Monday, September 3, 2012

The Kick The Can Champion Of Fitzwalkerstan

As Milwaukee County Executive, Scott Walker was a master of kicking the can down the road at budget time. He'd do things like let repairs slide; not pay the bills; lay off workers until programs stopped working, knowing that any lawsuits would be months or even years down the line; dip into reserved funding; and even just draw up illegal budgets knowing that the repercussions wouldn't be felt until he was safely out of that office. Then he would declare a surplus when there was nearly a billion dollars in debt taxpayers were facing.

As governor, we see that Walker is still the Kick the Can Down the Road champion of Fitzwalkerstan. Again we see him extending the state's debt, raiding the transportation fund (not to mention preparing to raid the pension fund), and cutting services which are leading to greater expenses.

But Walker has learned a new twist. Not only is he kicking the can down the road, but he is kicking it to trip up the local governments and school districts.

To exemplify this, the Milwaukee Journal Sentinel recently had an article about the future budgets of a "Fairly Normal" school district:
A year ago, Borch's analysis showed that things were going to be OK in Fairly Normal in the first year of the new financial realities. State aid went down, but employees paid a bigger share of health and retirement costs. The bottom line actually improved from what it would have been under the old system of increasing state aid and generous employee benefits.

In the second year, things weren't so good, and Fairly Normal had to dip into its "fund balance," which is pretty much like its long-term savings account. Years Three and Four get worse. By Year Five, which would be 2015-'16, Fairly Normal is running a big deficit, has used up all its savings and can't pay all its bills. I'm not exactly sure what we would call that when it happens to a unit of government in Wisconsin, but in other circumstances, I believe it's called bankruptcy.

Why did this happen? This is how I'd put it: Let's say your boss cut your pay. But he also helped you cover some of your expenses. For a year, it worked out to be pretty much a wash, and things were generally OK.

The next year, the boss gave you a little bit more pay, but your expenses started going up again. Things were not quite so OK. Same thing in the third year and fourth year. By the fifth year, it was ugly. You'd used up all your savings and you still couldn't pay your bills.

That's what is developing for Fairly Normal. As things stand, revenue stays pretty flat. But even without teachers unions having a say, expenses start climbing again. There are some modest raises, increases in health costs, costs for retirees and so on. Borch factors into his model that a lot of senior teachers retire due to changes in benefits and are replaced by younger teachers with lower salaries. (This is happening, in general.)

It's now a year since Borch first showed what he forecast for Fairly Normal. Things are developing pretty much as he envisioned, except a little less cheery on the bottom line. His forecasts now extend out an additional year and are looking like big financial problems loom for Fairly Normal.
The article goes on to cite a number of different possibilities to avoid the inevitable bankruptcy, including cutting even more teachers, cutting benefits even more (which would also reduce the number of good teachers), raising taxes and major program cuts.

I'd bet my bottom dollar that Walker is thinking that he will be out of the governor's chair by the time his bill is due, either in someone's cabinet or even as president himself.

But while Walker gets to celebrate being champion can kicker and parties hearty, we get stuck with the tab and the hangover.


  1. You are so right about this. Amen.

  2. Walker's plan is to use the financial problems of the schools (that he created as the article points out)to justify privatizing all of them. That way some people can make a profit off of tax money. Win-win for some people, for the students and the education level of the state it is lose-lose.

  3. Capper, your explanation sounds right on.
    I think Walker's star rose through the years because he could get away with just what you describe. He continued his method of operation in Madison, only enhanced some because they needed more tools to play off a manufactured budget crisis. They want to reduce government size and have the rich pay little taxes.
    When you describe the second year, with prices going up and thus more expenses, this is caused by rising inflation due to the Fed
    pumping more money into the system.
    10:59 is also right.
    None of this would be happening if we hadn't had a financial meltdown in 2007-08, plus the problem that Wall Street dominates our economy so much. Let Main Street die.
    And Walker shifts funding source from state level to local, just when local has little to operate with.