Wisconsin, fiscal responsibility, and power (plants?)
Have you heard about 16.896?
“…with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state.” Who knew behind the scenes it was also power plants? From rortybomb at the link above:
The fight in Wisconsin is over Governor Walker’s 144-page Budget Repair Bill. The parts everyone is focusing on have to do with the right to collectively bargain being stripped from public sector unions (except for the unions that supported Walker running for Governor). Focusing on this misses a large part of what the bill would do. Check out this language, from the same bill (my bold):
16.896 Sale or contractual operation of state−owned heating, cooling, and power plants. (1) Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).
(Update: Dan here…see also Linda Beale’s post on the same issue via Mark Thoma. Yves Smith adds her comments.)
The bill would allow for the selling of state-owned heating/cooling/power plants without bids. This excellent catch is from Ed at ginandtacos.com (who, speaking of Madison, took me to the Essen Haus on my 21st birthday, where the night began to go sideways). Ed correctly notes:
“If this isn’t the best summary of the goals of modern conservatism, I don’t know what is. It’s like a highlight reel of all of the tomahawk dunks of neo-Gilded Age corporatism: privatization, no-bid contracts, deregulation, and naked cronyism. Extra bonus points for the explicit effort to legally redefine the term “public interest” as “whatever the energy industry lobbyists we appoint to these unelected bureaucratic positions say it is.”
…
It’s important to think of this battle as a larger one over the role of the state. The attempt to break labor is part of the same continuous motion as saying that the crony, corporatist selling of state utilities to the Koch brothers and other energy interests is the new “public interest.”
So, drop the no-bid clause and the issue goes away?
This provision is most likely to accomodate some sort of sale-leaseback, most likely to some other state controlled entity, not the Koch brothers. The terms of the “leaseback” portion are as important as the selling price.
This Walker guy is really ahead of the curve.Look for more asset sales on the part of governments.
“Except for the Unions who supported him”, of which those should be front page news, along with the power grab. This tactic is the old smack em with a popular issue to keep them distracted, or camouflage is a more proper terminology here, but the real issue is the power grab of the energy system for the state. It’s simply amazing to me how low politicians will bend over to get those pieces of silver, at the expense of the citizenry. One would think that the plotocracy here in the U.S. would take heed to what’s going on in the M.E., but sadly, they are under the illusion that they are immune to such.
So, drop the no-bid clause and the issue goes away? It kinda makes you wonder: “What ere they thinking?” Going into hiding makes no sense.
Norman, are you suggesting that WI is selling all the power generating plants? If so you are mis/over interpreting th article.
On the table are publically owned power/cooling plants at state facilities, prisons, schools, etc.
CoRev–What’s the point of selling a bunch of broken down HVAC units in a lot of 50 year-old structures? Why would you ever want to sell that equipment if it’s part of a state owned facility?
But, ok suppose you do. Why not bid it out? You can wrap up that kind of thing pretty quickly if it’s just one facility, one “plant” at a time with competitve bids. Meanwhile, sammy points out that selling off public goods is a way for tax strapped states to generate some cash. Nancy then points out it’s also a way for the state to lose control of its operating expenses, cause the leasee/buyers call the tune on costs, maintenance, etc.
Besides, Linda’s friend sees the reason for all this privatization. No way govt is more expensive than privately operated enterprises producing services formerly provided at zero profit margin. Why, govts are just giving this stuff away! Can’t they see how wrong that is!!
😉 NancyO
Sammy,
Ahead of the curve yes…but there is already a history in the area of how this seems to actually work. Please send a few links.
NO, you ask a good question. There must be some value in that mix. We obviously are not close enough to know where that value is. And, bidding it makes some sense, unless there is only one interested bidder.
The other obvious point we are not discussing is the value to WI of contracting out their operations, the leasing part of the equation.
NO,
The way for the State to maintain control of the assets are to sell them to some state-controlled entity, and not send it out to bid.
Face it folks. This is the Paul Breener et al ideology coming to America. Of course, Brenner was what Walker is today.
I find it hard to believe that CoRev and Sammy are this naive. Read the language folks. You are selling the rights to your first born child on a no bid… friends of the governor only… basis.
Christ, no one should be this stupid.
I own a bit of property the Government wants to buy an easement on. I could use the money, and the Government says it will do with the property exactly what I would do if I had the money.
Problem is the contract they want me to sign gives them all the rights and me none. No deal.
I am aware the government could come back and do what they want to do anyway. But my experience has been that the devil likes you to sell your own soul. Greed and Envy are usually the selling points.
btw for Sammy mostly
the point of my story about me and government is to illustrate that prostituting yourself to the government is no better… or worse.. than prostituting yourself to the rich man. As someone who has apparently sold his… ah, judgement.. to the rich man, you often imply that anyone who disagrees with you has sold his to the government. Not so.
