Monday, November 24th, 2014

Walk-O-Meter

Never "raid" special state funds for other programs


Will "end the practice of raiding segregated state funds to pay for other programs. If taxpayer revenue is collected for a specific purpose such as building and maintaining roads, it should be used for that purpose and that purpose only."


Subjects: State Budget

Updates

Not as reliant on this practice as in budgets past, but it did occur in 2011-13 spending plan

As a candidate for governor in 2010, Scott Walker criticized the practice of "raiding” the state transportation fund and other segregated funds to balance the state budget.

Walker said taking taxpayer money from accounts built up for particular programs just masks the true depths of the state's fiscal problems.

The practice had become commonplace in tight budget times, with Gov. Jim Doyle and legislators tapping the state's transportation fund and a patient compensation fund for malpractice payments. Indeed, the state Supreme Court struck down the 2007 "raid” on the malpractice fund.

Tapping segregated funds helped generate between $240 million to $805 million every two years over the last four state budgets before Walker"s budget for 2011-2013 was introduced in March 2011, state records show.

Walker declared the end of an era on the campaign trail: He promised to "end the practice of raiding segregated state funds to pay for other programs. If taxpayer revenue is collected for a specific purpose such as building and maintaining roads, it should be used for that purpose and that purpose only."

Once in office, Walker did not tap the transportation fund or the patient compensation fund in his first budget, avoiding those major transfers.

But a July 5, 2011 memo from the Legislative Fiscal Bureau found more than $400 million in transfers in the final version of budget that "would be used for purposes other than those for which the fund has traditionally been used.”

We examined that memo, and found that in many respects it is not a good measuring stick to compare the Doyle and Walker moves.

Walker's promise was very specific. He said he would not raid "segregated funds,” which is a statutory designation for certain accounts, such as transportation. But the memo outlining Walker"s transfers looks at not only segregated funds, but shifts from so-called "program” funds.

One example: the revenue from fees on insurance companies that goes into a pot to pay for the Office of the Insurance Commissioner. Walker moved $36 million out of that pot into the general state budget.

Bob Lang, director of the nonpartisan Fiscal Bureau, said he broadened the definition of "transfers” because that was how the request came in from various lawmakers who sought a list of transfers.

Another note: Some of the Walker transfers were from accounts that were no longer necessary -- recycling fees, for instance, that went into limbo because Walker proposed eliminating state recycling subsidies to local governments, ending support for it.

We could try to parse whether Walker should be held accountable for transferring program revenues and the like.

But we don't have to.

His promise was specific to segregated funds, so what about those?

With Lang"s help, we examined the few remaining transfers in the Walker budget after you take out program revenue funds and others that don't fit, such as the recycling fund move.

We found one that fit the description of a segregated-fund raid from an ongoing program to another.

Walker tapped a petroleum-fee fund that primarily reimburses homeowners and gas stations for cleanup of underground tanks, according to the Fiscal Bureau memo and analysts with that agency. A small portion of the fund pays for state inspections of motor fuels and home-heating oil.

The petroleum inspection fees are charged to suppliers of petroleum products sold in Wisconsin. They are in a segregated account for the Petroleum Environmental Cleanup Fund Award program.

Doyle used fees in the fund to pay for programs in other state departments, and in the state transportation fund. The fees now generate more than needed for cleanups, but it"s not really a surplus: The program borrowed more than $180 million and has not been making principal payments on a significant chunk of its debt.

Walker followed Doyle's lead, proposing to move $39 million from the cleanup fund -- all of it to the transportation fund.

That move was approved by the Legislature.

Walker spokesman Cullen Werwie told us Walker was trying to replenish the transportation fund after Doyle's raids. And he argued that the petroleum fees are motor-vehicle related, so Walker"s use of them for highways is not a violation of his promise.

We'll grant the general connection, but the standard Walker laid out in his promise was that revenue be used only for the purpose for which it was collected.

In this case, more than 80 percent of the petroleum fund is for cleaning up after oil storage tanks. The rest is for inspecting gasoline and home heating oil. None is for building highways.

It"s clear that Doyle's transfers dwarf those of Walker, but Walker's promise wasn't to do it less than Doyle -- it was not to do it at all.

That makes this a Promise Broken.

Sources:

Wisconsin Legislative Fiscal Bureau, Use of certain funds within the state"s 2011-13 budget, July 5, 2011

Interview with Bob Lang, director, Wisconsin Legislative Fiscal Bureau, Nov. 9, 2011

Interview with Sam Austin, fiscal analyst, Health Services and Insurance section, Legislative Fiscal Bureau, Nov. 9, 2011

Interview with Jon Dyck, fiscal analyst, Transportation and Property Tax relief section, Legislative Fiscal Bureau, Nov. 15, 2011

Interview with Daryl Hinz, supervisor, Natural Resources and Commerce section, Legislative Fiscal Burea, Nov. 15, 2011

Email exchange with Cullen Werwie, spokesman for Gov. Scott  Walker, Nov. 15, 2011