Pocan "hates" DC, like any decent person should

Good stuff here from my Congressman, U.S. Rep. Mark Pocan. This story generates from Rep. Pocan’s interview with Mike Gousha over the weekend, where Mark admitted he “hates Congress” like the rest of us, and blames the self-absorbed, idiotic priorities that D.C. and many of its lawmakers have. Pocan says this mentality reflects in the shoddy process that passes for “lawmaking” these days.

"Well, what do we get done right now? People should be mad at us. Since 2010, we haven't done a budget process at all like it's supposed to happen. We don't do the appropriation bills like we should. We don't have full debates like we should so that public action can have scrutiny."

"Instead, I get an omnibus bill to look at with 48 hours notice that's full of everything, plus what you can't imagine is also in there. it's not even related to the subject matter. And I'm supposed to vote on it intelligently in 48 hours? People should be mad at us. We're not addressing the concerns of people when they sit at that kitchen table and are worried about their futures."

Pocan also told Gousha that stagnant wages and increasing economic inequality are what's causing the anger on both sides of the electorate, and he thinks that Sanders has tapped into that reality that people are feeling.

Pocan, who's in his second term in Congress from Wisconsin's 2nd congressional district, was initially responding to a question about whether Bernie Sanders could be elected president after having labeled himself a socialist.

"I think those labels, real people get beyond what the political class likes to talk about," Pocan said. "They don't worry so much about a label, but they worry about what are you going to do for them so that they can finally see that bump in their paychecks, so they can take care of their family? That's what real people care about."

And this conflict between the wants of everyday people and the game the political class plays is playing out in the presidential race for both Democrats and Republicans, where the average citizen does not see Congress and corporate America working for them, and they are turning against those candidates that are likely to be OK with a status quo that's not working for most people. The overriding question on both sides of the aisle seems to be this- Can this country's many problems be fixed incrementally through the current system, or are things so far gone that the game itself has to be changed, and that can be only be done by electing politicians that will work to change the game. Those that are wrapped up inside the Acela Corridor think things are still fine...and therefore seem way out of touch with the rest of the country, who aren't buying what a lot of people in power and in the media are trying to sell us.

At least some politicians like Mark Pocan still care enough about their constituents to understand why the average American is concerned and angry. We need to elect more people that do, and get rid of the ones who think “DC World” and working for Big Money is a more important than listening to the people that elect them (cough- PAUL RYAN - cough).

Urban Milwaukee shows how ALEC, Koch state policies don't work

For Sunday reading, wanted to direct you part 1 of a series of articles by Urban Milwaukee's Bruce Thompson that will look at the state of Wisconsin's economic performance in the five years that Scott Walker has been governor. The first part of this analysis is looking at how right-wing organizations gave Wisconsin and other GOP-run states high marks for their policies, but that the actual results haven't been so good.

Thompson starts with the American Legislative Exchange Council (ALEC), who ranks all 50 states for their "business favorability" and related right-wing metrics. As Thompson notes, while Wisconsin may rank higher in ALEC's ratings under Walker, it's performance hasn't gotten any better at all.

Walker entered office with the slogan “Wisconsin, open for business.” Early surveys of members of Wisconsin Manufacturers and Commerce showed a marked improvement in the perceived business climate. Whenever the Journal Sentinel reported on a business expansion, among the comments were several who nvariably said, “Thank you, Governor Walker.”

Many organizations on the right were enthusiastic about the changes in policy under Walker. The conservative American Legislative Exchange Council (ALEC) raised Wisconsin from 32nd place to 13th among the states on its “Outlook” scale, based on Walker’s policies, and the graph shows.

