In September, the nonpartisan Legislative Fiscal Bureau published a memo saying Wisconsin faced a $1.8 billion deficit for the upcoming biennial budget. At the time, Gov. Scott Walker and the Republicans said this was no problem since revenues would grow and cover the gap. Walker went so far as to say that not only did the deficit not exist, but that we would enter the next biennium with a half-billion surplus with even modest revenue growth.
We’re getting revenue growth, just not enough. The Department of Administration report released Nov. 20 revealed that we’ll have $1.4 billion in new revenue, which, while solid, does not keep pace with expenditures. Combining spending requests for school aid, the University of Wisconsin System, the new transportation and various other needs, we face a $2.2 billion deficit. Contrary to the DOA report, “our state budget’s foundation” is most definitely not secure. We will be eight years removed from the last recession and due for another when the disastrous effects of Walker’s inane budgeting will manifest, leaving Wisconsin with nothing to absorb the shock of potential revenue shortfalls.
Walker and his legislative counterparts were quick to say that this isn’t a “real” number because it shows the effects of the “wish lists” of state agencies. While taking the time to single out education initiatives that won’t be funded — the Department of Public Instruction requested $695 million to catch up their programs from previous cuts and the University of Wisconsin System requested almost $100 million for similar reasons — Walker and company still have a $1.4 billion deficit to deal with. Also, denying the whole DPI request, combined with a continued property tax freeze, K-12 schools would get absolutely no new money over the next two years. Apparently education in Wisconsin is good enough?
Some experts say tax decreases cause for gap in 2015-2017 state budget
But wait there’s more!
The other two large expenditures are the transportation fund and Medicaid. The Department of Health Services, which oversees Medicaid, is asking for about $800 million in new money over the next two years to maintain, not expand, current service levels. So Walker and his merry band will require Medicaid recipients to face significant service reductions in order to come in under Walker’s fairytale budget. The Department of Transportation has asked for a minimum of $270 million, presumably to help bail out the new transportation fund. While the DOT could scale back new initiatives to reduce this, if tax increases are off the table, Walker needs to figure out some way of balancing the transportation fund, which faces its own massive deficits separate from the biennial budget.
That’s just the big requests. There’s more in the report but it’s all comparatively insignificant next to the big few, and even these smaller pieces just maintain current services without expanding anything.
Without big reductions in current services, this budget will be out of balance even with new revenue growth. This goes back to the horrible mismanagement of this current fiscal year.
Looking at the DOA report, we can see that we entered FY15 with a balance of $517 million. We’ll end the year with a deficit of about $132 million — a swing of roughly $650 million. This means we’re spending $650 million more than what we are taking in this year. If these were one-time costs, they could be glossed over, but everything is ongoing funding, meaning that basically all revenue growth in the first year of the next biennium will have to go toward just scraping back to the break-even point without accounting for any new costs. If you’re looking for something to blame, the $500 million annual ongoing tax cuts passed earlier this year on top of the $300 million annual tax cuts in the biennial budget would be good places to start.
To compound this circus of budgeting malpractice, Walker and friends are talking about more tax cuts on top of this mess. While a central promise in the campaign, Walker also promised we would be starting the next biennium in good condition so it’s hard to take the guy seriously on the budget, especially when in DOA’s own report they need to wave a magic hand to say that the current year deficit will be resolved without making any claims as to how to do it.
This is just the surface, but this report shows a return to the dark times of the Doyle years where every budget began significantly in the hole and we struggled to crawl out of it. There has been no improvement in budget management practices despite parties swapping out. Disturbingly, this means we will likely see a budget that leaves no meaningful reserves.
Walker campaigned on being serious about managing the state’s finances but he has allowed politics to trump fiscal sense every time, again forcing Wisconsin to take on a gamble it cannot win.
Adam Johnson ([email protected]) is a Master’s candidate at the La Follette School of Public Affairs.
