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State Finances: Stuck in the Mud

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Monday, 15 April 2013
in Wisconsin

State Senate leader, Kathleen Vinehout, gives the inside story of how Walker and the Republicans in Madison have spent our State into a structural debt that will hold Wisconsin’s economy back for decades.


MADISON - “Pardon my tardiness,” I told the crowd gathered at a Town Hall Meeting. “I spent 20 minutes stuck in the mud.” Rural folks nodded in understanding. Spring has turned many unpaved roads into mud.

Stuck in the mud is an apt metaphor for Wisconsin state finances.

Debts and deficits; GAAP and gaps; bonding and borrowing; all these terms make it hard to follow what’s happening with the state’s fiscal health.

Wisconsin cannot run a deficit. Unlike the federal government, every budget must be balanced. But what exactly does that mean?

When state leaders make funding commitments to coming years they can create a ‘structural deficit’ which means the future years’ expected revenue won’t cover the expected spending.

This happened regularly over the past 20 years. A 2013 memo from the nonpartisan Legislative Fiscal Bureau (LFB) shows more in store in the future.

My colleague summed up the concern. “I cannot support a budget that has that kind of a structural deficit and I know several other Senate Republicans who feel the same way,” Senator Rob Cowles (R-Allouez) told the Milwaukee Journal Sentinel.

Commitments made in the proposed 2013-15 state budget leaves the following two-year budget with a significant shortfall.

Much has been made of the work done to create a budget surplus at the end of this fiscal year. LFB staff report the state ending up with a nearly $500 million surplus. The main reason is improvement in revenue from tax collections.

But the LFB memo has many folks talking about projections for a shortfall of $644 million in the 2015-17 state budget.

Deficits, structural or otherwise, should not be confused with debt. The state sells bonds to raise capital with a commitment to later pay back the bondholders. This is state debt.

The Wisconsin Taxpayers Alliance calculated debt per person rose 131.9% over the past decade. My research with the LFB shows state debt more than tripled from $4.4 billion in 1996 to $14.2 billion in 2012.

Money spent on debt payments can’t be spent on roads or classrooms so financial staff remind legislators to hold spending in check. Historically the state's debt management threshold is no more than 4% with a target of annual GPR debt service between 3% and 3.5% of all general fund spending. Debt payments go well into the danger zone at 5.28% in the first year of the 2013-15 budget.

One very troubling part of the current budget was the sale of more debt to avoid making payments coming due.

Even though the current budget had $1.8 billion projected in new revenue, the Governor did not pay $560 million in debt payments coming due. More debt was incurred as some bonds were sold at a premium to gain cash up front. This gave the appearance of the state having more cash. But the long-term effect was an increase in principle and interest.

The 5.28% of tax money spent on debt in the 2013-15 budget is the direct result of payments owed but not made in the past.

Deficits and debt are two measures of fiscal health. A third, rather unique to state government, is the GAAP Gap. This measures the gap between how the state budgets - on a cash basis - and generally accepted accounting principles (GAAP).

Since 1982 when the Attorney General interpreted the constitutional requirement for a balanced budget as “cash” accounting not “accrual” accounting, the state often committed more to spending than available resources. According to the Taxpayers Alliance, in 2011 only California and Illinois had a larger GAAP deficit than Wisconsin.

When revenues came in higher than expected, Governor Walker put half of these revenues into the rainy day fund as required by law. This, and his work paying other commitments, helped lower the GAAP deficit from $2.9B to $2.2B. But spending in his new budget increases the GAAP gap to $2.8B by 2015.

It’s important to remember the GAAP deficit only looks at the gap between money coming in and money going out in the next year. The real long-term health is better measured by the long-term commitments – i.e. debt.

Looking ahead, Wisconsin finances do seem stuck in the mud.

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Why I Voted Against the Open-Pit Mining Bill

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Wednesday, 13 March 2013
in Wisconsin

I am writing to provide you with an update about the open-pit mining bill. I voted against the bill when it was before the Senate. Prior to this, my colleagues and I tried to improve the bill with 20 bipartisan amendments, which were voted down. Since this is such a significant issue, I wanted you to know the latest.

The open-pit mining bill passed the state Senate by one vote. Recently the Assembly passed the bill 58 – 39. The Governor signed the bill into law last Monday, March 11th.

