Net balance, 2015-17 budget, from Legislature
FY 2015-16 +$73 million
FY 2016-17 +$22 million
Net balance, 2015-17 budget, after guv vetoes
FY 2015-16 +$96 million
FY 2016-17 +$66 million
Structural deficit 2017-19 budget, from Legislature
FY 2017-18 -$92 million
FY 2018-19 -$204 million
TOTAL DEFICIT $296 MILLION
Structural deficit 2017-19 budget, after guv vetoes
FY 2017-18 -$27 million
FY 2018-19 -$183 million
TOTAL DEFICIT $210 MILLION
In addition, the structural deficit figure is lower than the $490 million reported earlier this month related to an accounting trick being done on per-pupil school aids (you may remember that Walker proposed cutting this by $150 a student in his original budget, a move that was reversed by the Joint Finance Committee after large amounts of complaints). As the LFB mentions:
Of this [per-pupil] amount, $127 million would be paid on a one-time delayed basis on the second Monday in July of 2016, but would be considered as moneys appropriated in 2015-16 [school year]. Aid for 2016-17, equal to $211 million, would constitute base year funding for the 2017-19 biennium. Thus, $127 million should have been removed from each of 2017-18 and 2018-19 in the July 7 exercise.Of course, the structural deficit also assumes that those per-pupil aids will stay at that 2017 level for the following two years while most other costs go up, so…good luck with that.
What this "lower" structural deficit doesn’t take into account is Walker and WisGOP's biggest budget trick of them all. The Wisconsin Budget Project explains more in their excellent summary of the recent projections.
The latest calculations continue to understate the magnitude of future challenges because the budget bill assumes an unrealistically large amount of funding that agencies will lapse to the state treasury over the next four years – including $741 million in the 2016-17 fiscal year, and almost that much in each year of the 2017-19 biennium. As I explained in a July 8 blog post, the assumption that state agencies will lapse more than $2 billion over a 3-year period is a convenient way to make the structural deficit look relatively manageable, compared to many of the past structural deficits. However, it also means that the structural deficit figure by itself is no longer a very good indicator of the state’s future fiscal challenges, because that figure leaves out the immense challenge of lapsing so much funding year after year.There’s also $349 million in lapses baked into the 2015-16 budget AFTER the large amounts of cuts that are already being felt across state agencies (like last week's layoff of 83 workers at UW Colleges). By comparison, while Wisconsin’s Annual Fiscal Report from last October says the Fiscal Year 2014 budget ended up lapsing $345 million, there were no major cuts in appropriations in that budget, so it had more ability to have lapses from job vacancies and other measures.
The FY 2013 budget did lapse nearly $750 million, but that was due to two reasons that do not apply today. The first was Act 10 “savings” and large amounts of retirements of higher-priced, veteran workers in light of that union-busting measure, and the second had to do with $263 million being ADDED to the budget after it was signed into law, which artificially increased the lapses. The 2012-13 budget actually overspent its planned amount by $54.4 million, but was bailed out by a one-time bump in revenues at the same time (a bump which was promptly blown on two rounds of Koo-Koo/Walker tax cuts that have put the state in the fiscal bind it has today).
So unless there’s another Act 10 or shocking economic boom coming, bet on this budget and the next one continuing to be wracked with deficits and likely service cuts…unless the leadership in Wisconsin can be changed.