So, we’re discussing SB 11 again. Fine.
SENATE BILL 11
Introduced February 14, 2011
http://legis.wisconsin.gov/2011/data/JR1SB-11.pdf
What is missing from the following blog posts?
http://www.ginandtacos.com/2011/02/21/stand-and-deliver/
http://rortybomb.wordpress.com/2011/02/21/the-less-discussed-part-of-walkers-wisconsin-plan-no-bid-energy-assets-firesales/
http://andrewsullivan.theatlantic.com/the_daily_dish/2011/02/how-does-this-help-balance-wisconsins-budget.html
http://news.firedoglake.com/2011/02/21/in-budget-bill-wisconsin-gov-walker-pushing-for-no-bid-sales-of-state-owned-power-plants/
http://www.dailykos.com/story/2011/02/21/947954/-The-other-part-of-the-Scott-Walker-plan:-Firesale-of-Wisconsin-state-assets
http://ataxingmatter.blogs.com/tax/2011/02/krugman-on-union-busting.html
http://www.nakedcapitalism.com/2011/02/wisconsins-walker-joins-government-asset-giveaway-club-and-is-rahm-soon-to-follow.html
What do Ed (ginandtacos), Mike Konczal (Rortybomb), Andrew Sullivan (the Atlantic), David Dayen (firedoglake), Joan McCarter (Daily Kos), Linda Beale (ataxingmatter), Yves Smith (naked capitalism) and other bloggers cranking out similar blog “news” stories and blog op-eds have in common regarding the Wisconsin state-owned power plants issue?
None of the above bloggers cited any in-state news articles which reported on the Governor’s power plant facilities plan. One key in-state news article was published on 11 February and another on 14 February, the day that SB 11 was introduced in the Wisconsin state legislature.
None of the above bloggers cited the five sections of SB 11 which address the Wisconsin state owned power plant facilities issue. Only one paragraph of Section 44, SB 11, was originally cited by two of the above bloggers.
None of the above bloggers cited the amendment to SB 11 which addresses the bill provisions concerning the power plant facilities.
None of the above bloggers cited any of the three directly related reports from the Wisconsin Legislative Fiscal Bureau published on 14 February, 16 February, and 17 February. Earlier, other bloggers were keen to focus on a 31 January report from the Wisconsin Legislative Fiscal Bureau while ignoring the detailed follow ups to that report provided by the Wisconsin Governor’s office.
None of the above bloggers cited the fact that this isn’t the first time in Wisconsin’s history that the state’s power plant facilities have been considered for commercial sale and/or operation.
None of the above bloggers cited any information which explains the EPA compliance problems that many of the state owned power plant facilities face, facts which were known by the previous Democrat governor and Democrat controlled state […]
Information that Angry Bear readers could review in order to gain more insight into the State of Wisconsin power plant facitlites issue before the state legislature:
SENATE BILL 11
Introduced February 14, 2011
http://legis.wisconsin.gov/2011/data/JR1SB-11.pdf
Walker proposes selling state-owned heating plants
By Ron Seely, Wisconsin State Journal
February 11, 2011
http://host.madison.com/wsj/news/local/govt-and-politics/article_75759236-363e-11e0-bb98-001cc4c03286.html
Walker proposes selling state-owned power plants
By Thomas Content, Milwakee Wisconsin Journal Sentinel
February 14, 2011
http://www.jsonline.com/business/116204654.html
—-
Office of the Governor, State of Wisconsin
http://www.wisgov.state.wi.us/
Media Center
Office of the Governor, State of Wisconsin
http://www.wisgov.state.wi.us/mediaroom.asp?locid=177
Legislative Fiscal Bureau
State of Wisconsin Legislature
http://legis.wisconsin.gov/lfb/
—-
Key relevant reports from the Legislative Fiscal Bureau, State of Wisconsin Legislature:
Budget Adjustment Legislation
This document summarizes the provisions of January 2011 Special Session Senate Bill 11
Report pages 19-21 (Pdf pages 23-25)
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 14, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_14_budget Adjustment Legislation.pdf
Provisions of Senate Amendment LRB ___ to SS SB 11
This memorandum describes the changes that Senate Amendment LRB ___ would make to
January 2011 Special Session Senate Bill 11
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 16, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_16JFC.pdf
Summary of Joint Finance Version of Budget Adjustment Legislation
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 17, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_17WILEGISLATURE_Governor_JFC.pdf
Budget Adjustment Legislation
This document summarizes the provisions of January 2011 Special Session Senate Bill 11
Report pages 19-21 (Pdf pages 23-25)
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 14, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_14_budget Adjustment Legislation.pdf
EXCERPT:
“ADMINISTRATION
1. SALE AND CONTRACTUAL OPERATION OF STATE-OWNED POWER PLANTS
Allow the Department of Administration (DOA) to sell any state-owned heating, cooling, or power plant or contract with private entities for the operation of any such plant, with or without solicitation of bids, for any amount the Department determines to be in the best interest of the state.
