Wisconsin Lacks Key Tools for Long-Term Budget Planning and Measuring Effects of Tax Cuts

Wednesday, February 5, 2014 at 11:52 AM by

Wisconsin lacks certain key, proven budget-planning tools that would help it build an attractive business climate, make government more effective, and measure the future effect of tax cuts, according to a new report from the Center on Budget and Policy Priorities.

The report ranks the states according to whether and how well they make use of ten key fiscal planning tools, which fall into three broad categories:

  • A map for the future: the budget and accompanying documents should include a detailed roadmap of the budget’s immediate and future impacts on the state’s fiscal health, and help demonstrate the effect of tax changes on future budgets.
  • Professional and credible estimates: standards and sufficient oversight are needed to guarantee that these analyses of the budget’s impacts are professional, credible, and prepared without political influence.
  • Ways to stay on course: mechanisms should be in place to trigger any needed changes during the budget year, before too much damage is done.

Wisconsin does a little better than average in a ranking of the degree to which states use effective tools to chart an accurate fiscal course and make corrections when needed. We are ranked ahead of 28 states because we are tied with six other states for the 17th best score. But Wisconsin can and should do more long-term planning to help build a strong economy, cope with economic ups and downs, and improve government efficiency.

This discussion about budget tools is particularly appropriate in Wisconsin because it occurs in the context of a tax cut proposed by the governor, one that would dig a significant hole in the next two-year budget. A more robust set of budget tools – like those used in some other states – would give us a better idea of how the tax cut would affect future budgets. Two budget tools that Wisconsin is missing and which would be particularly helpful in this situation include:

  • A current services baseline, which would help policymakers estimate how much it will cost the state to continue to deliver the same quantity and quality of services to residents in the future that it is delivering currently. In their enthusiasm for cutting taxes, Wisconsin lawmakers are fond of saying that the state can simply grow its way out of any projected budget holes; conveniently overlooked is that fact that costs can increase in future years as well. A current services baseline would shed more light on what those costs might be.
  • Projections of revenues and spending for at least five years into the future. Longer-term projections would include changes to revenue or spending that were pushed from one budget period into the next. Those costs are sometimes delayed long enough to keep them from being reflected in the structural deficit calculations.

People across the political spectrum can agree that adopting proven, nonpartisan tools that allow our lawmakers to better plan for the future in a transparent way is in Wisconsin’s best interest. Using a key set of tools, states can create responsible, accurate budgets and give citizens more information about their state’s budget priorities and options. Budget tools could help add important information to the current debate about the effect of proposed tax cuts.

For more, see this fact sheet with information about which budget tools Wisconsin lacks.

fiscal tools

One Response to “Wisconsin Lacks Key Tools for Long-Term Budget Planning and Measuring Effects of Tax Cuts”

  1. […] Term Budget Planning and Measuring Effects of Tax cuts (February 5) – Wisconsin lacks certain key, proven budget-planning tools that would give us a better idea of the size of the hole the tax cut would dig in future budgets. Adopting a current services baseline, and projecting revenues and spending for at least five years into the future would add important information to the current debate about the tax cuts. […]