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3/5/2010 8:50:00 AM
Fact check: Dems to blame for abducted transportation funds
Republicans did sign off on some transfers

Richard Moore
Investigative Reporter

It all started with a fish fry - at least with the report of a fish fry - and then the whole affair got fishier and fishier.

A TV station in Madison, WISC-TV, reported that the administration of Gov. Jim Doyle was spending funds rifled from the state's gas tax on a free fish fry and child care. The state Department of Transportation had used the freebies to attract more people to a public meeting on a Verona Road expansion project.

That prompted the state Senate Republican leader, Scott Fitzgerald of Juneau, to accuse the Democrats of misspending transportation money on pet projects, which prompted Democratic Senate Majority Leader Russ Decker of Weston to blame the Republicans themselves for repeated transportation fund raids.

Certainly the transfer over the past seven years of nearly $1.3 billion from the supposedly segregated transportation fund to help balance the state budget has become septic between the two major political parties. The back-and-forth debate last week between Fitzgerald and Decker made the political waters an even murkier place in which to fish for the truth.

What's less tenebrous is the damage the transfers are doing to the state's economy and fiscal soundness. For example, a recent study by the nonpartisan think tank, the Pew Center on the States, placed Wisconsin in a fiscal situation very nearly as dire as that of California, and ranked the Badger state as one of the 10 worst states budget-wise in the nation, precisely because of fiscal antics such as raiding segregated funds.

"Often, lawmakers shifted money around, taking money from the state's transportation fund, for example, to pay for day-to-day operations - and then borrowed to cover the transportation budget," the report stated. "Legislators also failed to put money in reserve before the recession hit."

All totaled, since 2003, along with the raids on the transportation budget, the state has diverted more than $1.8 billion from segregated accounts, according to a July 15, 2009, Legislative Fiscal Bureau memo.

The Injured Patients and Families Compensation Fund was hit for $200 million in the 2007-09 budget, to cite just one example, while the recycling fund has had about $75 million recycled from it since 2003.

Still, the state's transportation fund has been the hardest hit, with nearly $1.3 billion having moved on down the road to other uses. The 2009-11 state budget will transport another $66 million, at least, and the Department of Administration has the discretion to pull another $200 million from state agencies if it deems necessary.

The transportation fund - 92 percent of state dollars came from the gas tax and vehicle registration fees in the 2007-09 biennium, the DOT states - is supposedly set aside for maintaining and improving Wisconsin's transportation infrastructure.

Given the money's source, critics such as the Wisconsin Manufacturers & Commerce say the raids add up to a hidden tax on citizens.

And that's not all. To keep up with vital transportation projects, the state has replaced the cash by borrowing.

According to state Sen. Dale Schultz (R-Richland Center) last June, interest payments on additional debt during the next two years alone will be nearly $5 million, while the use of debt has risen so fast during the last six years that only 88 cents of every dollar paid in gas tax and other transportation fees actually flows to road projects.

The other 12 cents goes to pay the debt on past road construction, Schultz stated.

It's getting even worse. The 2009-11 state budget authorizes transportation bonding of $1.304 billion. That's an increase of $767 million in borrowing over the 2007-09 budget act, and that's on top of a 96-percent increase in the use of transportation fund supported bonds between 2002 and 2006, according to the Legislative Fiscal Bureau.

The blame game

So everyone agrees the raid-and-borrow strategy is not exactly healthy, to understate the point.

The question of who is responsible for the mess arose against this horrific backdrop, and ended up as a catfight between Fitzgerald and Decker, sort of like two toms fighting for the same fish fry.

Fitzgerald started it, saying he was distressed by the TV report.

"In the 2009-11 budget, Wisconsin Democrats raided $205.5 million from the transportation fund and diverted the money to their pet projects," Fitzgerald said. "The transportation fund, which is supported by the gas tax, is statutorily required to be used only for state road projects. It is incredible that Democrats are continuing to raid road funds and now it's being used to pay for things like fish fries and child care."

Once again, he said, Democrats have proven they think the gas tax is their private slush fund to pay for anything they want.

"Democrats' bad budgeting has already caused Wisconsin to be listed in the top 10 states facing fiscal collapse," he said. "It's no wonder that our fiscal ranking is so poor when the Democrats don't use common-sense budgeting techniques, whether it was funding millions of dollars of pork projects in the last budget or using gas tax money for fish fries."

