IV. The Department of Administration requests the Committee’s approval pursuant to s. 20.004(2) of updated summaries and schedules under ss. 20.005(1), (2)(a) and (b), and (3) prepared by the Department of Administration and Legislative Fiscal Bureau, which include the fiscal effect of all legislation enacted by the 2015 Legislature.What does that mean? It means an update on where the budget numbers stand…sort of. There will be adjustments for recent legislation and actions on expenses and revenues, which means a few differences from what was in the finalized 2015-17 budget. As the LFB’s summary indicates, this report also figures in a large item that hit the news in the last month.
It should be noted that the attached summaries reflect all bills enacted in this legislative session (2015 Wisconsin Acts 1 thru 392), and approvals, to date, by the Joint Committee on Finance. In addition, the summaries incorporate the reduction in estimated debt service payments in this biennium due to the administration's recent decision to defer $101 million short-term, commercial paper principal payment that was scheduled to be made in 2015-16. Rather, this payment is now scheduled to be made over an eight-year period beginning in 2016-17. Further, the summaries reflect additional GPR debt service reductions ($14 million) that have accrued due to somewhat slower bond issuance than projected, as well as economic refunding bonds that have been issued to reduce the state's interest costs.Budgetarily, this will help the state’s bottom line in the short run, because we don’t pay that $101 million in this fiscal year, and also reduce our expenses by $14 million on other debt. But that skipped debt payment also means we’ll pay $13 million in 2016-17 that we weren’t scheduled to pay when the budget was passed, and so that has to be accounted for as well.
The upshot is that expenses are down from the original 2015-17 budget, but expenses start rising in the next fiscal year. On the revenue side in this report, little is changed from the original budget amounts (for now). There is $245,000 less in 2015-16 and $1,085,000 less in 2016-17, a drop in the bucket on a $16 billion annual budget. So what we see is that there is a huge cushion built into this fiscal year, which gets eroded with a deficit in 2016-17.
Change in budget balance, 2015-17
Original ending balance FY2016 +$283.991 million
Newly projected ending balance, FY 2016 +$390.551 million
Change +$106.560 million
Original ending balance FY2017 +$135.189 million
Newly projected ending balance, FY 2017 +$239.304 million
Change +104.115 million
FY 2017 balance vs FY 2016 -$151.247 million
You can already predict the spin jobs coming from this document. Scott Walker and the Wisconsin GOP will claim there is currently a $390 million budget surplus (well, it’s really a $255 million surplus and $135 mil carried over, but you get the idea), which will conveniently will leave out the $101 million in skipped debt payments which inflates that number. I especially expect Joint Finance co-chairs Alberta Darling and John Nygren to try to trot out this line, as they told a similar BS job about a surplus ahead of the 2014 election.
On the flip side, Democrats will likely point out the $151 million deficit in the coming fiscal year, and the increased debt payments that are required in future budgets due to the Walker Administration’s skipping of 2016’s debt payment. And they will likely mention the looming Transportation Fund deficit, which is not part of these budget numbers, and is becoming an increasing item of disagreement between Gov Walker with his “no tax, no fee” pose, and pretty much anyone else who can do math and see the gaping infrastructure needs in this state.
One other quick item to note is that there is a re-estimation of the Lottery Tax Credit in this report. The LFB now figures there will be more lottery sales for 2016-17 than first thought, which’ll raise the Lottery Credit for property tax relief by $3.22 million for the next fiscal year (around 2%). That would be a reversal from this year, when a lowered Lottery Credit was one of the reasons that the LFB said property tax bills went up last year. And given that K-12 cuts by Walker and WisGOP have caused school referenda that have raised property taxes statewide by more than $600 million, another couple of bucks back from the lottery for next year is needed.
These figures will probably get buried in Joint Finance’s debates on Monday over whether to release “voter ID education” funds and the attempt to take $8 million from start-ups and add it to the WEDC giveaway fund. But this new look at the overall state budget is an interesting slice of detail to have in the back of your mind before May’s revenues are released- ones which I fear will shrink a whole lot of that $390 million cushion that LFB projects today.