Senator Leibham reports the ongoing state budget bad news

Capitol Connection
By Senator Joe Leibham January 7, 2010

Throughout 2009, I consistently expressed concern regarding the irresponsible budget practices being advanced by our state government. Unfortunately, as we start 2010, my concerns remain high and are even stronger due to the release of recent information.

A few weeks ago, the state Department of Administration, in conjunction with the non-partisan Legislative Audit Bureau, released the state’s Comprehensive Annual Financial Report (CAFR) for the fiscal year that ended on June 30, 2009. To put it lightly, the report did not paint a pretty picture of our current financial situation, nor did it give us much encouragement going forward.

CAFR is required by law as an effort to get a handle on the true condition of our state accounting books and must be compiled according to generally accepted accounting principles (GAAP). According to the new CAFR, our last state budget ended with a deficit exceeding $2.71 billion – the biggest GAAP deficit ever.

If this deficit number surprises you, you’re not alone. After all, according to the “cash-basis” method of accounting used and touted by Gov. Jim Doyle, the state ended the last biennium with a $70 million surplus! What is responsible for this massive discrepancy?

In a recent column, Todd Berry of the Wisconsin Taxpayer’s Alliance attempted to explain in layman’s terms how these varying numbers can be developed. According to Berry, “Suppose you use your credit card to buy a new living room set. You take it home; the kids, their friends and your pets make active use of it. Credit card or no credit card, according to the state controller – who must follow accounting rules – you spent money. However, that is not the way the folks under Madison’s Capitol dome see it. The living room furniture might be well used, but they don’t budget the money until the credit card bill has to be paid.”

When private individuals or families practice this type of fiscal mismanagement or “book-cooking,” we are held accountable. Why do we find it acceptable for our state government to present budgets in this irresponsible way? This irresponsibility comes at a terrible cost for state taxpayers.

For example, many bond-rating agencies use our GAAP budget numbers as one of the criterion in determining the interest rates on money borrowed by our state government. Partially as a result of our horrific GAAP deficit, Wisconsin has one of the worst bond ratings in the country – ahead of only California and Louisiana according to Moody’s Investor Service. This means that Wisconsin taxpayers pay extremely high interest rates on the increasing amount of money borrowed by our state’s budget writers.

Mr. Berry informed us that “this year’s deficit is the largest ever reported.” Furthermore, while GAAP numbers are not available for all 50 states for the last fiscal year, “when 2007-08 deficits are compared on a per capita basis, the Badger State had the largest GAAP deficit in the nation ($445 per person), followed by Illinois ($305), Maine ($181), and California ($113).”

This is not good news for the taxpayers of our state or the services provided by our government. Without a doubt, this is the product of ongoing excessive government spending and a failure of our elected leaders to rein in costs and honestly present our budget realities. It is also one of the reasons our state was recently cited for having the tenth-worst fiscal budget crisis in the nation in a non-partisan report by the Pew Center on the States.

It is not too much to ask for our state budget to be written in accordance with the same GAAP standards that everyday taxpayers and private sector businesses must live within.

Please know that I have co-authored bipartisan legislation seeking to do exactly that but, unfortunately, the legislature continues to decline to enact this important budget reform. I will continue to pursue this common sense measure and other leadership on fiscally responsible and honest budgeting. This would bring about better budget news.

As always, it has been a pleasure communicating with you. Please remember to communicate with me and share your input by calling (888) 295-8750, writing to me at P.O. Box 7882, Madison, WI 53707-7882, or by e-mailing me at Sen.Leibham@ You can also logon to the 9th Senate District online office at

It is an honor representing the residents of the 9th District in the state Senate.

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