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Accounting Issues and Social Strife

by State Data Lab, published


In 2011, Wisconsin state budget and accounting issues actually got so exciting they brought reminders of protests from the 1960s and 1970s.  The 2011 debate centered on how the state would approach paying retirement benefits for government workers.   Wisconsin’s ‘Budget Repair Bill’ included provisions to limit pay and benefits and to restrict collective bargaining. These provisions sparked widespread protest, including counter-protests in favor of the bill.  After the Wisconsin Supreme Court upheld the provisions of the bill, the protests faded away, but the social forces remain strong underneath.

Looking at finances across the 50 states, Truth in Accounting (TIA) estimates that Wisconsin is actually in relatively good shape.  TIA’s latest estimate for Wisconsin’s “Taxpayer Burden” runs at $4,800, compared to a 50 state average of $9,100.

Just south of Wisconsin’s border, there is a lot of financial trouble but little apparent social turmoil.  TIA’s latest estimate for Illinois’ Taxpayer Burden’ runs at $42,200.  In other words, every taxpayer in Illinois (roughly equal to the number of households in the state) would have to write a check for $42,200 to pay off the bills that exceed the assets the state has available to pay those bills.  This is the second highest TIA Taxpayer Burden estimate of all the states in the entire nation.

Why are we seeing active social strife popping up in Wisconsin, but not in Illinois?

Truth in Accounting believes that untruthful accounting is an important part of the answer.  State governments have long been allowed to accumulate massive debts off of their balance sheets, all the while touting ‘balanced budgets’, achieved in important part by shady government accounting.

Wisconsin reports its results under government accounting standards like those for Illinois.  However, Wisconsin has significantly stricter controls on funding future obligations that lie outside the state’s official balance sheet.  Because of these controls, Wisconsin has some of the best-funded government retirement benefits in the nation.  Illinois, by contrast, has some of the worst funded programs – and they aren’t on the balance sheet.

Push came to shove earlier in Wisconsin. In Illinois, we may just be looking at the calm before the storm.


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