So moving on with our dissection of the Wisconsin Budget Repair Bill. I'll be covering pages 22 through 40 here. Much of this section revolves around accounting standards, which I'll admit to not being that familiar with. I'll try my best to translate it, but if anyone out there has a different interpretation of one of the sections I cover, please let me know. I'm debating whether I'm going to keep going through the bill in order and cover the collective bargaining section next (as it starts around page 59) or, since that is the part that has been in the news the most, skip that section for now and continue on with the lesser known portions of the bill. I'd come back to the collective bargaining portion in the end if that is the case. Let me know if you have any preferences. I plan to post the next section later this weekend.
The first thing to note on page 22 is that “This section does not apply to the sale of any state−owned heating, cooling, and power plant. Any sale of such a plant is governed exclusively by s. 16.896”. I'll get to section 16.896 soon enough, but keep this exclusion in mind as we discuss the upcoming portions. I'll admit that it's unclear if that means that anything listed in the next sections CANNOT be applied to state utility plants or if that just means that whatever the current process is stays in place. I'm hoping that it's the later, because section 41 of this bill is what authorizes the state to “furnish engineering, architectural, project management, and other building construction services whenever requisitions therefor are presented to the department by any agency”. Any funds received for these services is to be deposited into the general fund as revenue. If utility plants are excluded from this portion and the current procedure is not 'grandfathered' in, this could mean that the state does not have to pay for services to the utility plants. I find it hard to believe that is the intent of this section, if the state is not responsible for state power plant costs then who is? However, alternative interpretations are important to consider, and one alternative is that this portion of the bill essentially cuts off funding for state utility plants. This is more concerning when coupled with the 'sales' provision that will be discussed shortly.
Page 23 discusses the fees that are allowed to be charged to an agency each fiscal year, basically outlining budgets in very rough (no actual numbers) terms. This section does allow departments to charge agencies a 'premium' for certain services, including investigative services, litigation costs, data processing and staff support, and the cost of insurance contracts. Although the charges for these services are to be allocated annually, the bill also allows for departments to periodically assess agencies a portion of the expenses incurred by the department. I assume this is to allow for 'unpredicted' expenses to be 'billed' in a timely manner, such as increased security costs for an unexpected event, disease outbreak, or natural disaster.
Page 24 starts the section that covers the sale of state-owned utility plants. Besides the collective bargaining section of this bill, this is probably the portion that has received the most (but still not much) attention. This section provides the ability for state-owned “heating, cooling, and power plants' (I'll just say utility plants for short) to be sold to or contracted to a private entity “with or without
solicitation of bids, for any amount that the department determines to be in the best interest of the state.” I think the most concerning portion of that sentence is the 'without solicitation of bids' portion. Typically when an asset is being sold the goal is the accept the highest offer on the property. This section would allow that utility plants could be sold without asking for multiple offers, essentially making it a 'first come, first served' type of sale. The argument has been made that the offers that would be received for these plants would be minimal because of necessary technology upgrades and concerns about updates to federal pollution guidelines, but I don't think these arguments alone legitimize not even asking for competitive bidding on the sales. Plus, there is a high potential for abuse in this scenario. With no true oversight allowed for in these sales, it is entirely too possible that the sales would be available first to political contributors and/or that the offers would be outrageously low. Saying that the amount only has to be determined to be 'in the best interest of the state' doesn't really give a lot of guidance into the anticipated purchase price. Plus, the sales are excluded from needing approval or certification of the public service commission, again leaving no true oversight into the sales. Any utility plant sale is “considered to be in the public interest and to comply with the criteria for certification of a project”. The assumption made by this section is that any utility plant sold is a good thing, although it is not outlined as to how that determination was made. I'm assuming the argument is that a private company could operate the plants more efficiently than the current public process, but as there are no provisions for maintaining the current staff after the sale, efficiency changes would have to account for the potential training of new employees, plus there are no provisions the ensure that the cost of the utilities provided would not greatly increase when managed by a private company, potentially costing the state more in the long-run.
