I though I would give you a preview….
No Runny Eggs
The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.
Archive for February 24th, 2009
Doyle sabotages the future (and new NRE poll)
Buried in the FY2010/2011 Budget in Brief is a stinker of a table called the “General Fund Condition Under Governor’s Budget”. This year, it’s Table 9, on page 36 of the printed copy (page 39 of the PDF). It projects what the Department of Administration believes the proposed budget will do to the general fund in the biennium, as well as what it projects continuing that budget will do in the next one.
I would like to draw your attention to the “Balances” section of that chart, specfically what the 2011-2013 (FY2012/2013) projected balances are. The gross balance in FY2013 is projected to be -$559,500,000. For those that missed the minus sign, that’s a deficit of $559.5 million. That does not include the “required statutory” positive balance of $130 million, which would make the net deficit $689,500,000.
That is the second time a Doyle budget has admitted that it would short the following biennium budget. That is before the initial agency requests for mo’ money, mo’ money, mo’ money create a multi-billion deficit that supposedly gets filled. Let’s review the history of the Doyle budgets, with the previous budget’s projected surplus/deficit, and the “agency requests” deficit:
- Previous budget (FY2002/2003) projected net surplus/(deficit) for FY2005 – unavailable (not part of Scott McCallum’s budget)
- “Agency-request” net surplus/(deficit) for FY2005 (from Table 3) – ($966 million) (note: to match up with succeeding budget formats, this does not include FY2003 deficits and adjustments or a decision to increase shared revenue funding, but does include the structural deficit and adjustments to FY2004/2005 revenue)
- Previous budget (FY2004/2005) projected net surplus/(deficit) for FY2007 (from Table 6 of that budget) – $146 million (includes withholding a required statutory balance of $251.4 million)
- “Agency-request” net surplus/(deficit) for FY2007 (from Table 1) – ($1,666 million) (note: this does not include a re-estimate of the FY2005 Medical Assistance shortfall)
- Previous budget (FY2006/2007) projected net surplus/(deficit) for FY2009 (from Table 5 of that budget) – ($232.7 million) (includes withholding a required statutory balance of $65 million)
- “Agency-request” net surplus/(deficit) for FY2009 (from Table 1) – ($1,654 million) (note: this does not include FY2007 shortfalls)
- Previous budget (FY2008/2009) projected net surplus/(deficit) for FY2011 (from Table 8 of that budget) – $212.5 million (includes withholding a required statutory balance of $130 million)
- “Agency-request” net surplus/(deficit) for FY2011 (from Table 1) – ($5,945 million)
With that history of blowing budgets in mind, I present the latest NRE poll. What will the “agency-request” budget hole be next time around?
What will the Wisconsin "agency-requests" FY2013 (released in or around November 2010) deficit be?
Up to 1 answer(s) was/were allowed
- Over $5,945,000,000 (55%, 12 Vote(s))
- Between $1,666,000,001 and $5,945,000,000 (32%, 7 Vote(s))
- There won't be a deficit (9%, 2 Vote(s))
- Between $966,000,001 and $1,666,000,000 (5%, 1 Vote(s))
- Between $1 and $1,000,000 (0%, 0 Vote(s))
- Between $1,000,001 and $100,000,000 (0%, 0 Vote(s))
- Between $100,000,001 and $966,000,000 (0%, 0 Vote(s))
Total Voters: 22
Loading ...More Necro-Budget numbers via Dennis Yor…er, Christian Schneider
For those of you who came into the Cheddarsphere after February 2007, you missed the best anonymous blogger ever, Dennis York. The man behind the legend, Christian Schneider, really went to town yesterday over at the Wisconsin Policy Research Institute, apologizing to the future for the Necro-Budget.
I can’t even come close to duplicating the Schneider/York humor, but I can give the humor-challenged the hard, cold numbers gist:
– Included with $2.2 billion in tax hikes, supposedly only on the top 1% of wage-earners, is a $257 million cigarette tax hike. The cigarette tax is the most regressive tax that exists (i.e., it hits the poor harder)
– “Major cuts” equals an 8% spending hike (this number is rather fungible; but the lowest estimate, which is mine, is 5.4% and 6.3% once the budget “repair” bill is added in), funded in large part by the “one-time-only” $2.1 billion Generational Theft Law.
