Posted by Dave C. Johnson on February 21, 2011

In a new revelation about Governor Walker's "Budget Repair" bill, the Center for Media and Democracy has learned that a provision of the measure allows the sale of "any state−owned heating, cooling, and power plant" and does this "with or without solicitation of bids."

Bag of moneyAnd just who could be a recipient of no-bid state sales of publicly-owned heating, cooling and power facilities? According to the Rachel Maddow Show and other outlets, that could be companies controlled by the brothers David and Charles Koch, owners of Koch Industries, and big financial supporters of Governor Scott Walker. The Koch brothers have also funded groups that are attempting to create a crisis atmosphere over the state's budget, leading up to the attempt to pass this bill that could result in the low-cost transfer of state assets to their company.

In addition to the Koch brothers being backers and big financial supporters of Governor Walker, they are also primary funders of the Tea Party via their general financial support for Americans for Prosperity, which David Koch Chairs. They are also financial supporters of a number of so-called "conservative" organizations, lobbying groups, think tanks and various other conservative organizations. Koch companies have at least 17 facilities in Wisconsin, and would benefit tremendously from expanding this portfolio.

The news of the provision in the governor's Budget Repair Bill broke this morning in a blog post by Rortybomb: The Less Discussed Part of Walker's Wisconsin Plan: No-Bid Energy Assets Firesales.

Have you heard about 16.896?

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).

The bill would allow for the selling of state-owned heating/cooling/power plants without bids and without concern for the legally-defined public interest.

Rortybomb concludes:

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."

Koch Industries has extensive interests in Wisconsin. Their website describes their Wisconsin investments:

Companies in Wisconsin

  • Flint Hills Resources, LLC, through its subsidiaries, is a leading refining and chemicals company. Its subsidiaries market products such as gasoline, diesel, jet fuel, ethanol, olefins, polymers and intermediate chemicals, as well as base oils and asphalt. A subsidiary distributes refined fuel through its strategically located pipelines and terminals in Junction City, Waupun, Madison and Milwaukee. Another subsidiary manufactures asphalt that is distributed to terminals in Green Bay and Stevens Point.
  • The C. Reiss Coal Company is a leading supplier of coal used to generate power. The company has locations in Green Bay, Manitowoc, Ashland and Sheboygan.
  • Koch Pipeline Company, L.P. operates a pipeline system that crosses Wisconsin, part of the nearly 4,000 miles of pipelines owned or operated by the company.
  • Georgia-Pacific companies have six facilities in the state that manufacture consumer tissue, towel and wiper products, corrugated packaging, and hardboard. In addition, the company has offices and a research center in the state. Georgia-Pacific LLC, based in Atlanta, and its subsidiaries have approximately 300 manufacturing facilities across North America, South America and Europe, ranging from large pulp, paper and tissue operations to gypsum plants, box plants and building products operations. companies have six facilities in the state that manufacture consumer tissue, towel and wiper products, corrugated packaging, and hardboard. In addition, the company has offices and a research center in the state. Georgia-Pacific LLC, based in Atlanta, and its subsidiaries have approximately 300 manufacturing facilities across North America, South America and Europe, ranging from large pulp, paper and tissue operations to gypsum plants, box plants and building products operations.

Koch and Governor Walker

From a recent CMD Special Report titled Scott Walker Runs on Koch Money:

David Koch, the son of a radical founding member of the John Birch Society, which has long been obsessed with claims about socialism and advocated the repeal of civil rights laws, personally donated $1 million to the Republican Governors Association (RGA) in June of last year. This was the most he had ever personally given to that group. ...

The RGA in turn spent $5 million in the race, mostly on TV ads attacking Walker's political opponent, Democratic Mayor Tom Barrett. As this photo shows, the RGA described itself as a "key investor" in Walker's victory.

...As Mother Jones has noted, the Koch Industries' political action committee, KochPAC, gave Walker's campaign $43,000 directly (according to the Wisconsin Government Accountability Board). ...

...David Koch was the founder and chairman of a front group called Citizens for a Sound Economy, which received at least $12 million from the Koch Family Foundations and which is the predecessor of the group Americans for Prosperity.

...Americans for Prosperity has actively supported and promoted Scott Walker in a variety of ways. It featured him at its tea party rally in Wisconsin in September 2009, when he was running for the Republican nomination for governor. Americans for Prosperity also ran millions of dollars in ads on a "spending crisis" ... It also funded a "spending revolt" tour in Wisconsin last fall through its state "chapter."

More on why Koch Industries would be interested in supporting Governor Walker comes from CMD's item titled, The Koch Connection in Scott Walker's War on Working People.