Under current law, through June 30, 2011, DOA may sell state-owned property, if the Department determines that it is in the best interest of the state. The sale may be conducted using public bids, or negotiated prices. The Department may reject bids if they do not serve the state’s interest. Such sales must be approved by the Building Commission. After June 30, 2011, such property would have to be declared surplus (property not needed for agency operations) in order to be sold by the state. In addition, the University of Wisconsin System Board may sell or dispose of property as allowed under statute and as is deemed beneficial to the System and the state. The bill would exempt the sale of state-owned heating, cooling and power plants from these current law requirements. Specify that DOA may attach conditions to the sale or contractual services agreement as it finds in the best interest of the state.
Specify that any outstanding public debt, including principal, interest, and premiums related to refunding of the debt associated with a state-owned heating, cooling or power plant would be paid from the net proceeds of any sale of the property. Specify that property acquired, constructed, or improved using federal financial assistance would be repaid to the federal government through any net proceeds, if required under federal law. If there are any net proceeds after debt service, and repayments to the federal government have been completed, specify that remaining funds be deposited into the budget stabilization fund, unless the sale of property comes from the sale of property or assets at the Northern Center for the Developmentally Disabled, in which case the proceeds would be used for the current law purpose of deposits into the Department of Health Services institutional operations appropriation.
Specify that public utilities would not have to seek Public Service Commission (PSC) approval in order to buy or contract for the operation of a state-owned heating, cooling or power plant. Under current law, the PSC must approve and certify construction, renovation, improvement, expansion, sale, lease, and consolidation of electric generating facilities for public utilities.
Public utilities are currently defined as an entity that provides heat, light, water, or power directly or indirectly to the public.
Specify that DOA would only be responsible for state power plants if they are owned and operated by the state. Under current law DOA must operate, maintain, and keep in repair certain state facilities, including the Capitol heating plant, and other power plants that are operated in conjuncture with state facilities.
If DOA sells or enters a contract for the operation of a state-owned heating, cooling, or power plant, unless otherwise agreed between DOA and the operator, specify that the purchaser or contractor would continue to operate the […]
Changes to Medicare criticized; up to 70000 could lose coverage – Overshadowed in Gov. Scott Walker’s controversial budget repair bill is a provision that could lead to some 70,000 people losing health insurance. The measure would give the state Department of Health Services the authority to restrict eligibility, modify benefits and make other changes to Medicaid with less legislative review than required now. The proposal has drawn the criticism of health care advocates and Democratic lawmakers upset by what they see as unchecked power for the administration. Walker spokesman Cullen Werwie said changes and flexibility are needed to plug the $1.8 billion hole in the state’s Medicaid budget over the next two years. The program, which includes BadgerCare Plus, Family Care, SeniorCare and other health plans, accounts for half of the state’s estimated $3.6 billion budget gap. Under current rules, people earning up to twice the federal poverty level can participate in the programs. Walker’s bill would allow the state to disqualify those earning more than 133 percent of the poverty level; that includes about 63,200 parents and another 6,800 adults, according to the Legislative Fiscal Bureau.
Budget Adjustment Legislation
This document summarizes the provisions of January 2011 Special Session Senate Bill 11
Report pages 19-21 (Pdf pages 23-25)
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 14, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_14_budget Adjustment Legislation.pdf
EXCERPT:
“ADMINISTRATION
1. SALE AND CONTRACTUAL OPERATION OF STATE-OWNED POWER PLANTS
Allow the Department of Administration (DOA) to sell any state-owned heating, cooling, or power plant or contract with private entities for the operation of any such plant, with or without solicitation of bids, for any amount the Department determines to be in the best interest of the state.
Under current law, through June 30, 2011, DOA may sell state-owned property, if the Department determines that it is in the best interest of the state. The sale may be conducted using public bids, or negotiated prices. The Department may reject bids if they do not serve the state’s interest. Such sales must be approved by the Building Commission. After June 30, 2011, such property would have to be declared surplus (property not needed for agency operations) in order to be sold by the state. In addition, the University of Wisconsin System Board may sell or dispose of property as allowed under statute and as is deemed beneficial to the System and the state. The bill would exempt the sale of state-owned heating, cooling and power plants from these current law requirements. Specify that DOA may attach conditions to the sale or contractual services agreement as it finds in the best interest of the state.
