Sunday, November 20, 2016

Wisconsin budget deficit looming, the only question is how big it is

Today is November 20, which usually would be an important day in Wisconsin budget geek world, because it's the usual date that the Wisconsin Department of Administration summarizes the 2017-19 budget requests of all state agencies and estimates revenues for the next 2 fiscal years. The 2015-17 version of this document got a lot of attention 2 years ago because it estimated a $2.2 billion budget deficit in Wisconsin, and the decline in Scott Walker's approval ratings started almost immediately afterward.

But it's a Sunday, and so therefore we're going to be waiting a day to see these figures released. So I took the time to look at the 2017-19 budget requests themselves, counted up the numbers, and took a look to see where we are.

First of all, if you put together the requests from agencies, and combine it with the supplemental request for aid from the Department of Public Instruction that came out last week, you have a total requested increase in General Fund money of just over $666.8 million from the FY 2017 base.

Here are some of the standout figures from that
Largest budget request increases
DPI School Aid +$706.5 million
Dept. Health Services +$455.5 million
Dept. of Corrections +$122.1 million
UW System +$42.5 million
District Attorneys +$22.3 million

You may notice that this is well over $666.8 million. The reason the final increase number isn't even higher is because of a $756.4 million decrease from the base expenses for 2017, which is the result of a debt swap that was made in August to prevent a $383 million balloon payment that was due in May 2018. This money had to be set aside in the 2016-17 budget in preparation for the next year (which increases the base expenses), but because it wasn't going to spent until 2018, it also led to a massive lapse that was built in to this year.

Now that we're not going to paying that balloon payment, and instead spreading out those payments (and interest) between now and 2027, it reduces what we have to pay in the next budget, hence the decrease of approximately $378 million a year in costs for DOA. What's not mentioned is that it all comes back and then some in future budgets, but how to pay for that is something to be dealt with after the next Governor's election in 2018 (funny how that works). But even with that decrease, we still have to find an additional $666.8 million in revenues over the $17 billion a year in General Fund appropriations that is already built into the budget.

Let's then turn to the revenue side, which has its own set of difficulties. You may recall that in last month's Annual Fiscal Report, the State of Wisconsin fell nearly $116 million short of budgeted amounts in taxes and other General Fund revenues. This now means that the state has to get a revenue increase of 3.7% in the 2016-17 fiscal year just to meet budgeted amounts, something that may prove hard to reach, as the first 3 months of the Fiscal Year had revenues increasing by only 1.4% year-over-year.

But let's give Walker-nomics the benefit of the doubt, even in light of the bad jobs numbers, and say that the state reaches that 3.7% increase in revenues. And then let's assume revenues increase at that strong 3.7% clip over the 2 years of the 2017-19 budget. Even if all of these things happened, the request increases on the expense side mean a General Fund deficit of over a half-billion dollars

FY 2017 base x2 = $34,025.2 million
2017-19 budget requests = +$666.835 million
TOTAL 2017-19 EXPENSES $34,692.0 million

Revenues (assume 3.7% increase each year)
2016-17 Revenues $16,180.3 million
2017-18 Revenues $16,779.0 million
2018-19 Revenues $17,399.8 million
TOTAL 2017-19 REVENUES $34,178.8 million


All of these numbers are crude and I'm sure there are some small adjustments that I may be missing, but that's the base assumption I'm going to go with as I compare it with what Walker's DOA figures tomorrow. a $513 million General Fund deficit, in what is frankly a rosy scenario.

Last note, this $513 million does not include the Transportation budget, which is funded from a different area. That DOT budget request is asking for $406.3 million in extra money, and looks to borrow another $473.9 million, for a total deficit of over $880 million. And that's assuming cuts and delays in various road projects.

Yeah, needless to say, we have serious budget issues that seem to get more chronic and ingrained with each Walker/WisGOP budget. We'll get a better picture of this tomorrow, but hopefully this gives you an idea of what to look for.

1 comment:

  1. Your guess of $513 million wasn't that far off...