The biggest issue of the new legislative term is what to do with the state’s $4 billion surplus. I have a really boring suggestion.
Last year the Republican-controlled Legislature and Democratic Gov. Tony Evers couldn’t agree on what to do with the money. The Republicans passed tax cuts weighted to the wealthy and Evers used his line item veto to target a much lower total amount at lower income residents. That left most of the money sitting around in state coffers, still waiting to be deployed somehow.
Republicans have now renewed calls to spend at least half the money on tax cuts while Democrats would rather spend it on various services, though they’ve also signaled that they could go along with tax cuts as long as they were structured to benefit the middle class. Superintendent of Public Instruction Jill Underly has proposed spending much of it on public schools. Evers will propose some plan in his two-year state budget to be offered in February and then the debate will start in earnest.
I’d like to offer an idea that has all the excitement of watching paint dry: use it to pay off current debt or to supplant future debt.
The first reason this makes sense is that any permanent tax cuts or spending will require ongoing revenues. Only some fraction of that $4 billion is from increased ongoing revenues, and even that can turn south if the economy cools. Most of the surplus is one-time money. So it makes sense to use one-time money for one-time expenses and that means capital projects like buildings and roads.
Second, paying cash instead of borrowing saves a bunch of money in the long-run. Just as an example, if you supplant $4 billion in borrowing over 20 years at 4% interest, that would save $1.8 billion in interest payments over that period. Of course, if the interest on the debt you’re displacing is higher, so are the savings.
So, there might be a kind of bonus that comes from this that you could actually responsibly spend. In the example above, $1.8 billion over 20 years comes out to an average of $90 million a year. In the context of a $50 billion biennial state budget, that’s actually not a lot of money. So how could you use it and get the most bang for the buck as well as a nice tangible impact that would have broad support?
My suggestion would be to use it to reinvest in our state parks and trails. I don’t mean land purchases as we have the Knowles-Nelson Stewardship Program for that — although Speaker Robin Vos is now threatening to end that program. Instead, I’m suggesting we use the interest savings to regrade or pave recreational trails, add more campsites, improve and add hiking trails, and upgrade park shelters and other facilities.
In fact, a recent article in Silent Sports states that our parks have $1 billion in deferred maintenance.
This is the kind of thing that shouldn’t be controversial. It helps tourism but it’s also something that every Wisconsinite can enjoy. Anything that makes it easier for people to get outside and move around is good for public health. And, in a way, it’s free money as it’s dollars that would otherwise be used for interest on debt. The only losers are the banks. Anybody care?
It’s going to be hard for the Legislature and the Governor to agree on anything, but this route should appeal to fiscal conservatives, the important tourism industry and everyday Wisconsinites.
Dave Cieslewicz is a Madison- and Upper Peninsula-based writer who served as mayor of Madison from 2003 to 2011. You can read more of his work at Yellow Stripes & Dead Armadillos.
