Daniel M. Finley: Budget GAAP — Mis-State of the State

By Daniel M. Finley

This could be the most boring opinion piece you have ever read; not because it isn’t important but rather nobody seems to care.

The state’s budget is still a mess in spite of what we heard from the governor in the State of the State speech and the Legislature continues to play along in this game of fiscal malpractice.

The annual address by our governor has become the most predictable event in Wisconsin politics. Each year the governor, whoever it may be, will declare finances are on the right track irrespective of the economy and budget deficits, roll out a laundry list of new programs without revealing how they might be actually paid for and pledge his support to a boatload of causes he knows have no chance of ever being enacted into law.

But just once we’d like to hear the truth about our state. This may come as a revelation to our leaders but we can actually handle it.

The occasion of the State of the State should be a direct, unpretentious, and forceful account of our collective condition and a declaration of the strategic vision necessary to move Wisconsin forward. Few in Madison will admit the state budget is still riddled with holes. Poor budgeting practices got the state into their fiscal freefall and their penchant for time bomb budgeting has doomed the state to years of fiscal struggles. Did the state budget increase property taxes? Of course it did.

The fact is state government has mismanaged its finances for years. In spite of warning after warning from national bond rating agencies, Wisconsin’s bond rating has dropped faster than a bowling ball in Lake Michigan.

Only four states have lower ratings than Wisconsin. Our rating is based on budgeting practices and ability to make timely debt payments. This results in the state paying a higher interest rate when it borrows money and thus has to raise more in taxes to pay the debt. The irony is if the state would just put in place better fiscal practices now they would save millions in interest in the long run.

Unfathomably Gov. Doyle is now proposing yet another plan that would restructure state debt that only will make this problem worse! Why is this even being considered? Because it will make the budget look better now and put off the added tab to the future.

Wisconsin is one of only two states that don’t use Generally Accepted Accounting Principles (GAAP) in budgeting. Not using GAAP allows the state to pass budgets with huge structural deficits. This credit card mentality of buy now and pay later will haunt us for years.

Not using GAAP allows the deficit to appear smaller than it really is, thus creating an illusion of progress, and conveniently makes our deficit, especially when compared to other states, not look so bad. It’s an apples and oranges comparison and this fruit salad approach to accounting is just the way Madison likes it.

State government is addicted to using one-time money to pay for annual operating expenses. It sets up the next budget with yet another hole that has to be filled just to get back to even.

The budget also uses dubious federal revenues to make the bottom line look better and everyone accepts them because if they didn’t they would have to make more cuts.

State government has been plagued this past year with tone deafness toward those issues that matter most to us. Instead of acting on responsible health care, education, tax and campaign finance reform, the Legislature has pursued a bizarre agenda of gay marriages, guns, grocery cart theft and designation of the cranberry as the state fruit.

They now claim they will get around to the important things.

The true state of the State is that State government has yet again used tricks and gimmicks to allegedly balance the budget. That’s the reality and that’s what we are entitled to hear.

Until state leaders get past the petty partisanship, their constant vacuuming for campaign cash and their insatiable need to make the opposing party look bad we will not hear a fair assessment of our state and a realistic plan to truly clean up our fiscal house.

While accounting and fiscal policy are dull stuff to most, they are an essential part to getting Wisconsin back on track and we all need to care.

–Finley is the Waukesha County Executive.