– The biggest, but not only, example was a swap of $498 million in state funds for the school equilization aid for $498 million in federal funds for the school equilization aid. Where do you suppose that $498 million is going to come from in 2 years?
– Despite the $2.2 billion tax hike in the budget, the aforementioned $2.1 billion from the Generational Theft Law, and the unmentioned $1.4 billion tax hike in the recently-signed budget “repair” bill (that itself increased the current-year deficit to something north of $400 million), the Generally Accepted Accounting Principles deficit in the general fund would only drop $138.1 million from FY2009 to FY2011 to $2,278.9 million (or $2.3 billion), and actually would increase $38.6 million from FY2009 to FY2010 to $2,455.6 million (or $2.5 billion).
Revisions/extensions (3:40 pm 2/24/2009) – If you want a truly-frightening experience, take a gander at Table 9 of the Budget in Brief, specifically the balances section for FY2012 and FY2013, found on page 36 (page 39 in the PDF file). For those of you without Adobe Acrobat, I’ll summarize:
- FY2012 – Gross balance of -$127.6 million, net balance of -$257.6 million (there’s supposed to be a $130 million required statutory balance), and a structural balance of -$396.3 million
- FY2013 – Gross balance of -$559.5 million (based off the gross balance of FY2012, not the net), net balance of -$689.5 million, and a structural balance of -$431.9 million
That’s right, all of those numbers are negative. For the first time in a Doyle budget, they are admitting that the following 2-year budget will be massively in the red.
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Eggs on the road and Open Blog – rest of the week
Tonight, 7 pm – Blog ‘n Grog, Sprizzos, 363 W Main in Waukesha (yes, this will preclude my participation in any ObamiNation address live thread)
Tonight, sometime after 9pm (if I’m not completely hammered from playing an ObamiNation drinking game) – Papa’s Fat Tuesday party, 7718 W Burleigh in Milwaukee
Tomrrow through Sunday – CPAC.
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In For A Penny…
What’s that I hear? it’s the big sucking sound created by the Federal Government mucking around in things they know nothing about. First on the list:
AIG, as you may remember, was the first “too big to fail,” after the Feds got nervous after Lehman hit the dust. After two bites at the apple, AIG got a total of $150B government support. Reports are that after several sales of profitable pieces of their company, AIG has gotten their outstanding balance down to $35B. It’s believed that AIG will report the largest loss ever by a US company tomorrow at $60B. Please note that we (and by we I mean the Federal Government) owns 80% of AIG so there should be no surprise when money is “shovel ready” to keep them afloat.
Next:
Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people familiar with the situation.
While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup’s common stock.
Here again, the Fed is already into Citi for $45B. This little ditty has a twist from the others. Citi is spinning this saying “it won’t cost the taxpayers a dime!” Oh lucky us, not exactly.
You see, nearly all accounting and investing rules will tell you that at 40% ownership you effectively control the company. Once you own the company, you are responsible for it. Once you’re responsible for it, if the company should need additional capital, you as the major shareholder will be put in the position of either putting up that capital or diluting your ownership. For an entity that can just run an inkjet to get the additional capital, the answer is easy.
Oh, and the part about not costing the taxpayers anything, not so much. The preferred stock that we currently have gets periodic interest payments. It is also in a senior position to common shareholders should the company go bankrupt. By converting to common stock the interest payments will go away. Thus, at the very least it will cost the taxpayer something short term and if the company ultimately fails or needs more money, it will definitely cost more.
Finally thought on this one; even though the Obama administration’s spokes person said just 3 days ago:
“This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government”
Don’t “bank that!” Remember, all Obama positions have expiration dates.
Bringing it all together:
Remember that the automakers are back talking about plans for their future support. If any of you believe that just one more government infusion will get the automakers back to a point where they’ll be able to function on their own please take note of what’s happening in the financial industry. When it comes to government “help,” it’s fair to say:
In for a penny, in for a pound!
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