This section also states that any outstanding public debt on any utility plants sold would be covered by the net proceeds of the sale. Ideally, this would encourage some competitive bidding as one would assume the state would want to sell the plant for enough to at least cover this debt. However, there is no indication of what happens to that debt if the sale price of the plant does not cover the debt itself. If the sale is still determined to be 'in the best interest of the state', does that debt that is not covered by the sale price then get added to the general state debt? As there is no provision stating sales cannot take place for less than the amount of outstanding debt, this is an important question to answer.
Any profits from the sale of utility plants (after all state and federal debts on the plants are paid off), is to be deposited in a 'budget stabilization fund'. This sounds fine to me, although I would need details as to what the 'budget stabilization fund' is to be used for, how the funds are to be managed or invested, and who is responsible for overseeing this fund. Later in this bill (pages 25-26) it appears that the Secretary is given oversight of any profits from these sales, and any agency that wants to use the funds from sale of utility plants must petition for approval from the Secretary. If an agency's utility plant is sold, they do not have the ability to use the profits from that purchase on agency projects without Secretary approval, even though it appears that the agencies themselves have little to no say in the decision to sell that plant. Essentially, this takes away the agencies plant AND any benefit they might get from the sale. On one hand this could be good as it may minimize the temptation to sell plants for short-term gain, but on the other hand it seems that the agency should see some benefit from the sale if they have no ability to stop it.
The purchaser of any state utility plant is subject to any provision that the state feels it is necessary to place on the sale, including submitting to any rulings of the public service commission. So although the public service commission is essentially unable to weigh in on the sales before hand, they are allowed to chose to oversee the plant after the sale. This seems appropriate, although I'm unclear why they are then excluded for say in the sale if they are later allowed to oversee the plant anyway. If they are good enough to manage it after the sale, shouldn't they maintain that jurisdiction before and during the sale as well? This section also states that unless it is agreed to “between the parties' (I assume this means the state department overseeing the sale and the purchaser), the purchaser of the plant is required to keep them in good repair and continued operation to “provide adequate...power to meet the state's current and future needs”. This avoids someone purchasing the plant just to shut it down and then charge the state facility served by that plant to purchase power from another location. However, if the state and the purchaser agree to closing the plant, that is still a possibility.
The Secretary also has the ability, after the sale of a utility plant, to decrease the number of full-time positions in the plant by whatever number he/she feels necessary. I think the intention is to allow the Secretary to eliminate any positions in the agency that were associated with the operation of the utility plant, so again the issue of training new employees and it's impact on efficiency (and safety) at the plant rears it's head.
Page 27 starts a section that (indirectly) deals with the major collective bargaining section that is later in the bill. Although this section doesn't deal with collective bargaining rights, which is what is getting the majority of the current press coverage of this bill, it does deal with things like collective bargaining notice, administrative costs, studies, etc. This section requires notification of the end of a contract period and the reopening of negotiations, but does not give a time frame for that notification or outline the required methods of notification. Without this being outlined, it is possible that the contract could expire, minimal notice could be give (say, with a single announcement posted on a board down a lightly-used hallway) and therefore discussion would be limited. I'd like to think that wouldn't happen, but the pessimist in me requires that I point out that possibility. Any funds necessary to complete actuarial and other types of studies relating to insurance and retirement must be approved by the secretary of administration. It makes sense that someone would have to approve the distribution of these funds, but I would want assurances that the determination is not made based on political ideals. It is easy to imagine an administration only approving funds for studies done by groups that share their ideological or political beliefs, which is not the way to get accurate or unbiased information.
Page 29 refers to collective bargaining grievance arbitration, stating that agencies will reimburse the state for the costs of arbitration. This section seems a little odd to me, seeing as later in the bill the collective bargaining rights are limited to simply wages. It is possible that there would be arbitration necessary on that topic, but as little else will be available for arbitration it seems almost unnecessary to have the stipulation as to who pays for said arbitration.
