New Report Brings Good and Bad News for Wisconsin Budget

Thursday, October 15, 2015 at 3:01 PM by

Wisconsin finished the last fiscal year with a balance in the general fund of $135.6 million, according to the annual budget report issued by the Department of Administration today. Although that balance only amounts to a cushion of about 3 days of spending, it’s still relatively good news because the Legislative Fiscal Bureau (LFB) estimated back in January that the state was on track to finish the 2014-15 year with a deficit of $283 million.  

One part of the turnaround was an increase in tax revenue of $71 million, relative to the more pessimistic forecast by the LFB in January. Compared to the previous fiscal year, general fund tax collections grew by $593 million or 4.3% in FY 2014-15. 

Although some of the news in the annual report is positive, a careful analysis of the report casts a more worrisome light on the state’s fiscal situation. In particular, the report reveals that net spending from the general fund surpassed revenue by more than $503 million last year – even though spending was suppressed by postponing $108 million of debt payments and by cutting compensation reserves by $98 million. Read more

Positive News on Revenue, but not for State Reserves

Friday, August 28, 2015 at 6:21 PM by

Wisconsin got some good budget news this week, but our state may once again squander an opportunity to use an upturn in revenue to shore up its meager budget reserves. That’s very disappointing because states should set aside funding when revenue exceeds expectations, in order to have stronger reserves to weather economic downturns. 

The good news this week was that the preliminary estimate of Wisconsin’s actual 2014-15 tax revenue is $71 million (0.5%) more than the last projection, which probably has a lot to do with the fact that national economic growth was stronger than previously estimated in the second quarter of 2015.  Although Wisconsin’s individual income tax revenue fell below the projected level by about $24 million, corporate income tax collections are almost $70 million higher than expected, and sales and excise taxes are about $29 million above the anticipated amounts.  The total is 4.3% above the amount in the prior year, though it falls about $100 million short of the optimistic Department of Revenue projection in November of last year.  Read more

Challenges for State Medicaid Budget Grow again in Third Quarter

Thursday, April 2, 2015 at 6:35 PM by

Cost Growth Underscores the Value of Accepting Federal Funds for BadgerCare Expansion

The latest quarterly report on the state Medicaid budget, issued this week by the Department of Health Services (DHS), reinforces our concerns about the choice of Wisconsin lawmakers to spend substantially more for BadgerCare and insure far fewer people than if the state expanded eligibility to cover additional low-income adults.

The new report reveals a $24.8 million net increase in projected Medicaid and BadgerCare spending in the current fiscal year, relative to what DHS estimated just three months ago. Despite that increase in program costs, the department says the Medicaid budget remains in balance because they plan to more than double the amount of drug settlement funds allocated for the Medicaid budget.  (That funding comes from payments by manufacturers to settle lawsuits alleging they improperly charged for medications used by Medicaid recipients.) 

The jump in Wisconsin’s Medicaid costs does not come as a big surprise – considering the rapid growth in BadgerCare enrollment of childless adults, which is now almost 60% above the level that DHS originally expected it to reach at the end of the current fiscal year.  Read more

Closing the Budget Shortfall by Delaying a Debt Payment

Tuesday, February 17, 2015 at 8:52 PM by

We finally learned this week one of the major tactics being used to fill the large hole in this year’s state budget.  The Governor plans to push part of the problem further into the future by delaying a $108 million debt payment that is coming due in May. 

A Legislative Fiscal Bureau (LFB) memo released yesterday by Reps. Hintz and Taylor explains that there are two kinds of debt restructuring – one that has the effect of reducing the total amount of interest paid on an outstanding debt, and another type that extends the life of an existing debt and increases the total cost to state taxpayers.  The planned delay in the $108 million payment is the second type.  Although the LFB memo doesn’t show the full impact of the revised payment schedule, it indicates that the delay will increase debt service costs by $544,900 in 2015-16 and more than $18.7 million in 2016-17. Read more

A Groundhog Day Resolution for Better Budgeting

Monday, February 2, 2015 at 7:54 PM by

Lawmakers Should Stop Delaying Requirement for an Increased Budget Reserve

Groundhog Day always makes me think of the Bill Murray movie, and the movie sometimes makes me think of the Wisconsin budget process.  This year as I contemplate Murray’s almost endless entrapment in a Punxsutawney PA time loop, I can’t help wondering whether Wisconsin lawmakers are doomed to keep making the same fiscal policy mistakes, such as failing to set aside adequate reserves that could keep the state from having a deficit every time tax revenue falls short of the unanticipated level.  We may get at least a partial answer to that question when the Governor introduces his budget Tuesday. 

