Thursday, February 9, 2012

Jake's complete lack of surprise- A Walker deficit appears

Big day down at the LFB today, as the annual revenue/ budget estimates came out late this morning. I'd been waiting a couple of weeks for this report, and sure enough it revealed what I thought it would. Scott Walker's budget is not balanced, and in a $208 million deficit. Think they'll be changing the Koch Brothers' ads running in support of Walker's "balanced budget?"

Now, the common number used is $143 million, because that's the negative balance, but we also need to have $65 million in our rainy day fund, so in reality, we need to find $208 million in savings over the next 16 months, not $143 million.

So, why did we end up here? The same reason we've had issues at the federal level- low revenues caused by low taxes and a lack of job and income growth. Page 10 of the report explains it:
As shown in the table, total general fund tax collections are estimated at $13,194.6 million in 2011-2012 and $13,603.5 million in 2012-13. These amounts are lower than the previous estimates by $99.9 million in the first year and $172.9 million in the second year, for a biennial decrease of $272.8 million...

The revised revenue projections reflect year-to-date collections data, the new economic forecast, and the effects of a number of law changes that will reduce revenues during the remainder of 2011-12 and 2012-13.
Among these changes include tax breaks for the rich like health savings accounts, "reinvesting" capital gains (which are gains from gambling on assets, not making stuff), and corporate taxes are also expected to be about 2.5% lower, partly due to Walker/WisGOP givewaways. Walker's union-busting is also showing itself in the deficit, as income taxes are also expected to be down due to lower incomes as a result of Act 10, and Real Estate Transfer fee taxes are down nearly $9 million due to fewer home sales. Cigarette taxes are down by about $55 million, and even the beer tax is expected to be down 4-5% (c'mon guys! Light 'em up and throw 'em down!). Heck, if the LFB didn't count the $31.6 million that the state government will take recent settlement banks made with almost all states as damages for screwing homeowners into foreclosure, we'd be looking at $300 million down in revs. (And yes, the state will keep that $31.6 million instead of giving more back to homeowners, as they could).

But hey, maybe the economy will turn around in Wisconsin over the next 6 months and we can close this revenue gap through strong growth? Let's see what the Philly Fed tells us.

Awwww, DAMMIT!

So I guess all those tax breaks and pro-corporate legislation really doesn't help bring in the dough, does it? In fact, the LFB might be giving Walker a break in these revenue estimates, because it bases some of it on the expectation that the U.S. economy to continue with slow and steady growth of 150,000+ jobs a month, while not mentioning the Walker jobs gap that has kept Wisconsin 40,000 jobs below what we should be.

And as tends to be the case, "but wait, there's more!", as the LFB admits that there are other items that could drive the deficit higher, starting on Page 3. (any emphasis added is mine)
...[the deficit] does not reflect the estimated shortfall in the private bar appropriation of the Office of the State Public Defender. It is projected that this appropriation will incur a deficit of $5.8 million by the end of the 2011-13 biennium. Third, [the figures do] not reflect any appropriation changes to the Medical Assistance (MA) program. On January 26, 2012, this office distributed a memorandum to the members of the Legislature entitled "Medical Assistance Program Status." That memorandum inidcated that the MA program faced a potential shortfall of $140.9 million in the biennium. The memorandum further listed a series of savings initiaitives identified by the Department of Health Services that are inteded to address the shortfall (and this is why it isn't counted)
Ah yes, the Medicaid deficit, which I pointed out last week is only closed based on lots of rosy scenarios and hope that the Obama Administration bails them out. And if they don't get the federal bailout, or if the Walker folks don't get savings from allowing Grandma to get a pill dispenser at home, then there's more money that has to be made up in our deficit. So in reality, there could be another $146 million you have to add in, so then we'd have to make up $354 million, not $208 million.

So let's see if the media lets this Administration continue its remarkable 4-in-1 lie of "Walker balanced the budget (WRONG!) while avoiding public sector layoffs (12,000 public sector jobs lost) and holding the line on taxes (ask anyone who got EITC or Homestead credits, and property tax rates are significantly UP), so he shouldn't be recalled." (HE'S EARNED EVERY ONE OF THOSE SIGNATURES). After the liberally biased operation of math has exposed the truth about Walker's job-killing, deficit-inducing budget, there really isn't anything else Scotty can cling to once he gets back from another out-of-state fundraising jaunt. And we can't let them lie their way out of their failures.

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