As the state’s fiscal position becomes more dire, in large part due to the tax cuts implemented last year, Governor Walker proposes to delay some debt payments.
We finally learned this week one of the major tactics being used to fill the large hole in this year’s state budget. The Governor plans to push part of the problem further into the future by delaying a $108 million debt payment that is coming due in May.
A Legislative Fiscal Bureau (LFB) memo released yesterday by Reps. Hintz and Taylor explains that there are two kinds of debt restructuring – one that has the effect of reducing the total amount of interest paid on an outstanding debt, and another type that extends the life of an existing debt and increases the total cost to state taxpayers. The planned delay in the $108 million payment is the second type. Although the LFB memo doesn’t show the full impact of the revised payment schedule, it indicates that the delay will increase debt service costs by $544,900 in 2015-16 and more than $18.7 million in 2016-17.
The [commercial paper] maneuver is fueling Democratic arguments that the state couldn’t afford to tap a budget surplus last year for a $600 million tax cut package. The state faces a $648 million deficit in its next two-year budget. Walker uses spending cuts to deal with the deficit in his proposed $68.2 billion budget.
In other words, no budget repair bill, as when the Governor took office in 2011,  but a measure to increase the ultimate debt burden faced by Wisconsin taxpayers.