Tuesday, April 28, 2009

Throwing the book at the governor's library plan

Our friends at the MacIver Institute alert us to an impending vote on library funding as part of the state budget. The governor is once again raiding another segregated fee to fund a pet project, even as he eliminates the pet project's existing funding from the general fund. Worse, the fund he is raiding doesn't even have the money yet, so it has to borrow the money the governor wants to spend. The result is a tax on your phone and more borrowing to pay for libraries.

The Governor's recommendation also includes a nonstatutory fiscal change provision to delete $11,297,400 General Purpose Revenue in 2008-09 and instead provide $11,297,400 Segregated Fees (From the Universal Service Fund) in 2008-09. However, because this amount was not appropriated originally in the 2008-09 fiscal year, assessments on telecommunications providers (which will be passed through to you, the consumer) this year are insufficient to cover the additional payment. That is, there is not enough money in the USF to make this year's payment.

According to the Legislative Fiscal Bureau: Because the USF would have insufficient funding for this provision, the PSC would use interfund borrowing authority, provided to the Secretary of DOA under current law, to reallocate available balances from eligible funds in the state investment fund in order to cover the additional outlay in 2008-09. The PSC would then be responsible for levying sufficient charges on telecommunications providers, in 2009-10 or future fiscal years, in order to repay the borrowed funds. Funds that borrow money through temporary reallocations are charged interest at the earnings rate of the state investment fund. In February, 2009, this annualized rate of return was 0.88%.

To sum it up: The Governor is proposing to raid yet another segregated fund to pay for something other than which it was intended, and since the new fees on businesses that feed the fund (which will eventually be assessed and passed on to consumers) have not been imposed yet, he'll borrow the funds in the interim.

State Senator Mike Ellis points out the real cost of this shell game:

The provision amounts to a 40 percent increase in a fee that was originally meant to improve access to telecommunications technology to all Wisconsin residents, including providing internet access to schools and libraries.

“This is a hidden tax amounting to $12.6 million,” Ellis said. “It is not a fee and to call it such is dishonest. How does having a telephone equate to supporting public libraries?”

The joint finance committee is expected to take up this budget item tomorrow.