Wisconsin Gov. Scott Walker to Testify at Hearing on State and Municipal Debt

Hearing will examine the severity of debt obligations and need for spending cuts

WASHINGTON. D.C. – Rep. Darrell Issa (R-CA), Chairman of the House Committee on Oversight and Government Reform, today announced that Wisconsin Governor Scott Walker will testify at the committee’s April 14, 2011, hearing “State and Municipal Debt: Tough Choices Ahead”  to be held at 9:30 a.m. in room 2154 of the Rayburn House Office Building.

“Spending at the local, state, and federal level is raising unmanageable debts and sinking our future.  U.S. states and municipalities are starting to look increasingly like Greece, Spain, and Portugal,” said Chairman Issa.  “Rather than kick the can down the road in Wisconsin, Governor Walker’s actions to cut spending and address over-compensation of public employees are putting his state government in a stronger financial position.  The credit rating agency Moody’s recently announced that these reforms will have a positive impact on Wisconsin’s credit rating.  The Committee looks forward to hearing from Governor Walker about the challenge ahead and the tough choices leaders at all levels of government must make to get control of our debt and spending problems.”

Since 1990, state and local government spending has increased 70 percent faster than inflation.  The hearing will examine the causes and severity of fiscal problems this spending has created for states and municipalities with a particular focus on the liabilities of public employee pension programs.  Also taken into consideration will be the fiscal pressures faced by the federal government and the lessons that can be learned from Europe’s challenges with excessive sovereign debt.  This hearing builds upon those held by the Committee’s Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs on February 9, 2011, and March 15, 2011.

Academic studies estimate the unfunded liabilities of state pension plans total as high as $3.2 trillion; those for municipal pension plans are estimated to total up to an additional $383 billion.

States and municipalities currently face the following fiscal challenges:

• Outstanding municipal bonds: $3 trillion
• Unfunded pension liabilities faced by states and municipalities: $3.6 trillion
• State budget shortfalls for FY2012: $112 billion

This hearing will examine the severity of, and threats posed, by the looming state budget crisis and evaluate the consequences of possible federal government actions. Confirmed Witnesses:

• Governor Scott Walker
  Wisconsin

• Dr. Andrew Biggs
  Resident Scholar, The American Enterprise Institute for Public Policy Research

• Mr. Mark Mix
  President, National Right to Work Legal Defense Foundation

• Dr. Robert Novy-Marx
  Professor of Finance, University of Rochester Simon Graduate School of Business

• Dr. Desmond Lachman
  Resident Scholar, The American Enterprise Institute for Public Policy Research

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