Scott Walker's Illiteracy Costs Wisconsin Taxpayers 87 Million Dollars

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Last updated on February 8th, 2013 at 08:00 pm

When Scott Walker introduced his controversial anti-collective bargaining law, he claimed it was “necessary” in the name of fiscal restraint.

You may recall this claim by Walker in February 2011.

“The bottom line is we are trying to balance our budget and there really is no room to negotiate on that because we’re broke,” the Republican governor said.

Later when testifying before Congress, Walker admitted that his union busting bill wouldn’t save money at all during this exchange with Rep. Dennis Kucinich.

KUCINICH: Let me ask you about some of the specific provisions in your proposals to strip collective bargaining rights. First, your proposal would require unions to hold annual votes to continue representing their own members. Can you please explain to me and members of this committee how much money this provision saves for your state budget?

WALKER: That and a number of other provisions we put in because if you’re going to ask, if you’re going to put in place a change like that, we wanted to make sure we protected the workers of our state, so they got value out of that. […]

KUCINICH: Would you answer the question? How much money does it save, Governor?

WALKER: It doesn’t save any. […]

KUCINICH: I want to ask about another one of your proposals. Under your plan you would prohibit paying union member dues from their paychecks. How much money would this provision save your state budget?

WALKER: It would save employees a thousand dollars a year they could use to pay for their pensions and health care contributions.

KUCINICH: Governor, it wouldn’t save anything.

It turns out, for all the expertise that Walker and his Koch Puppet friends claim to have about all things fiscal, they made a itsy bitsy little error that will cost the State’s pension fund $87.5 million dollars this year. That’s right, the bill that was supposed to save money because Wisconsin was broke, will increase the state’s expenses. Nice going Scott.

There was a little noticed provision in Walker’s centerpiece legislation, that will boost employee benefits in the state’s retirement system. As a result, Wisconsin’s retirement system costs will increase by $87.5 million. Since we know that Wisconsin’s Republicans would never spend a penny on the workers of Wisconsin, when that money could go to the Koch Brothers and other sugar mommas and sugar daddies, we’re left with facing the reality that no one thought Walker’s centerpiece legislation was important enough to read. Or maybe the state’s retirement system is just a little too intellectually challenging for Wisconsin’s Republican Party. It isn’t as if the Koch controlled Republicans weren’t warned, as reported by the Wisconsin State Journal.

“The unanticipated costs aren’t a back-breaking amount for the massive retirement fund, but they illustrate why laws that alter the complex retirement system should be examined carefully before enactment, said Robert Conlin, secretary of the Department of Employee Trust Funds.

Conlin’s predecessor, David Stella, stepped down in January saying that elected officials disregarded his plea for a thorough examination of how changes in the law would affect the $82 billion pension fund.”

Ooops. It’s possible that Walker’s centerpiece law, the one that was supposed to save money, may bring a few more surprises in September, when the final contribution projections for 2014 are approved.

To be fair to Walker and his merry men, Wisconsin’s pension fund is a complex system with several moving parts, like salary levels, retirement rates and investment returns, which were paid for by Wisconsin’s employers. So it may have taken a bit of time to study the situation and figure out the repercussions of Walker’s centerpiece legislation. It seems though, he was so anxious to do slice and dice collective bargaining that it will cost the state $87.5 million. As a result, while seeking to be the cool union basher to his coporate friends, Walker winds up driving the clown car.

The effect is compounded because higher benefits mean the annual contribution must be increased to cover the higher future benefit cost. In turn, that means employees must put even more money in their accounts, which boosts projected benefits again, and requires a still higher contribution, Murphy said. The benefits structure eventually stops the cycle, Murphy said.

“The system is still in very good health,” Conlin said. “Our contribution rate is still low compared to other states.”

A separate study of the retirement system, including possibly creating a separate 401(k) plan or allowing employees to opt out of the system, is under way and due to be delivered to Walker and the Legislature’s budget committee by June 30.

Image from Blogging Blue