Can Bucky's run close the budget gap?

That was an amazing 3 weeks of basketball, and in representing the university so well, even if it ended in a gut-wrenching loss (like everything else in Wisconsin over the last year, it seems). I want to segue from that point back to our state budget, which went on the back burner as Badgermania overran the state and the state budget hearings came to a close. But as April continues, things will heat up at the Capitol, and the numbers will come into clarity that help to decide just what's going to be available for state aids and services for the coming months and years.

Ironically, Bucky's big run to the title game may help things a bit with the budget. Obviously, Madison was the center of the scene, but I'd imagine you could tell similar stories to this in many parts of the state, for both Saturday and Monday nights.

Earlier in the evening, campus buildings and Downtown Madison bars bulged with UW fans hoping to experience a singular victory together. With college students back from spring break, seats went fast at viewing parties for the game, which was played in Indianapolis.

"There is no backup plan. We're going to get in," said Ryan Parkos of Cottage Grove, stuck in a rain-sprayed line outside Whiskey Jack's (us old folks remember it as The Pub) about 30 minutes before tip-off.

Similar situations played out around town. Union South locked its doors at 8:15 p.m. having reached its capacity of 2,100. Over 1,100 people filled the newly renovated Shannon Theater at Memorial Union. Some fans got caught up in the capacity issues.

Between the added crowds at the bars and the sales of Final Four gear, let's see if this translates into a minor bump in sales tax revenues for April, and possibly add a bit of work hours for people in the retail and bar industry. Of course, it may only be a short-term thing, and displaced other behavior over the last few days, but given the recent figures from the Department of Revenue, every little boost will be a big help when it comes to the chances of making the deficit-ridden state budget end up balancing when the fiscal year ends in 2 1/2 years.

The February state revenue numbers were quietly released a couple of weeks ago, and indicated a recovery from the subpar numbers of January. February is usually the lowest month of the year for revenue collections, since income tax refunds pick up in earnest (and count against taxes paid in), and it's near the lowest amounts for raw work numbers, as Christmas season is over, and Spring hasn't started yet, so the numbers start from a lower base and can be quite jumpy. This February was no different, as the DOR says adjusted revenues were up by 40%, or $216.2 million from February 2014's take, but because of shortfalls and other changes in the previous months, total revenues were only up 0.2% for the Fiscal Year.

I will add that February's increase is a bit misleading, as it was the first month of lower state tax refunds due to the lower withholdings that started in April 2014 (if you haven't done your taxes yet, you've been warned), and so based on prior estimates from the LFB, these figures should be deflated by $110 million when comparing with last year ($165 million in reduced tax refunds - $55 million in increased withholding). But the numbers are still good when you reduce the income taxes by $110 million- income taxes still up more than $50 million, sales taxes up 11.1%, and total General Fund taxes up just under 16.5%.

On the flip side, there are two major laggers that continued in February tax collections- corporate taxes and excise taxes. This continues a trend that has been going on throughout this Fiscal Year.

Tax revenue, February 2015 vs February 2015
Corporate tax -23.2%
Excise tax -7.1%

Tax revenue, FY 2015 vs FY 2014
Corporate tax -9.3%
Excise tax -3.5%

We've touched on the fact that the corporate tax cuts that have passed in the Age of Fitzwalkerstan are blowing bigger holes in the budget than previously predicted, and I'd imagine it might get worse now that tax season is coming on, and companies try to cash in. Maybe some of that excise tax decline goes away with all the booze that got bought during Bucky's big run through the tournament (I'm sure Indy appreciated the Badger fans' imbibing over the weekend), but right now, the lagging taxes are also causing some fiscal stress.

So where are we at, with all of the adjustments and other trends in Wisconsin tax collections. I estimate the state has lost $440 million in revenue with lower withholding, but got back $165 million in lower tax refunds in February, so that means I should add $275 million in income tax revenues for now to see what the underlying "real" change in income tax collections is. When I do that, I get a 4.10% increase for income taxes. Sales taxes are up 5.76% for the year, corporate and excise taxes down as shown above, and other taxes are largely in line with projections. So with that in mind, here's what the numbers look like if those figures hold for the last 4 months of the Fiscal Year, when compared with the LFB's revenue estimates in January.

Wisconsin FY 2015 tax revenue trend vs LFB projections
Income tax +$0.9 million
Sales tax +14.9 million
Corporate tax -$58.2 million
Excise tax -$7.6 million
Other taxes in line
NET CHANGE -$50.0 million

So that $50 million goes on top of being $283 million in the hole when LFB did those projections in January. Now, some of that hole is being closed through expense reduction moves by the Walker Administration (including the skipping of a $108 million debt payment next month), but any sizable revenue gap would likely require even more drastic action, not only for the 2 1/2 months where the hole has to be made up in for this budget, but with the lower revenue base starting off in the next budget.

And that's where I go full circle on this. What if the Badgers' great run through March Madness causes enough of a short-time bump in revenues that it closes that $50 million revenue gap, prevents the need for a budget repair bill, and keeps up the base revenues for this already-fragile 2015-17 budget? And if so, shouldn't the UW System get some of its cuts reduced in the next budget as a "thank you"? I'm just sayin'.