Fitzgerald said such frivolous spending decisions created the state's budget deficit.

"We are heading toward a budgeting nightmare when bills come due in the next budget cycle," he said. "Something smells, and it's not the fish."

To Decker, it was all so much hypocrisy because, he said, Republicans themselves had a history of repeatedly raiding the transportation fund.

"In fact, the transportation fund is still hurting from some of their budget moves in the past, so now they are making up numbers about what happened in this budget to hide what they did," Decker said.

Indeed, he said, Republicans were in complete control of the Legislature for the 2003-05 budget, which transferred $675 million out of the transportation fund, and they were in complete control of the Legislature for the 2005-07 budget, which transferred $427 million out of the transportation fund.

"Over $1 billion was transferred out of the transportation fund while the Republicans were in complete control of the Legislature," Decker said. "The only money that came out of the transportation fund in this budget was the cuts that every agency had to make to balance the budget."

Decker said he welcomed the GOP's newfound interest in protecting the transportation fund, but said Republicans did long-term damage to the fund when they were in control.

Hook, line and sinker

So who is telling the truth, or is at least closer to it, and who is hoping citizens take their bait hook, line and sinker?

Well, casting a line into the reservoir of recent budget history quickly reels in some factual inaccuracies on both sides, though, generally speaking, Fitzgerald's claims are nearer to the mark than Decker's.

The truth is, though Republicans can share a slice of the blame, the raids fit most comfortably in the gaping pockets of Gov. Jim Doyle and his Democratic colleagues.

Armed with strong veto powers to rewrite state budgets, and with a substantial enough minority in the Legislature to withstand override attempts, between 2003 and 2007 the Governor and legislative Democrats found it as easy to raid the transportation fund as, say, to shoot fish in a barrel.

For one thing, while Decker's assertion that "over $1 billion was transferred out of the transportation fund while the Republicans were in complete control of the Legislature" is technically true, it is irrelevant because being in control of the Legislature does not necessarily translate into being in control of the budget.

The remark was meant to assign Republicans responsibility for the transfers during those years, but that's simply not true. It was Gov. Jim Doyle who proposed the transfers, and Republicans publicly criticized the proposals from day one.

As years went by, GOP resistance became more pronounced. It especially became marked after Doyle used his veto pen in 2005 to excavate $427 million out of the highway account.

As researchers at the Wisconsin Taxpayers Alliance have stated, the governor used the so-called Frankenstein veto - in which he could cross out words and numbers to create a new sentence from two or more sentences - to pare a 752-word section to 20 words sanctioning the transfer of the $427 million to the general fund to be used education.

That sparked a successful Republican push, led by state Sen. Sheila Harsdorf (R-River Falls), to amend the state constitution and curb the governor's Frankenstein veto power.

In April 2008, voters ratified the Republican-fueled amendment with 70 percent approval, though the governor could still cross out words within a sentence to alter its meaning, as well as delete single or multiple digits to create new numbers or remove entire sentences from paragraphs.

Finally, it should be noted, the $427 million created by Doyle's veto pen is the same $427 million Decker accused the Republicans of taking.

Back in 2007, interestingly, Doyle was more forthright than Decker was last week about who grabbed the $427 million in the 2005-07 session, admitting it was his work. In 2007, the governor told the Milwaukee Journal Sentinel, without the veto schools "would have taken a $400 million cut that would have been a 'disaster.'"

In 2005, Doyle also said he was proud of the proposed raids on the transportation fund he was sending to the Legislature.

"My budget transfers $250 million from the transportation fund to support our investment in schools and other key priorities," he said in his February 2005 budget address. "With such a large transportation budget, and so many pressing needs in our state, it's the only responsible thing to do."

Why not override the veto?

So Decker wasn't telling a lot of the story about the origination of the raid proposal, or its creation through veto, and he omitted the Republicans' subsequent efforts to curb the governor's veto authority.

Still, if they were so opposed to the raids, why didn't Republicans - who did indeed control the Legislature in 2005 - simply override the governor?

The answer is, they may have been in charge, but it's virtually impossible in this state to override a gubernatorial veto, as Democrats themselves learned last week when they failed to upend Doyle on a DNR secretary appointment bill.