Page 30 refers to the refinancing of existing state debt. This is the portion that Gov. Walker believes required that the Bill be passed by Friday, February 25th in order for the debt to be amortized. This section allowed for $474,000,000 to be contracted for debt incurred before July 1, 2011. I have heard the best explanation of this portion is to think about a mortgage. If you have 10 years left on your 30-year mortgage, you have a set payment you make each month. You can refinance that 10 years of remaining debt out another 30 years, your payments each month/year will go down but the overall amount you will pay on this debt will increase because of the interest you will pay for the 'new' 20 years of the loan. In essence, this doesn't reduce your debt, it just reduces the payments you make each month. I can't take credit for that explanation, a Republican explained it to me, but it seemed the clearest way to cover that portion of the bill. Most people have a general understanding of loans and interest.
The bottom of Page 32 introduces the discussion of salaries for appointed positions in government, as long as those appointed positions are not subject to a collective bargaining agreement. I won't go into all the details of what each rank of government is eligible to be paid, but I will say that the pay appears to be based on what the highest rank would get paid, with each rank below that getting a salary range 'one range below' the preceding rank. On one hand this seems appropriate, the higher rank you have in any company the higher your pay scale, in general. However, there is no detail as to what a 'range' is considered in actual dollars and cents, so it is possible that the pay differences could be minimal OR extreme. Also, there is no mention of a potential cap on the salaries of the top rank, leaving a potential for skyrocketing costs if an agency head is appointed at an inflated pay rate. The Secretary of Administration is responsible for approving the funds for the agencies and a 'board' is responsible for reviewing the pay ranges. This board also has the ability to establish salaries for new appointments or increase salaries as they see fit to 'correct a salary inequity or to recognize competitive factors', leaving potential abuse for political appointees to be paid inflated rates.
Page 34 has a provision that is easily overlooked, but I find interesting. “The board shall not permit a facility that would be privately owned or operated to be constructed on state−owned land without obtaining prior approval of the building commission... the board may sell or dispose of such property as provided by law, or any part thereof when in its judgment it is for the best interests of the system and the state.” There is an exception to this, that being the state utility plants. So not only does this reinforce the limited oversight into the sale of state utilities, but it also gives the board the ability to approve the sale of any state property simply by determining its in the state's best interest. This could include state forests, state-owned parks and wildlife preserves, state commercial-zoned properties, etc. The only restriction, besides the 'best interest' clause, is that if there is a physical building on the property the sale must be approved by the building commission. The Natural Resources Manager in me is picturing clear cutting state forests and hotels in Devil's Lake State Park, but hopefully that is just my pessimism talking. But it is important to consider that this bill does not DISallow that type of activity...
Page 35 deals with insurance, specifically for part-time or limited term employees. The important topic here, in my opinion, is that although this bill no longer eliminates benefits for these employees it does potentially have a major impact on their benefits. Specifically, it allows the group insurance board to modify “the standard plan to establish a more cost effective benefit plan design or providing optional insurance coverages as alternatives to the standard insurance coverage when any excess of required premium over the premium for the standard coverage is paid by the employee”. Allowing modifications based on 'cost effectiveness' is pretty open. Lets face it, the most cost-effective option for the state would be the employees paying the entire insurance bill themselves, and this section essentially, if not explicitly, allows for that. The group insurance board would simply have to accept as the standard plan an insurance policy with so little coverage it is essentially useless and then offer a supplemental plan with decent coverage but highly increased employee contributions. This seems like an end-run allowing the previous exclusion of part-time employees from insurance coverage to still be possible. Unless I am mis-reading this section, “For each participating employee whose formula rate is determined under s. 40.23 (2m) (e) 2., an amount equal to one−half of all actuarially required contributions, as approved by the board under s. 40.03 (1) (e).” it also appears that part-time employees would be responsible for at least half of their insurance costs no matter what plan they choose or is chosen for them. Although it is understandable that part-time employees would pay more for their benefits, I would need to review the current benefit structure to determine if 50% is in line with the current benefits. This section ends with a description of how unused sick and vacation time can be used by a retired employee as 'credits' toward continued coverage of health insurance premiums.
There are lots of sub-sections in this bill, so I apologize if my review seems haphazard at times. In attempting to go through the Budget Repair Bill page by page, the flow of the explanation is not always smooth. As always, if you have any alternative suggestions or comments, please feel free to chime in to the discussion, but remember, I reserve the right to not approve any comment that is abusive, violent, or does not substantively add to the conversation.
No comments:
Post a Comment