Scott Walker may be spending this weekend at Steve King’s race-bashfest in Iowa and the Koch Brothers’ soiree in Palm Springs. But he still has a "day job" that involves a six-figure salary to be Wisconsin's governor, and yesterday we got another piece of evidence that the story Scotty is telling GOPs out of state doesn't match with the reality back here in Dairyland.
Late yesterday afternoon, the Wisconsin Legislative Fiscal Bureau released newly-updated revenue figures for the next 5 months, and the upcoming 2015-17 budget. As predicted, the LFB found the November estimates from Scott Walker’s Department of Revenue to be too rosy for this current fiscal year, which means us in Wisconsin now have a larger budget hole over the next 5 months.
Based upon the November report, the administration's general fund condition statement for 2014-15 reflects a gross ending balance (June 30, 2015) of -$132.1 million. Our analysis indicates a gross balance of -$283.4 million for 2014-15. This is $151.3 million below that of the administration's report…..
The factors that cause the $151.3 million variance are as follows. First, based on economic forecasts and tax collections to date, the estimated tax collections of this memorandum are $173.5 million below the projections of the November 20 report. Second, departmental revenues (non-tax amounts deposited into the general fund) are projected to be $2.7 million less than the estimate of the administration. Third, it is estimated that net appropriations will be $24.9 million below the amount reflected in the administration's report. The primary reason for this difference is a reduction of $18.4 million in debt service payments.
In other words, this would have been worse if it wasn’t for the fact that our falling deficit and stronger dollar are putting interest rates at 2-year lows, which means we pay less in debt service (thanks Obama!).
Now maybe that $283 million hole will be reduced by $50 million due to the Potawatomi Tribe plans to give the State of Wisconsin their payments for the last two years as part of their gambling compacts, but even that situation makes Walker look awful. That's because it's a payback to Walker's decision to disallow the building of a casino near the Illinois border that Walker's own administration admitted would add thousands of jobs. Walker had weighed this decision for well over a year, getting the decision delayed until after the November 2014 election, and allowing him to shake down for $170,000 in donations get input from the various Indian tribes involved. Of course, the more cynical of us would note that Walker's decision to turn down the casino came a week after various fundamentalist groups in Iowa encouraged Scotty not to expand gambling, which tells you what's really calling the shots in Walker World.
Back at Walker's day job, the Wisconsin LFB also looked ahead to the next state budget, which starts on July 1 and goes through June 2017. The good news is that the LFB was slightly more positive on revenue growth than the relatively-optimistic figures from the DOR, predicting revenue growth of 4.7% in Fiscal Year 2015-16, and 3.8% in 2016-17,. A lot of this is due to the expectation of strong growth continuing in the U.S. for 2015 and 2016, with the LFB paper quoting Global Insight forecasts of 3.1% GDP growth and 2.83 million more jobs for this year, and 2.7% GDP growth and 2.49 million more jobs next year (thanks, Obama!).
The LFB puts total tax revenues modestly above Walker Admin's estimates for those two years (by $110.9 million in ’15-’16, and $65.9 million in ’16-’17). However, the bad news is that this still leaves a massive budget hole in Walker's Wisconsin, based on the budget requests made by the state’s many departments.
2015-17 projected budget, based on LFB revenue est.
2015-16 Starting balance $65 million (required reserves)
2015-16 proj. revenues $15,651.3 million
2015-16 proj. expenses $16,636.4 million
2015-16 TOTAL DEFICIT $920.1 million
2016-17 Starting in the hole -$920.1 million
2016-17 proj. revenues $16,191.4 million
2016-17 proj. expenses $17,243.6 million
2016-17 TOTAL DEFICIT -$1,052.2 million
Plus $65 million required reserves
TOTAL 2015-17 DEFICITS $2.037 BILLION
Yes, the $2.3 billion plus in combined deficits are lower than the $3.5 billion I was predicting earlier this week, but it's still a whole lot to make up, and we aren't even mentioning the additional troubles in the state's Transportation Fund, which is asking for $751 million in tax and fee increases just to keep up with the state's freeway-building binge. Any limitation Walker gives to gas tax increases to stay on Grover Norquist's good side inevitably raises that deficit, or requires even more borrowing to pay those bills.
The scary part is that the LFB's estimates of revenue growth may be generous. The LFB says higher tax collections will rise in early 2015 due to a “bounce back” in investment income in 2014 (the LFB says this, along with the lower withholding rates should lower tax refunds and increase revenues). What if that doesn't happen, and the increase is modest and leads to another revenue shortfall? Remember, it just takes a small revenue shortfall in this fiscal year to balloon the shortfalls in the future years, due to the lower tax base.
The star-fucking Wisconsin media has reported the numbers, but many are trying to diminish the significance,
copping out to a more benign-sounding $928 million deficit which ignores a huge part of reality, because that number removes over $500 million in transfers to balance the Transportation Fund and several other added programs that are requested. In addition, the $2.3 billion figure is an "apples-to-apples" comparison to the claims Walker makes on the national stage of "closing a $3.6 billion deficit without raising taxes" in 2011 (done by cutting take-home pay to public employees and payments to local governments, putting huge hardships on both).
I've lost hope that the Wisconsin media will give the real story, given that they owe Walker far too much in clicks and ad money but let’s see if some in the national poitical reportage start to take notice of these deficit numbers, along with Walker's potential rivals in the 2016 GOP primary. Once these people start asking real questions, it won't take long for Scott Walker’s and WisGOP’s stories of “fiscal responsibility” to be exposed as Bush-like "tax cut and borrow" policies that exploded our country's debt, and there isn't enough spin in the world for Walker to talk his way out of it on the national stage.
EDIT- Here's Kossack AnnieJo with a good comparison of how Walker's Administration is saying nothing about this year's budget deficit, despite it being much larger than the current-year deficit we faced this time in 2011.