On Milwaukee County government’s debt burden
Chris Abele on Friday, August 26th, 2011 in an interview
Milwaukee County Executive Chris Abele says the county's debt load is "reckless"
Chris Abele bolstered his leadership credentials in the 2011 county executive’s race by boasting of his support for a plan to borrow millions of dollars to pay off Milwaukee County’s burgeoning pension costs.
Now in office, Abele is publicly lamenting the amount of debt the county is facing, using terms like "reckless" to describe the level of borrowing.
So, did Abele change his tune once he changed his title from philanthropist to Milwaukee County executive?
At least one member of the Milwaukee County Board thinks so. Supervisor Theo Lipscomb Sr. says it is unfair for Abele to attack the county's debt level when he has supported and even touted his role in promoting the pension obligation bond financing of 2009.
"Politically, you can't have it both ways," Lipscomb said.
Sounds like a job for the Flip-O-Meter.
As we roll it out, we do so with our standard disclaimer: We are not evaluating whether it is good politics or good policy to change a position. You can decide that. We’re measuring whether the position has changed.
Let’s start at the beginning.
Abele led a coalition of prominent community figures that studied and endorsed the pension-debt idea in 2006 and again in 2008 as then-County Executive Scott Walker sought state permission to issue the bonds.
"It was hard work, but it was the fiscally responsible thing to do," Abele wrote on his campaign website about the successful lobbying campaign.
In 2009, the county borrowed nearly $400 million to help pay off unfunded pension liabilities over 25 years. That move, along with accelerated borrowing under the federal stimulus program, effectively doubled the county’s outstanding debt by 2010. (Walker was elected governor in November 2010, leaving the seat open in early 2011.)
The long-term pension borrowing deal carries potential risks and rewards.
Borrowed proceeds are invested in hopes of growing a pot that could shrink the eventual tab for taxpayers. But it puts the county on the hook for regular payments with no guarantee the investment will pan out as planned.
Abele made his support for the pension-borrowing deal clear in the 2011 campaign. He claimed a lot of credit for making it happen and contended it would be a big money saver.
In a campaign ad, he said the bonds will save over $200 million.
He went further in a campaign fundraising letter, saying the approach already "saved" $237 million. PolitiFact Wisconsin gave a False to the TV ad claim: Nobody knows how much, if anything they will save over 25 years.
Flash forward to August 2011.
Abele drew attention to the issue -- and his own position on it -- with comments to a reporter the day after an Aug. 25, 2011, hearing on the 2012 budget. The headline on a subsequent article in Milwaukee Journal Sentinel: "Abele blames high county debt on ‘reckless’ borrowing."
At a listening session conducted as he seeks public input on cuts to balance his first budget, Abele had declared that "by accumulating this much debt, we have deeply diminished our ability to use tax dollars for what they were meant for," such as transit, parks, health services for the poor and other county services.
Team Abele’s presentation included a slide outlining the steep increase in annual debt service payments from Walker’s second budget (2004) to the projected 2012 figure. Bottom line: the payments more than double, from $52 million to $108 million.
Here’s what the Journal Sentinel said on Aug. 28, 2011, based on coverage of the listening session and an interview with Abele:
"Abele said the extent of past borrowing, which rose under Gov. Scott Walker's tenure as county executive, was unwise despite worthy projects for which the money was borrowed.
"I do think it's been reckless," Abele said Friday. "Every decision to incur debt should have been made with the knowledge of what that would mean."
We asked Abele about the new remarks.
He argued they do not represent a shift: Borrowing for pensions, he said, "was a good idea then, and it’s a good idea now."
What was irresponsible, Abele told us, was accumulating that much debt -- specifically the reckless decision to "incur expenses without the ability to pay." He singled out spending millions on generous lump-sum pension payouts. He was referring to one of the many pension sweeteners that drew public ire during the pension scandal that drove former Executive F. Thomas Ament from office. Ament was replaced by Walker in 2002.
Abele says he also was referring to the $470 million in non-pension debt as "reckless" -- though various outside studies have said the county actually had prudent and strong debt policies in place. Abele made clear during the campaign he strongly wanted to accelerate debt payments.
And he argues that it’s not exactly "new debt" because the pension liability had to be paid off one way or another.
Our conclusion: This situation reminds us of statements by Jeff Stone, the Republican who lost to Abele in the 2011 exec’s race.
Stone backed Walker’s controversial curbs on collective bargaining for most public employees, but then when running for county office said he would have taken a different approach if he’d been in charge. Still, he didn’t renounce his vote.
We gave Stone a Half Flip, which is defined as "a partial change of position or inconsistent statements."
Now, it is Abele who is muddying the waters.
As an outsider before he ran for office, he advocated taking on more debt and downplayed concerns about kicking the can down the road. Now that it’s his problem as county executive, he leaves the impression -- without an explicit reversal of his position on borrowing for pensions -- that all this debt is hurting the county and was ill-advised.
Indeed, he includes all of the pension borrowing in his chart highlighting the debt problem. But, in fact, so far the investment returns on the pension bonds have allowed the county to put less toward annual payments to the pension fund -- in effect helping free up more money for parks and other departments.
On this issue, Abele has certainly made inconsistent statements.
That rates as a Half Flip.
Published: Friday, September 2nd, 2011 at 9:00 a.m.
Interview with County Executive Chris Abele, Aug. 30, 2011
Interview with Jeff Bentoff, Abele deputy chief of staff, Aug. 30-31
Interview with Rob Henken, president, Public Policy Forum, Aug. 30, 2011
Interview with Pamela Bryant, fiscal and budget administrator, Milwaukee County
Public Policy Forum, Milwaukee County’s Fiscal Condition: Crisis on the Horizon?, March 2009
Milwaukee Journal Sentinel op-ed piece, "Pension obligation bonds vital to county," Sheldon Lubar and Chris Abele, Feb. 7, 2008
Abele campaign website, reference to pension bonds
"Chris Abele for Milwaukee County Executive," campaign TV ad
Milwaukee Journal Sentinel, "Abele blames high county debt on ‘reckless’ borrowing," Aug. 28, 2011
2012 Budget Listening Sessions, PowerPoint presentation, Chris Abele, Aug. 24-25, 2011
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