Budget Balancing for Dummies

Tuesday, June 9, 2009
I hate to pick on my state of residence, but sometimes it's just too easy and too well deserved.

A proposal in Wisconsin suggests that state policymakers may be prioritizing the appearance of belt tightening over the enactment of meaningful savings. To close a $6.5 billion deficit, the governor and legislature will require that all state and university employees be furloughed regardless of whether their positions are actually funded with state dollars. It's a proposal that attends to a 'Keep It Simple, Stupid' view of budgetary public relations rather than striving for intelligent budgeting. The furlough as enacted enables politicians to blather blindly that "everyone is sacrificing, doing their part, tightening their belt, blah, blah, blah," even if it won't save Wisconsin one red cent--and could actually cost it money. In fact, the furlough could actually serve as an anti-stimulus. It would pull money out of the state economy by forcing employees funded through federal and private grants to not spend those dollars at a time the state desperately needs such an influx.

Erica Perez of the Milwaukee Journal-Sentinel reports:

Facing state-mandated furloughs, University of Wisconsin System employees are struggling with how to handle unpaid days off in an academic environment.

Professors and instructors aren't sure if they will have to cancel classes. And many argue that a break from federally funded research does nothing to help the state budget.

To help close the state budget gap, lawmakers recently approved Gov. Jim Doyle's plan to require all state employees - including those represented by unions - to take 16 unpaid furlough days over the next two years, the equivalent of a 3% pay cut.

They also rescinded a 2% pay increase that was to take effect this month. That freeze affects state employees not represented by unions, including 19,500 faculty, academic staff members and senior executives in the UW System.

Then there are the university employees whose salaries aren't paid with state money. Thousands of UW employees are paid partially or fully with non-state sources of revenue. For instance, many researchers have won federal grant money that helps pay their salaries. Other staffers, such as for a pre-college program, are federally funded.

They have to take furloughs and the corresponding pay cut even though the state has assured UW officials that the non-state funded parts of the unpaid salaries, such as federal grant money, would not be taken away, [UW System spokesman David] Giroux said.

"What the researchers are pointing out is that not only does that not help the state financially, it actually hurts the state," UW-Madison Chancellor Biddy Martin told regents last week.

Where seasoned leadership lets us down, a savvy, first-term legislator, Rep. Kilda Helen Roys, injects some common sense into the budget process. (As a Madison area legislator, she undoubtedly also represents large numbers of state and UW System employees, making her proposal good politics as well.)
Rep. Kelda Helen Roys (D-Madison) issued the following statement on her proposed amendment to the state budget, a motion that would only furlough state employees if doing so would result in a net savings to the state:

"A blanket furlough of all state workers may, in some cases, actually end up increasing the cost to state taxpayers.

Some examples of this include workers whose furlough times will need to be staffed by other workers at overtime pay rates (time and a half or more), workers whose positions are funded by federal or non-GPR dollars, and workers whose positions bring money into the state through matching funds based on the hours they work, like university researchers.

Part of this is making sure that state employee furloughs actually save taxpayer money. My amendment ensures that furloughs for state workers will be implemented strategically, at a savings to the state. "
Here's more from the Wisconsin State Journal.

My prediction: PR will triumph over common sense. But, stay tuned.