mykeystrokes.com

“A Very Bad Boy”: Will Gov. Scott Walker Ever Come Clean On Wisconsin’s Budget Deficit?

Scott Walker is running a television commercial extolling the crowning achievement of his short time in office —the balancing of the Wisconsin state budget and the wiping out of the $3.2 billion deficit he inherited. Check this out:

Even the harshest critic of the Wisconsin governor would have to acknowledge that this is some pretty impressive work. For a governor to balance his state’s budget in these tough times—even if it is done by making Draconian cuts to health and education—is a noteworthy accomplishment.

Of course, such admiration would only be required if the Governor had, in truth, actually succeeded in the manner he suggests.Unfortunately, it turns out that Scott Walker is being a very bad boy…again.

In fact, we now know that the Governor is either being untruthful with the good people of Wisconsin on the whole ‘I balanced the budget and wiped out the deficit’ thing or he’s been, shall we say, stretching the truth when speaking to Uncle Sam on the same topic.

As we all know, it’s not nice to lie to your Uncle Sam.

In a letter sent by Mike Huebsch, Walker’s Administration Secretary, to the U.S. Department of Health & Human Services just two months ago, Huebsch disclosed that the state of Wisconsin would have an ‘undisclosed deficit’ from January, 2012 through June, 2013.

But didn’t we all just watch the video where Walker extolls his great victory in cleaning up the state’s multibillion dollar deficit?

If you’re confused, get use to it as it only gets worse.

This latest episode in the “Adventures of Scott In Dairyland” it is the perfect expression of everything we have come to expect from Governor Walker—half-truths designed to mislead, broken campaign promises, and a predilection to sneak  through the back door when going in via the front would result in way too much unwanted exposure.

Let’s begin with why Walker would want to go on record with his letter to HHS claiming a deficit while, at the same time, campaigning on a message that tells a very different story.

Federal law allows a state to remove people from the state’s Medicaid rolls only in the circumstance where the state can show that it is suffering deficits. As Walker is planning to make even more cuts to Wisconsin’s health budgets—cuts he tells us he is attempting to accomplish without forcing people out of this critical health program—the Governor wants to keep his options open. To do that, it was necessary for the Walker Administration to tell HHS that his state is running a deficit while attempting, at the same time, to convince voters of the precise opposite—all so he can hold onto the opportunity to place more than 50,000 Wisconsinites in danger of losing their only access to health care.

Perfectly understandable, yes? After all, what’s a governor to do when he wants to take health care away from thousands while trying to convince those same people to vote for him in a recall election?

It’s not easy being Scott.

Still, we are left to wonder whether Walker is lying to the people of Wisconsin or fibbing to the federal government? It pretty much has to be one or the other.

The answer is dependent on, of all things, accounting.

The Milwaukee Journal Sentinel does a good job of laying it out-

In June, Walker and Republican lawmakers passed a balanced budget according to the measure that is always used for state budgets – cash accounting. That means essentially that the state will have cash left in its main account – an estimated balance of $68 million – when the budget ends on June 30, 2013.

That’s the measure that state officials use for budgets and the one Walker has repeatedly touted in statements when he says he eliminated a $3 billion budget deficit on a cash accounting basis.”

There are, essentially, two accepted methods of accounting. There is the “cash method”— the one utilized by the Wisconsin legislature and Gov. Walker in creating their balanced budget—which accounts for how much money is in the bank at the end of the fiscal year after bills have been paid. If there remains cash in the bank account, then there is no deficit.

Of course, this approach does not take into account the reality that upcoming obligations are not only going to wipe out that cash, but create a deficit when those obligations exceed what is in the bank. As a result, cash accounting rarely presents a true picture of an organization’s finances—which is precisely why every public company in America, along with most city and country units of government, are required to use the GAAP method.

GAAP (the acronym for Generally Accepted Accounting Practices) accounting takes into consideration the money expected to come in and the money committed to going out in order to work out where an organization actually stands.

If you employ the cash method being utilized by Governor Walker, were you to have $100 in the bank at the end of the year, after all the invoices that came in during December have been paid, you can credibly claim that you have no deficit. Never mind that you know full well that a credit card bill is coming in January for the $5,000 you spent Christmas shopping during the month of December and that there won’t be anywhere near enough cash in your bank account to pay that bill when it arrives. That is what we call a deficit. If you are using GAAP, you are required to account for that $5,000 obligation in the month you rack up the obligation. Thus, what is a $100 surplus if you are using cash accounting becomes a $4900 deficit if you are using the more precise GAAP accounting.

What Walker is doing here is using the cash method of accounting to form the basis of his claims as stated in his advertisement while using GAAP accounting when making his claim to the Feds.

That’s a no-no in anybody’s version of the real world—or should I say anybody but Scott Walker. While the rest of us are required to live and die by the accounting method we choose, Governor Walker, apparently, doesn’t believe that this applies to him because …well, because Governor Walker is ‘special’. He is, after all, on a first name basis with the Koch Brothers.

To be fair, politicians have long used the more favorable cash method of accounting to lay claim to better financial results, including Walker’s predecessor, Democrat Governor Jim Doyle.  However, because this is so dishonest a way of putting forth the realities of a state’s financial condition, people have long been disturbed by the practice—people like ….Scott Walker?

It seems that while Governor Walker now chooses to use cash basis accounting rather than a more honest representation of the state’s finances—at least when reporting his results to the people of Wisconsin—Candidate Walker saw it very differently. In fact, in 2010, Walker vigorously campaigned on the importance of ridding the state of this distorted method of accounting, going so far as to state on his  campaign website that he would  “Require the use of generally accepted accounting principles (GAAP) to balance every state budget, just as we require every local government and school district to do.”

How quickly he forgets—except when it serves his purposes to suddenly convert to GAAP when he wants something from the federal government.

There is really no logical way around the conclusion that Governor Walker has, at the very least,  (a) broken an important campaign promise within months of making that promise, and (b) lied to either the people of Wisconsin or the government of the United States.

The good news is that Governor’s Walker’s spokesman, Cullen Werwie, doesn’t see a big deal here. He tells us that this is all “…nothing more than what we’ve been saying all along.”

That’s good enough for me. I mean, it’s not like this is the Cullen Werwie who required a grant of immunity from prosecution before he would cooperate with prosecutors in the John Doe investigation into illegal electioneering that threatens to bring down the Walker Administration before we even get to the recall vote.

Oh wait….it seems that the governor’s chief spokesman is the very same Cullen Werwie who required a grant of immunity to avoid prosecution.

Say what you will about the folks running things up in Madison, Wisconsin, but you certainly can’t say they aren’t colorful.

February 15, 2012 Posted by raemd95 | Wisconsin, Wisconsin Republicans | Accounting Principles, GAAP, Health care, Medicaid, Politics, Scott Walker, Wisconsin Budget, Wisconsin Recall | Leave a Comment