Tuesday, June 30, 2015

Budget delay won't mean much short-term....and apparently it's short-term

Unlike what’s going on to our south, Wisconsin government won’t shut down when the 2015-16 fiscal year begins tomorrow without a budget in place. As the Wisconsin State Journal’s Molly Beck explains, things largely stay “business as usual” for the short-term.
... .State spending will continue at the same rate as it is now.

“No one in our state knows the difference between June 30 and July 1,” said Legislative Fiscal Bureau director Bob Lang….

Local governments aren’t expecting a lump sum of money on Wednesday, said Lang, and if a budget is passed later than the deadline, then the periodic payments agencies receive throughout a budget cycle are adjusted at that time.

[State Sen. Luther] Olsen said public schools could have been affected if general funding levels were different than last year’s budget, but they are likely to be held flat.
However, the later timetable does mean those adjustments to payments and funding amounts will suffer a more drastic change the longer this plays out, and that’s what I want to touch on with this post.

In comparing the base-year budget for Fiscal Year 2015 vs the amount Governor Walker has recommended for 2016 (starting with Appendix 3 of the Budget in Brief), here are the agencies facing the biggest changes in expenses, and therefore the ones that may need to make larger and more sudden adjustments as the budget drags on.

Biggest increases in GPR Spending
Dept of Health Services +$263.0 million
Dept of Children and Families +$44.9 million
Dept of Revenue +$14.8 million
High Education Aids Board +$3.9 million

The higher DHS costs are largely the result of increasing Medicaid expenses. There is likely plenty of money from the Feds to keep up with the increases on a short-term basis, but problems would likely come in if the budget is dragged out for another month or two. Same seems to be the case for DCF. DOR’s problem is that the Walker budget had $25 million in extra funding to hire additional auditors, and $1.75 million to expand the Statewide Debt Collection program. If there is no budget, the positions and funding aren’t available to hire those agents, and that puts into doubt the Walker Administration’s projections of recapturing nearly $125 million from these measures over the two years of the budget if it takes longer to get off the ground.

Biggest decreases in GPR Spending
UW System -$145.6 million
Dept of Public Instruction -$111.1 million
Dept of Corrections -$46.1 million
Dept of Natural Resources -$19.8 million
Environmental Improvement Program -$15.9 million

As Sen. Olsen mentioned, the FY 2016 drop in DPI funding was mostly restored by the Joint Finance Committee (albeit there is still a loss of $18.6 million to vouchers and virtual charter schools), so delayed payments and cash-flow crunches would be more likely to be the larger concern for K-12 schools if there is a budget delay, barring any changes in the final budget in the Assembly and/or Senate. The cuts to the UW System and Dept. of Corrections have been slightly reduced, but are still significant, and both of these organizations will likely have to perform layoffs and other cost-cutting measures before the budget is passed, to prevent an even larger disruption later this Summer. Likewise, the director of the DNR’s Science Services Bureau at the DNR wasn’t willing to stick around to deal with the expected cuts in his area that the Joint Finance Committee approved of a few weeks ago, and he announced his retirement last week.

Another area that will feel the sting of a delayed budget is the Department of Transportation. The DOT’s total budget was slated to increase in total spending of nearly $270 million, with almost all of that being related to extra borrowing in the Transportation Fund for the Zoo Interchange. However, GOP legislators’ concerns over high levels of borrowing in Gov Walker’s budget mean that they are looking at cutting $800 million in highway projects from Walker’s budget. That’s a huge difference, but with construction season already underway, you’d think much of those cuts wouldn’t be seen for a few months, with projects that haven't had much work started on them.

A wild card with transportation is the federal Highway Trust Fund runs out of money at the end of July, and any changes that might result from a new bill could greatly affect the amount of total money available for the state to use. Perhaps that’s a reason why it may be prudent to delay the non-GPR parts of the DOT budget until a later time, when both the state budget and federal transportation funding have been decided. In Governor Walker’s budget, GPR only makes up 3.75% of the total costs for the DOT ($123.4 million), so any adjustments that would have to be made to the final total to make the General Fund balance shouldn’t be a big deal for the DOT’s operations.

So while the delay in this budget shows a lack of WisGOP leadership and the result of trying to place bubble-world policies into real life, there likely won't be much of a day-to-day change in Wisconsin government operations for at least the next couple of weeks. But expect the anger to grow even larger if this drags out even more, or if new items are snuck in at the last second as favors to campaign contributors or other self-interested scum (as predicted by State Rep. Andy Jorgensen last week).

EDIT: And of course as I write this, this hits the wire.

Ruh roh....they gotta give 24 hours notice to have Joint Finance meet, so they'll meet Thursday. Keep your eyes peeled for the goodies and other giveaways that likely WON'T be mentioned in tomorrow's WisGOP press conference.


  1. Layoffs have been happening at the UW since the budget was first announced. At least one campus has laid off tenure-track faculty. Layoffs are continuing at this time; the campus closest to me will inform wave 2 terminated staff this week, wave 3 will happen later in July.

  2. Walker's stinkin' budget is putting a big a$$ wrench in Vos' plans to be governor. He'll be inheriting whatever goes through and it's going to be ugly.

  3. Jake,

    Maybe you already covered this, but why are the DoR Tax Collection reports for May late? The 2014 reports dated June 27th were released on June 30th. The 2013 reports for May came out on June 21st of that year! I can't remember seeing any notice from DoR saying they'd be late.

    Wuz up wit dat?

    Dr. Morbius

  4. Doc- I've hinted at it, and like you I find the silence VERRRRY interesting. Especially since the Transportation Fund had its projections and May figures ready to go this week. Maybe some JFC Dem should ask about that tomorrow