Specify that any outstanding public debt, including principal, interest, and premiums related to refunding of the debt associated with a state-owned heating, cooling or power plant would be paid from the net proceeds of any sale of the property. Specify that property acquired, constructed, or improved using federal financial assistance would be repaid to the federal government through any net proceeds, if required under federal law. If there are any net proceeds after debt service, and repayments to the federal government have been completed, specify that remaining funds be deposited into the budget stabilization fund, unless the sale of property comes from the sale of property or assets at the Northern Center for the Developmentally Disabled, in which case the proceeds would be used for the current law purpose of deposits into the Department of Health Services institutional operations appropriation.
Specify that public utilities would not have to seek Public Service Commission (PSC) approval in order to buy or contract for the operation of a state-owned heating, cooling or power plant. Under current law, the PSC must approve and certify construction, renovation, improvement, expansion, sale, lease, and consolidation of electric generating facilities for public utilities. Public utilities are currently defined as an entity that provides heat, light, water, or power directly or indirectly to the public.
Specify that DOA would only be responsible for state power plants if they are owned and operated by the state. Under current law DOA must operate, maintain, and keep in repair certain state facilities, including the Capitol heating plant, and other power plants that are operated in conjuncture with state facilities.
If DOA sells or enters a contract for the operation of a state-owned heating, cooling, or power plant, unless otherwise agreed between DOA and the operator, specify that the purchaser or contractor would continue to operate […]
Provisions of Senate Amendment LRB ___ to SS SB 11
This memorandum describes the changes that Senate Amendment LRB ___ would make to
January 2011 Special Session Senate Bill 11
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 16, 2011
EXCERPT:
“5. Sale or Contractual Operation of State-Owned Power Plants
Joint Finance Review. Specify that the Department of Administration (DOA) could not sell, enter a lease, or contract for any of the operations of a state-owned heating, cooling or power plant unless such a transaction was approved by the Joint Committee on Finance under a 14-day passive review process. Require the Department of Administration to submit the following to the Committee as part of any request: (a) estimated value of the facility as determined by DOA and at least one qualified privately-owned assessor; (b) full cost of retiring remaining debt for the facility; (c) a cost benefit analysis that considers the short-term and long-term costs and benefits to the state for selling, leasing, or entering a contract for facility operations; (d) the length and conditions of any proposed sale, lease or service agreement between the state and a proposed purchaser; (e) the estimated budgetary impact for affected state agencies for at least the current and following biennium; and (f) any other information requested by the Committee.
Repayments of Tax Exempt Bonding. Authorize the Building Commission to determine and make payments to the federal government so as to avoid an adverse effect on any exclusion of interest from gross income for federal income tax purposes on public debt, revenue obligations, appropriation obligations, operating notes, and master lease obligations and to make payments to advisors that assist in making the determination. This provision would allow the state to make payments to federal Internal Revenue Service (IRS) so as to retain the tax exempt status of bonds issued to finance a power plant or facility in the event that plant or facility is subsequently sold to a private entity for which that tax exempt status would not apply. Under current law, the Building Commission has the authority to only make payments to federal government so that public debt, revenue obligations, and operating notes are not treated as arbitrage bonds. The payment provisions under the amendment are broad enough to continue to allow these payments to be made. The amendment would also modify the existing program revenue appropriation from which current law
payments can be made to incorporate the payments allowed under the amendment.
Modify the portions of the bill relating to the payment of any debts owed on the heating, cooling and power plants in the event of a sale, lease, or contract for service to specify that debt service shall be repaid for the portion of a building project that was related to the construction of the heating, cooling, or power plant.
Require DOA to determine any actions that may be necessary or appropriate as to avoid an adverse effect on any exclusion of interest on such public debt from gross income for federal income tax purposes should a plant be sold, leased or where there would be a contractual services agreement. This may include payments to advisors or the IRS. Net proceeds from the sale of a plant would be in the following order, based on sufficiency of funds: (a) payments to advisors or the IRS determined by DOA to be necessary and appropriate; (b) the repayment of any federal funds used to acquire, construct, or improve the plant, that are required under federal law; (c) to deposit sufficient amounts in the bond security and redemption fund to repay the principal and the interest on any […]
Provisions of Senate Amendment LRB ___ to SS SB 11
This memorandum describes the changes that Senate Amendment LRB ___ would make to
January 2011 Special Session Senate Bill 11
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 16, 2011
EXCERPT:
“5. Sale or Contractual Operation of State-Owned Power Plants
Joint Finance Review. Specify that the Department of Administration (DOA) could not sell, enter a lease, or contract for any of the operations of a state-owned heating, cooling or power plant unless such a transaction was approved by the Joint Committee on Finance under a 14-day passive review process. Require the Department of Administration to submit the following to the Committee as part of any request: (a) estimated value of the facility as determined by DOA and at least one qualified privately-owned assessor; (b) full cost of retiring remaining debt for the facility; (c) a cost benefit analysis that considers the short-term and long-term costs and benefits to the state for selling, leasing, or entering a contract for facility operations; (d) the length and conditions of any proposed sale, lease or service agreement between the state and a proposed purchaser; (e) the estimated budgetary impact for affected state agencies for at least the current and following biennium; and (f) any other information requested by the Committee.
