Wisconsin’s fiscal year budget shortfall is projected to be $151.3 million higher than estimates from late last year.
The state’s Fiscal Bureau has projected a budget shortfall of $283 million for the fiscal year, in contrast to the $132.1 million Gov. Scott Walker’s administration estimated in November.
Todd Berry, president of the Wisconsin Taxpayers Alliance, said it was not completely unexpected that the state deficit would bump up in this current fiscal year after the estimate came out in November. Berry said he can envisage possibilities for specific reasons behind the deficit, but cannot be sure about any particular reason.
“Since it is inherently difficult to put together the revenue forecast and calculate exact tax collections, the state tries to keep some ending balance as a cushion,” he said. “However, this year there was a very small cushion.”
Berry said other possibilities include the slow economy this year, as well as higher-than-expected tax credits from manufacturing and agricultural farms that began in 2011.
Constitutionally, the state cannot end a fiscal year with a deficit. When the Fiscal Bureau comes out with the revenue projection, Walker will be officially notified and he will submit proposals to solve this pending deficit with a budget repair bill.
Jon Peacock, research director of Wisconsin Council on Children and Families, said state policy makers made a mistake when they planned to use the state surplus early.
“In 2014, they anticipated a big surplus and committed to offer tax-cuts of $500 million. But it turned out that their revenue projection was overly optimistic and lawmakers did not create a contingency plan either,” Peacock said.
Peacock said in addition to approving the tax-cut bill, the government also suspended the state statute that required half of revenue growth to be put aside for a rainy day fund. Because they do not have that statute they do not have that rainy day fund, except for $250 million to use in dire emergency, he said.
Though this is a projected budget shortfall declared by the Fiscal Bureau, Wisconsin residents may have concerns that many gubernatorial agencies and universities might freeze on hiring faculty members, Peacock said. Staffs and the state economy might be slow for next few years, he said.
Laurel Patrick, spokesperson for Walker, said to the Wisconsin State Journal there are no plans to submit an emergency budget plan.
“Wisconsin will finish the biennium with a balanced budget,” Patrick said. “We have a proven track record of keeping the state’s fiscal house in order. We will empower agency heads to use all available tools to live within their means and continue their prudent management of agency resources.”
