Since we saw April's tax revenues fall well short of expectations following two rounds of Koo-Koo tax cuts, it made today's release of the May revenues from the Department of Revenue quite important. And I had an idea that the numbers would be weak because the DOR refused to release the numbers until late this Friday afternoon, to try to bury the numbers. Then I saw the figures, and I understood why.
May 2014 vs May 2013 Wisconsin tax revenues
Income taxes -5.5%
Sales taxes +0.2%
Corporate taxes -20.2% (!)
Excise taxes -0.6%
Other taxes +1.4%
TOTAL CHANGE, MAY 2014 VS. MAY 2013 -2.5%
The picture looks even worse when you look at how tax revenues have gone since the start of calendar year 2014, which is when most of these tax cuts were being given back to Wisconsinites. And those tax cuts have not trickled down into more sales, as the sales tax increase has slowed down drastically compared to the 5.8% year-over-year jump it had in the last 6 months of 2013.
Jan-May 2014 vs Jan-May 2013 Wisconsin tax revenues
Income tax -11.7%
Sales taxes +2.4%
Corporate taxes -22.0% (!)
Excise taxes +0.7%
June is the final month of the fiscal year, and there are a lot of extra revenues bunched into that month as there are year-end collections that get charged back over the next couple of months. And I'll be charitable and assume that the last month of fiscal 2014 will have the same amount of Income Tax and Corporate Tax revenues as there was at the end of 2013(even though they have fallen short so far). I'll also assume we'll have the same 2.4% increase in sales taxes that we have had so far in calendar 2014, and that excise and other taxes stay on track to meet the LFB revenue projections (Excise and Other Taxes are on track as it stands today).
Wisconsin revenue shortfall using "rosy" assumptions
Income taxes $33.6 million
Sales taxes $24.1 million
Corporate taxes $115.6 million
TOTAL SHORTFALL $173.3 million
And this is the good-case scenario. If we assume June 2014 also has a 5% decrease in income taxes, that's another $59.6 million added to the shortfall, and a 20% decrease in corporate taxes would put the state another $33.5 million in the hole. If that scenario happens, the revenue shortfall balloons to $266.1 million.
So add this shortfall to the $642 million projected General Fund deficit in the 2015-17 budget (noted on Page 5), then double it (since each year starts off lower). You're now looking at a structural deficit near $1 billion and perhaps higher if the "rosy assumption" doesn't hold up. It also means we could be facing a deficit by this time next year if the shortfall continues (we had $100 million in cushion before the revenue shortfall happened), which would require action to clean up the problem.
And I'm not even including the extra costs from Walker's stupid refusal to take the federal Obamacare money to expand Medicaid or the extraordinary expenses caused by the polar vortex winter. We'll know more about those in the coming weeks and months, and if the revenue shortfall continues, it could paint a dire budget picture in Wisconsin- one that's very different than the one Scott Walker and WisGOP were planning to spin for the November elections.