The state of Wisconsin is billions of dollars in the hole, according to the findings of a recent report.
Last Monday, the National Governor’s Association and the National Association of State Budget Officers released a report finding states in their worst financial straits since World War II. The Fiscal Survey of States is released biannually and reports state budget estimates collectively.
In Wisconsin, governor-elect Jim Doyle will face a state budget deficit estimated to exceed $2.5 billion dollars for 2003 when he is inaugurated Jan. 6.
“The fiscal crisis is affecting states across the country,” said NGA executive director Raymond C. Scheppach.
Scheppach said the combination of deteriorating state tax systems, rising health-care costs, collapse of capital-gains tax revenues and slow economic growth have “battered almost every state budget to the point where there just are no easy choices left.”
The report found that in the fiscal year 2002, states employed a number of tactics to reduce budget gaps. States made across-the-board budget cuts, laid off state employees, reorganized state-run programs and used money from tobacco settlements to fix their budgets. The report also found that some states exempted programs such as K-12 and higher education from budget cuts.
Wisconsin was also forced to resort to similar measures to fill this year’s deficit. Legislatures sold off the state’s tobacco settlement for $1.3 billion to add to state funds, and the funding of public schools, which make up 44 percent of the state’s operating budget, was scrutinized. In the last state budget, Gov. Scott McCallum capped budget cuts to the University of Wisconsin System at 8 percent, but cuts to the System constituted a loss of $44 million.
Doyle and the newly elected, Republican-led State Senate have remained optimistic about balancing Wisconsin’s budget without tax increases or cuts in funding to state-run programs.
“As states fight to balance their budgets, the solutions available to them are increasingly dire, and some of the most difficult fiscal decisions have yet to be made,” the report concluded.
Twenty-six states were able to use rainy-day funds to repair parts of their budget. These funds are set up during times of budget surplus. The NGA report showed Wisconsin as one of six states with no money in a budget-stabilization fund, with some states as much as $2.9 billion in reserve funds.
