By Kevin Binversie | Wisconsin Reporter
Call me “cautiously optimistic.”
The state Department of Revenue announced Wednesday preliminary tax collection data for fiscal year 2012 was almost a percent higher ($127 million) than initial projections. For the entire fiscal year, the state’s “General Purpose Revenue” – the bulk of the state’s flexible funding source – was up 4.7 percent from fiscal year 2012.
And that means — great news — Wisconsin didn’t run a deficit for its most recent two-year biennial budget cycle.
But every silver lining has a cloud. This year’s positive news can’t hide the fact that we’ll need several more good cycles before Wisconsin’s books are balanced. For too long, lawmakers balanced our budget by raiding funds intended to pay for such things as roads, medical malpractice lawsuits, and federal tobacco settlement were the norm. Many of those funds will never be repaid.
During the same period, bond initiatives pushed current costs (for example, pensions for state workers) onto the backs of future Wisconsin residents. Those will have to be paid. The state also owes the federal government upwards of a billion dollars or more (plus interest) for loans it took out to help pay for unemployment benefits during the economic downturn.
In its March 2012 report, “Wisconsin’s Fiscal Health,” the Wisconsin Taxpayers Alliance points out many of the past decade’s balanced budgets were built on imprecise cash accounting.
Cash accounting is great for small businesses — cash comes in and, when you’re ready to make a payment, cash goes out. But more complex organizations are supposed to account for future and ongoing obligations under Generally Accepted Accounting Principles (GAAP). Wisconsin’s future obligations, for example, include pension payments to retired workers, road construction projects and new dormitories at University of Wisconsin System schools.
“From the look of things, we are not going to be carrying over a structural deficit, so that’s better than they’ve been for the past 10-plus years,” said Todd Berry, president of the Wisconsin Taxpayers Alliance. “But in the grand scheme of things, nothing much has changed. The economy is still uncertain, so that’s going to have an effect on future tax collections. Plus, it’s not like we’ll be sitting on vast piles of money to help make any of it go away any time soon.
“We still have a $3 billion GAAP deficit,” Berry said. “We’ll know in October what state spending numbers are, which will give us the other side of the equation. I think we will see the GAAP deficit go down, but by how much is unknown. That will help counter a lot of the sins of the past. Real progress would be getting that number under $2 billion.”
We can hope that Wednesday’s revenue numbers are the first in a series of good budget numbers for Wisconsin. But the reality behind the state’s finances is that it took decades of mismanagement by both parties to put the state in the fiscal hole. It may well take just as long for the state to achieve true fiscal health.
Veteran political blogger Kevin Binversie is a Wisconsin native. He served in the George W. Bush administration from 2007-2009, worked at the Heritage Foundation and has worked on numerous state Republican campaigns, most recently as research director for Ron Johnson for Senate. Contact him at email@example.com.