State distribution of federal funds requires accountability, transparency

On March 10, 2021, Badger Institute Public Affairs Associate David Fladeboe submitted written testimony in favor of 2021 AB 149 before the Wisconsin Assembly Committee on Constitution and Ethics.

Read David's testimony below.

Read more about 2021 AB 149 here.

Chairman Wichgers and Members of the Committee:

Thank you for the opportunity to submit our testimony in support of Assembly Bill 149 – indeed a record of our frustrations in trying to determine how billions of tax dollars are actually being spent in this state – to the Committee on Constitution and Ethics.

We think today in particular this committee is aptly named.

The issue before you is truly one of fidelity to the constitution and ethics – that is, the constitutional primacy of state governments to control their own destinies rather than act as mere rubber stamps and pass-throughs for federal money and policy.

In other words, the basic right of citizens to know how their government is spending their money, whether it is being done responsibly and ethically.

There can be no assurance of ethics without transparency. There can be no true federalism – no true governance at the state level – without legislative review of billions of dollars in spending.

Every two years in the state budget process, the Governor proposes, and the Legislature approves tens of billions of dollars in spending of federal dollars that come to Wisconsin. In the 2019-21 budget, a total of $23 billion from Washington was directed by this process. These procedures ensure transparency and approval of dozens of elected officials who are held accountable by the voters. This system works well regardless of who occupies the governorship or which party controls the Legislature.

In sharp contrast, the federal money coming in response to the COVID-19 crisis is directed by a single elected official, largely out of view of the public and with no accountability.

For months, Gov. Evers’ staff issued press releases to announce each new funding distribution initiative, and the legacy media turned their stenography into stories in newspapers and on television. This is no way to maintain a robust account of how billions of our tax dollars are being spent.

Where, exactly, did the Cares Act money go and to whom and how did those receiving it spend it? Unfortunately, the average citizen or even a fully staffed think tank such as our own cannot fully answer these questions.

Our investigators resorted to requests made under the Wisconsin Open Records Law. We can tell you, for example, that Gov. Evers signed off on 1,164 grants totaling $190 million to city and county governments. We can tell you to the penny who got what. But without making a second round of records requests of each and one of those local governments, the public has no idea on what Dane County spent its 53 separate grants or what Milwaukee County bought with its $11.7 million.

Under this unilateral arrangement, the job of informing the public can not be done in any timely way. The Badger Institute began asking for spending breakdowns in the late Spring of 2020 and was told the information simply wasn’t available. It took until November 11, 2020, for the state to comply with our request for a breakdown of cultural organization grants, representing just $15 million of the $2 billion handed out.

And when Gov. Evers used his discretionary authority to increase supplemental childcare spending from $30 million to $80 million last summer, we filed a records request. After a month, we asked about the status of the request. We are still waiting for a response.

This is no way of conducting an open and honest government. AB 149 makes a small first step in ensuring that a plan would be submitted to the Legislature for approval and, if any objections arose, questions could be asked and plans adjusted. We wish more could be done to ensure timely information is delivered to the public in an open manner, but this bill would ensure that more elected officials are able to weigh in and make decisions on the front end.

According to Governor Evers’ spokesman, Britt Cudaback, he intends to veto Assembly Bill 149:

"Wisconsinites can’t afford to wait around for the Legislature, and that’s why the governor will continue working to save lives, put shots in arms, and get resources and relief out as fast as he can, just as he has since the beginning of this pandemic.”

This is quite a statement. It’s hard to imagine that the governor would not have time for the state’s duly elected representatives to consider in a deliberative fashion the dissemination of billions of dollars in federal funds. The 14-day passive review process with the Joint Finance Committee in this bill should not be a hurdle too high when it comes to spending billions in taxpayer dollars. Especially when, as of December 15, Gov. Evers had yet to distribute $635.9 million or nearly a third of the original Cares Act sum.

Nearly $2 billion came to the state under the CARES Act and another $3.2 billion will be headed our way in the latest round of funding. Thousands of Wisconsinites have been hurt by the lockdowns and government restrictions. It’s paramount that this money goes to those who need it most. With all the questions that still exist nearly a year after the first round of funding, a thoughtful, coherent plan to get this money distributed needs to be established in the full light of day with the involvement of the public.

From his own press releases it is clear that far from hustling relief into a disabled economy, the governor, as late as December, was struggling to find places to spend the federal monies. As late as October, the governor was soliciting bids for grants from hospitals, health and emergency care groups.

Our research has found that federal money directed to the states can increase costs, expand the administrative bureaucracy, undermine state and local control, create perverse incentives and stifle innovation, among other things. The Founders’ vision of a balance between national and state power is eroded by growing federal involvement in state issues. Outside of this discussion, we would encourage you as legislators to consider alternatives to federal funds that often leave Wisconsinites worse off.

But for now, the primary issue is accountability. As the U.S. House of Representatives is voting to approve the latest round of stimulus spending, the Wisconsin Legislature needs to act quickly to adjust how we will handle the next round of federal funding. If the Governor and his team are honest about wanting an open and fair administration, he will work in a collaborative manner with the Legislature and approve Assembly 149.

Thank you for your consideration.