Monday, October 20, 2014

Walker tries zombie lie to deflect from exploding deficit

It is remarkable to see our Governor desperately trying to convince people that his policies are somehow working, particularly involving his deficit-ridden budget. Check out this whopper from a press release trying to sell how “Wisconsin’s Economy is on a Comeback Under Governor Scott Walker." Among the list of "accomplishments" (most of which is due to the Obama Recovery, by the way), is this gem.

· Wisconsin is estimated to have a $535 million surplus in the 2015-17 state budget. Governor Walker has also built a rainy day fund that is the largest in state history ($279 million). (LFB, 2013-15 and 2015-17 General Fund, 9/18/14).

This links to the list of “what ifs” that GOP Joint Finance Co-Chairs Alberta Darling and John Nygren tried to throw at the Legislative Fiscal Bureau last month. The problem is that those numbers are based on BS that has little to no connection to reality, something I pointed out at the time.

But for the sake of argument, let’s go over those figures again, in light of last week’s releases of the state’s Annual Fiscal Report and the first three months of revenue figures for the fiscal year that started on July 1.

1. From the AFR, we know the year-end balance was $516.9 million, after the Walker Admin held back $25.75 million in payments to the Transportation Fund to beef up this balance, so plug that number in (this is $35.9 million better than what we had on revenues only).

2. Once you adjust for lower withholdings that are now in effect, the first three months of revenues are basically in line for the 3.5% revenue growth that LFB is projecting for Fiscal Year 2014-15. If that number were to hold up, we would be at $14.436 billion in tax revenues, or $289 million short of what the first assumption in that paper says.

3. If this is the case, then the balance that would have to be made up by “reducing appropriations” to the level of $0 would be $371 million, not $116 million. And this includes that extra $25.75 million that has to go in the Transportation Fund. This is also past the $279 million in the Rainy Day Fund, so Walker and WisGOP need to NAME THE CUTS.

4. 2.9% revenue growth on $14.436 billion in taxes with no change in expenses means the following balances for the 2015-17 budget (starting from $0)

a.2015-16 balance -$196.4 million
b.2016-17 balance +$144.4 million
c.TOTAL -$52.0 million + $65 million = $117 million deficit.

5. But that’s definitely not all, because it is only in Fantasyland that we won’t spend more money on our current programs. Don’t forget that budget requests for 2015-17 have now come in, which total over $1.1 billion in new spending required just to keep doing what we’re currently doing ($760 million for Medicaid alone). So that now makes the deficit in the next budget reach $1.217 billion.

6. And then you have at least $680 million in deficit for the Transportation Fund, and more likely $1 billion that'll have to be taken care of. But we’ll be kind and only add in the $680 million for now.

7. Put it together and the TOTAL DEFICITS IN NEXT BUDGET ARE $1.897 BILLION.

For Scott Walker to even try to pull that “we have a budget surplus” talk when the numbers have already been debunked, and with new information in the last week making that scenario even less likely, it shows a level of cynicism that is sickening. And for Walker to be allowed to pull this zombie lie out in Friday’s debate, in his press releases, and likely in his scripted interviews with AM radio shows how pathetic our state’s political media is when it comes to discussing economic issues.

So if any of your media types are reading this, learn something from these posts, and challenge Walker whenever he tries to BS his way around the huge budget hole he and his WisGOP have put this state into.


  1. "2. Once you adjust for lower withholdings that are now in effect, the first three months of revenues are basically in line for the 3.5% revenue growth that LFB is projecting for Fiscal Year 2014-15."

    What I have directly from the DoR is: "For just this fiscal year (1/2 of July, August, Sept) withholding is down 5.2%, or $69.7m. Adjusting for the WH table update, growth is +4.0%."

    The impact of the withholding table change is therefore (4.0+5.2) x $69.7m / 5.2 = $123.3m. Adding that to actual 2015Q1 revenue gives $2,848.4m, a like-for-like increase over 2014Q1 of just 2.1%.

    If this trend should continue over the next three quarters, FY15 will end with $14,237m in tax revenue, some $199m less than the figure you use based on a 3.5% growth rate. With a FY15 base year this much lower, FY16 and FY17 growth would be from a much lower base, so over the next three fiscal years we're looking at a hole about $600m bigger than the one you calculated.

    You're being awfully generous to Walker with these numbers!

  2. I merely added $165 million to the total revenue number, guessing a $55 mil a month (it's about what LFB figures as the "adjustment").

    Yes, I'm being intentionally generous here, and even giving the revenue growth Nygren and Darling assume. And it's still a massive deficit. That's the point

    1. As hinted at by my DoR quote, Q1 is actually 2 1/2 months, not 3 (plenty of early July income is for work done in June, so gets shifted back to the prior FY). Which pretty much explains the difference between $165m and $123m.