Unfortunately, Wisconsin’s actual performance did not match its enthusiastic reviews. Job growth came in at about half the promised numbers, well behind that of all its neighbors except for Illinois which is suffering from the worst-funded public pensions in the nation. Despite ALEC’s enthusiastic Outlook rating, Wisconsin remains mired near the bottom — anywhere from 41st to 44th place among the states — when it comes to the same group’s “Performance” rating

Thompson points out a similar contrast between right-wing rankings and reality when it comes to the Charles Koch-founded Cato Institute's approval of state policies. Thompson provides these two graphs showing how the "best" states under Cato's "Fiscal Policy Report Card for America's Governors" generally have done worse for job growth in the last 5 years than Cato's "worst" states.





By the way, if you put Wisconsin on this list, we'd mired around Alabama and Kansas in the top graph, at 5.8% job growth, and that doesn't count the job losses that the state saw in December. Thompson said Wisconsin just ended up off Cato's "top states" list due to allegedly spending too much (apparently Cato doesn't differentiate between higher amounts of road building and WEDC giveaways vs cutting education funding).

But then again, you shouldn't be too surprised by what Bruce Thompson found in this analysis, because right-wing bubble-worlders like ALEC and Cato (and state-level tools like WMC) don't really care about growing jobs or improving the economic well-being of most people. All they care about is increasing profit, whether that's by reducing the wages and bargaining power of workers, or through privatization that gives their corporations large state contracts.

This part isn't surprising- it's the nature of corporatism to favor greed and self-interest over things that help the public good. But what is alarming is that it means the puppet politicians that these organizations buy off also don't care about the well-being of the very people who voted for them, and who pay their salaries and benefits. Which means anyone who uses Cato, ALEC, or WMC as a legitimate campaign resource or policy influence should be removed from office as soon as possible, before Wisconsin slips any further down the abyss of economic failure.

Why I think WIsconsin's revenue shortfall will only get bigger

I wanted to jump back to yesterday’s revenue estimates from the Wisconsin Legislative Fiscal Bureau, because I think there are a few assumptions in that document that may not quite work out. And it if they don’t work out, we will likely have much worse to worry about than yesterday’s revenue shortfall (detailed in this post).

The first item of concern comes from the LFB’s national economic data, which already was downgraded from what was assumed in last year’s estimates.

Economic growth in 2015 was somewhat slower than projected last January. Real (inflation-adjusted) growth in U.S. gross domestic product (GDP) is now estimated at 2.4% in 2015, which is lower than the projection of 3.1% for that year.

The LFB also estimated 2016’s GDP growth at 2.7% and 2017 at 2.9%. This helped lead to some of the reasons behind the downgrade in revenues, as future income growth was estimated down as well. However, I even find those subdued expectations of GDP growth to be questionable, as the Congressional Budget Office came out with lower estimates when it gave its federal budget projections earlier this week.

CBO expects that the economy will grow more quickly in 2016 and 2017 than it did in 2015, when real (that is, inflation-adjusted) GDP grew by an estimated 2.0 percent. The agency anticipates moderate economic growth in subsequent years, constrained by relatively slow growth in the labor force.

The Economic Outlook for 2016 Through 2020
If current laws governing federal taxes and spending generally remained in place, by CBO’s projections, real GDP would grow by 2.7 percent this calendar year and by 2.5 percent in 2017, as measured by the change from the fourth quarter of the previous year…

Now you may say that a 0.4% difference in the first year isn’t much, or that another shortfall in GDP in 2017 wouldn’t be a big deal. But you put all 3 of those years together, and you end up at $136 billion in lowered real GDP. Wisconsin’s share of that would be just over $2 billion of that reduced activity, and obviously that would work its way down into lowered revenues.

The LFB also noted that IHS Global Insight (who they rely on for their estimates) had reduced their profit growth estimates from last year’s forecast. But those figures still counted on profits to spring back for this year and next year.

Global Insight corporate profit projections
2015 -1.6%
2016 +4.0%
2017 +2.8%

But even those mediocre numbers for 2015 and 2016 may be too high. Take a look at what this article out today from Reuters has to say on the subject.