Repayments of Tax Exempt Bonding. Authorize the Building Commission to determine and make payments to the federal government so as to avoid an adverse effect on any exclusion of interest from gross income for federal income tax purposes on public debt, revenue obligations, appropriation obligations, operating notes, and master lease obligations and to make payments to advisors that assist in making the determination. This provision would allow the state to make payments to federal Internal Revenue Service (IRS) so as to retain the tax exempt status of bonds issued to finance a power plant or facility in the event that plant or facility is subsequently sold to a private entity for which that tax exempt status would not apply. Under current law, the Building Commission has the authority to only make payments to federal government so that public debt, revenue obligations, and operating notes are not treated as arbitrage bonds. The payment provisions under the amendment are broad enough to continue to allow these payments to be made. The amendment would also modify the existing program revenue appropriation from which current law payments can be made to incorporate the payments allowed under the amendment.
Modify the portions of the bill relating to the payment of any debts owed on the heating, cooling and power plants in the event of a sale, lease, or contract for service to specify that debt service shall be repaid for the portion of a building project that was related to the construction of the heating, cooling, or power plant.
Require DOA to determine any actions that may be necessary or appropriate as to avoid an adverse effect on any exclusion of interest on such public debt from gross income for federal income tax purposes should a plant be sold, leased or where there would be a contractual services agreement. This may include payments to advisors or the IRS. Net proceeds from the sale of a plant would be in the following order, based on sufficiency of funds: (a) payments to advisors or the IRS determined by DOA to be necessary and appropriate; (b) the repayment of any federal funds used to acquire, construct, or improve the plant, that are required under federal law; (c) to deposit sufficient amounts in the bond security and redemption fund to repay the principal and the interest on any […]
Summary of Joint Finance Version of Budget Adjustment Legislation
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 17, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_17WILEGISLATURE_Governor_JFC.pdf
EXCERPT:
“1. SALE AND CONTRACTUAL OPERATION OF STATE-OWNED POWER PLANTS
Governor: Allow the Department of Administration (DOA) to sell any state-owned heating, cooling, or power plant or contract with private entities for the operation of any such plant, with or without solicitation of bids, for any amount the Department determines to be in the best interest of the state.
Under current law, through June 30, 2011, DOA may sell state-owned property, if the Department determines that it is in the best interest of the state. The sale may be conducted using public bids, or negotiated prices. The Department may reject bids if they do not serve the state’s interest. Such sales must be approved by the Building Commission. After June 30, 2011, such property would have to be declared surplus (property not needed for agency operations) in order to be sold by the state. In addition, the University of Wisconsin System Board may sell or dispose of property as allowed under statute and as is deemed beneficial to the System and the state. The bill would exempt the sale of state-owned heating, cooling and power plants from these current law requirements. Specify that DOA may attach conditions to the sale or contractual services agreement as it finds in the best interest of the state.
Specify that any outstanding public debt, including principal, interest, and premiums related to refunding of the debt associated with a state-owned heating, cooling or power plant would be paid from the net proceeds of any sale of the property. Specify that property acquired, constructed, or improved using federal financial assistance would be repaid to the federal government through any net proceeds, if required under federal law. If there are any net proceeds after debt service, and repayments to the federal government have been completed, specify that remaining funds be deposited into the budget stabilization fund, unless the sale of property comes from the sale of property or assets at the Northern Center for the Developmentally Disabled, in which case the proceeds would be used for the current law purpose of deposits into the Department of Health Services institutional operations appropriation.
Specify that public utilities would not have to seek Public Service Commission (PSC) approval in order to buy or contract for the operation of a state-owned heating, cooling or power plant. Under current law, the PSC must approve and certify construction, renovation, improvement, expansion, sale, lease, and consolidation of electric generating facilities for public utilities. Public utilities are currently defined as an entity that provides heat, light, water, or power directly or indirectly to the public.
Specify that DOA would only be responsible for state power plants if they are owned and operated by the state. Under current law DOA must operate, maintain, and keep in repair certain state facilities, including the Capitol heating plant, and other power plants that are operated in conjuncture with state facilities.
