Monday, May 12, 2008

The State Budget: From Bad to Much, Much Worse

First thing you should know is that the $650MM problem was "reduced" to only $525MM by simply NOT paying $125MM in State debt, which will be rolled over for payment in the next biennium. So we begin with a problem, if you intend to be around Wisconsin and paying taxes 3 years from now.

We also have another "beginning" problem: the assumption that revenue-projections from taxes are going to hold up. If the current credit-crisis works its way down a bit further the State could be in trouble. Similarly, on the spending side, if the price of petroleum holds at its current levels, the State's budget for asphalt and motor fuel is pure fantasy.



But it gets worse.



The "remedy" found another $125MM to roll into the next biennium by delaying school-aid payments.



The "remedy" drains another $66MM from the rainy-day fund and spends it.



The "remedy" (by fiat: Presto! Change-o!) reduces the required cash-on-hand required balance by another $40MM.



The "remedy" pisses away $4+MM which should be used for "Real ID". No real ID this biennium, folks. Oh, and by the way--the "remedy" would also put nails in the REAL ID coffin by prohibiting expenditure of the other $21+MM budgeted for that purpose.



There IS a seeming reduction in spending of $69MM--but it's money that the State is not obligated to spend, nor HAS the State spent the money--so it's "money we really didn't have to spend in the first damn place" which will be called "spending reduction."



(That, folks, is like budgeting in Marcy 2008 for your 2009 vacation and then cancelling the budget item in June 2008....you didn't spend the money!!)



THEN...



They will spend $50MM on roads, by issuing MORE DEBT. So they took out $50MM (above) and then re-spent it--but like the first item, it's going to be more debt for the NEXT biennium...



AND...



They will push $25MM in County roadbuilding/maintenance from THIS biennium to the NEXT biennium. The potholes will have grandchildren, and the taxpayers will have MORE debt.



The State will allow locals to tax elder-housing (targets: Lutheran Home, Villa Clement, and the Congregational Home, among others.)



(A minor point: in order to effect some administrative changes in retired-police-and-fire health insurance pay, the State authorizes THREE positions--at a cost of $100K/year/position. Nice work if you can get it, folks...)



(Another minor point: the "remedy" will force all school districts which offer 4-year-old kindergarten to offer it to ALL 4-year-olds, not just some. Do you see footprints of WEAC?)



Then there's the re-financing of the tobacco deal.



Way back when, McCallum patched HIS leaky budget by selling the State's tobacco revenues. (That is something he should not put on his resume, folks...)



At any rate, the tobacco companies paid the State and the State then made its payments on the bonds issued to give McCallum the money he needed.



NOW the State wants to re-fi that deal and extend its annual debt payments another 12 years. But in order to do that at a better interest rate, the STATE will guarantee the payments--where before, the bond-holders had assumed the risk that the tobacco companies would pay, now the State TAXPAYERS assume that risk.



$200 million or so this year, yes--but then, if RJR or Marlboro goes BK, guess who pays? (Hint: get a mirror and look square into it...)



And to top it off, the net present value of the income from the settlements is REDUCED by $80MM or so over the next 30 years. The "remedy" puts you on the hook and cleans $80MM from your pockets for the privilege.



What a country! What a State!!



The "remedy" will also spend an additional $18.5MM or so by putting child-care providers on retainer instead of paying them for services actually delivered. In other words, the State will pay providers based on "expected" child attendance, rather than ACTUAL attendance.



Then there's the WallyWorld tax hike. The State will hit up WallyWorld for $18MM or so by dis-allowing rents/lease payments to "related entities." There are a lot of highly technical provisions in the legislation--but it's entirely possible that this provision will affect a lot more entities than just WallyWorld. In any case, this is a sop to the UFCW and deserves separate consideration--if it deserves consideration at all.



Finally...

Under the Old Budget, the State would have $52MM in the bank as of the close of the budget year. Under the "remedy," the State would have only $1.5MM in the bank. Hell, that's a ROUNDING error. We could still be overdrawn--not to mention the nuclear-bombs left for the next biennial Charade and Smoke/Mirrors game.

Speaker Huebsch should simply resign. This is abominable, disgraceful, and immoral. This is the kind of crap that would place any private-sector employee in Club Fed for fraud.

Now it's LEGAL?

4 comments:

Billiam said...

Haloscan is starting to piss me off. Looks like Wisconsin is becoming a "3rd world state". I myself will be gone in 3 years. Just think, with more conservatives leaving, that means that the Libs in this state will have to pay for all this bullsh*t. Maeks one smile just thinking about it.

Amy said...

billiam:

I'm right there with you. I will be leaving as soon as I finish my MA.

Neo-Con Tastic said...

I moved and came back. Wisconsin is like a black hole.

asianbadger said...

Got a call from Zipperer yesterday with a heads up on this piece of crap. He's going to fight it with some others but he felt it was going to pass.

I told him to go kick Huebsch in the nuts. Sadly, he declined.