A $2.2 billion deficit? Kind of, but a new Guv can tax and spend smarter

Naturally, 1 day after I mention that Robbin’ Vos was a fiscal fool for claiming taxes had to be raised to pay for Tony Evers’ proposals, this is the headline in the state’s newspapers. Report: $2 Billion Needed to Maintain Current State Spending.

The report in question comes from Jason Stein and the rest of the folks at the Wisconsin Policy Forum, where the organization outlines “Challenge and Change Ahead in the State Budget.” The “challenge” starts with the Policy Forum mentioning that the Legislative Fiscal Bureau has previously calculated that the structural deficit for 2019-21 totals $865 million. Then, the Policy Forum adds on the following new money that’s going to be needed for existing programs.

The analysis starts by including the costs to the state of continuing current Medicaid programs providing health care for low-income recipients, long-term care for the elderly and disabled, and prescription drug coverage for seniors. The Department of Health Services estimates this cost at an additional $496 million in state general purpose revenue (GPR) over the next two years. This projection does not include any potential savings available to the state through taking expanded federal Affordable Care Act funding.

Let’s see Robbin’ Vos, Scott Fitzgerald and the rest of the ALEC crew justify spending nearly half a billion dollars more when they could save $400 million by taking the Medicaid expansion.

We continue.

Aid to K-12 schools represents the state’s biggest expense. Both candidates for governor called for the state to fund two-thirds of the statewide cost of K-12 education. They did not agree on how to reach that goal, but doing so could easily require hundreds of millions of dollars more in additional state aid. Rather than seek to account for the specifics of such a commitment, our analysis provides the same dollar increase in each year of the next budget as was given in the current budget at an added GPR cost of $621 million over two years. State officials could opt to provide more or less.

The report doesn’t mention that perhaps that money should be spent in different ways than the per-pupil aid increases that Walker and WisGOP gave to schools, which helped a lot of growing schools and areas that didn’t need as much help as the stagnant and/or low-income areas which rely more on state support to operate.

This would also be $800 million less than the net increase Evers proposed in the budget he proposed as State School Superintendent. But I also assume that the Wisconsin Policy Forum is counting the $365 million or so of state tax dollars that is going to vouchers, so if you cut that, there will be more available to public schools.

What about the rest of the budget?

Our analysis lumps together state spending on other programs such as the UW System, prisons, and local government aid. As a whole since 2012, these programs have averaged about 2% more per year in GPR funding and that is roughly the forecasted national inflation rate. Some spending increases for the 2019-21 budget, however, are already factored into the LFB structural deficit and do not need to be repeated. We are including 1% yearly increases for these programs, for a two-year total of $256 million more. Meeting this figure may not be easy. For instance, just the UW System and Department of Corrections have together asked for roughly that much in additional spending.

Table 1 shows covering the commitments already approved by lawmakers, providing the same school aid increases as the current budget, funding present Medicaid service levels, and providing 1% increases for all other programs would require an estimated $2.2 billion more over two years.

Sure seems like controlling Corrections costs might not be a bad idea, wouldn’t it? Maybe we should revisit why Wisconsin is twice as likely to put people in prison as Minnesota despite similar populations, crime rates, and demographics, eh? And a 1% increase each year would be about half the estimated rate of inflation, let alone not accounting for any population growth we might have (no, there hasn’t been much of it during the Age of Fitzwalkerstan, but we can be hopeful).

The Policy Forum adds that in order to hit this $2.26 billion, revenues would have to rise by nearly 4% in 2019-20 and more than 5% in 2021, which is asking a lot when Wisconsin just fell short of 4% in the last Fiscal Year and grew by less than 2.9% the year before. And with 2/3 of economists expecting a recession to hit in the next 2 years, it seems more likely that revenue growth shrinks instead of grows.

By the way, this analysis doesn’t include the approximately $1 billion that’s needed to start clearing the backlog of projects in the state’s Transportation Fund, and it assumes the Fox-con will add hundreds of millions of dollars of tax revenue that otherwise wouldn’t exist- a claim that seems highly unlikely given that Foxconn claims it can’t find enough Wisconsin workers and may well ship people in from China for the relatively few jobs that actually might be in the state by 2021.

So yes, we are in a budget hole due to the reckless giveaways from Scott Walker and the Wisconsin GOP. But I also think that mess can be overcome through a simple reordering of priorities. This includes Evers proceeding with his planned removal of the M&A giveaway for people and corporations making $300,000 or more, cutting back on WEDC kickbacks, vouchers and other GOP special interest pork, and reducing the amount of state tax dollars that are used in a shell game on property taxes.

I appreciate the Wisconsin Policy Forum putting the numbers together to show the tough situation that Scott Walker and other Republicans have left the state in (which looks especially bad given how Wisconsin’s economy has underperformed the last 8 years). But it’s sure interesting how they come out with this report 3 days after the election, instead of releasing it beforehand so voters could remove more of the GOP bums that caused this mess.