Money by Tracy O. (CC BY-SA 2.0) CC BY-SA 2.0
A couple of weeks ago, the U.S. Department of Education warned Wisconsin that we stand to lose $2.3 billion in federal funds for schools because the Republican-led Legislature’s budget so badly underfunds education that we fail to meet the minimum federal requirements for investing in kids.
The nonpartisan Legislative Fiscal Bureau estimated last week the state needs to spend about $430 million more on K-12 education to qualify for the federal funds.
So this week the GOP came up with a fix — they plan to borrow money to cover health care programs and rural broadband, instead of spending available tax dollars. Borrowing will cost more money in interest payments in the long run, but it will make overall spending look smaller. That way, their paltry schools budget will appear bigger in the context of their stingy overall budget, and they might make the federal standard for spending a big enough portion of the budget on schools.
Viola! If their plan works, they can push through a lean budget and fund programs we could have afforded now through long-term borrowing, even though we have billions of aid on offer from the federal government and $4.4 billion more than expected coming in state revenue over the next three years. It’s the exact opposite of the miracle of the loaves and fishes; presented with a bounty, the Republicans have figured out a way to create scarcity.
The actual money won’t change. Instead of seizing the opportunity to put the state on a sound financial footing and improving our Wisconsinites’ health, infrastructure and education, Republicans are committed to doing as little as possible to help us build a better future. When Democrats proposed solving the budget hole problem for K-12 schools by accepting the federal Medicaid expansion, which would save the state $1.6 billion, on top of allowing us to qualify for the $2.3 billion for schools from the feds, the Republicans blocked the motion.
Republicans then voted down a long list of health care budget items the Democrats asked for, from services for the elderly and disabled to substance abuse programs.
They passed a plan that funds less than half of Evers’ requests for child care, foster care and adoption.
And they stripped out funding aimed at dealing with Wisconsin’s scandalously high rates of Black infant and maternal mortality by providing Medicaid coverage for doula services, funding for community health workers and grants to improve racial health disparities. As Sen. LaTonya Johnson (D-Milwaukee) pointed out, there is something downright mean-spirited about that particular cut in a state with the worst record in the nation for black infant mortality, and where maternal mortality for Black mothers that is five times higher than for white mothers.
But it was on rural broadband, which touches their own constituents, that the Republicans really got tricky. Budget committee co-chair Sen. Howard Marklein (R-Spring Green) praised his party’s decision to borrow money to expand broadband in rural parts of the state, explaining that it was based on their recognition that they are in a hole when it comes to the K-12 budget. To qualify for federal aid, the state has to spend 42 cents of every dollar in their budget on schools. If they make the budget bigger, they will owe even more than the $430 million they are already short, putting them even further away from qualifying for the $2.3 billion from the feds. But they do want to spend money on broadband. What to do?
“I think bonding is an appropriate use here,” Marklein told reporters. “It’s a long-term investment.”
Actually, borrowing money when state coffers are full is the worst kind of short-term thinking, as Democrats pointed out. The state will have to pay an extra $35 million in interest, and will still be paying off the loans for broadband technology long after that technology becomes obsolete. It’s an absurdly bad choice, especially when there’s an unexpectedly large $5.2 billion available in the state’s general purpose fund. Now is the time to spend the money on infrastructure, including broadband, debt-free. Instead, the Republicans are needlessly kicking the can down the road.
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To show you how short-term their thinking is, you need only listen to their comments on the evils of borrowing from last week.
During the debate on Evers’ capital budget, Republicans on the budget committee argued strenuously against using bonding, i.e. borrowing, to fund needed investments in infrastructure.
Presenting a budget proposal that included only half the level of bonding Gov. Tony Evers asked for to fix roads and improve transportation across the state, Marklein made a big deal about how much better the GOP version was, because it borrowed less — $224 million instead of the $556 million Ever asked for.
“I’ve heard from many of my locals that, you know, a number of years ago when we were paying upwards of 20% on the dollar for debt service — we were on a trajectory that was not sustainable. And I’m glad that we’re able to turn the corner on that,” Marklein said.
He dwelt on that point for a while, asking the Legislative Fiscal Bureau, “How far back would you have to go to come up with that level of bonding? … This is lower than anything in the last decade.”
Mark Born (R-Beaver Dam) also took a swipe at Evers for “irresponsible” spending, crowing that “Joint Finance Committee Republicans are putting together a responsible capital budget.”
But it turns out that by responsible, the Republicans just mean cheap. Even if it costs the state more money in the long run, they are determined to squeeze public school children, the elderly and the disabled and kick the can down the road on paying for broadband.
To pay for the modest expansion of health care programs they are willing to fund, they are depositing the money and then withdrawing it from the Medicaid trust fund — another accounting trick, so that technically they don’t increase spending and can avoid digging a bigger hole and owing even more to K-12 education.
Fortunately, they seem to have been scared enough by the federal government’s warning that they seem to be scrambling to fill the hole they created for schools. Their ridiculous shell game, using money from bonding and from the Medicaid trust fund, shows that they intend to get back to the federal government’s minimum standard for school funding. Sen. Jon Erpenbach (D-West Point), who sits on the Legislature’s budget committee, says their efforts not to dig themselves into a deeper hole shows that they intend to come up with the $430 million they are short to qualify for federal funds.
“They are not going to screw their school districts out of $2.3 billion,” he says. “Some are not that safe in their seats and most of them are not that stupid.”
Marklein looked stunned when Erpenbach first confronted him, during a budget meeting, with the size of the loss the state was about to incur due to GOP stinginess. “They’ve been hearing from their school districts, I imagine,” Erpenbach says.
Since then, their tone has changed. Instead of insisting that somehow the federal government will change the rules, they have recognized that they unless they do something, they will be forcing schools to take a massive, unnecessary hit. So they are moving money around.
That’s what passes for good news in a budget debate full of tragic missed opportunities.
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