To all the hard-working, Democracy loving, fiscally responsible people of Wisconsin,
You have been misled. Governor Scott Walker has completely misrepresented his budget and Wisconsin’s fiscal state. Before, during, and after debate on this budget, Walker has lied to you. His statement released after the Legislature’s budget passage continues these lies:
“I am proud of the work done by the Legislature, which passed a budget today that isn’t built on accounting gimmicks, use of one time money for ongoing expenses, or tax increases. The budget approved by the Legislature is an honest document that balancesWisconsin’s $3.6 billion budget deficit so that our children and grandchildren aren’t saddled with mountains of debt in the future.”
Moving forward, I plan on taking time over the next two weeks to review the changes made by the Legislature prior to signing the bill before June 30th.”
These lies were repeated so many times by Walker, GOP Legislators, and the media they have passed for conventional wisdom. As a service to the people of Wisconsin who may have fallen prey to Scott Walker’s budget hijinks, here are the lies in Scott Walker’s statement exposed:
Piece #1 – The “…budget today…isn’t built on…tax increases.” (see quote above) In a January 13, 2011 memo from LFB Director Bob Lang, the LFB specifies two significant tax increases. These tax increases affect poor, lower-income residents who rely on the Earned Income Credit and Homestead Tax Credit to simply make ends meet. Through this budget, the state is increasing the tax burden on the lowest wage earners by nearly $70 million over two years. In addition, fees will increase by over $100 million, targeted primarily at tuition increases for UW students, and vehicle title fees to segregated funds. A tax is a tax – it is a lie to consider these anything but what they are.
Piece #2 – “The budget…isn’t built on accounting gimmicks” Scott Walker promised, backed by GOP Legislators, to not raid segregated funds to balance the budget. This was a practice he slammed Jim Doyle over, and repeated this promise again and again. A June 14, 2011 memo, again from LFB Director Bob Lang, proves this to be a blatant lie. The memo itemized over $400 million in segregated fund “transfers”. Most of the raids transfer funds from General and Environmental Funds into Transportation Fund (to fund road construction boondoggles). The LFB memo confirms these funds are “used for purposes other than…the funds have traditionally been used.” The fund raids themselves are gimmicks used to give the appearance of a “balanced” budget.
Piece #3 – “…our children and grandchildren aren’t saddled with mountains of debt…” In the biennial budget, Scott Walker has given huge tax breaks to corporations and the wealthiest individuals to make Wisconsin more “business friendly.” Regardless of the fact that tax breaks don’t create jobs (see item #3 of the link – includes charts!); there will be a significant price for our children to pay - long after Walker is out of office. The June 9, 2011 LFB memo from Rob Reinhardt itemized the long-term consequences of these tax cuts for large corporations and the wealthy. The total LFB projection in lost revenue over ten years – over $2.3 Billion. Yes – BILLION. Most of the revenue loss is due to the changes in Capital Gains and Combined Reporting, benefitting the highest income earners and largest corporations in Wisconsin. Scott Walker will be out of office long before this revenue loss impacts Wisconsin’s children.
Piece #4 – “…our children and grandchildren aren’t saddled with mountains of debt…” (part 2) The June 14, 2011 LFB memo from Fiscal Analyst Al Runde unveils the most disturbing lie about the Walker budget. Walker’s debt restructuring plan provides for longer term debt service, incurring greater interest costs for the state. The plan simply allows the Governor to delay debt service payments beginning in 2013. Scott Walker will delay debt payments, accruing higher interest, and literally “kicking the can down the road.” The impact? The state standard for debt-to-revenue ratio is no greater than 4%, with a target debt ratio of 3-3.5% of General Program Revenue. Table 2 in the linked memo shows the debt-to-revenue ratio projections. THIS IS CRITICAL – Debt ratio grows from 2.28% this year, to almost 5% next year. In 2013-2014, it grows to OVER 5%, even with a generous 4% growth in revenue. A debt-to-revenue ratio of over 5% is higher than ANY budget under Jim Doyle. This literally saddles Wisconsin with increased debt AFTER Walker’s term is over.
Point #5 - This budget “…balances Wisconsin’s $3.6 billion budget deficit.” No, it doesn’t. The June 15, 2011 LFB memo specifies the fiscal condition of the Transportation Fund. The fund will operate in a deficit after this fiscal year. Through the raiding of the General Fund (see above), which is a one-time transfer, the Transportation Fund will be in a $244 million deficit for the 2013-2015 bienium. In addition, because of Walker’s method for debt restructuring (see above), the Transportation Fund will require higher levels of bonding to maintain equal levels. The total deficit, over the 2013-2015 bienium - $319 million. A deficit which will come due AFTER Walker is out of office, and after the Road Construction lobby has been paid – with money raided from the General Fund, and debt sold to our children.
Simply stated, Scott Walker has lied. He has raised taxes, raided funds, created a critical future revenue shortfall, sold debt to future generations, and created a budget deficit. Spread the word, share the facts, and make sure Wisconsin knows the truth about this fiscally (and socially) disastrous budget – which doesn’t work for anyone!
Thanks to all contributing legislators in sharing their research, time, and efforts in this unprecedented time. On Wisconsin!