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home : news : county/state news July 27, 2015

11/29/2012 7:30:00 AM
State opens budget season in strongest shape since 2001

Richard Moore
Investigative Reporter


The state of Wisconsin is kicking off fiscal year 2013 with a starting balance of $342.1 million, the largest opening balance since 2001, the Department of Administration announced last week.

The department made the announcement as it submitted to Gov. Scott Walker state agency budget requests and revenue estimates for the next biennia.

"In the first time in a decade, Gov. Walker and this administration have set the standard that government will not spend more money than it has," DOA secretary Mike Huebsch said. "We will continue in our frugal management of taxpayer dollars so we're in the best position to help the state grow and create jobs for our hard-working families."

According to the DOA, the opening balance comes even after the state deposited $108.7 million into its rainy day fund in October. A total of $125 million has been deposited in two consecutive years, the first time since the fund was created in 2001.

Huebsch also said there is no structural deficit for the 2013-15 budget planning process, and no budget repair bill will be required to finish fiscal year 2012, the first time that's occurred in three budget cycles.

Wisconsin entered the last budget cycle with a structural deficit of $3.6 billion.

The specifics

For the coming biennium, the DOA reported, agency budget requests exceed expected revenues by $91.4 million in fiscal year 2013-14 and by $80 million in fiscal year 2014-15.

That's a gap of $171.4 million to make up, and Walker says that's his administration's top goal. But it is an imminently doable one, DOA officials say, because expected revenues and expenditures are largely equivalent without the use of one-time injections of revenue to maintain spending.

"In addition, fiscal year 2012-13 was the first fiscal year since fiscal year 2006-07 that Wisconsin has not needed to issue operating notes to maintain cash flow," the DOA stated. "Wisconsin has the sixth lowest amount of tax-supported and pension debt per capita of any state in the country."

For fiscal year 2012-13, the DOA stated, state tax revenues are estimated at $13.762 billion. That's $248 million, or 1.8 percent, higher than fiscal year 2011-12 actual revenues and $374 million higher than the revenue estimate made on May 10, 2012.

"State tax revenues are estimated to increase from this revised fiscal year 2012-13 base to $14.280 billion in fiscal year 2013-14, which is an increase of $518.2 million (3.8 percent) over fiscal year 2012-13," the DOA stated. "Revenues are estimated to increase to $14.783 billion in fiscal year 2014-15, an additional $502.3 million (3.5 percent) over fiscal year 2013-14. In total, revenue is estimated to increase $1.520 billion over the fiscal year 2012-13 base.

The revenue estimates are based on existing tax law and are the result of economic activity, not proposed general tax law changes, the agency emphasized, and they assume current federal law that would restore the federal estate tax credit for state estate taxes paid, reactivating the Wisconsin estate tax and resulting in state estate tax revenue collections of $219 million in the 2013-15 biennium.

Officials said two major risks could impede the estimate and derail the state's economic recovery: the so-called fiscal cliff and the Affordable Care Act.

"According to the Congressional Budget Office, [s]ubstantial changes to tax and spending policies are scheduled to take effect in January 2013, significantly reducing the federal budget deficit," the DOA stated. "According to the Congressional Budget Office's (CBO's) projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013.... [This] will cause...the [national] unemployment rate to rise to 9.1 percent in the fourth quarter of 2013...[and then] economic growth will pick up..."

DOA officials said the fiscal cliff compels a sequestration of funding streams that Wisconsin receives from the federal government, absent some other agreement.

"Medicaid and many other programs were exempted from the sequestration order," the DOA stated. "Initial reports indicate that Wisconsin has about $94 million at stake in fiscal year 2013-14 with the sequestration agreement. About one-half of this reduction would affect federal education transfers to Wisconsin and, therefore, would not be felt until next fall's school year and after passage of the 2015-17 Biennial Budget."

Officials said it was important to underscore the amount of uncertainty involved.

"For example, while Medicaid was exempted from the sequestration agreement, it is an entitlement that will face pressure as the parties negotiate a solution to the long-term predicament," the DOA stated. "Medicaid, in Wisconsin, is a $7 billion annual program that provides health care insurance for 20 percent of the state."

Officials at the MacIver Institute said the DOA budget report proves that Walker's policies are working.

"Almost two years after Gov. Walker's bold and long overdue budget reforms, Wisconsin's fiscal health continues to improve," said MacIver Institute president Brett Healy. "We've been saying it's working, and today state officials confirmed that is most certainly the case."

However, Senate Democratic leader Chris Larson (D-Milwaukee) urged lawmakers to be cautious about relying solely on fiscal numbers provided by an agency he said was filled with partisan appointees.

"There are still a lot of moving puzzle pieces that have to be put into place, including figuring out how to finance an anticipated spending increase by Gov. Walker and his administration," Larson said. "Instead, I would encourage fellow Democrats, Republican legislators, and Gov. Walker to wait patiently for the real budgetary numbers expected to be released by the nonpartisan Legislative Fiscal Bureau in January."

Richard Moore may be reached at richardmoore.gov@gmail.com





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