The state of Wisconsin will not pay some of its debts this year because governor and presidential hopeful Scott Walker will defer payment to plug holes in the state budget generated by his tax cuts.
Moreover, deferring payment of the debt will cost the state more in the long term.
Delaying the $108 million principal payment due in May on short-term debt would free funds. The move doesn’t require legislative approval, the nonpartisan Legislative Fiscal Bureau said in a Feb. 13 memorandum. The terms of the debt sale allow Wisconsin to defer the payment in any given year, a procedure known as a restructuring, without defaulting. [...]
Walker’s plan would increase debt-service bills by $545,000 in the next budget year, which starts July 1, and by $18.7 million in the one after that.
Wisconsin is currently facing a $283 million budget deficit which Walker will close with a mixture of spending cuts (mostly for higher education) and deferred debt payments.
The state saw a budget surplus of $759 million in 2013, but Walker wasted no time in squandering all of it with over $2 billion in tax cuts.
Is there a doubt in anyone's mind that a hypothetical President Walker, backed by a Republican-controlled Congress, would preside over massive tax cuts with no plan to pay for any of them?
Congressional Republicans have already voted for such a plan several times over the past several years in the form of Paul Ryan's Path to
Prosperity Poverty which would rely on magic asterisks and the Revenue Fairy to pay for firesale tax cuts.
Massive holes in state budgets generated by unnecessary tax cuts is a recurring theme in states controlled by Republican governors.