What Candidates Aren’t Saying About the State Budget
Campaign season is upon us, and that means calls by candidates to cut state spending significantly in order to close the gap in the state budget, currently estimated at $3 billion over the next two years. What these candidates don’t say is that trying to balance the budget through cuts alone will likely drive up property taxes and reduce services that are critical to well-functioning communities.
An issue brief released today by the Wisconsin Budget Project, based on new spending figures put out by the Wisconsin Department of Administration last week, examines two main characteristics of our state budget that make major spending cuts particularly painful.
First, most state spending in Wisconsin actually goes to support local services. State support for local services makes up 56.5 percent of state spending from the General Fund, as shown in Figure 1. This includes state spending on programs like K-12 education, shared revenue, and community aids. Big cuts in state spending for local assistance would probably lead to some combination of higher property taxes and reduced services, which is not something candidates want to emphasize.
When candidates talk about making cuts to balance the state budget, they might be envisioning making cuts to the portion of the budget that supports state agency operations. But that makes up only a quarter of state spending, and it includes the UW System and the corrections system.
A second challenge lies in the fact that the bulk of the state budget is devoted to just a few large — and popular — programs, many of which benefit hundreds of thousands of Wisconsinites: K-12 education, the University of Wisconsin system, corrections, and medical assistance. Together, those four programs account for about two-thirds of Wisconsin’s General Fund spending, as shown in Figure 2. The concentration of the state budget in a few areas means if cuts alone are used to balance the budget, those popular programs would likely have to take the brunt.
It’s hardly surprising that these two messages – cuts to the state budget will mean cuts to local services, and a few large programs will have to bear the brunt of the cuts – are not getting the emphasis they deserve in the season’s discourse. Instead, some candidates are calling for additional tax cuts and the reopening of certain recently closed corporate tax loopholes. If those measures were to be implemented, the threat to local services and key programs would become even greater.
These new revenue figures underscore the need to adopt a balanced approach during the upcoming budget debate. There will certainly be painful cuts. But in addition to identifying potential spending cuts, we should seek out opportunities to enhance revenue. Policy-makers must realize that trying to balance the budget through cuts alone would ultimately do a lot of harm in our communities.
Click here for the new Wisconsin Budget Project Issue Brief: New Spending Figures Show Difficulty of Making Deep Cuts.