Fourth-quarter 2015 earnings for S&P 500 companies are projected to have fallen 4.5 percent from a year ago, with a decline of 3.5 percent in revenue expected. Earnings fell 0.8 percent in the third quarter of 2015, Thomson Reuters data shows.

In the past week, first-quarter 2016 earnings estimates have fallen by more than 1 percentage point, flipping the year-over-year outlook for the quarter to a decline of 0.4 percent from a gain of 0.8 percent.

It would take quite a bounce-back in corporate profits in the second half of this year to reach those 4.0% estimates of annual profit growth, let alone the questionable nature of a decline of only 1.6% for 2015.

Those are the macro threats to fulfilling the LFB’s revenue estimates, but there are also concerns about the LFB’s assumptions of revenue growth being strong for the first half of 2016. The first deals with income tax collections, which LFB already revised down by nearly $46 million in this Fiscal Year and over $188 million in 2016-17. But the scary part is that these lower figures still include a fiscally positive assumption for the next 6 months.

Based on preliminary collection information through December, 2015, individual income tax revenues for the current fiscal year are 5.1% higher than such revenues through the same period in 2014-15. A higher rate of increase (7.9%) is anticipated over the next six months largely because fewer refunds are expected for 2015 tax returns than were processed for 2014 tax returns. A lower level of refunds will occur this year because the withholding table change that took effect in tax year 2014 affected withholding levels for nine months in the 2014 tax year, but all 12 months in the 2015 tax year. Because withholding changes do not affect individuals’ tax liabilities, lower withholding levels result in lower tax refunds.

But what if that presumption of a lower amount of refunds doesn’t hold, and income tax collections stay at the 5.1% (actually 5.07%) rate of increase that we’re at right now? We end up $113 million below the projections that just came out. That type of shortfall wouldn’t necessarily trigger a budget repair bill, but eliminates the miniscule cushion we have, and would require using all $726 million in lapses built into our budget, which likely means furloughs and in-year cuts.

In addition, the lower amount of tax refunds makes me skeptical that the state of Wisconsin can reach the LFB projections on another type of revenue.

….Sales tax collections through December, 2015 are 2.3% higher than the same period in 2014 and are projected to accelerate to 3.9% for the remainder of the 2015-16 fiscal year.

So the LFB is counting on sales taxes to pick up in the next 6 months? Despite the fact that Wisconsinites will be seeing fewer tax refunds, and have less money in their pockets to spend on items that generate sales tax revenue, the LFB thinks the rate of growth will pick up?

That’s not the direction that was indicated in December’s report from the Wisconsin Department of Revenue. In a month where a lot of shopping takes place, Wisconsin sales taxes went up all of 0.1%, and since gasoline isn’t susceptible to Wisconsin sales taxes, the drop in gas prices didn’t reduce that total at all (in fact, it should have driven it higher, since people would have had more money to spend on sales tax-generating items). Yesterday’s awful Wisconsin jobs report said that the retail sector dropped 4,500 seasonally-adjusted jobs last month, which indicates that the state’s stores aren’t counting on more spending coming. So I’d be very surprised if we see that nearly 4% increase in sales tax collections that we need to cover that projection.

Lastly, the stock market dive of the last few months may put a damper on Wisconsin revenues. 2015 was the S&P 500’s first down year since 2008, and it’s dropped another 6.7% in the first 3 weeks of 2016. Selling stocks at a loss reduces overall incomes, which means there could be another hit to revenues coming in the near future. The LFB admitted at the end of their revenue report that the 2016 declines in the stock market were not taken into account, and if that decline continues, it seems quite possible that this becomes another source of a revenue shortfall.

Now, don’t take this as criticism of the LFB themselves- they’re probably the best agency around when it comes to analysis and giving information, which is why it is critical for them to remain as the independent organization that it has always been (with the eradication of civil service by the ALEC crew in the Capitol, we need as much independent analysis as we can get). But I am saying that recent state data and the declining national outlook on the economy may prove their estimates to be too rosy vs what we could see over these next 18 months. Which means that an already-bad budget situation stands a strong chance of becoming much worse. 

