Like Bush Walker inherited a surplus and within days gave it away in tax cuts , and now he wants to use it as an excuse to break unions.
http://www.examiner.com/political-buzz-in-...it?render=printBy Paul Neuberger, Madison Political Buzz Examiner
November 24th, 2010 10:13 am CT
Wisconsin Gov.-elect Scott Walker was the recipient of the unwelcome news that he will be inheriting a projected budget deficit as high as $3.3 billion over the next two years. Last week, the Wisconsin Department of Administration (DOA) published a report announcing there would be a $1.5 billion gap between state revenue and state spending through June 30, 2013. It appears that the news is much grimmer than that, however.
Nearly $1.8 billion in extra costsAs published on JSOnline, John Hiller, Walker transition director, said, “the revenue projections released Friday underscore what Governor-elect Walker has said for months – the state of Wisconsin is facing very serious budget challenges. Further, we believe that the true budget shortfall is much higher than indicated by the projections released [last week].”
The report by the DOA, according to Walker officials, does not take several costly measures into consideration which would drastically raise that number. For starters, according to the non-partisan Legislative Fiscal Bureau, Wisconsin faces a deficit of nearly $100 million in the current state budget, which ends on June 30, 2011.
Due to rising costs within a variety of state agencies, in particularly Medicare (projected $148 million overage), the Public Defender’s Office (projected $9 million overage), and the state prison system, which also might finish the year in the red, Walker officials maintain it will be nearly impossible to avoid this deficit.
These predictions by the Walker team are in stark contrast to the report by the DOA, especially in regards to the current budget that ends June 30. According to this report, not only will there not be a $100 million deficit, there will actually be a surplus of $10 million. This razor thin profit would be out of an overall budget of $13.54 billion (.074%) and would only be enough to run state programs for about 6.5 hours.
However, a surplus of any size surely is better than a deficit, state officials maintain. As published on JSOnline, State Administration Secretary Dan Schooff said, “It seems like people would like there to be a budget emergency, but there’s not.”
According to Walker officials, the $1.5 billion does not take into consideration the projected shortfall of $100 million in the current budget, the shortfall of the aforementioned agencies, nor does it account for the $200 million that the state has been ordered to pay back to the Patients Compensation Fund after an illegal raid in 2007 authorized by Gov. Jim Doyle to help balance the state’s budget.
Additionally, tax revenues for the current budget year are expected to fall short of projections. Overall income from this revenue source is expected to fall about $140 million shy of the 5.4% growth that was expected in this sector, serving to further exacerbate the issue.
Lastly, the projected budget deficit makes nearly $1.1 billion in cost-saving assumptions by the Doyle administration over the next two years, namely state employee furloughs, no pay raises, and a virtual hiring freeze, something that is not guaranteed with a new governor being sworn in on Jan. 3.
When one considers the costs not factored in plus the cost saving assumptions made in the development of the budget, Wisconsin is staring a $3.3 billion deficit for the 2011-2013 budget in the face, placing the state in the upper tier of budget deficits across the country.
To put this projected deficit into perspective, it would be a whopping 11% of the overall $29.23 billion state budget for 2011-2013 and would be enough to run both the University of Wisconsin system and the Wisconsin Technical College system for two years with money left to spare.
Praise for Jim Doyle's administration from DOA
Despite the looming budget deficit, Schooffs maintains that the shortfall had been even larger just a few short years ago heading into the 2009-2011 budget, and through the assistance of the federal government, the state was able to proactively address this issue and save Wisconsin money. The DOA in their report to Doyle and state legislators seem to validate this claim.
As published in the Biz Times, the report reads, “Economists have reported that the economic recovery, which began earlier this year, is expected to remain tempered for the next several months, with the global and national economies having limited capacity to weather any further financial crises. However, there are several positive signs for future economic growth, including strong corporate balance sheets and improvement in consumer debt levels and disposable income. Despite the worst economic crisis since the Great Depression, under the leadership of Governor Jim Doyle, Wisconsin was able to keep its budget balanced.”
Ability to create jobs?
Walker, who campaigned heavily on Wisconsin’s need to cut spending and lower taxes (please see video), now finds himself in an unfavorable environment in which to fulfill his biggest campaign pledge: to create 250,000 new Wisconsin jobs. Walker opponents argue that, facing such a drastic budget deficit and with state tax revenue projected to be roughly $140 million short, cutting taxes further will simply exasperate the issue.
As published in the Green Bay Press-Gazette, John Witte, professor of public affairs and political science at UW-Madison, said, “You can argue ‘I’m going to cut taxes and that’s a good thing’, but to link it to a specific job number, that’s going to be very hard. I don’t see how he can cut taxes unless he’s going to give up on fiscal responsibility.”