Between 1931 and 2001, in fact, there have been only 37 overrides of 2,405 partial vetoes of biennial budget bills, a 1.5 percent success rate, according to the Wisconsin Taxpayers Alliance. The last override occurred in 1985.

In 2005, the year of the infamous Frankenstein veto, the state Senate included 19 Republicans and 14 Democrats; the 2005 Assembly, 60 Republicans and 39 Democrats. The numbers did not realistically entertain a victorious override effort, which Rep. Mark Pocan (D-Madison) acknowledged candidly at the time, telling the Milwaukee Journal Sentinel that "Republicans had no chance of succeeding in any override attempt."

In May 2008, Republicans did try to overturn several of Doyle's line-item vetoes in the so-called budget repair bill, including a provision to eliminate the exclusion for any unused appropriations to the Department of Transportation from being transferred to the general fund.

With the vetoes, Doyle fashioned spending reductions of $270 million more than came to him, with $103 million of that coming from the transportation budget.

Republicans implored their Democratic counterparts to join them to protect road dollars.

"As part of that budget repair bill, the Assembly included a number of important safeguards to protect Wisconsin families and Seniors from the brunt of those cuts," Rep. Mike Huebsch (R-West Salem), said. "None of the budget cuts can come from the state's SeniorCare prescription drug program, none can come from K-12 education, and none can come from another raid of the transportation fund."

His words were in vain. Democrats controlled the Senate, while Republicans had only a five-vote margin in the Assembly. The override failed 60-36 in the Assembly.

After the attempt failed, Huebsch pointed out the party-line support of the transportation fund raid.

"I'm disappointed that we did not have enough votes today to achieve the two-thirds majority required to override, and I'm disappointed that a majority of Assembly Democrats chose to side with Gov. Doyle and the bureaucracy over our seniors, our property taxpayers and safety on our roads," he said.

Not much earlier than that, Republicans had also pushed to stop raids when Sen. Dan Kapanke (R-La Crosse) tried and failed to get the Senate to rescind proposed raids on both transportation and the Injured Patients and Families Compensation Fund.

Both motions failed on party-line votes of 18-15.

Republicans not blameless

So, overall, analysis of budget votes and actions shows Fitzgerald's comments to be rather consistent with past Republican actions, while Decker's accusation of hypocrisy is more far-flung.

However, that's not to say the charge is completely off the mark. There is evidence of Republican acquiescence, particularly early on. Simply put, despite their criticism, Republicans have signed off on some on the transfers.

In 2005, for example, Rep. Dean Kaufert (R-Neenah), then co-chairman of the Legislature's Joint Finance Committee, told the Milwaukee Journal Sentinel that Republicans "may have to buy into some of this stuff," meaning the raids of the segregated funds.

"There are programs in this state that need to be funded," Kaufert told the newspaper, while on the Senate side Fitzgerald said Republicans weren't "going to slam the door on everything the governor has done."

And they didn't.

It's worth remembering that, before the governor used his veto to siphon off $427 million from the transportation fund - the action so galling to the GOP - he had originally proposed a more modest transfer of $268 million. That included the $250 million he talked about in the 2005 budget address and an additional $18 million for the second year of the budget cycle.

That did not rile Republicans nearly so much. Indeed, the GOP-controlled Joint Finance Committee signed off on the $268 million raid, and the GOP-controlled Legislature approved it as well, so long as it was a one-time proposition and would be offset by, you guessed it, general fund bonding.

So opposition to raiding segregated funds and replacing that money with borrowed dollars turns out to have mostly been a matter of degree and rhetorical nuance on the part of Republicans, though the record clearly indicates it is a substantial degree and a significant nuance.

The policy differences on this matter are real, in other words.

And so last week's debate between Fitzgerald and Decker no doubt foreshadows a much larger discussion of the issue as the next budget approaches.

With a skyrocketing structural budget deficit, lawmakers will have much larger fish to fry than in the Verona debacle, a spectacle that in any case is not likely to be repeated: After the controversy erupted last week, the DOT announced taxpayers would not foot the bill after all but that the fish fry and child care would be paid for by an anonymous donor.

Richard Moore can be reached at rmmoore1@verizon.net

Reader Comments

Posted: Friday, March 5, 2010
Article comment by: Chris Fadrowski

Excellant investigative reporting!!

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