Despite Delay in Debt Payments, Budget Remains Very Tight
An annual budget report issued yesterday has a little bit of good news for the state, but also disappointing news. The bottom line is that the state’s budget balance grew this year, but by less than the budget bill was counting on. As a result, it could be difficult to keep this year’s budget in the black if tax revenue continues to fall short of the expected level. [See the update below about the new tax collection figures.]
The new Annual Fiscal Report shows that Wisconsin finished the 2015-16 fiscal year with a balance of almost $314 million. Although that’s pretty good news, it’s also a bit disappointing because even though the balance grew by $87 million this year, the budget bill had assumed the state would have about $77 million more in its balance at the end of the 2015-16 fiscal year. Read more
Reduced Participation Provides Opportunity and Reason to Streamline Enrollment Procedures
Members of the legislature’s Joint Finance Committee got some very good news last Friday in the form of a quarterly report on the state Medicaid budget from the Wisconsin Department of Health Services (DHS). The letter from the interim Secretary of DHS indicates that the agency now estimates that Medicaid spending during the 2015-17 biennium will be $418.6 million below the amount lawmakers anticipated when they passed the budget bill a year ago.
The portion of Medicaid spending specifically from state General Purpose Revenue (GPR) is projected to be almost $176 million (3.1%) less than the budget bill set aside. That’s an improvement of $90.6 million GPR since the last projection was made three months ago.
These numbers from DHS are very good news at a time when state revenue projections haven’t been very good. The reduced growth in Medicaid spending improves the prospects for keeping the total state budget in the black – without resorting to additional remedial measures (beyond the delay in debt payments that the Governor already implemented). Read more
The latest quarterly report from the Department of Health Services (DHS) projects that state spending for Medicaid and related services during the current biennium will be $85.2 million less than the state budgeted. That amounts to $12.6 million less state spending than the state estimated in its last update, three months ago. (I’m focusing just on the state share of spending; the total reduction from all sources is almost $203 million, relative to the amount budgeted for 2015-17.)
Granted, Medicaid spending trends can change rapidly, but the DHS report is welcome news – particularly since other budget indicators aren’t so good. Recently reduced estimates of national economic growth in 2016 suggest the possibility of less state revenue growth than anticipated, and as we noted in a recent blog post, state tax collections dropped by $91 million in February. Against that backdrop, the latest DHS report provides a bit of positive news relating to the prospects for keeping the state budget in the black. Read more
On a party-line vote Tuesday, the Wisconsin Senate Passed a bill that will tilt the state budget process in favor of spending cuts or freezes. It does that by striving to frame budget deliberations as a choice between frozen spending and spending cuts, while shifting attention away from the question of what is needed to maintain the current level of services.
If the Assembly concurs with the Senate later this week, the proposal, SB 407 , will require state agencies to submit two additional things with their biennial budget requests: a) a proposal that would maintain the existing level of funding, and b) a proposal to cut the agency’s budget by 5%.
As I wrote in a previous blog post, I don’t necessarily have a problem with giving legislators access to information from agencies on how they would handle a budget freeze or a budget cut; shining more light on budget options is a good thing. Read more
A recently introduced bill appears to be aimed at tilting the state budget process in favor of spending cuts or freezes. It does that in the guise of seeking more information from state agencies about budget options, but it fails to do so in a way that will facilitate a balanced and well-informed public debate of budget choices.
The proposed legislation – SB 407 and its Assembly twin, AB 534 – would require state agencies to submit two additional things with their biennial budget requests: a) a proposal that would maintain the existing level of funding, and b) a proposal to cut the agency’s budget by 5%.
If legislators want information from agencies that will help guide state lawmakers in where and how to make budget cuts, that’s their privilege. My concern about the bill isn’t about the information it would require from agencies, because I think shining more light on budget options is a good thing. Read more
New Structural Deficit Calculation Assumes $2.15 Billion of Lapses over Three Years
The state’s fiscal health isn’t nearly as strong as the Governor and a number of other lawmakers asserted in the spring. While the Governor was courting GOP support in South Carolina for his upcoming presidential campaign, he said: “At the end of the budget we’re debating right now for our next two years in my state, we will end with a structural surplus of $499 million.” Unfortunately, the latest figures from the Legislative Fiscal Bureau (LFB) show that we need to change that plus sign to a minus sign, because the Governor’s optimistic assertion was off by about $1 billion.
A July 7th memo from the LFB projects that Wisconsin will start the 2017-19 biennium with a structural deficit of $490 million. In other words, the 2015-17 budget developed by the Joint Finance Committee (JFC) puts the state in a position where lawmakers would need to use the first $490 million of revenue growth during the 2017-19 biennium simply to maintain the spending commitments assumed in the second year of the 2015-17 budget. Read more
Legislators Can Avoid Deep Cuts without Raising Taxes
Wisconsin needs a budget that invests in the building blocks of a strong economy. Healthy families, safe and stable communities, and a well-educated workforce are assets critical to helping Wisconsin remain an attractive place to live, raise families, and do business. By strengthening these resources, the state budget can lay the groundwork for broad-based prosperity and an economy that works for everyone.
Unfortunately, the budget proposed by the Governor makes deep and unnecessary cuts to investments vital to Wisconsin’s long-term economic success. For example, the proposed budget would reduce resources for public education – a cut that would come on top of dramatic reductions in resources that have already occurred. The budget would also make deep cuts in state support for the University of Wisconsin System, giving a tremendous blow to one of the engines of Wisconsin’s long-term prosperity. The proposed budget would also make it harder for people with disabilities to get the help they need to contribute to their communities. Read more
New figures released last week by the Census Bureau show that total state and local spending and revenue in Wisconsin is not much different in Wisconsin than the per capita figures for the nation as a whole. For example, our analysis of the new data – which is for state and local revenue and spending in 2012 – found the following:
- Wisconsin ranks 25th in total revenue (including federal aid) per capita, and was 1.5% below the national average on that measure.
- Looking at all state and local revenue per capita, but excluding federal financing, Wisconsin ranked 19th and was 1.1% above average.
- We ranked 24th in total spending per capita, 2.9% below average, and 21st (just 0.2% above average) in a slightly narrower spending measure – direct general spending – which I think is better for comparative purposes because it excludes things like state-owned enterprises.
Wisconsin’s figures are higher compared to the national averages when they are measured relative to income, because personal income in Wisconsin is well below the average nationally. Read more
Governor Walker proposed a $100 million property tax cut at a hastily-called press conference today. The tax relief would be delivered through the school aid formula – by adding $40 million this year and $60 million next year. Because the school spending caps aren’t being raised, schools will have to reduce property taxes to offset the increased state aid. The Governor is calling a special session for next week to expedite legislative action on the plan.
According to a story on Channel 3000.com, Assembly Speaker Robin Vos said the bill will be introduced tomorrow, and he would like the legislature to pass it by the end of next week. The Governor is pushing for fast action on the proposal so the tax cut would be in effect when property tax bills are being calculated later this year.
Walker said that the funding for the property tax cut would come from the state budget surplus. Read more