CHICAGO — Wisconsin Gov. Scott Walker’s long-stalled plan to restructure $165 million of debt to eliminate a shortfall in the current budget won legislative approval Tuesday and will go before the State Building Commission Wednesday as officials work to complete the deal before an April 14 deadline.
“We have been given a very short schedule,” said state capital finance director Frank Hoadley.
The proposal was among the less controversial measures unveiled by Walker earlier this year to deal with a current-year deficit. Democratic senators prevented a vote on the package when they fled the state in mid-February over opposition to a provision in the legislation that gutted the collective bargaining rights of most public unions.
Though the Republican governor enjoys a GOP majority in the Legislature, at least one Democratic senator was needed to establish a quorum. To break the stalemate, Republicans last month stripped the debt restructuring and other finance-related items from the bill, eliminating the need for the higher number of senators to establish a quorum.
Democratic senators returned to the Senate floor Tuesday for the first time since their exodus and three joined the Republicans in voting for the debt-restructuring bill, which passed in a 22-to-11 vote. The Assembly voted 58-36 to approve the legislation. .
Walker is expected to quickly sign the package, which is aimed at fully eliminating a $137 million deficit in the fiscal 2011 budget that runs through June 30 and covering a $176 million shortfall in Medicaid funding. Secretary of State Doug La Follette must then publish it within 10 days for it to become law.
Hoadley said the State Building Commission would meet Wednesday to approve the debt authorization.
The legislation grants authority for a restructuring deal to push $165 million of debt service on general obligation bonds that come due next month further out into the original bonds’ maturity schedule. The authority would boost to more than $225 million the amount of May debt service that could be restructured, as the state has existing authority to refund $61 million.
Hoadley said he hopes to enter the market this week, if all required authorizations fall into place. The state faces a tight deadline of April 14 to close on the restructuring and fund the May debt service payment under state rules. Citi is senior manager and Foley & Lardner LLP is bond counsel.
The state also is considering another option: issuing GO notes that mature later in the year to fund the May debt service payment.
“That option would give the state time to prepare a more orderly transaction to present to the market, but no decision has been made,” Hoadley said.
Fitch Ratings, Standard & Poor’s, and Moody’s Investors Service all rate Wisconsin’s $7.2 billion of GOs in the mid-double-A category.