Walker has taken a total of more than $70,000 from gas and pipeline companies, and opposed a high speed rail project that would have reduced Wisconsin's dependence on oil. Koch Pipeline Company, L.P. operates a pipeline system that crosses Wisconsin, and the Koch's paper and wood products division, Georgia Pacific, has six facilities in Wisconsin. A Koch subsidiary, the C. Reiss Coal Company, has locations in Green Bay, Manitowoc, Ashland and Sheboygan. All of these business interests give the Kochs ample motive to try to influence Wisconsin politics.

Think Progress, in Koch Industries Slashed WI Jobs, Helped Elect Scott Walker, Now Orchestrating Pro-Walker Protest, expands on Governor Walker's Koch connections:

Koch Industries was one of the biggest contributors to Walker's gubernatorial campaign, funneling $43,000 over the course of last year. In return, Koch front groups are closely guiding the Walker agenda. The American Legislative Exchange Council, another Koch-funded group, advised Walker and the GOP legislature on its anti-labor legislation and its first corporate tax cuts.

Budget Crisis Engineered

There is evidence that the budget crisis in Wisconsin was engineered, with help from organizations backed by the Koch brothers.

Talking Points Memo, in Wisconsin Gov. Walker Ginned Up Budget Shortfall To Undercut Worker Rights, writes,

Unlike true austerity measures -- service rollbacks, furloughs, and other temporary measures that cause pain but save money -- rolling back worker's bargaining rights by itself saves almost nothing on its own. But Walker's doing it anyhow, to knock down a barrier and allow him to cut state employee benefits immediately.

Furthermore, this broadside comes less than a month after the state's fiscal bureau -- the Wisconsin equivalent of the Congressional Budget Office -- concluded that Wisconsin isn't even in need of austerity measures, and could conclude the fiscal year with a surplus. In fact, they say that the current budget shortfall is a direct result of tax cut policies Walker enacted in his first days in office.

"Walker was not forced into a budget repair bill by circumstances beyond his control," says Jack Norman, research director at the Institute for Wisconsin Future -- a public interest think tank. "He wanted a budget repair bill and forced it by pushing through tax cuts ... so he could rush through these other changes."

"The state of Wisconsin has not reached the point at which austerity measures are needed," Norman adds.

You can read the fiscal bureaus report here (pdf). It holds that "more than half" of the new shortfall comes from three of Walker's initiatives:

  • $25 million for an economic development fund for job creation, which still holds $73 million because of anemic job growth.
  • $48 million for private health savings accounts -- a perennial Republican favorite.
  • $67 million for a tax incentive plan that benefits employers, but at levels too low to spur hiring.

Madison's Cap Times agrees in an editorial: Walker gins up 'crisis' to reward cronies:

In its Jan. 31 memo to legislators on the condition of the state's budget, the Fiscal Bureau determined that the state will end the year with a balance of $121.4 million.

To the extent that there is an imbalance -- Walker claims there is a $137 million deficit -- it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January. If the Legislature were simply to rescind Walker's new spending schemes -- or delay their implementation until they are offset by fresh revenues -- the "crisis" would not exist.

The Fiscal Bureau memo -- which readers can access at http://legis.wisconsin.gov/lfb/Misc/2011_01_31Vos&Darling.pdf here] (pdf) -- makes it clear that Walker did not inherit a budget that required a repair bill.

There are many questions raised by the connections between Governor Walker and the Koch brothers and their company and this emergency "Budget Repair" bill. The likely handing of state assets to the Koch brothers at a low price raises even more.


Dave C. Johnson is a contributing writer to the Center for Media and Democracy, where he has focused primarily on Wall Street issues on our SourceWatch site, in conjunction with the Center's Real Economy Project, since 2009. Dave is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California, working on progressive messaging and a Fellow at the Commonwealth Institute, writing about the relationship between corporations and democracy. He is a frequent public speaker and talk-radio guest and a leading participant in the progressive blogging community, blogging at Seeing the Forest, Speak Out California, Open Left, Firedoglake and others. He does a regular weekly segment on the popular Fairness Doctrine radio show.

This article has been updated.

Comments

"Currently, this state owns and operates numerous heating, cooling, and power plants that were constructed by the state to provide heating, cooling, and power to state facilities.

The bill also allows DOA, at any time, to petition the PSC to regulate as a public utility any person who purchases or contracts for the operation of any plant under the bill. Under current law, the PSC has regulatory authority over public utilities, including the authority to set rates for utility service."

Its quite a jump from the wording above to a suspicion that this was inserted just to financially benefit the Koch brothers.