I want to explain a little about the bill and why I opposed it.

Wisconsin has a long history of mining. We also have a carefully crafted law that allows mining. In fact, as recently as 1993, the Flambeau Mine in Rusk County operated under the current law. I have read this law in detail. It is very thorough and has evolved over the years to accommodate changes in the industry and in public health and environmental needs. It is well balanced, involves local citizen input and provides resources to local communities affected by mining.

A few years ago, a West Virginia coal mining company, Gogebic Taconite (GTAC), asked Wisconsin to change the law. The concern conveyed to the Legislature by the company was the lack of certainty and predictability in the mining permit process. Both Democrats and Republicans agreed there could be positive changes to the law to bring certainty for mining companies and to streamline the permitting process.

I agreed there needed to be a clear deadline by which the state must agree to permit or not permit a mine.

Changes in creating the right process and timing had to be carefully balanced because Wisconsin is not the only player in permitting a mine. The U.S. Army Corps of Engineers must approve a federal permit that shows the mine will comply with the federal Clean Air Act and the Clean Water Act. The Corps acknowledged that one of the most significant opportunities to speed up the process was to make sure the law allowed for the collaboration between the state and the federal government by respecting federal law and the time needed by the federal agency.

The timelines had to be carefully established to allow for the concurrent review of the permitting application by the state and federal government. Also, it would be in the best interest of all those involved if the law allowed one single environmental impact statement be submitted. These statements are very expensive, highly technical and often disagree.

This particular location for the mine will affect the streams leading into the Bad River. This river flows through the reservation of the Bad River Band of the Lake Superior Chippewa. Native American tribes and bands are sovereign nations. As such they have their own clean water standards and laws that the mine must agree to follow if the mine engages in activities that would affect these waterways.

This past summer and fall the Senate Select Committee on Mining, led by Senator Cullen, collected over 20 hours of public testimony. Input was gathered from the mining association, industry experts, environmentalists, Native Americans, the Department of Natural Resources, the US Corps of Engineers and many others.

From this work Senator Cullen, Senator Schultz and Senator Jauch drafted a bipartisan bill to change the process. This bill, known as Senate Bill 3, added a 520-day deadline to the permitting process. The bill allowed for a collaborative process between the mine owners, the state and the Army Corps of Engineers. The bill that was only 25 pages did not change Wisconsin environmental law, nor did it release the mine from any existing environmental law. The bill allowed for a master public hearing once the DNR approved the permit and made immediate payments to the local communities affected by the mine. The bill did not release the mine from following local laws.

I found this bill to be a carefully balanced approach. I cosponsored and voted for a version of SB 3 on the Senate floor.

Unfortunately there was a parallel process to draft a different mining bill. The bill was drafted behind closed doors during the last legislative session. Modifications were made in secret during December of 2012. Newly elected Senator Tiffany introduced the bill in January of 2013. The bill, known as Senate Bill 1, received one public hearing in January and was modified by the committee on Finance and brought to the Senate floor in late February.

Senate Bill 1 had a number of problems that my colleagues and I tried to correct on the Senate floor. Chief among the problems were the potential environmental damage caused by the mine to local water sources, ground water and harm to navigable waterways.

The open-pit mine proposed by GTAC would be the largest of its type. The iron ore deposit is roughly 22 miles long. The first phase of the mine would be 4 ½ miles long and a mile and 1,000 feet deep. The waste from this mine (434 million cubic yards) would fill 3 times over the volume of Lake Monona. The waste materials would be used to fill lakes and streams – contaminating water with toxins like arsenic, lead and mercury.

The bill allowed the mine to not follow a number of environmental regulations related to water. For example, the bill allowed the mine to fill streams less than two miles long and ponds less than two acres wide. Proponents claimed this filling of streams and ponds was necessary. Senator Schultz argued on the Senate floor so many streams would be filled they would stretch from Lambeau Field to Camp Randall – 108 miles.

The taking of Wisconsin’s navigable waterways may violate Article IX of the Wisconsin Constitution that contains a clause known as the Public Trust Doctrine. The constitution protects the rights of the people of Wisconsin to use the water ways as common highways and forever free.” During the Senate debate I heard testimony that the filling of streams and lakes would likely result in an immediate court challenge.

