I was struck by an interesting quote from Walker DWD Secretary Reggie Newson in the most recent excuse-filled monthly jobs release, where he mentions "higher state sales and withholding tax collections" as proof of some kind of growth in Wisconsin, regardless of what the 6 months of job losses are telling us.
Coincidentally, the Department of Revenue released their December tax collections late Friday afternoon, and it does seem like tax collections have held up for the first half of the 2011-2012 fiscal year. So far, individual income taxes are indeed up 5.5% for the year, and sales taxes are up 3.7%. This puts income taxes above the 2.5% increase figured in the 2011-2012 budget, and sales taxes are in the neighborhood of the 3.91% rise for this year. So at first glance, it seems that perhaps that $500 million budget deficit I predicted due to low revenues might not show up, as revenues have stayed strong.
But, as usual with this Administration, things aren't a good as they appear at first glance. To start, Newson crediting Walker policies for the strong income tax growth is very misleading, because as usual, we need to look at national figures to get the full story. Daniel Gross at Yahoo Finance tipped me off to the fact that U.S. tax revenues are on the upswing, and are on track to reduce the deficit, perhaps down below $1 trillion (it's still not enough, but it's a start). So I went to the U.S. Monthly Treasury Statement, and took a look at what federal taxes have done for the last 6 months, to get a nationwide perspective. Once I crunched the numbers for Federal Income and Corporate taxes, Wisconsin's increase didn't seem so impressive.
Change in Tax Revenues July-Dec. 2010 vs. July-Dec. 2011
Individual income tax U.S. +10.08%, Wis. +5.55%
Corporate tax U.S. +7.44%, Wis. +3.98%
As you can see, the U.S. tax collections for individuals and corporations are growing twice as fast as Wisconsin's, so if you're going to credit anyone for the good revenue figures, CREDIT OBAMA. This is especially true when you realize Wisconsin individual income tax rates were not really changed at all by Walker and the WisGOPs (corporates got the breaks, not people), so it's quite funny to see that an Administration that seems to want to take on the White House at every turn is relying on them for keeping their "balanced" budget somewhat solvent.
And by the way, Walker and the WisGOPs have a long way to go if they want to stay on track for 2012. While the numbers look good when you compare July-December 2010 and 2011, you need to remember that January-June 2011 were huge months for Wisconsin revenues under the Doyle/Dem budget (you may recall the surprise "surplus" that showed up in May, proving we were never "broke" and didn't have a massive budget deficit).
Wisconsin fiscal year 2011 1st 6 months vs. last 6
Individual income - $3.147 Billion 1st 6, $3.534 Billion last 6 (+12.3%)
Sales Taxes -$1.736 Billion 1st 6, $2.373 Billion last 6 (+36.7%)
Corporate Taxes - $363.97 Million 1st 6, $489.10 Million last 6 (+34.4%)
Excise Taxes - $319.02 Million 1st 6, $401.83 last 6(+26.0%).
(Quick sidelight, excise taxes are the one thing that is down vs. 2010 - almost 1% the last 6 months. Start drinking and smoking, fellow Cheeseheads!)
So we have a lot of catch-up that needs to hit in order to reach those year-long goals over the next 6 months, and we need income tax growth of a god 6-7% vs. the last 6 months of 2011 just to reach the budgeted amounts of $6.868 Billion. Given that 3.5%-inflation indexed brackets automatically reduce taxes collected on flat paychecks for 2012 (hey, there's your Walker tax cut!), this seems like a very tough number to reach. Sales taxes require even more of a push, at 37.28%. And given the amount of post-Holiday sales items that keep getting emailed to me (and the Packers collapse against the Giants), good luck with coming anywhere close to that.
Let's keep an eye on these revenue numbers, especially when the LFB releases its new budget figures in the next 10 days. These projections could play a major role in denying the last big claim the Walker folks are clinging to - that they "balanced the budget."
(Oh wait, the Walker folks admitted to the Feds they haven't balanced the budget either.)