Why did the state get so little cash in August?

It’s usually a bland and unnoticed report, but I caught something unusual in the Department of Administration’s release of Wisconsin’s General Fund Cash Forecast on Monday of this week. This featured a new forecast of funds compared to the early August version of this report and it incorporated the results from July and August of this year into the new forecast.

The changes between the two reports are what grabbed my eye, as I compared the July 2015-December 2015 forecast in the August document to the October-December 2015 forecast that is in this current one.

July’s figures were largely spot on, with total receipts $52.2 million above and disbursements $61.3 million above, for a difference of $9.1 million (basically a rounding error). But I noticed this discrepancy between August 5’s predictions of August’s cash activity, and the actual results.

Projected vs Actual Cash activity, Aug 2015
Projected
Receipts $2,238.0 million
Expenditures $1,705.3 million

Actual
Receipts $1,895.2 million (-$342.8 million)
Disbursements $1,705.3 (-$101.5 million)
CHANGE IN BALANCE VS AUG PROJECTION -$241.3 million

That’s not good, and if the lower cash balance is a harbinger of lower tax revenues, (like we saw in late 2013 and early 2014) this would put even more pressure on a budget that needs income taxes to rise by nearly 7.3% this fiscal year, and relies on $1.1 billion in unspecified lapses over the next 2 years. While the cash balance report isn’t an exact match for the General Fund’s actual tax revenues, the overall balance does seem to correspond reasonably well (if it’s better or worse than expected, revenues seem to follow suit). We already know that tax revenues for Fiscal Year 2015 ended up slightly above January’s LFB projections by $71.4 million, but almost all of that was due to an unexpected bump in corporate tax revenues. With the stock market floundering and Wisconsin manufacturers struggling with a stronger dollar, you wonder if that trend reverses in this coming year.

On the flip side, it also makes me wonder if these incoming receipts were merely “held back” because of a later Labor Day, and that we’ll see a bump up in September. Or perhaps there will be a positive number as a result of the consistently warm and sunny weather that the state has seen throughout September. Regardless, that monthly cash report (which will come out in the next 2 weeks) suddenly grows in importance.

This adds to a list of recent state economic data that often has been had mixed and/or contradictory messages, which has made the direction of things hard to decipher. We’ll see things clear up enough in the next month, with the release of the year-end financial report (which will have the year-end cash surplus/deficit for Fiscal Year 2015), the first revenue reports of Fiscal Year 2016, and the jobs figures as Summer and seasonal employment draws to a close. And you wonder if WisGOP’s decision to concentrate on social issues and divisive bills against public employees are a signal that the economic news may not be so good.