Taken in its entirety, SB 1 added longer delays and higher costs to the mining permitting process particularly because of the unworkable time frame from the federal agencies position. The bill creates a fractured and uncertain process that will likely lead to a many year delay by the US Corps of Engineers. The bill will almost certainly result in lawsuits from the tribe and others concerned with the violation of the Wisconsin Constitution. The fiscal estimate – or cost to the state- prepared by the Department of Justice recognized these likely court costs to the people of the state of Wisconsin. The DOJ said they were unable to determine how high the court costs would be.

Mines pay fees to the state for the right to extract minerals. Unfortunately SB 1 uses the net proceeds tax” and allows the mine to write off” expenses and avoid making payments to the local communities impacted by the mine. This is especially troublesome during the early years of the mine when the communities would most incur costs like new road construction or the hiring of additional law enforcement officers.

Because of the lack of local resources to cope with the effects of the mine, the environmental damage and the permission to avoid following local ordinances, many local elected leaders in the Northern Wisconsin opposed the bill. For example, the Mayor of Mellon, the city nearest the mine, strongly opposes the mine. I also received a resolution from the Washburn City Council opposing the mine.

The strongest argument the proponents of the mine made was the possibility of job creation in an economically depressed area of the state. But even this argument is questionable. I carefully reviewed the only economic impact statement used to demonstrate the jobs created by the mine. The analysis by NorthStar Economics is made up almost entirely with assertions about dollars and jobs but without any supporting evidence. There are only two sentences in the 26 page document that describe the author’s assertions. There was no basis by which to evaluate the author’s assumptions, methodology or accuracy.

Taken in its entirety, SB 1 did exactly the opposite of what it claimed to do: It created a more uncertain, less predictable and longer process than we now have in Wisconsin’s mining law. The bill undermines the authority of the Department of Natural Resources by taking away the discretion the department has to work with a mining company. The bill releases the mine from many environmental protections. The bill releases the mine from complying with local ordinances. The bill does not provide resources to local communities –especially in the early years of the mine. The bill creates a mining process that will almost certainly end up in court.

There is a clear alternative to SB 1. We can choose a mining bill that gives greater certainty to the process, does not change environmental law, will not end up in court and provides resources to communities affected by the mine.

I’ve been hired by the people of the 31st Senate District to represent their interests in Madison. I received over 200 contacts related to the open-pit mining bill. Overwhelmingly the people of my district opposed this bill. Over 95% of those who contacted me opposed the bill. These numbers are similar across Wisconsin. It is clear to me that people want a bipartisan bill that does not destroy the pristine North Woods.

We should not presume the only way to have mining in Wisconsin is to degrade our wetlands, rivers, lakes and streams and ignore the rules and needs of local people.

For these reasons I voted against the open-pit mining bill SB1.

Thank you so much for your email. Please feel free to share this message with your friends. Please contact me regarding any issue of concern or interest to you.

 

Sincerely,

Kathleen Vinehout
State Senator - 31st District

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Republican Open-pit Iron Ore Mining Bill Bad for Wisconsin

Posted by Dr. Steve Kagen, M.D.
Dr. Steve Kagen, M.D.
Dr. Steve Kagen, M.D. is a physician and a former congressman from Appleton.
User is currently offline
on Wednesday, 13 March 2013
in Wisconsin

APPLETON - Shame, shame, shame on all legislators who voted for dirty air, dirty water and bad health for people in Wisconsin.

Remember, we have seen this movie before. It's called the China Way, and it did not have a happy ending. China sacrificed its environment for short-term economic gain, and their people are now paying the highest price possible: more cancer, more dirty air and water pollution that can never be undone.

The Wisconsin Way must never become the China Way, for in Wisconsin we believe in clean air, clean water and healthy people - not corporate greed.

Please join me in supporting the Bad River Band of Lake Superior in their efforts to protect Wisconsin's precious environment. Together, We Will...

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Rand Paul Right On This One

Posted by Bob Kiefert, Green Bay Progressive
Bob Kiefert, Green Bay Progressive
Bob Kiefert is the Publisher of the Northeast Wisconsin - Green Bay Progressive.
User is currently offline
on Thursday, 07 March 2013
in Our View

rand_paulGREEN BAY - Yesterday, Rand Paul spent thirteen hours on the Senate floor conducting an old fashioned filibuster questioning the U.S. drone policy. Rand Paul has a lot of lame ideas, but on this one he was right on both questioning the policy and the method in which he did it.

