Economy

Crunched By His Big Tax Cuts, Scott Walker Will Skip $108 Million In Debt Payments

CREDIT: AP Photo/Jacquelyn Martin

Wisconsin Gov. Scott Walker (R) will skip making $108 million in debt payments in the face of a budget shortfall due to a slew of tax cuts he enacted.

The governor has to close a $283 million shortfall by the end of June. To do so, he will delay making the $100 million payment that is due in May on short-term debt, which doesn’t require legislative approval. The terms of the debt allow the state to defer a payment in any given year without defaulting. The move will increase its debt-service bills by $545,000 in the next budget year starting July 1 and by $18.7 million in the following one.

A spokesperson for the Wisconsin Department of Administration told Bloomberg News that the state is taking advantage of “favorable short-term interest rates.” He also noted that the previous Democratic governor used similar budgeting tools.

Walker has pushed for and enacted more than $2 billion in tax cuts since he took office in 2011. Although the state had a surplus of $759 million last year, it now faces a projected shortfall that could wind up being more than $2 billion for the next two budget years.

His latest budget, which he unveiled earlier this month, seeks even more property tax cuts. At the same time, it cuts $300 million from the state’s public universities as well as cuts to public media and the Department of National Resources. It also seeks new borrowing: $1.3 billion to cover transportation projects instead of increasing the gas tax and more than $200 million to finance a new basketball stadium.

Walker’s not the only governor trying to find ways to plug budget holes created by big tax cuts. To pay for massive tax cuts enacted in 2012, which have led to millions in budget shortfalls, Kansas Gov. Sam Brownback (R) is seeking to cut school funding by $127 million and to delay pension fund payments. Louisiana Gov. Bobby Jindal (R) has to close a $1.6 billion budget hole created largely by his massive tax breaks for the wealthy and corporations and has proposed slashing the state’s public college budget by nearly a third.

Walker has come under fire for other parts of his budget plan, such as a push to drug test anyone who receives unemployment benefits or food stamps. While at least 12 other states have passed drug testing programs for public benefits, most are for welfare applicants. Some of those programs have been struck down by the courts, while others come at a high cost without uncovering much drug abuse at all.