The first tries to answer the question of "how much are we in the hole in Wisconsin? Here's what One Wisconsin Now put up on their whiteboard when the revenue numbers dumped on Thursday.
The Wisconsin State Journal story claimed the deficit was really $115 million, and even really smart dudes like UW Professor Menzie Chinn quoted the "$115 million deficit" figure. I replied in that Econbrowser article of Prof. Chinn's that I believe the real deficit for the 2015 fiscal year should be figured at $472 million based on the revenue shortfall, and here's my explanation for that (follow along with One Wisconsin Now's whiteboard if it helps you with the numbers).
When the LFB made their updated revenue projections in May 2014, after the latest round of Walker/WisGOP tax cuts was put in place, they figured we would end the 2014 fiscal year on June 30 with $14,229 million in tax revenues. Then they figured tax revenues would grow by 3.5% in FY 2015, based on the economy, inflation, and numerous other factors. Well, we haven't changed any laws that would change the rate of revenue growth in Wisconsin since then, so wouldn't it be logical to still assume a 3.5% increase in tax revenue, all other things being equal?
So we now know actual tax revenues came in at $13,948 ($281 million below what was predicted), and that would make the ending cash balance for FY 2014 at +$443 million, not the $724 that was originally projected.
A 3.5% increase from $13,948 = $14,436 in tax revenues FY 2015.
The old LFB prediction was 14,725 million for FY 2015
$14,725 - $14,436 = $291 million shortfall in FY 2015
If you plug that into the OWN whiteboard, it drops the total available for FY15 from $15,727 to $15,436.
$15,436 avail. - $15,843 appropriations = $407 million deficit
$407 million + $65 million in reserve = $472 million to be made up by June 30.
This is how one revenue miss compounds into further revenue misses, because you're starting from a lower number. This is also an explanation as to why I predicted this would balloon the 2015-17 structural deficit past $1.3 billion, if you plug the new revenue figures into other LFB calculations.
By the way, one other interesting note to bring up, courtesy of frequent blog commentator GeoffT. The two states run by Dems that border Wisconsin actually had revenue surpluses for the recently-completed fiscal year.
Minnesota was $168 million to the upside compared to its February projections, and $235 million better than what they predicted in April. The higher-than-expected revenues are noteworthy, because our neighbors to the west already had a projected $1.23 billion budget surplus BEFORE the higher revenues were known. This was mostly based on Minnesota's booming economy in 2013, the first year Dems resumed control of both houses of its Legislature (by comparison, Wisconsin had its lowest job growth of any of Walker's first 3 years in office in 2013, based on the Quarterly Census of Employment and Wages).
Illinois was $43 million to the upside in FY14 compared to what it thought it'd have this Spring, Income and sales taxes both beat expectations, and Illinois ended up with $1.3 BILLION in surplus revenues compared to what their budget bill planned for Fiscal Year 2014. However, the FIBs still have a backlog of bills worth billions of dollars, and got downgraded by S&P last month not because of excessive spending, but because their state Legislature decided to roll back tax increases put in place in 2011 to cut into that backlog of bills. When even the banks are saying "you really shouldn't follow the ways of
Keep those realities in mind when the Walker folks try to argue that their way is superior to the way things are done in "Democrat states." Because the two closest blue state governments outperformed deficit-ridden Wisconsin in 2014 when it came to bringing in tax revenues. And Wisconsin's path under Scott Walker seems a whole lot closer to "broke" Illinois' than surplus-laden Minnesota's.
No, it's not working. Not at all.