A presidential choice, and presidential mocking

Happy Friday evening, all. Figured I'd end on somewhat thoughtful and fun notes for you on the 2016 presidential race.

First of all, I want to lead you to an excellent analysis by a rare DC journalist that isn't clueless about life west of I-95- the Washington Post's Greg Sargent. He gets to the heart of the choice that Democratic voters will make between their two candidates, and starts by taking a look at Bernie Sanders' new "America" ad.

The Sanders argument, to put it simply, has essentially been that America is in deep, deep trouble — it faces structural challenges so pressing and urgent, from climate change to soaring inequality, that the failure to meet them with proportionately outsize solutions risks a slow motion slide into disaster that could prove irreversible. Sanders’ message has been that the version of progressive change that we’ve seen during the Obama years — from Dodd Frank to Obamacare to the global climate deal — is basically small beer compared to the epic problems we face. That’s what makes this new ad so striking: it doesn’t detail these challenges, instead suggesting vaguely that inspiration and mobilization can secure America’s future....

Sanders has also said: “The major political, strategic difference I have with Obama, is it’s too late to do anything inside the Beltway. You gotta take your case to the American people, mobilize them, and organize them at the grassroots level in a way that we have never done before.”...

This theory of change is perhaps unrealistic, given the structural realities of how our political system works and of the GOP grip on the House of Representatives. It may not be sufficiently nuanced to do justice to the lessons of our history: major change has arguably been won both from the outside and the inside. It has sometimes been the product, in part, of very ugly exercises of inside manipulation, dealmaking, logrolling, bullying, and ethical corner-cutting, and has required not just inspiration, but fighting, bloodshed, and death.

To be clear, it’s indisputably a good thing that Sanders is setting the policy bar very high. That’s great for the debate, and has made the Democratic primary deeply substantive and has forced Clinton to be a better candidate and offer more ambitious proposals than she otherwise might have if she had followed only her own instincts. And Sanders’ success in energizing young people and, hopefully, engaging them more deeply in the process is a big positive and should alarm Clinton and get her to take notice.

Still, it’s worth noting that the differences between Sanders and Clinton go beyond policy, to the very core of how change can be secured. Clinton has come to see politics as essentially a form of trench warfare. Clinton’s closing ad in Iowa vows to “stop the Republicans from ripping all our progress away,” an implicit acknowledgment that a new Democratic president (whoever it might be) would be deeply constrained from realizing his or her agenda, meaning the 2016 election is mostly about whether Dems can prevent total Republican rule from rolling back the gains of the Obama years. Clinton acknowledges the true nature of the structural impediments to change; that the country is deeply divided ideologically; and that we will probably remain stuck in a grueling holding pattern for years — meaning legislative advances will be ground out on the margins, thorough difficult, painstaking efforts to peel off Republicans and forge compromises that will look dirty and will really, really suck.

That sums it up quite well, and it goes to the deeper question of "Is the status quo in 2015 acceptable, and should we work within that to improve things, or do we think things are unacceptable, and that a large amount of change is necessary to return the country to greatness?"

If you're a Dem, and you think things are going well and want to "stay the course," and that there's only so much that can be changed within the current system anyway, you're probably more likely to vote for Clinton. If you think things in America are messed up and that President Obama hasn't gone far enough in making the change from 30 years of trickle-down failure and increasing corporate influence over all segments of society, you're probably more likely to Feel the Bern. You can guess which direction I take.


But it could be a lot worse than to choose between Clinton and Sanders. And Stephen Colbert illustrated why in this awesome segment from this week, discussing the "Original Material Girl." Colbert's "impersonation" starting around 4:20 is absolutely epic.



Time for more beer to drink, although even if I had a dozen of these high-quality beers, I'm guessing I still wouldn't sound that incoherent....or high.

