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WI Fiscal Bureau Chief: Walker Tax Cuts Did Not Cause This Year's Budget Shortfall

7:15 PM, Feb 18, 2011 • By JOHN MCCORMACK
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One talking point from opponents of Scott Walker's budget and unions bill is that the $137 million budget shortfall for Wisconsin's current fiscal year is the result of spending on health savings accounts and business tax cuts Walker pushed through during a special legislative session last month. "Walker gins up 'crisis' to reward cronies," reads the headline of an editorial for Madison's Capitol Times, a self-described progressive news outlet. The editorial reports:

In its Jan. 31 memo to legislators on the condition of the state’s budget, the Fiscal Bureau determined that the state will end the year with a balance of $121.4 million.

To the extent that there is an imbalance -- Walker claims there is a $137 million deficit -- it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January.

The liberal news website Talking Points Memo repeats the claim made in the Cap Times editorial that former Democratic governor Jim Doyle left the state with a surplus. But the claim isn't true. According to Robert Lang, the director of the Wisconsin Fiscal Bureau (the Legislature's nonpartisan budget office), the purported $121 million surplus does not account for $258 million in other other shortfalls, including money owed to the state of Minnesota. Lang writes in an email to TWS:  

January 31, 2011.  The condition statement is shown on page 2.  It reflects a projected gross balance on June 30, 2011, of $121.4 million.  This document was prepared prior to the introduction of the state's budget adjustment bill.  In addition to the condition statement, the document identifies a pending payment under the Minnesota/Wisconsin Income Tax Reciprocity Program (page 3) and 2010-11 appropriation shortfalls (pages 3 and 4).  The Minnesota/Wisconsin payment and the identified shortfalls total $258.1 million.  These amounts are not reflected in the January 31 condition statement because legislative and executive action would be required between February 1, 2011, and June 30, 2011, to address them.  If the entire $258.1 million was to be addressed before June 30, 2011, the gross general fund balance would be -$136.7 million.  http://legis.wisconsin.gov/lfb/Misc/2011_01_31Vos&Darling.pdf  

In a phone call this evening, Lang confirmed that "the fiscal effect" of Walker's health savings accounts and business bills "is not reflected until the 2011-2013 budget." The projected deficit for the 2011-2013 budget is $3.6 billion.So the state will eventually have to find a way to pay for Walker's and the legislature's recent measures, but the claim that he "ginned up" the current controversy by rewarding "cronies" with those bills is false.

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