay more in future years to make up the difference.

And if you look at Page 2 of that debt document, you see that a lot of that debt wasn’t put off for too long.

Date of maturity for Wis debt sold Aug 2016
2020 $49.855 million
2021 $74.175 million
2022 $77.875 million
2023 $75.705 million
TOTAL MATURING 2020-2023 $277.61 MILLION

So why might the Governor’s Office and WisGOP want to go this route? Well, those added payments just so happen to coincide with the next 4-year term of governor in Wisconsin, which means those funds are tied up, and can’t be used for other means, or for avoiding cuts elsewhere in the budget. I’m not saying that was done maliciously to increase the chances that the austerity errors in the Age of Fitzwalkerstan could be reversed….but it’d be a nice way to get to that outcome.

So keep your eyes open if Republicans try to claim the 2017-19 budget is “just fine” even with the added money for agency budget requests. Any breathing room that may exist will be a one-budget item largely coming from this debt shuffle, and it’ll literally be getting paid back with interest right afterwards. But if the next (Dem) Governor and Legislature have to clean up that mess, the GOP won’t care. In fact, it puts GOPs in their favorite position- bitching about Dems and Dem groups without taking any responsibility for the bad tax, spend, and borrow decisions they made that led to the situation requiring tougher choices.


  1. He's either teeing things up for more "emergency" measures in the first term of some new dick, or ensuring that in the event that the party switches, they'll have a mess to clean up, are likely to fail piss people off and keep opposite-party stronghold in midterms and or flip the top back four years later.

    1. Yup, ALEC "Starve the Beast" strategy to a T. And if it really works, they get to also blame President Clinton for it, just like how ALEC guvs tried to screw up the economy in 2011 then blame Obama for the "slow recovery"