Projections for Wisconsin’s gross general fund balance have dropped nearly $220 million below the budgeted projection, according to a report released late last week by the Legislative Fiscal Bureau.
In an annual January report, the LFB estimated the closing gross balance to be $55.7 million, which is not enough of a difference to necessitate a legislative budget repair bill.
Principal reasons for the reduction include the loss of the tax reciprocity agreement between Minnesota and Wisconsin, a decrease in sales and cigarette and tax collections, and a decline in revenue collected from insurance companies, LFB Director Bob Lang said.
“We have probably twice as many people — if not more — who live in Wisconsin and work in Minnesota than the other way around, so when the agreement was terminated we’ve got a one-time revenue loss… and we’re going to lose in this biennium about $92 million because of that termination,” Lang said.
In regard to Gov. Jim Doyle talking about more spending cuts in his state of the state address, Lang said he thinks Doyle was referring to cuts which were already planned in the formation of last year’s state budget.
He added this new projection means the balance is a lot narrower and the Legislature will have to carefully monitor the costs of bills going through it.
John Anderson, spokesperson for Joint Finance Committee Co-Chair Sen. Mark Miller, D-Monona, said Miller is encouraged by the findings of the report, considering the condition of the national economy and other states like California and Arizona.
“The Legislature made some significant decisions in the state budget, and now we feel we are positioned well,” Anderson said. “We are not out of the woods yet, but we are on the road to recovery.”
He added there are other indicators of a recovering economy, including increased orders of cardboard boxes for companies.
Andrew Reschovsky, professor of public affairs and applied economics at the University of Wisconsin, said he also saw the report as good news.
“The implications for revenue are extremely difficult to foresee, and you hope your projections are right,” Reschovsky said. “In a budget of [tax revenue] alone over $12 million, being a couple hundred million dollars off strikes me as pretty good news.”
Reschovsky added he thinks the state and country could be on track to recovery, but added the process will be slow.
However, Rep. Robin Vos, R-Racine, said in a statement released late last week he does not think the state is poised for a rebound.
“Gov. Doyle said… another round of cuts is necessary to ensure that the budget stays balanced. That is the only thing on which the governor and I agree,” Vos said in the statement.
He said the tax burdens and expensive government programs put forth by Doyle and the Democrats are hurting citizens and will only make the economic condition of the state worse.
