GOP Legislators Raise Eyebrows At Proposed Increase In Borrowing

Republicans on the legislature’s budget committee pushed back against a top aide to Governor Scott Walker today for the way Walker’s budget would increase borrowing.

Walker’s budget would increase borrowing by about a billion dollars, mostly to pay for roads. Asked to defend the move, Department of Administration Secretary Mike Huebsch said it made sense to borrow now with interest rates low.

“The fact is that when you borrow money, you’re purchasing money. I mean that’s essentially what you’re doing, is you’re borrowing money and it’s going to be something you’re going to have to pay back. Well the price of money is at the lowest it’s been in a generation. To borrow money now is relatively inexpensive.”

But some of Huebsch’s fellow Republicans sounded skeptical of that idea. Hudson Assembly Republican Dean Knudson said that borrowing would have long-term costs: “One of the things you’re doing is you’re committing that future legislature to make the payment even if it’s just that annual payment and those will stack if you keep on borrowing at a higher level.”

Knudson questioned whether it might make more sense for the state to cut spending rather than borrow to pay for it. Finance Committee Co-Chair John Nygren noted that Huebsch had been a member of the legislature not too many years ago: “I don’t think you probably put on your brochure that we’re going to grow the size of government.”

Republicans have also expressed worry that the Governor’s budget would grow the state’s structural deficit and its GAAP deficit, which is what the finance industry looks at when it rates the state’s bonds.