Let’s start by going back to June, when the LFB gave us updated projections of what the 2017-19 budget would look like. It accounted for the post-budget, pre-election spending spree by Walker and WisGOP that included reinsurance subsidies for ACA, added funding for small, rural schools and one-time gimmicks like the sales tax holiday and the $100-per-child rebate (remember those poll-driven handouts? Sure changed things, didn’t they?).
I’ll also include the preliminary FY 2018 General Fund tax revenues from the Wisconsin DOR, which came out about 6 weeks ago.
Wisconsin budget balance 2017-19, LFB June projection
2017-18 beginning balance +$579.0 million
2017-18 projected ending balance +$547.3 million
PLUS 2017-18 actual revs vs. proj +$18.4 million
TOTAL PROJECTED 2017-18 FINAL BALANCE $565.7 MILLION
2018-19 beginning balance +$565.7 million
2018-19 projected ending balance $200.1 million
Interestingly, the LFB projected deficits for both FY 2018 and (especially) FY 2019.
So let’s compare to what the Annual Fiscal Report said this week. First of all, the final FY 2018 balance came in slightly above expectations, at $588.5 million, meaning there was an actual surplus of $9.5 million. At first glance, it looks like this is because transfers of excess fees and other revenues were $44 million above expectations, and was offset by slightly higher expenses of $21 million.
But the reason why those expenses were higher is the oddity. Back when the WisGOP Legislature and Walker pushed through the $100 Child Tax Credit in February, the money was allocated to the 2018-19 Fiscal Year because the money was to be paid out in September 2018, which is well after the July 1, 2018 start of FY 2019. But for some reason, the AFR has that one-time payment shown in the Fiscal Year that just ended. Is that because the Walker Administration wanted to put together a talking point of “look at how much we handed out to Wisconsin parents?”
Regardless, it really didn’t work out, not politically (because Evers has the same small lead he had before the checks were handed out), and because out of the $122.1 million that was set aside for that gimmick, only $93.6 million had been sent out, according to this report. Maybe they’re holding back the other $28.5 million for late claims, but it seems like an odd move to put that amount in this year’s report, as leaving it out would have made the bottom line appear to be $682 million instead of $588.5 million.
Sure, a lot of that left-over money is getting spent out in the next Fiscal Year (along with another $243 million of this alleged “surplus”), but you’d think it would make for a good talking point. The Walker Administration’s silence about this makes me think even they know the AFR’s numbers are shaky.
A few other line items in the “Sum Sufficient” expenses (ie., entitlements that have to get paid regardless of how much money is set aside in the budget) stood out.
1. The state spent $1.76 million in Special Counsel expenses for outside lawyers, almost double the $986,000 that was set aside. That’s on top of last year’s $1.03 million, which was overran its budget by more than $400,000. Hey, when WisGOPs like Brad Schimel, Robbin’ Vos and Scott Fitzgerald try to defend gerrymandering and wreck Obamacare, it has its costs!
2. The state spent nearly $336 million on voucher schools, charter schools, and “scholarships” so kids with special needs could have their voucher school pay for the extra services. In fact, that special needs scholarship program exceeded its budgeted amount, and ended up costing over $3 millon. Meanwhile, regular special ed aids for public schools haven’t been changed since Walker took office 7 years ago.
3. General Fund-supported debt payments dropped by more than $23 million compared to 2016-17, likely due to large-scale refinancing of debt by the Walker Administration that kicks the payoff for that debt into future years. On a related note, they’re refinancing another $362 million in debt this week, and repaying that amount over the next 10 ½ years.
I also want to look at Wisconsin’s Transportation Fund, especially given that “Say Anything Scotty” is now promising Wisconsin towns that he’ll give a huge increase in road aids to them if he gets re-elected.
Based on the topline numbers, you can see where that extra $53 million might be there for the towns, if everything else holds up.
Wis Transportation Fund
2017-18 beginning balance +$219.1 million
2017-18 ending balance +$350.9 million ($131.8 million)
Based on the original projections in the State Budget, the Transportation Fund was supposed to be losing around $65 million a year for this budget cycle, but instead it gained nearly $132 million. How did this miracle happen?
Simple. Walker’s DOT simply got other levels of government to pay the bills, particularly Uncle Sam.
2016-17 vs 2017-18 Transportation Fund expenses
2016-17 State Spending $1.714 billion
2016-17 Federal, Local, + Agency Spending $945.7 million
TOTAL SPENDING $2.659 BILLION
2017-18 State Spending $1.652 billion (-$62 million)
2017-18 Federal, Local, + Agency Spending $1.256 billion (+$311 mil)
TOTAL SPENDING $2.909 BILLION (+$250 MILLION)
In fact, WisDOT spent $124 million less on highway improvements in FY 2018 than they did in FY 2017, but let the Feds and others pay $135 million more to make up the difference. Pretty easy to have a better bottom line when you get someone else to pay for your bills.
If there's so much money for DOT, why is there so much of this?
It’s also funny how Scott Walker’s DOT has no problem with using Federal money when it comes to filling Scott-holes and dealing with other road projects. And relying on Federal money to avoid raising taxes and fees might have worked last year, but it doesn’t seem like much of a long-term solution when the Trump Administration wants to cut back the share of what it pays for road projects, leaving the states and locals to pick up the rest.
Ironically, Walker takes the exact opposite approach when it comes to expanding Medicaid. Scotty claims that federal money can’t be taken now because some time in the future the money (or 90%-100% share of funding) might go away. So instead Wisconsin has spent billions of dollars covering people on our own dime in the last 4 years instead of taking those funds from DC. And that cost went up by $850 million in Fiscal year 2018 compared to 5 years prior, with costs rising consistently in every year except for 2017.
And the Wisconsin Department of Health Services is projected to need another $623 million in the next budget, according to DHS's own budget request.
But despite the rising costs of vouchers, health care and the bigger shell games involving property taxes, there was enough money banked from prior austerity and our current debt-fueled Bubble that there was a decent amount of money left over on June 30, 2018. Unfortunately, most of that is likely to be gone by June 30, 2019, while the needs to fix the roads and fund our schools will still be there and the gap will continue to grow without a change in direction.
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