If DOA sells or enters a contract for the operation of a state-owned heating, cooling, or power plant, unless otherwise agreed between DOA and the operator, specify that the purchaser or contractor would continue to operate the plant, keep it in good repair, and continue to provide adequate and sufficient heating, […]
Summary of Joint Finance Version of Budget Adjustment Legislation
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 17, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_17WILEGISLATURE_Governor_JFC.pdf
EXCERPT: [CONTINUED]
Joint Finance: Specify that the Department of Administration (DOA) could not sell, enter a lease, or contract for any of the operations of a state-owned heating, cooling or power plant unless such a transaction was approved by the Joint Committee on Finance under a 14-day passive review process. Require the Department of Administration to submit the following to the Committee as part of any request: (a) estimated value of the facility as determined by DOA and at least one qualified privately-owned assessor; (b) full cost of retiring remaining debt for the facility; (c) a cost benefit analysis that considers the short-term and long-term costs and benefits to the state for selling, leasing, or entering a contract for facility operations; (d) the length and conditions of any proposed sale, lease or service agreement between the state and a proposed purchaser; (e) the estimated budgetary impact for affected state agencies for at least the current and following biennium; and (f) any other information requested by the Committee.
Authorize the Building Commission to determine and make payments to the federal government so as to avoid an adverse effect on any exclusion of interest from gross income for federal income tax purposes on public debt, revenue obligations, appropriation obligations, operating notes, and master lease obligations and to make payments to advisors that assist in making the determination. This provision would allow the state to make payments to federal Internal Revenue Service (IRS) so as to retain the tax exempt status of bonds issued to finance a power plant or facility in the event that plant or facility is subsequently sold to a private entity for which that tax exempt status would not apply. Under current law, the Building Commission has the authority to only make payments to federal government so that public debt, revenue obligations, and operating notes are not treated as arbitrage bonds. The payment provisions under the amendment are broad enough to continue to allow these payments to be made. The amendment would also modify the existing program revenue appropriation from which current law payments can be made to incorporate the payments allowed under the amendment.
Modify the portions of the bill relating to the payment of any debts owed on the heating, cooling and power plants in the event of a sale, lease, or contract for service to specify that debt service shall be repaid for the portion of a building project that was related to the construction of the heating, cooling, or power plant.
Require DOA to determine any actions that may be necessary or appropriate as to avoid an adverse effect on any exclusion of interest on such public debt from gross income for federal income tax purposes should a plant be sold, leased or where there would be a contractual services agreement. This may include payments to advisors or the IRS. Net proceeds from the sale of a plant would be in the following order, based on sufficiency of funds: (a) payments to advisors or the IRS determined by DOA to be necessary and appropriate; (b) the repayment of any federal funds used to acquire, construct, or improve the plant, that are required under federal law; (c) to deposit sufficient amounts in the bond security and redemption fund to repay the principal and the interest on any portion […]
Summary of Joint Finance Version of Budget Adjustment Legislation
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 17, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_17WILEGISLATURE_Governor_JFC.pdf
EXCERPT: [CONTINUED]
Joint Finance: Specify that the Department of Administration (DOA) could not sell, enter a lease, or contract for any of the operations of a state-owned heating, cooling or power plant unless such a transaction was approved by the Joint Committee on Finance under a 14-day passive review process. Require the Department of Administration to submit the following to the Committee as part of any request: (a) estimated value of the facility as determined by DOA and at least one qualified privately-owned assessor; (b) full cost of retiring remaining debt for the facility; (c) a cost benefit analysis that considers the short-term and long-term costs and benefits to the state for selling, leasing, or entering a contract for facility operations; (d) the length and conditions of any proposed sale, lease or service agreement between the state and a proposed purchaser; (e) the estimated budgetary impact for affected state agencies for at least the current and following biennium; and (f) any other information requested by the Committee.
Authorize the Building Commission to determine and make payments to the federal government so as to avoid an adverse effect on any exclusion of interest from gross income for federal income tax purposes on public debt, revenue obligations, appropriation obligations, operating notes, and master lease obligations and to make payments to advisors that assist in making the determination. This provision would allow the state to make payments to federal Internal Revenue Service (IRS) so as to retain the tax exempt status of bonds issued to finance a power plant or facility in the event that plant or facility is subsequently sold to a private entity for which that tax exempt status would not apply. Under current law, the Building Commission has the authority to only make payments to federal government so that public debt, revenue obligations, and operating notes are not treated as arbitrage bonds. The payment provisions under the amendment are broad enough to continue to allow these payments to be made. The amendment would also modify the existing program revenue appropriation from which current law payments can be made to incorporate the payments allowed under the amendment.
