Wisconsin ended its fiscal year last June with a $2.7 billion budget deficit and is projected to have a $2.2 billion budget deficit for the next two-year cycle, according to two recently released financial reports.
The Department of Administration’s Comprehensive Annual Financial Report shows Wisconsin’s budget deficit for the 2008-09 fiscal year at $2.7 billion, an 8 percent increase over the previous year’s $2.5 billion deficit.
Dale Knapp, research director for the Wisconsin Taxpayer’s Alliance, said the budget deficit is a serious issue that government officials are not always completely honest about.
“If you look at the way Wisconsin does budgeting, we keep saying that year after year the budget is balanced, yet when the official accounting statements come out, we’ve had these gap deficits since at least 1990, and they’ve been growing,” Knapp said. “There’s a lot of coverage of the budget being balanced when it’s actually balanced with a lot of tricks.”
Knapp said one of the ways the government covers up the deficit is by making commitments to fund programs in one fiscal year, but then not paying for it until the next year. By pushing the payment to future years, the cost doesn’t show up in the current fiscal year.
According to University of Wisconsin professor of public affairs and applied economics Andrew Reschovsky, this moving and pushing around of funds is not particular to Wisconsin.
“All states do that, that’s not unique to Wisconsin,” Reschovsky said. “These are widespread phenomena. I think it’s important not to see Wisconsin as so out of line.”
Reschovsky said Wisconsin’s budget deficit is an overall reflection of the national recession as well as specific state policies.
Since the early 1990s, Wisconsin has made a commitment to increase funding for a variety of programs like schools and prisons without raising taxes, Reschovsky said. This has put the underlying fiscal system fundamentally out of balance.
“Ultimately, we as a state… have to decide what’s important for us,” Reschovsky said. “Those are hard decisions, but in the end you have to bring in line spending programs we want with revenue needed to fund spending programs.”
In 2008, Doyle announced that Wisconsin was projected to have a $3 billion deficit for the 2009-2011 operating budget.
In addition to the CAFR report, the Wisconsin Policy Research Institute released a report earlier this month that projects the budget deficit for 2011-13 at $2.2 billion.
WPRI President George Lightbourn said the report looked at what a reasonable revenue growth expectation would be and compared it to the average projected spending increases in four different categories. If everything else in the state government funds was held at zero, the mismatch from those two assumptions is $2.2 billion.
“Realistically you can’t depend on revenue growth to close the gap. What we have is not just a gap related to the recession, it’s a structural problem and a mismatch between spending and revenue,” Lightbourn said. “Spending has to be brought down so that the budget moving forward is sustainable.”