Lawmakers Don’t Need Additional Tax Revenue to Avoid Worst of Budget Cuts

Wednesday, May 6, 2015 at 10:13 AM by

Lawmakers hoping to avoid some of the damaging budget cuts proposed by Governor Walker had pinned their hopes on tax revenues coming in higher than originally anticipated, thereby boosting the resources available to invest in Wisconsin’s schools, communities and workforce.

However, new estimates released today show no increase in tax revenue over the original projections.

That news is sure to put key GOP legislators in a bind, especially ones who have indicated they would like to undo some of the damaging cuts in the Governor’s budget and make budget changes that have strong public support. The legislature’s budget committee even postponed their deliberations last week, hoping for news of higher-than-anticipated tax revenues. That hope has now been dashed.

Fortunately, there is another way to build a budget that invests in Wisconsin and avoids the worst of the cuts proposed by Governor Walker, even without higher than anticipated tax revenue.

By reallocating resources and avoiding new tax cuts, legislators can support Wisconsin’s excellent public schools, a university system that drives innovation, and a healthy workforce. Lawmakers can free up an estimated $782 million in the budget by making three changes:

  • Capping a new corporate tax break that is now expected to cost more than twice the amount originally anticipated;
  • Halting the $211 million expansion of a property tax credit that does little to help most Wisconsinites; and
  • Saving an estimated $345 million by expanding access to BadgerCare for adults with low incomes, which would qualify Wisconsin for a much larger share of federal Medicaid funding.

We’ve put together more information that shows lawmakers how they can avoid devastating budget cuts and instead invest in the assets that make Wisconsin a great place to live, raise families, and do business. Here are resources about alternative budget priorities that would protect Wisconsin’s future prosperity and quality of life:

Nearly 20 groups have signed on to support an alternative budget that invests in Wisconsin’s strengths. Supporters include the Wisconsin Council of Churches, the League of Women Voters of Wisconsin, the Wisconsin Alliance for Women’s Health, and many other organizations.

The deep cuts in critical areas of the budget can be avoided relatively easily without any new tax revenue. State policymakers could free up $782 million by making three changes: capturing our state’s share of the money Wisconsin taxpayers have been sending to Washington for Medicaid expansions; halting the continued phase-in of an ineffective corporate tax break that has mushroomed in cost; and reallocating $211 million that the bill uses for poorly targeted property tax cuts.

Tamarine Cornelius

2 Responses to “Lawmakers Don’t Need Additional Tax Revenue to Avoid Worst of Budget Cuts”

  1. Jake formerly of the LP says:

    You guys are doing great work in connecting the wrong choices that got us in this mess, and the relatively easy way out. Keep it coming.

    On a related note, since revenues won’t rise this year and expenses aren’t coming down, may we still need a budget repair bill for THIS fiscal year?

  2. Jon Peacock says:

    Hi Jake, I just caught up with you comment. Thanks for the positive feedback.

    Re your question about the current fiscal year, I agree with the concern you raised in your May 7th blog post (http://jakehasablog.blogspot.com/2015/05/more-on-budget-blunders.html) that we might not be out of the woods this year. Although Tamarine and I haven’t attempted to calculate the state’s budget status at the end of the current year (because the latest Fiscal Bureau document doesn’t give us any hard data to work from), I wouldn’t be surprised if we’re still headed for a deficit. I say that partly because of the size of the revenue hole we had to climb out of and partly because I think we’ll soon learn that there’s a Medicaid shortfall this year and in the next biennium.

    But even though I think we could be on track toward a deficit, I think it’s very unlikely that there will be a budget repair bill. At this late date in the fiscal year, there’s not much the legislature can do to get the budget into balance, and proposing a bill to close a deficit would be very embarrassing for the Governor. In lieu of introducing such legislation, I think the Walker administration would find additional accounting maneuvers that temporarily mask the problem. In any event, I agree with the sentiment in your blog post that legislators and the public deserve an explanation of the state’s current fiscal status and a summary of the fallback plan if May and June tax collections don’t close the budget gap.