In the first place, he had the guts to actually stand up on the Senate floor and speak his mind for as long as he could in a filibuster as intended by the framers of our Constitution. Of course, it was theatrics, but that’s what a filibuster is. He did not hide behind the questionable rule commonly used in the Senate to stop discussion by merely saying you want to filibuster. He stood up and talked. He took responsibility for his words. It was a fundamental exercise in democracy that progressives should applaud.

But in a larger sense, in forcing a discussion of the Constitutionality of our government’s use of drones to kill people without charge or even demonstration of just cause in a Court of law, Rand Paul has forced us to face a question we have dodged for over ten years. Under our Constitution, even in a time of fear, how do we keep our form of democratic government viable while still providing for our defense.

It is a thin line and delicate balance. As progressives, we all love President Obama and generally trust him to do the right thing. But our founders had just cause to fear too much arbitrary power in the hands of one leader, as in a King, and placed in our Constitution a division of power between three branches. A President could lead us in war, but only after the people through their representatives in Congress declared it a war, and even then the President’s power was limited by the Courts and the law of the land.

On September 11, 2001 our nation was profoundly shocked by a dastardly attack by an international group of terrorists, and in the atmosphere of fear that followed President George W. Bush embarked our nation on a war-like foreign policy that lead to our invasions of Afghanistan and Iraq and a number of policies on the treatment of combatants that clearly stretched the limits of our law and national character. The Congress, too timid to appear to question the public mood, looked the other way rather than declare it a real war. The draft was gone, and the majority of people really didn’t have to get involved. And the undeclared war against some shadowy, undefined terrorist enemy has continued for over ten years.

Osama bin Laden is dead, our adventure in Iraq has concluded, and the commitment of troops in Afghanistan is winding down. Our national treasury has been bled dry. The question now is “when does it all end?” When do we go back to being the nation of law and rules I remember as a boy?

Rand Paul has done us a service in pushing this debate, at least a little bit, back into our public consciousness. As citizens of a country we declare a democracy, we should not let it slip back under the rug.

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Scott Walker Beats the Rap in Milwaukee John Doe Investigation

Posted by Bob Kiefert, Green Bay Progressive
Bob Kiefert, Green Bay Progressive
Bob Kiefert is the Publisher of the Northeast Wisconsin - Green Bay Progressive.
User is currently offline
on Tuesday, 05 March 2013
in Our View

scott-walkerMADISON - On Friday we learned that Scott Walker will not be charged with crimes in the John Doe criminal corruption probe. Six close associates of Walker were convicted in actions directly related to Walker and some currently sit in prison. Nineteen individuals, constituting Walker's entire inner circle, were granted transactional immunity for their truthful testimony.

The entire affair speaks directly to Scott Walker's bad values. The court record speaks clearly to the fact that Scott Walker was directly involved in criminal activity. That he was not charged with crimes is no feather in his cap-the standard should be much higher for an elected official.

But does it matter that Walker acts, and the people around him act, as if though he is above the law?

This investigation was without precedent, and as it ends, we have a clear picture of Scott Walker. He has abused the trust of the people he is supposed to serve. He wasn't charged with crimes, but he clearly was involved in crimes.

Scott Walker beat the rap. We can only hope that the corruption that he brought with him from Milwaukee does not continue any more in his current administration.

Now that the investigation is over, we should expect that all documents obtained throughout the course of the John Doe to be made public. When all the documents are out, the fuller picture of Scott Walker's involvement will finally be revealed, as will the involvement of several current cabinet and administration officials. Any governor whose greatest accomplishment in his first two years in office is that he escaped the criminal charges for which several close aides were brought to justice really needs more to brag about. So far, Scott Walker has cleared the bar set by Illinois, but barely.

Wisconsin’s Republican governors in recent decades have gone from red vests to (almost) orange jumpsuits. Robert M. LaFollette must be not just rolling over in his grave, but downright glad that he’s dead and doesn’t have to witness this from above the ground.

As it stands, Scott Walker is the most investigated governor in Wisconsin history. By Scott Walker’s own standards, he should be considered unfit for public office.

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