TWO Sets Of Books — One BIG Mess!!!

Did you know that the State of Wisconsin maintains two profoundly different, separate sets of books to document its finances and to determine whether or not its budget is balanced?

Some very interesting details follow and you can find out more about Wisconsin’s “questionable” accounting practices by attending the next general meeting of the Pierce County TEA PARTY. It will be held on Thursday, May 19th from 7:00 to 8:30 PM in the banquet room (in the separate pool building) of the River Heights Motel located at 1020 Hwy. 10 in Prescott. A REASON meeting for Prescott School District residents will immediately follow.

Two sets of books — one big mess!

Did you know that only one set of books complies with current generally accepted accounting principles (GAAP)? This set, which is kept on an accrual basis in order to satisfy bonding companies, projects a $1.9 Billion — that’s with a “B” — deficit in the budget for the next two-year biennial period. Accrual accounting is a comprehensive method used by most of government and private industry. This method recognizes not only current but also future revenue and spending obligations. Wisconsin’s future spending obligations are substantial. It was one of the last states to adopt this method.

Did you know that the other set of books does not comply with GAAP and is significantly out of step with the standards called for by the national Government Accounting Standards Board? This set is kept on a cash basis in order to (technically) meet Wisconsin’s constitutional requirement of balanced budgets and portrays the situation in a more favorable light. This set projects a balanced budget for the next two-year biennial period by understating our state’s spending obligations and overstating its revenues.

Did you know that for many years now the only way Wisconsin has met the constitutional balanced budget requirement has been by the shifting of numerous items from one fiscal year to another and through an assortment of maneuvers and accounting schemes in the cash books? This masks the true dimensions of the budget deficits.

Did you know that, in reality, the state budget has probably not been truly balanced in the last 25 years? Since 1990 the Wisconsin state controller, who’s responsible for monitoring state finanaces, has issued official annual reports documenting fiscal insolvency? Buried deep inside each 200-plus page report was information showing that the state was operating in the red each and every year. This includes all of the economic “boom” years of the ’90s, despite unprecedented revenue growth far beyond what was anticipated leading the state’s general fund to nearly double in the decade. Yet, the state ended the decade with a yearly deficit that was actually larger than at the decades beginning. During the decade our states spending increased at an average annual rate of 6.9% contrasted with increases of only 2.9% in inflation and just .9% in population growth.

Just what has all of this gotten us and where do we stand today?

Even with Wisconsin continuing to be one of the highest taxed states in the nation, its projected excess spending for the next two-year biennial period stands at an imposing 18% of general fund revenues. That’s the worst of any state with a deficit.

Wisconsin’s bond rating is lower than any of our Midwestern neighbors. As a matter of fact, it has declined to the point where it is among the lowest of all states which greatly increases borrowing costs.

Wisconsin’s repetitive fiscal deficit situation is considered serious by all three bond rating agencies. They are unanimous in their criticism of our state’s financial management. They view the deficits as “standing out” because of their size, growth and longevity. Particularly of concern to them is Wisconsin’s funding of continuing expenses with one-time revenues.

The leadership of the Pierce County TEA PARTY must admit that it didn’t know all of this either until just recently. The truly alarming and disturbing part is that Wisconsin’s persistent budget deficit problems are extremely unlikely to get much better — ever –under this two-books system that perpetuates fiscal weakness.

Desperately needed is stark, straight-forward fiscal accounting that portrays a true picture upon which to base decisions and make the hard choices necessary. Accurate and honest accounting demonstrates accountability and stewardship.

Also on the agenda for the May 19th Pierce County TEA PARTY meeting are several other items including the preliminary 2006 Pierce County budget.

Immediately following this meeting at 8:30PM will be a Responsible Education And Spending Options Now (REASON) meeting for Prescott School District residents. The agenda includes a progress report on the Middle and High School referendum building projects and the preliminary annual budget for the next school year.

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