More Wisconsin jobs lost in December, and DWD Sec also out of work

The revenue report wasn't the only big economic news in Wisconsin today, as this was the 3rd Thursday of the month, which meant the monthly jobs report was slated to come out. However, it took a while for it to be released the public, and once you read this report, it wasn't a shock as to why the Walker Administration took its own sweet time to do so.

The first tipoff that something was up happened with this surprise press release from late morning.

Today, Governor Scott Walker announced the following administrative appointments:

•Ray Allen – Secretary, Department of Workforce Development (DWD)​
•Lon Roberts – Secretary, Department of Financial Institutions (DFI)

“Our congratulations to Reggie Newson for his outstanding leadership and commitment to supporting and strengthening Wisconsin’s workforce,” Governor Walker said. “We are grateful for Reggie’s dedication to the great state of Wisconsin and sincerely wish him the best in his future endeavors. Ray and Lon are both exceptional leaders, and we welcome them to their new roles and thank them for their service to the people of Wisconsin.

I hadn't heard former DWD Secretary (and obnoxious Walker cheerleader) Reggie Newson was on his way out. And amazingly, our media has just kind of shrugged this story off- take a look at the Journal-Sentinel or Madison.com sites, and you'll find the story buried down by the bottom of the page (if you can find it at all).

That raised my antennae to see if the report was bad, and if Newson's "resignation" was related to that, so I waited for the DWD to release the December report around Noon.....And was still waiting at 2....And was still waiting at 4. They released it so late it isn't even in tonight's Wheeler Report (a go-to repository of Wisconsin politics information. Bookmark it if you haven't already), or in the Wispolitics.com website.

Fortunately, I wandered over to the DWD site, and finally got the numbers after 5pm. And yes, there was a reason they dumped this report late in the day. I'll skip over the spin, and give you the key stat.

The estimates show a decline of 5,000 private sector jobs from November 2015 to December 2015, which is within the margin of error for the data series.

ANOTHER 5,000 JOBS LOST IN DECEMBER? Sure, November was revised up by 600 private-sector jobs and 400 overall, but that month also had job losses, even with those revisions. It means there was a combined 8,200 private sector jobs lost in the last 2 months of 2015, and 6,000 overall.



And what's scarier is that the state was lucky to only lose that much. Construction "gained" a seasonally-adjusted 2,000 jobs in December, which is a reflection of the record-warm weather leading to fewer seasonal layoffs than normal. Obviously, that boost will go away in January's report, given that the survey month was last week, when a below-zero cold snap was spreading over the state. Take that out, and 7,000 private-sector jobs were lost.

In addition, every single private-sector services area failed to gain jobs last month, with consumer-driven sectors doing the worst. This includes 1,900 jobs lost in the Leisure and Hospitality Sector (bars, restaurants and lodging) abd 4,500 jobs lost in the "Trade" Sector (which includes retail and related store-type positions). These areas were losing jobs at Christmas time, a peak time for those areas of the economy, and it goes along with the paltry 0.1% year-over-year gain in sales taxes for December that the Wisconsin DOR released today. That is a horrible sign going forward, and you have to wonder how many stores in Wisconsin might close as Year-end figures come in.

And to add insult to the injury of Wisconsin job losses, take a look at what happened to the blue state across the St. Croix.

Minnesota employers added 9,100 jobs in December, boosting the state’s job gains for 2015 to over 42,000.

The Department of Employment and Economic Development reported Thursday that the state’s unemployment rate fell to a seasonally adjusted 3.5 percent in December from a revised rate of 3.6 percent in November. That’s better than the nationwide unemployment rate in December of 5 percent.