Modify the portions of the bill relating to the payment of any debts owed on the heating, cooling and power plants in the event of a sale, lease, or contract for service to specify that debt service shall be repaid for the portion of a building project that was related to the construction of the heating, cooling, or power plant.
Require DOA to determine any actions that may be necessary or appropriate as to avoid an adverse effect on any exclusion of interest on such public debt from gross income for federal income tax purposes should a plant be sold, leased or where there would be a contractual services agreement. This may include payments to advisors or the IRS. Net proceeds from the sale of a plant would be in the following order, based on sufficiency of funds: (a) payments to advisors or the IRS determined by DOA to be necessary and appropriate; (b) the repayment of any federal funds used to acquire, construct, or improve the plant, that are required under federal law; (c) to deposit sufficient amounts in the bond security and redemption fund to repay the principal and the interest on any portion […]
So, we’re discussing SB 11 again. Fine.
SENATE BILL 11
Introduced February 14, 2011
http://legis.wisconsin.gov/2011/data/JR1SB-11.pdf
What is missing from the following blog posts?
http://www.ginandtacos.com/2011/02/21/stand-and-deliver/
http://rortybomb.wordpress.com/2011/02/21/the-less-discussed-part-of-walkers-wisconsin-plan-no-bid-energy-assets-firesales/
http://andrewsullivan.theatlantic.com/the_daily_dish/2011/02/how-does-this-help-balance-wisconsins-budget.html
http://news.firedoglake.com/2011/02/21/in-budget-bill-wisconsin-gov-walker-pushing-for-no-bid-sales-of-state-owned-power-plants/
http://www.dailykos.com/story/2011/02/21/947954/-The-other-part-of-the-Scott-Walker-plan:-Firesale-of-Wisconsin-state-assets
http://ataxingmatter.blogs.com/tax/2011/02/krugman-on-union-busting.html
http://www.nakedcapitalism.com/2011/02/wisconsins-walker-joins-government-asset-giveaway-club-and-is-rahm-soon-to-follow.html
What do Ed (ginandtacos), Mike Konczal (Rortybomb), Andrew Sullivan (the Atlantic), David Dayen (firedoglake), Joan McCarter (Daily Kos), Linda Beale (ataxingmatter), Yves Smith (naked capitalism) and other bloggers cranking out similar blog “news” stories and blog op-eds have in common regarding the Wisconsin state-owned power plants issue?
None of the above bloggers cited any in-state news articles which reported on the Governor’s heating, cooling, and power plant facilities plan. One key in-state news article was published on 11 February and another on 14 February, the day that SB 11 was introduced in the Wisconsin state legislature.
None of the above bloggers cited the five sections of SB 11 which address the Wisconsin state owned heating, cooling and power plant facilities issue. Only one paragraph of Section 44, SB 11, was originally cited by two of the above bloggers.
None of the above bloggers cited the amendment to SB 11 which addresses the bill provisions concerning the heating, cooling and power plant facilities.
None of the above bloggers cited any of the three directly related reports from the Wisconsin Legislative Fiscal Bureau published on 14 February, 16 February, and 17 February. Earlier, other bloggers were keen to focus on a 31 January report from the Wisconsin Legislative Fiscal Bureau while ignoring the detailed follow ups to that report provided by the Wisconsin Governor’s office.
None of the above bloggers cited the fact that this isn’t the first time in Wisconsin’s history that the state’s power plant facilities have been considered for commercial sale and/or operation.
None of the above bloggers cited any information which explains the EPA compliance problems that many of the state owned heating, cooling and power plant facilities face, facts […]
Information that Angry Bear readers could review in order to gain more insight into the State of Wisconsin heating, cooling and power plant facitlites issue before the state legislature:
SENATE BILL 11
Introduced February 14, 2011
http://legis.wisconsin.gov/2011/data/JR1SB-11.pdf
Walker proposes selling state-owned heating plants
By Ron Seely, Wisconsin State Journal
February 11, 2011
http://host.madison.com/wsj/news/local/govt-and-politics/article_75759236-363e-11e0-bb98-001cc4c03286.html
Walker proposes selling state-owned power plants
By Thomas Content, Milwakee Wisconsin Journal Sentinel
February 14, 2011
http://www.jsonline.com/business/116204654.html
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Office of the Governor, State of Wisconsin
http://www.wisgov.state.wi.us/
Media Center
Office of the Governor, State of Wisconsin
http://www.wisgov.state.wi.us/mediaroom.asp?locid=177
Legislative Fiscal Bureau
State of Wisconsin Legislature
http://legis.wisconsin.gov/lfb/
—-
Key relevant reports from the Legislative Fiscal Bureau, State of Wisconsin Legislature:
Budget Adjustment Legislation
This document summarizes the provisions of January 2011 Special Session
Senate Bill 11
Report pages 19-21 (Pdf pages 23-25)
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 14, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_14_budget Adjustment Legislation.pdf
Provisions of Senate Amendment LRB ___ to SS SB 11
This memorandum describes the changes that Senate Amendment LRB ___ would
make to January 2011 Special Session Senate Bill 11
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 16, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_16JFC.pdf
Summary of Joint Finance Version of Budget Adjustment Legislation
Published by Legislative Fiscal Bureau, State of Wisconsin Legislature
February 17, 2011
http://legis.wisconsin.gov/lfb/2011-13Bills/2011_02_17WILEGISLATURE_Governor_JFC.pdf
Most of the posts and comments on the issue of Walker’s line item in the budget bill were focused on the “no bid” aspect of any sale of state owned property. Some times the little things count more than the details. Many noticed that the Koch business interests are closely related to the possible “for sale” state properties. That sees like an interesting coincidence. Interesting coincidences are what interest most readers. Walker can defend his actions with all the quotations he may be able to gather together with your assistance. some times too much detail can hide a small, but highly relevant, point.
