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Dale Kooyenga is a certified public accountant, though he says if he’s at a party, "accounting is not on my top 10 list of fun things to talk about." But as a Republican member of the Assembly, Kooyenga is plenty happy to discuss the accounting arts as part of the "CPA Caucus."
When the group dug into the University of Wisconsin System’s books and publicized what members considered an overly large reserve fund, Gov. Scott Walker and GOP lawmakers wound up reducing the system’s budget increase.
As a result, when Kooyenga talks accounting at the Capitol, people listen.
Even when -- perhaps especially when -- he’s commenting on something as dry as Wisconsin’s poor national ranking on budget deficits as measured by "generally accepted accounting principles."
Those principles, known as GAAP for short, are a core issue when it comes to how state government spends tax dollars.
Kooyenga says adopting the principles would rule out "games," "deceptive accounting practices" and "gimmicks" that hold back the state’s credit rating and enable lawmakers to saddle future generations with unsustainable financial obligations.
On Sept. 18, 2013, Kooyenga cited GAAP after hearing a state investment board official laud the fully-funded status of the state pension fund in testimony before the Legislature’s Joint Committee on Finance.
"Before we applaud ourselves, there’s a reason that Wisconsin has a 100 percent funded pension system but we have the fourth-highest GAAP deficit in the country," Kooyenga said, mentioning a couple of the aforementioned accounting gimmicks. "So I hope we can work on that over time -- which we have."
He concluded: "We’ve used GAAP accounting here in this building the last two years."
That last phrase is worth checking, because the back-and-forth over budgets is heating up as we approach the 2014 gubernatorial race.
Gov. Scott Walker actually campaigned on GAAP as an issue in 2010, contending that then-Gov. Jim Doyle had falsely claimed the state’s budget was balanced. He promised to balance the budget not only by the usual Madison standard, but also under the GAAP scorecard -- and to do it in every budget, just as local units of government do.
State lawyers long ago said the constitutional requirement to balance the state budget could be done mostly on a simple cash basis -- not the accrual method called for by GAAP.
And that’s been just fine with the political set in Madison.
Lawmakers and the governor would have to cut $2 billion to $3 billion more from the budget to fully balance under the more stringent GAAP standards. That $2 billion to $3 billion represents the "GAAP deficit." And it’s been in that range most years since 2002.
So, how has GAAP been applied in recent years?
Talk of change aside, the fact remains that neither party and no governor -- including Walker -- has balanced the budget without a GAAP deficit since the state started tracking it in 1990.
We gave Walker a Promise Broken when his first proposed budget (2011-’13) not only left a GAAP deficit intact, but increased the size of it, to $3 billion. The governor’s second budget (2013-’15) went even further the other way, estimating a 29 percent increase in that deficit.
Those facts put Kooyenga’s claim into a hole right off the bat.
Neither budget was prepared using GAAP or balanced by those principles. And Kooyenga supported both budgets.
We spoke with Kooyenga and checked the long history of GAAP deficits and found an element of truth in his claim, which is vague enough to leave it open to some interpretation.
Kooyenga referred to the "last two years," 2011 and 2012. That coincides with his first two years in office and with Walker’s first two-year budget.
Looking just at the final adopted version of that budget, it turns out that some tangible GAAP progress was made. That’s mainly because after Walker submitted his spending plan, a new revenue estimate gave lawmakers another $600 million to play with.
Lawmakers chose to use a big chunk of the windfall to pay some big bills left behind from Doyle’s days -- a move that cut significantly into the GAAP deficit.
We now know, based on actual results, that the first year of that budget (2011-’12) saw nearly an $800 million drop in the size of the GAAP deficit. It was the first drop in eight years, though it still left a long ways to go to be fully balanced under GAAP.
As for year two, we won’t know the results until the books are closed on 2013. But experienced forecasters in the independent Legislative Fiscal Bureau and at the Wisconsin Taxpayers Alliance say the GAAP deficit is very likely to shrink again.
Walker and his Republican legislative allies have rejuvenated the state’s rainy day fund, and fund balances are running well into the black, both of which are positive factors in driving down the GAAP number.
That, Kooyenga told us, is in part what he was referring to when he said "we’ve used GAAP."
The "we" in his statement, he said, refers also to the CPA Caucus.
That caucus has publicly tracked and reported how budget decisions look under GAAP. And Kooyenga went door to door in the Assembly to get bipartisan support for a constitutional amendment requiring the use of GAAP principles. That measure passed the Assembly in 2012 but died in the Senate.
Still, the state continues to use accounting maneuvers such as manipulating the timing of huge aid payments to local governments and schools into future fiscal years. Such moves help elected officials balance the budget on paper -- but run afoul of GAAP.
Those maneuvers were in the final version of the 2011-13 budget.
Kooyenga said "We’ve used (generally accepted accounting principles) here in this building the last two years."
State officials, including Kooyenga and his caucus, have partially "used" significant moves to improve the GAAP deficit picture, and they have increased public awareness of it.
But those principles certainly haven’t been fully put to use; not even close. Most of the GAAP deficit remained after those two years. And left unmentioned by Kooyenga is that much of the progress in decreasing it is projected to be reversed in fiscal 2014 and 2015.
We rate his claim Mostly False.
Wisconsin Eye, video of Rep. Kooyenga comments at Joint Finance Committee (1:54:00 mark), Sept. 18, 2013
Interview with State Rep. Dale Kooyenga, Sept. 19, 2013
State Department of Administration, "Budget in Brief," 2013-15
Interview with Robert Lang, director, State Legislative Fiscal Bureau, Sept. 19, 2013
Interview with Todd Berry, president, Wisconsin Taxpayers Alliance, Sept. 20, 2013
Interview with Rachel Geary, aide, Rep. Dale Kooyenga, Sept. 20, 2013
PolitiFact Wisconsin, item on Gov. Scott Walker claim about eliminating deficit, Jan. 29, 2012
Milwaukee Journal Sentinel, "Wanted: Honesty in accounting," by Dale Kooyenga, February 2012
State Legislative Fiscal Bureau, Annual GAAP deficit report
State Department of Administration, "Budget in Brief," 2011-13
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