Tomorrow is a huge day for news in the governor's race. Yes, there's the Marquette Law Poll, and we'll see if Charles Franklin actually gets poll respondents that are something old other than old white right-wingers, which will allow Mary Burke to "catch up." But I'm going to be paying more attention to the state's Annual Fiscal Report (AFR), which also drops tomorrow and will show just where we stood at the end of the fiscal year in 2014.
To quickly review, we already know that Wisconsin will come up $281 million short on tax revenues for Fiscal Year 2013-14. But the AFR will also show all expenses for that fiscal year, as well as other revenues that won't be included in the tax revenue number. The One Wisconsin Now whiteboard gives a good rundown of where these numbers fit.
As you can see, even if all other numbers in the AFR are the same for FY 2014, we have some room to make up between now and June 30, 2015 just to keep the books balanced for this budget, let alone the billions of dollars in deficits looming for the next one.
On that subject, we got a hint of where we stand for the 2015 Fiscal Year with the release of the first three months of revenue numbers this afternoon. The fact that it was released a few days ahead of its usual schedule, and ahead of the AFR, should not go unnoticed- it smacks of a pre-emptive move by the Walker Administration to blunt what may be bad news tomorrow.
Also interesting is that the Walker Administration released a supplemental report that implied that revenues were running ahead of the $14.725 billion that were projected in the 2014-15 budget after tax cuts were put in place in May 2014. Call me a bit skeptical on this one. In addition to there being a very small amount of revenues in the first 3 months of the fiscal year vs. the other 9, claiming a $55 million surplus for three months behind a relatively arbitrary projection isn't really something that's reassuring for where this is going on the year-round numbers.
By the way, those late Summer 2014 revenue numbers don't measure up to the tax revenues from July 2013-Sept. 2013. The DOR revenue report shows total revenues were DOWN 2.3% against the same 3 months last year ($65.4 million). So why isn't that the headline, as it sounds like another revenue shortfall? Because for the rest of 2014, income tax collections can be expected to drop $55 million a month due to the changes in withholding (Item 14 on this list), which were designed to buy off Wisconsinites into voting for Walker. Wait, you didn't notice the $10 or $15 extra a month you've allegedly been getting? (Don't spend it all either, you'll be getting lower tax refunds as a result next Winter)
So I'll add $165 million into the totals ($55 million a month), and it makes tax revenues go up by just under $100 million compared to the same time period in 2013- about 3.57%. And what did the LFB project as our increase in tax revenues for 2015 after the tax cuts? 3.49% - pretty much in line.
So what's it mean? It means this revenue report hasn't changed a thing in terms of where our budget is. The lower tax base from 2014's shortfall means we're on track to fall short by about $281 million again in 2014-15, which mwould cause us to be looking at a projected deficit of $396 million....for now. But that number will be sure to change tomorrow with the AFR report, because we'll have the expenses and every other number to fit in to see where we ended FY 2014 with. Given the higher-than-expected increases in Medicaid enrollment and likely lower amounts of Indian gaming revenues, don't be surprised if that number to make up grows higher, along with the budget deficits for 2015-17.
Isn't it nice to have this news just in time for Friday's final debate? No wonder Scott Walker is throwing around goofy ideas like a "gas sales tax" and making Palin-like word salads on the subject of Medicaid expansion. I encourage you to read the AFR's numbers for yourself (well, as much as you can without going goofy) and ignore the spin, because you can bet there will be a lot of that from the right tomorrow.