ISTHMUS: Wisconsin goes back to budget deficits

June 27, 2013
Joe Tarr

Andrew Reschovsky is disappointed.

The economics professor at UW-Madison's La Follette School of Public Affairs has been studying the state's problem with budget deficits for decades.

And say what you will about Gov. Scott Walker, one thing he did do was eliminate that pesky deficit in his last budget. But, Reschovsky says, the 2013-15 $68 billion budget recently approved by the Legislature and awaiting Walker's signature shows a government up to its old tricks.

"After years of saying we need to have a balanced budget, very quickly they've turned around and set us up for a deficit," Reschovsky says. "We finally got our house in order and then we're back to creating another structural deficit."

The nonpartisan Legislative Fiscal Bureau found that as of July 1 the state will have a $670 million surplus, but by the end of the 2013-15 biennium, it will have a $500 million shortfall. Reschovsky says this is probably a low estimate, because the bureau doesn't contemplate how things like inflation and a growing population might increase state spending.

Says Reschovsky: "It seems to me we're talking about a structural deficit that exceeds a billion for the next biennium."

Reschovsky says the roots of the state's deficit can be traced back to the 1990s and Gov. Tommy Thompson. At the time, the economy was humming and the state was flush with cash. As a result, the governor and the Legislature boosted funding for schools and health care and got tough on crime with mandatory sentencing laws that vastly increased the prison population, all the while cutting taxes. But when the economy faltered, the state had to maintain spending on those programs.

For better or worse, Walker eliminated the deficit by slashing government spending, especially in education and local government aid. But Walker and the Legislature are now proposing a $650 million tax cut over the next two years, bringing back deficits.

Jon Peacock, research director for the Wisconsin Council on Children and Families, points out that Walker -- like his predecessor -- is delaying creating a 2% minimum balance in this budget.

The Legislature created the requirement a decade ago but has yet to meet it. Peacock says it made sense to ignore the requirement two years ago, when the state had a huge deficit. "But when you finally have a surplus, this is exactly the time to address it."

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