Minnesota's 42,000 jobs gained is nearly DOUBLE what Wisconsin added for 2015. And Gov Walker can't even brag about Wisconsin's lower unemployment rate this month, as that went up by 0.1%, from 4.24% to 4.34%. One rare positive in this report is that the Wisconsin labor force finally went back up by 10,500, but even that is still 13,000 below the seasonally-adjusted labor force that existed at the start of 2015. Would anyone in their right mind in Minnesota trade their state's economy and government for ours right now?

With these preliminary numbers, the Walker jobs gap has ballooned well past 110,000 jobs, with 30,000 of that gap coming in the last year.



So in light of yet another awful Wisconsin jobs report, I'd love to find out just who answers next week's Marquette Law School poll by saying "Yes, things are just fine in Wisconsin." They probably are as clueless and self-absorbed as Del Griffith on a late night in November.

Revenue shortfalls and why Wisconsin has another one

Obviously, today's big Wisconsin budget news is the release of today’s new revenue projections by the Legislative Fiscal Bureau. Honestly, the topline projections weren’t as bad as I feared they might be, even though they are by no means good.

Based upon our analysis, we project the closing, net general fund balance at the end of this biennium (June 30, 2017) to be $70.2 million. This is $94.3 below the $164.5 million balance that was estimated prior to our review. The $164.5 million balance includes all bills enacted to date in this legislative session (through 2015 Act 126).

The $94.3 million reduction is the net result of: (1) a decrease of $158.2 million in estimated tax collections; (2) an increase in departmental revenues of $6.3 million; (3) a decrease of $87.1 million in sum sufficient appropriation expenditures; and (4) a $29.5 million decrease in estimated lapses to the general fund.

That $70.2 million left over at the end of the budget means that for now there is no need for a budget repair bill (even if Year 2 of the budget has a deficit of around $149 million). When I saw GOP Senate Leader Fitzgerald say that revenues were looking to be off $150 million, I thought he meant THIS year,which would have likely triggered a future budget repair bill. This is not the case.

I want to speak a second on the expense side of this report. The LFB gives 3 “significant factors” for the $87 million decrease in sum sufficients (generally unknown amounts for mandatory spending and tax write-offs whose totals can be spent above or below this amount without extra legislation being required)

1. $18.8 million in lowered debt payments (thanks to the Fed delaying a rise in interest rates until December).
2. $19.5 million in lower-than-expected Homestead credits
3. $4.9 million in lower-than-expected Earned Income Tax Credits (EITC)

The Homestead and EITC credits overwhelmingly go to the working-class Wisconsinites, were notoriously reduced in Scott Walker’s first budget in 2011, and as the Wisconsin Budget Project notes, have not been increased for inflation since then, causing more of their value to be eroded. So this $24.4 million in “savings” is really $24.4 million that isn’t going to low-income workers, causing them to slip further behind.

The $29.5 million in reduced lapses still isn’t much of a help, as it still leaves $1.06 BILLION more that needs to be lapsed for the 2 years in the budget, with over $726 million of that coming after July 1. If revenues stay at their current reduced levels, it means that you can expect many in-year cuts and/or furloughs for state services coming after that time (likely after the November elections).

Now, onto the reasons behind the revenue projection changes. I’ll keep to the numbers on this one, and go more into what I think it portends for the future in an upcoming post. The biggest factor driving the revenue changes is a reduction in projected income taxes, by $48.5 million in this Fiscal Year, and $188.2 million in FY 2016-17. This goes along with the below-budget trend we have seen so far – income taxes needed to go up by nearly 7.3%, and it hasn’t been hitting that in the Department of Revenue’s monthly releases, (including the December figures they snuck out this afternoon).

The LFB adds that the recently tax cuts from Congress also will take a bite out of the state’s revenues, and the gap would be even larger except that there is expected to a one-time bump in the coming months…in a form that you probably won’t like.