Jack,
It appears that you have no knowledge of the existing laws, rules, regulations, and procedures that govern disposal or leasing of state owned property in the State of Wisconsin.
It appears that you have not read the Wisconsin Legislative Fiscal Bureau reports identified above which discuss the bill provisions of SB 11, the bill that the governor has submitted to the legislature. In that regard, it is apparent also that you have no knowledge of the submitted amendment nor the Bureau’s related analysis.
If you had bothered to do any serious research on this issue, you could have learned that the “no bid” sale option of state owned property is already stated in law in the State of Wisconsin. The Wisconsin Fiscal Bureau addresed this point in its first report that I cited above. Apparently, you didn’t read it.
If you had performed any serious research, you could have also learned that a final environmental impact statement (EIS) was recently released on the stated owned Capitol Heat and Power Plant Rebuild located in the City of Madison. That document outlines the proposed rebuild and associated major cost of undertakiing that project. That EIS applies to only one of the 37 heating, cooling, and power plant facilities owned by the State of Wisconsin and other such facilities are also not in environmental compliance.
“Several of the state-owned plants are under court mandate or settlement to stop burning coal after violations of the Clean Air Act. The U.S. Environmental Protection Agency is investigating all of the state facilities for potential violations of air pollution laws. Any cost-benefit analysis will need to evaluate the benefit to the state of bringing the plants into compliance with pollution laws, said Jennifer Feyerherm of the Sierra Club in Madison. It’s possible that the state would seek to sell the plants to “get out of having to spend the money on pollution controls,” she said.”
If you were well informed on Wisconsin in-state news, you could have learned that Koch has expressed no interest in operating or providing substitute sources for any of the state owned heating, cooling, and power plant operations in the State of Wisconsin. The Koch operations in the State of Wisconsin do not include operating any public supply heating, cooling, and power plants operations.
“In a statement, Koch Industries said it had nothing to gain financially from the bill. The company’s Wisconsin operations range from Georgia-Pacific paper mills in Green Bay and asphalt manufacturers in Green Bay and Stevens Point to companies that ship coal and run fuel pipelines and terminals. “We have no interest in purchasing any of the state-owned power plants in Wisconsin and any allegations to the contrary are completely false,” Philip Ellender of Koch said in a statement. “This is a dispute between public-sector unions and democratically elected officials over how best to serve the public interest. Unfortunately, there are those who would prefer to portray it as something else entirely.”
Jack – “Walker can defend his actions with all the quotations he may be able to gather together with your assistance. some times too much detail can hide a small, but highly relevant, point.”
This is a false claim. I am not involved in any aspect of the ongoing dispute in the State of Wisconsin. What I have stated is that a specific group of bloggers in the blog posts I cited failed to address any of the background facts regarding the five provisions of SB 11 which are focused on the potential sale or lease of 1 to 37 state owned heating, cooling, […]
As previously noted it is possible to bury a small truth with an avalange of data. Pile on the citations, references and all the numerical mountains you can and one small truth may be lost to oblivion. It proves only that the truth can easily over whelmed by the facts.
Jack,
The truth is that the “no bid” option of disposing of State property existed in State of Wisconsin law long before the current governor was elected. I doubt that you were aware of that fact.
I doubt that you know much of anything about this issue facing the State legislature in Wisconsin. You jumped on the standard bandwagon, citing one thing, and didn’t even realize that the laws in Wisconsin already covered that point. Of course, that doesn’t support your outrage for the new governor.
Facts are readily ignored when the purpose is just to present an opposition position. You apparently have no interest whatsoever in the facts regarding this issue.