Says he "helped lead an outside audit that’ll save (Milwaukee County) taxpayers over $200 million."
Chris Abele on Tuesday, January 25th, 2011 in a campaign TV ad
Milwaukee County executive candidate Chris Abele says he led audit that will save the county $200 million
What is it about candidates for Milwaukee County executive claiming they’re saving taxpayers millions upon millions of dollars?
Lee Holloway, the County Board chairman, said on Jan. 12, 2011 he had saved the county more than $100 million in health care costs.
Now comes philanthropist and political newcomer Chris Abele. He makes his own brag in the first TV ad of the ad of the campaign, unveiled Jan. 25, 2011.
In the ad, as the words "Save Over $200 million" appear on the screen, a narrator says Abele "helped lead an outside audit that’ll save taxpayers over $200 million."
We rated Holloway’s statement Mostly True. Let’s take a look at Abele’s.
The "audit" the ad refers to is a report commissioned in 2006 by the Greater Milwaukee Committee’s Task Force on Milwaukee County's Fiscal Crisis. Abele and businessman Sheldon Lubar co-chaired the task force. (Lubar is also co-chairman of Abele’s campaign.)
Milwaukee County was in a fiscal crisis largely because of its pension scandal. To shore up the pension fund, the report recommended that the state Legislature allow the county to issue pension obligation bonds. The county would then borrow money to pay off the unfunded portion of its pension liability.
The idea wasn’t new; as county executive, Scott Walker proposed the bonds in 2004. But the idea didn’t take hold until Walker proposed it again in January 2008. A month later, Abele and Lubar cited their 2006 recommendation and pushed the bonds by co-authoring an article in the Milwaukee Journal Sentinel.
So, the idea Abele credits to the "audit" originated with Walker and -- once revived by the task force -- was proposed again by Walker.
The Legislature ultimately approved the enabling legislation, which was backed by Holloway and introduced by another county executive candidate, state Rep. Jeff Stone, R-Greendale. Yes, you may need a scorecard for this one.
In March 2009, the county issued $400 million in pension obligation bonds.
Now let’s examine the second part of Abele’s statement -- that the pension obligation bonds will save the county over $200 million. It is presented as if there is no uncertainty about this number, as a settled fact.
The bonds are a debt the county must repay. If by investing the borrowed money the county can reach its goal of an 8 percent return, it could save an estimated $237 million in pension contributions over 25 years. But if the investments don’t earn at least 6.19 percent, the county could wind up paying extra.
In the first year, $8.5 million was saved. So, they are off to a good start.
But it will be many years before we know whether the approach saved the county any money over the period at all.
Even before the ad, Abele focused on the issue.
In a Jan. 19, 2011 letter soliciting campaign donations, which aides say was sent to a few thousand people, Abele declared:
"As a concerned private citizen, I led an audit of the county's pension problems and identified a solution that saved Milwaukee County taxpayers $237 million." The claim that $237 million has already been saved is clearly wrong.
Campaign spokesman Brandon Lorenz told PolitiFact Wisconsin the wording in the letter "was not up to our standards" and is no longer being used.
So, let’s get back to what is being used.
Abele said an idea he helped propose -- pension obligation bonds -- will save the county over $200 million. He had a role in pushing for the plan, but it had already been on the table and Walker re-introduced it. As for the money-savings statement, the savings is presented as a settled fact, but it’s far from it. There’s no guarantee the bonds will save the county any money over the repayment period. We won’t know for another 23 years.
We rate Abele’s statement False.