Based on the preliminary collection information through December, 2015, individual income tax revenues for the current fiscal year are 5.1% higher than such revenues through the same period in 2014-15. A higher rate of increase (7.9%) is anticipated over the next six months largely because fewer refunds are expected for 2015 tax returns than were processed for 2014 tax returns. A lower level of refunds will occur this year because the withholding table change that took effect in tax year 2014, affected withholding levels for nine months in the 2014 tax year, but all 12 months in the 2015 tax year. Because withholding changes do not affect individuals’ tax liabilities, lower withholding levels result in lower tax refunds.

What that means is that if the 7.9% increase in individual income taxes isn’t showing up by May (when tax refund season is mostly paid out), we have big-time problems.

The LFB also says they anticipate a pickup in sales tax growth for the next 6 months (to 3.9% from the current 2.3%), so they did not change their projections for sales tax revenues for this year or next year. However, the DOR's December report gives a big flashing warning sign, as sales taxes were only up 0.1% vs 2014, in a month with huge amounts of retail spending for the Holidays, and a month with record warmth that should have allowed people to stay out and about and keep on spending. Uh oh.

Corporate taxes were slightly revised down for this fiscal year, but up by more than $29 million for 2016-17. The LFB says they expect profits to pick up this time next year, which explains why they’re bumping up the totals. In fact, they say it’d be even higher, except for the DC tax cuts and that the Manufacturers and Agriculture giveaway tax credit is being used more by “individuals” than corporations.

Lastly, the LFB says there’s one other intriguing bit of support to tax revenues.

Excise tax revenues over the next biennium are estimated at $706.4 million in 2015-16 and $705.1 million in 2016-17, which represents increased revenue of $26.9 million in the first year and $28.3 million in the second year compared to prior estimates. Excise tax estimates have increased largely due to higher year-to-date cigarette tax collections, which are currently 2.2% higher than collections over the same period in 2014.

In fact, cigarette taxes were expected to fall by $18.6 million this year and another $5.5 million next year instead of going up. So THANK YOU SMOKERS, I guess! (I rarely see people smoking here in Madison, so is it really picking up elsewhere? I could use some insight here)

The LFB also gives a cautionary note that economic forecasts for the U.S. and the state were taken before the oil and stock markets had its huge drop, and it is noteworthy that the LFB quotes a survey from Global Insight which expects 2.4% real GDP growth for 2015, while the Congressional Budget Office just suggested a 2.0% growth rate in its estimates this week. That little bit of difference could go a long way as we move forward with our current budget.

I have one last issue to clear up, and as you’d imagine, it involves typical WisGOP lying about these figures. Both Assembly Speaker Robbin’ Vos and Governor Walker called the $135.2 million projected ending balance a “surplus.” (Walker is especially weaselly in how he spins the numbers).

Here’s the reality.

Ending 2014-15 balance +$135.6 million
Projected ending 2016-17 balance $135.2 million
Change in balance -$366,300.

That’s not a surplus, that is technically a DEFICIT. And the $148.7 million DEFICIT in Year 2 of this budget means a structural deficit near $300 million for the next 2 years…before the increased tax credits and mandatory extra spending kicks in that will both be a part of those budgets.

So stop it, Republicans. While these LFB figures weren’t as awful as some of the hints indicated they might be, we still are worse off, and they certainly do not vindicate the disastrous direction that Gov Walker and WisGOP have put the state on. And as I’ll go into detail later, it’s likely that these budget figures will get worse, and not better.

Follow-up from yesterday's events- more budget deficits, and more DOT funding?

I ignored the silliness of Gov Walker's State of the State speech last night (Twitter is always a better source than putting up with that guy's voice). But the real headline from state politics yesterday was revealed in the Journal-Sentinel’s rundown of the State of the State. And it didn’t come from Walker, but instead came from the GOP's Senate Leader hinting that an already-bad state budget situation is likely to get worse after the Legislative Fiscal Bureau releases new revenue figures next month.

The state budget remains relatively tight — and Senate Majority Leader Scott Fitzgerald (R-Juneau) said Tuesday that new estimates on tax revenues would leave it still tighter.

