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In this Edition

All about the Public Finance Authority

Two years ago, Rep. Allen voted against the state budget. At the heart of his rationale was a little-known government agency which sought to expand its powers cloaked in the anonymity of the state budget.  In an obscure budget motion, the PFA requested the power of eminent domain.  Those provisions were vetoed by Gov. Walker.  Now, that agency is getting more scrutiny at a national and local level.  Here is an in-depth look at a major issue Rep. Allen has been focused on since 2017.

Legislative Reference Bureau: Non-partisan researchers release report on Wisconsin's Public Finance Authority (PFA).

Wall Street Journal: Popular in Wisconsin: Cheese, the Packers, and...Risky Bonds

Mark Belling asks: Why is a Wisconsin government agency approving municipal junk bonds for other states?

Rep. Allen: Bill shining a light on the PFA submitted to Chief Clerk; details... 

Non-partisan researchers release report on PFA

Last month, the Legislative Reference Bureau released a report entitled, "Wisconsin's Public Finance Authority." This report, which you can read here,  delves into the background of the PFA and answers some of the following questions:

  • What is it?
  • How did this conduit bonding authority come into existence?
  • What is a conduit bond?
  • Is the State of Wisconsin liable for the debt it issues?

The Wall Street Journal 

In early October, the Wall Street Journal published an article* discussing PFA, and its increasingly risky business.

Some of the PFA's risky debt is starting to sour-which is not uncommon to the marketplace.  However, the PFA produced nearly 10 percent of the impaired bonds in the municipal market in the last year. This, despite only making up a tiny fraction of the overall municipal bond market.

Since 2010, the PFA's yearly average of these bad debt warnings is 65% higher than the average of the ten highest risk issuers.  The WSJ report spurred several legislators, including Rep. Allen, to author a letter to the Joint Audit Committee requesting a thorough audit of the PFA's actions.  You can read that letter here.

*The article is behind a paywall.

Mark Belling: why is a Wisconsin government agency approving municipal junk bonds for other states? 

Mark Belling asked the million-dollar question (and probably the multi-million-dollar question):  why would Wisconsin get involved with creating a conduit bonding authority like the PFA?  

Mark writes about the Madison swamp in his exclusive opinion piece, which you can read by clicking on this link.  

In this recent podcast, beginning at 98 minutes and 30 seconds, Mark lays out the PFA, discusses the Madison swamp, and asks important questions, some of which Rep. Allen has been asking for years. 

 Rep. Allen acts on Public Finance Authority 

Although the PFA is a government entity, formed by virtue of state statute and subject to legislative oversight, the Legislative Audit Bureau has never audited its books. Nor does the PFA seem to provide any tangible benefit to Wisconsin taxpayers.  It is time for that to change.

Today, Rep. Allen submitted LRB-0561 to the Chief Clerk, legislation he hopes will be taken up this term.  The bill establishes an origination fee of 1% for all debt issued by the PFA, which would go to funding a property tax cut.  It also requires fiscal and performance audits of the organization every two years.  Those audits will ensure that laws are being followed and that Wisconsin property owners receive a benefit.