While Wis budget has help for many, it'll likely be tougher in 2 years

Let’s look at what the LFB says the structural numbers are set as for this budget, and then the next 2 years.

You can see where the problems could happen for the next budget, because of that $679 million deficit in the last year, as that becomes the base amount that the 2021-23 budget starts from.

The LFB says there are a few adjustments to that $679 million deficit that are “baked in”, generally debt-related and expenses and revenues that are different due to tax changes and entitlement spending.

“Baked in” changes, 2021-23 budget
Revenues
Added state taxes due to GOP Tax Scam changes +$40 million
Expanded use of Low-Income Housing Credit -$21 million
Other -$2 million
TOTAL $+17 MILLION

Expenses
Debt payments on outstanding bonds +$30 million
Debt payments due to Evers prepayment in 2019 -$29 million
Wage increases for state employees +$46 million
End of one-time Hospital Payments -$60 million
Milwaukee voucher schools +$24 million
Shell game to pay off Forestry Property Tax +$12 million
State aid to replace Federal TANF block grant +$28 million
Others +$0 (net)
TOTAL +$51 MILLION

There is also one major item LFB includes that I disagree on, and that deals with assumptions about the Foxconn project. The LFB is sticking with its original projections that Foxconn will add $107 million in state tax revenue, and cost $94 million in tax credits for the 2021-23 biennium. I don’t see either of those items happening, given the recent indications that the Foxconn development will have at best 1,500 jobs (and likely a lot less…if any at all).

I also would argue that due to Wisconsin’s low population/labor force growth and resultingly low unemployment rate, Foxconn really isn’t adding anything that otherwise wouldn’t happen. But some expenses might still go out the door, making it a net loser, instead of a $13 million “gain” that LFB is counting on.

But I’ll leave that out for now, and put the LFB’s numbers together, and here’s what you have.

CUMULATIVE 2021-23 STRUCTURAL DEFICIT -$1,351 MILLION

You can see where rejecting Medicaid expansion and throwing an extra $531 million in state dollars into Medicaid services for 2019-21 has a notable effect for now, and for the next budget if it continues. You can also see where adding spending while cutting income taxes used up the surplus we had for this budget on a one-time basis, while not raising taxes and/or ending other Walker-era tax cuts (like what Evers wanted to do with the giveaway to manufacturers) that would have made up the difference.

Not good, and would likely be worse if we get hit with a recession over the next 4 years (as is extremely likely). So now, barring some kind of fiscal help from DC (HAH!) or booming revenues that come on top of an economy that is currently at full employment (HAH!), there is a situation where more budget adjustments are going to be needed for 2021-23.

Maybe at that time, we can have a better Legislature that understands that taking Medicaid expansion and curtailing giveaways to the rich and corporate are the best ways to both balance the budget, and for Wisconsin to do better than 39th in the US for job growth. This is why I see the current budget not as an end, but merely the beginning of a multi-year effort that is needed to restore Wisconsin into being a fiscally responsible, decent, and economically competitive state.