Thursday, April 03, 2008

The Fifth-Largest Wisconsin Budget Item: Debt

This arises from Tommy "Stick-It-To-'Em" Thompson's spend-it-all-and-more purchasing of the highway and construction contractors' votes--plus the insatiable demands of schools and local Gummints.

After state aid to local governments, low-income health care, prisons, and the university, the largest item in the state’s general fund budget is now debt service...

According to WISTAX, Wisconsin has begun every two-year spending period with unfunded commitments since 1997. This fiscal unbalance was $701 million at the start of the 2005-07 biennium and $653 million as budgeting for 2007-09 began. With current projections of a $652 million budget shortfall, the governor and legislators are now trying to reach agreement on a fiscal "fix" that will likely push the structural deficit over $700 million by next year.

Another surprising indicator of continuing state fiscal problems is how little budget cushion the state has. WISTAX points to a national survey showing that the 50 states have $45.8 billion in reserve this year. If Wisconsin were a typical state, it would have a surplus of almost $1 billion, but its actual reserves are about one-eighth that amount.

The principal reason the state faces major challenges whenever it has a budget crisis rests on how it spends its money. In addition to debt service, which it legally cannot cut, it devotes 55% of general fund expenses to aiding schools and local governments, and another 12% on health care for low-income individuals (Medicaid).

In other words, local governments have transferred their overspending to State bonds. Think that those public-employee Unions (Firefighters', Police, AFSCME, WEAC) have an effect on spending?

It's at the LOCAL level--not at the State:

"What is not readily understood," observes WISTAX President Todd A. Berry, "is that the cost of operating state governments accounts for only 17% of general fund expenditures. The public and press often presume that cutting state agency budgets can solve a budget problem, yet the uncomfortable truth is that more than four of every five dollars in the state budget are spent elsewhere."

This has implications for Scott Walker. Milwaukee County, the MPS, and the City of Milwaukee are by far the largest bloodsuckers--and the out-state folks know it.

Popquiz: who was the last Wisconsin Governor to have come from a Milwaukee political base?

HT: FoxPolitics.

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