To help close the state’s $283 million budget shortfall this year, Wisconsin Governor Scott Walker (R) plans to skip a $108 million debt payment scheduled for May.
Walker, a likely presidential candidate whose campaign message rooted in Wisconsin’s fiscal record, has been struggling to balance the budget in his home state before the June 30 deadline. Pushing off debt payments is one tactic that he and predecessors have used in the past.
By missing the May payment, Walker will incur about $1.1 million in additional interest fees between 2015 and 2017. The $108 million debt will continue to live on the books; Walker’s budget proposal for 2015-2017 will pay down no more than about $18 million of the principal.
“This latest accounting gimmick kicks the can further down the road and will end up costing taxpayers millions more,” State Sen. Jennifer Shilling (D) said in a press release yesterday.
Democrats have been pressuring Walker to address the estimated $283 million shortfall with an emergency budget bill, but he has resisted so far. Restructuring this kind of debt does not require legislative sign-off. Walker may also be forced to make emergency government spending cuts in the next four months to make ends meet.
In March last year, Walker signed a $541 million tax cut for both families and businesses. At that point, Wisconsin was facing a $1 billion budget surplus through June 2015, the Journal Sentinel reported.
By November last year, the administration was estimating a $132 million shortfall. In January, the non-partisan Legislative Fiscal Bureau pegged it at $283 million. The Bureau, which does research for the Wisconsin Legislature, explained that tax collections were $173 million worse than the administration’s own estimates in November.
The Walker administration argues that pushing off the debt payment is a smart financial move. “The State is taking advantage of unusually strong, favorable short-term interest rates for these notes,” spokesperson Cullen Werwie wrote in an e-mail.
Looking ahead, the administration also faces a $2 billion gap between what Wisconsin agencies have requested in their budgets over the next two years, and Wisconsin’s projected revenues. His budget proposal for 2015-2017, released earlier this month, includes a controversial $300 million cut to the University of Wisconsin System.
Walker has bragged that he has approved $2 billion in tax cuts since he took office in 2011. The Legislative Fiscal Bureau told PolitiFact in March that the claim is accurate.