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Squish, squish, squish. 

That’s the noise coming from the Capitol in Madison every two years when our leaders assemble the state budget.  Although citizens naively think that something as important and as the state budget is anchored in terra firma, such is not the case.  State government accounting is an exercise in illusion.  In the hands of both Democrats and Republicans, budget numbers are mystifyingly slippery. 

Most of us believe there to be only one kind of math; the kind taught to me by the nuns at Immaculate Heart of Mary.  But, there’s another kind of math.  Sheila Weinberg from the Institute for Truth in Accounting coined the term, “political math.”  When politicians delay a payment and refer to the delay as a “savings,” they’re using political math.  Or when no money is set aside for a bill they know is coming due, practitioners of political call the IOU a “savings.”  It’s political math that allows state government to meet the balanced budget requirement while state accountants show it to be running a $3 billion deficit (according to the official tally released over the Christmas holiday). 

Both Republicans and Democrats have used political math to make budgets balance over the years.  Political math allowed my former boss Scott McCallum to balance the budget using one-time tobacco money and it was political math that green lighted Jim Doyle to “borrow” over $1 billion from the transportation fund.  Thanks to political math, Governors and legislatures of all political stripe have been able to buy more government than they could really afford.

Last summer, conservatives celebrated the budget Walker put together with the help of a friendly legislature because it squeezed nearly all the political math out of the process.  (We say nearly because they still used a couple of old tricks which included $264 million of “debt restructuring” a practice that permits state government to delay its debt payments for a couple of years).  We finally have a budget that comes pretty close to balancing, i.e. spends no more money than is actually available.

Yet, no one, especially fiscal conservatives, should think the job is finished; far from it.  What Walker and company accomplished was a one-off budget, one that can easily be undone – and then some – by the next governor and legislature.  Wisconsin’s budget is as vulnerable as ever. 

Either an uptick of the economy or a change in the political whim could lead Wisconsin right back into the old style of budgeting where our politicians spend way more money than they have. 

As long as the official books of the state are kept using cash accounting, political math will forever be part of our heritage and we will continue to spend more money than we actually have.  It is time for the Governor to take a giant step toward creating a legacy of balanced budgets that will inevitably yield a more limited government. 

One rather wonkish change would kill political math once and for all.  Wisconsin state government to do what every local government and every Wisconsin business does – use generally accepted accounting principles (GAAP) to balance its books.  If our government made that one budget change, then any commitment to spend, no matter how far into the future, would have to be backed by actual money. 

In other words, there had better be actual money behind every current and future spending commitment; otherwise, the budget won’t balance.  No longer would legislators be able to hide behind political math.  Instantly, we would only have the amount of government we can afford. 

Revolutionary?  Hardly, since this is the same accounting standard that every local government and business in Wisconsin has learned to live with.

-February 2, 2012