Uppity Wisconsin posted this clearly explained look at Wisconsin's financial state written by Senator and gubernatorial candidate Kathleen Vinehout. It's a must read that exposes the continued debt build up by Walker and the Fitzgerald's, along with the best reason to dump these hacks; they're throwing valuable taxpayer dollars away on escalating interest payments. No honest politician would have made the kind of promises Walker offered up in the campaign. Hell, his own party is trying to tank the economy to win the presidency. Let's be real. Having debt isn't a bad thing, every homeowner I knows has a massive debt with their mortgage company, but paying it off little by little is the goal.
I'm posting Vinehout's explanation here for my own reference. Enjoy the read:
People I meet ask me “Do we have a deficit?” “Did the state
really pay off all its debt?” To understand the numbers, I recently spent time with the
Legislature’s financial and auditing experts. I asked them to help explain the
financial state of the state. I learned ‘debt’ and ‘deficit’ are frequently confused.
Debt is money borrowed by the state and repaid over many
years – like a home mortgage. A deficit occurs when expected current state
revenues aren’t enough to cover expected current expenditures – will your
paychecks cover everything you have to pay for this year. Wisconsin’s debt is $13.5 billion and growing. The budget
deficit – by accounting standards – is just under a negative $3 billion.
“I thought the governor balanced the budget,” I can hear you
say. Here’s the rest of the story.
Budgets look forward. They compare expected revenue with
expected expenditures. To start the process, Governors ask agency directors
what money they need to keep their agencies running. New spending is added to
current spending. Often requests are ‘pie in the sky’. What agency
directors ask for is compared to estimated revenue. If the mismatch is negative
there is a “deficit”. This is the origin of the $3.6 billion deficit often
cited at the beginning of 2011.
The budget gurus told me governors usually start the budget
process with a deficit and then, by law, are required to bring the budget into
balance – expected spending during the budget years can’t be more than expected
dollars coming in.
There is another type of deficit – an accounting
deficit. Unlike the budgetary deficit that just looks at cash in and cash
out during the year, the accounting deficit looks at orders made over the year,
bills paid, and bills due but postponed. It measures how far into the hole you
are, even if your check book still balances. At the end of 2011 auditors
reported the accounting deficit was nearly $3 billion - somewhat larger than at
the end of last year. The accounting deficit has been growing for many years.
The state debt is not the accumulation of deficits. The debt
is the money borrowed to pay for long-term projects. During the 1990s Governor
Thompson authorized a large prison building program. This cost a lot of money
and increased state debt. In 2003 the state took on new debt to pay off
unfunded pension obligations. In just seven years, from the mid-nineties to
2003, the state’s debt doubled.
During the Doyle administration, old university buildings
were replaced and money was added to the Stewardship Fund. This added to the
state’s debt.
A troubling aspect of state finances is “kicking the can
down the road” or debt payments due but not paid. When the state fails to make
a payment and adds this payment to future debt it costs taxpayers more. Financial staff called this practice “scoop and toss” as
debt payments that are due are scooped up and tossed into the future.
Many governors have followed this practice and Governor
Walker is no exception. In May of 2011 the state did not pay a $190 million
debt payment. In addition, under the current budget the state delays another
$338 million debt payment. Together the over-half-a-billion in delayed debt
payments will cost taxpayers nearly $150 million in additional interest.
Not making current debt payments that are due “kicks the can
down the road,” increases interest obligations and leaves less money for
schools, health care and roads.
Historically, Wisconsin’s annual debt payments as a percent
of tax revenues are below four percent. Financial staff recommend that debt
payments should not exceed three and a half percent. Because of repeated delays in debt payments, including the
over-half-a-billion delayed in 2011, the size of this important ratio grows to
over five percent at the end of Governor Walker’s first budget. This places
Wisconsin well in the danger-zone.
Wisconsin continues to face significant budget challenges. A
public discussion about how to move Wisconsin forward must be based on the
facts. Facts are stubborn things and demand respect.
U.S. Solicitor General Donald Verrilli told the court the Obama administration’s reading of the law was the only one that made sense. Allowing subsidies nationwide is compelled by the structure and design of the health law, he said, adding that Mr. Carvin’s interpretation couldn’t be what Congress intended.
WSJ: A bill released by state Sen. Kathleen Vinehout, D-Alma, and Rep. Melissa Sargent, D-Madison, would set up the Badger Health Benefit Authority to run an exchange with insurance options for individuals and employers with up to 100 workers.
