Thursday, September 25, 2014

$4 billion budget deficit? More possible than last week's "surplus"

Another day, another question asked of “what's really happening with the budget?” Last week it was the absurd spin of a budget “surplus” from the GOP Co-Chairs of the Joint Finance Committee who made rosy revenue assumptions for this year and ignored any new spending that will be needed over the next two years (debunked in this post). This time it’s from Dem State Senator Jennifer Shilling, who turned those budget assumptions on its head, and asked LFB to crunch some different numbers. She even starts with the GOP assumptions of 2.9% revenue growth for each of the years in the 2015-17 biennium, then injects the following items on spending.
2. 2015-17 agency budget requests of $1.07 billion would be appropriated in 2015-17.

3. In addition to Item#2 , above, appropriations for educational programs would increase by $568 million in 2015-17 over base year levels (I believe this is the estimated amount of extra school aids that would be required to carry out the Department of Public Instruction’s “Fair Funding for Schools”initiative).

4. In 2015-17, $680 million would be transferred from the general fund to the transportation fund (this is the most popular estimate of the Transportation Fund deficit for 2015-17, but given current projects, it could be over a billion).

Under these assumptions, the 2014-15 gross, general fund balance would be -$397 million and the balance for 2015-17 would be -$2,767 million.
YIKES! But also not that surprising, since this includes an extra $1.25 billion that needs to be come out of the General Fund on top of the budget requests to make everything solvent. It also tells you how in the hole we are for this year, as that $397 million figure keeps the LFB revenue growth assumptions, and not the ridiculous 5.6% assumption that the GOP “surplus” had.

By the way, Shilling also got a projection from LFB that showed if there was 0% revenue growth (as done in the structural balance), and there was the same amount of spending described above, we would be staring at a deficit of more than $4 billion! That’s higher than the "$3.6 billion figure" that Walker and WisGOP throw around in regards to 2011's alleged defict, and they were using the exact same assumptions Shilling is making in the $4 billion figure. So in other words, we’re worse off now than when we were allegedly "broke" 3 years ago!

But I’ll give the 2.9% revenue growth scenario the bigger emphasis. And yes, some of that spending will not likely happen- because we know all $2.767 billion won’t be made up by state tax increases (though refusing to raise any state taxes will make it extremely likely your local property taxes and fees will go way up). So further spending cuts are on the way, and it’s in no small part due to two stupid rounds of tax cuts that were put in place before a surplus ever became reality. Since those tax and shared revenue cuts haven’t translated into jobs and economic growth (in fact,Wisconsin job growth and home sales declined again in August, and are down 7 out 8 months this year). If anything, trickle-down Walker policies have been counterproductive, and some of these tax cuts should be reversed to stabilize our budget - but you can bet that reality won’t be discussed over the next 40 days.

These are the numbers. You can try to spin em all you want, but it doesn’t change the fact that we are in an absolute budget mess resulting from 4 years of neglect, and the “business and consumer confidence” genie aren’t going to be able to clean it up.

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