"It sounds like the projections are going to be far shorter than what we anticipated, although we don't know what the number is going to be yet," Fitzgerald told reporters after the speech. "It's not going to be the $150, $160 million (surplus for the two-year budget) that we thought we'd be working with."

So Walker focused his address more on past accomplishments than costly future plans. The governor said he would invest future state savings on education, but gave no figures and limited his new proposals to addressing student loan debt and modestly funding partnerships between high schools and technical colleges.

Speaking of the governor’s band-aid bills on higher education (I’ve earlier explained why I think it doesn’t go nearly far enough to solve the crisis past Walker/WisGOP cuts have caused), those bills were formally published today, and an Assembly Committee hearing is scheduled on them Thursday morning. Seems odd to be in such a hurry, especially since we don’t know if there is going to be any money available for these initiatives after the revenue numbers hit. But maybe that's the point (don't bet against it with this crew).

Tere was one item of good news on the budgetary front, and this is something else I hinted at in my post yesterday. The Joint Finance Committee just received information from the Department of Transportation that includes plans to spend an additional $37.6 million heading to Wisconsin as part of the recently-passed Congressional budget bill (the one that’s increasing the federal deficit for the first time in the last 5 years). This includes additional bridge work, state highway projects, and some freeway resurfacing.

In addition, the DOT says those federal highway funding levels will be elevated for the next year, allowing for more projects to be done. This is a good thing, mostly because state taxpayers aren't putting up the brunt of these funds, but I also think this extra boost of federal aid allows for another option. This seems like a good opportunity for the Joint Finance Committee to go back on their plans to borrow $850 million in the next 2 years, and use this funding along with the $140 million that was carried over from the last year to drop the future debt costs in the General Fund that is set to happen as a result of the careless DOT policy of “borrow and spend.” Oddly, the upside in revenue that we will likely see will be enough to offset the borrowing in the Transportation Fund, but it probably won't do that for the General Fund money that was borrowed in this budget (more in a second why this is an important difference).

In addition, there should be cost savings in the Transportation Fund coming from lower gas prices reducing costs for the State Patrol, highway maintenance vehicles, and other parts of the sizable DOT fleet of cars. Which is another reason that there should be extra funds left over in the Transportation Fund that could well reduce the massive borrowing that is in the current budget, and allow the state to catch up on some of its large backlog of projects. But here's the problem- because of the 2014 Road Builders' Amendment to the State Constitution, this extra money can't be used to fill in the looming General Fund budget. So the state seems likely to have to cut more General Fund services like school aids, health, and the DNR in the next 1 1/2 years due to that deficit, but can't do anything with the one-time surplus of funds in Transportation other than fixing more roads (and note than none of these surplus funds are going to transit).

When the LFB officially reveals later this month how much of a revenue crater the state is in, it'll be interesting to see if immediate action is required to fix that problem. It would have to be an overall revenue shortfall of around $300 million in year 1 or $200 million in year 2 to officially go into the red, and if that $300 million doesn't show up for this year, it would likely allow Assembly Speaker Robbin' Vos and Senate Leader Fitzgerald to stay on track to end this legislative session by March. That move would allow more time for WisGOPs "independent" supporters to run campaign ads trying to convince the public that they haven't totally messed things up in Wisconsin during their reign of error (good luck), and kick the can on a potential budget repair bill till after the November elections.

But delaying the inevitable budget repair bill doesn't mean Wisconsin's General Fund budget situation is any good, or that there is any money out there that can fulfill Gov Walker's half-measures on college affordability. And it still doesn't reduce the $1.1 billion in unspecified lapses that are baked into this budget, an important fact to remember as any budget deficit comes on top of that absurd gimmick, which means that worker furloughs and other in-budget cost reductions seem to be a certainty for the State of Wisconsin starting on July 1, if not sooner.

Stay tuned, it's gonna get frantic at the Capitol soon enough, and likely very messy and ugly.