The $283 million deficit that the state must close over the next five months (in addition to the $2 billion structural deficit in the next biennium) once again makes the case that state policymakers need to budget more cautiously. A great place to start is to stop postponing a state statute that requires lawmakers to set aside a reserve or budget cushion equivalent to at least 2% of spending at the end of each fiscal year.   Read more

Fiscal Bureau Projects $283 Million Deficit at the End of this Fiscal Year

Friday, January 23, 2015 at 5:32 PM by

The Very Bad Fiscal News for this Year Offsets Improved Revenue Estimates for the Next Biennium

New budget figures from the Legislative Fiscal Bureau (LFB) indicate that the state is on track to have a $283 million deficit at the end of the fiscal year. That hole is $153 million deeper than what the Department of Administration (DOA) had indicated in November.

Of course, the Fiscal Bureau isn’t predicting that the state will actually finish the fiscal year with a substantial deficit; they are sizing up the amount of red ink that the Walker administration and state legislators have to eliminate in order to meet the constitutional requirement to have a balanced budget. 

On many occasions in 2014, we expressed concerns that state lawmakers were going to have to make painful budget cuts before the end of fiscal year 2014-15 because the tax cuts enacted early last year were based on overly optimistic revenue estimates and because the state was planning to draw down almost all of the anticipated balance. Read more

New Tax Collection Figures Are Mixed News for State Budget

Tuesday, January 20, 2015 at 7:14 PM by

The Department of Revenue (DOR) issued its report on December tax collections today, and at first blush the numbers look bad; however, I think they may actually suggest a modest upturn – relative to the November estimate for the current fiscal year (FY).  Whether that assessment is accurate will become apparent later this week when officials release updated state revenue estimates for FY 2014-15 and for the next biennium, which begins on July 1.

What the short new report reveals on its face is that tax collections were down by 2.6% in December, compared to the same month in 2013, and tax collections for the first half of the current fiscal year were down by 2.7% compared to the last six months of 2013.  Individual income tax collections for the last half of 2014 were down by 6.4% or $232 million, and corporate income tax revenue was down 8.0% or $38 million.  Read more

New DOR Report Foreshadows Budget Challenges

Tuesday, November 18, 2014 at 9:13 PM by

An economic forecast issued Monday by the Department of Revenue (DOR) provides more evidence that Wisconsin will face substantial budget challenges in the current fiscal year and the next biennium.  According to that document, which is the fall 2014 Wisconsin Economic Outlook, the nation’s economic growth will fall well short of what DOR assumed in its last report, which was issued in January.  (These used to be known as the quarterly economic reports, but for some reason are now issued irregularly and just once or twice a year.)

The January economic report was issued in conjunction with increased state revenue projections, which helped persuade state lawmakers to enact substantial tax cuts. But over the last 10 months the estimates of the national* economy, i.e. the “gross domestic product” (GDP), have changed as follows:

  • The anticipated GDP in 2014 is now $152 billion less (-0.9%) than assumed in January. 
  • The estimate for 2015 is $210 billion lower than previously anticipated (-1.1%).
  • Read more

State Tax Collections Fall Far Short of Projections

Thursday, August 28, 2014 at 3:21 PM by

State revenue collections fell $281 million (2.0%) short of projections during the fiscal year that ended on June 30. Rather than growing by 1% as anticipated, state tax collections fell by 1%, and that will cause a substantial jump in the state’s structural deficit.

Revenue Watch: Anxiously Awaiting the 2013-14 Tax Numbers

Tuesday, August 26, 2014 at 5:46 PM by

For the past month or so I’ve been scratching my head wondering when we would get an update from the WI Department of Revenue on state tax collections during the fiscal year that ended on June 30th.  I’m not the only one who has been anxiously awaiting those numbers; four Democrats in the state Senate sent a letter yesterday to Secretary Huebsch asking when the FY 2013-14 revenue numbers will be released. 

The letter signed by Senators Larson, Hansen, Shilling and Wirch notes that “last year the June numbers were released on August 23rd.”  (You can see that DOR press release here.)  The letter adds:

“Given the numbers we’ve seen to date, the delay is already fueling concern that they will show a revenue shortfall.  How significant that shortfall is could have a wide ranging impact not only on future budgets but the current budget as well.” 

I share the concern about the potential for a revenue shortfall.  Read more