Watchdog group says state budget hole to get deeper

Talk about it

More...

• Link to Wisconsin Taxpayer's Alliance Web site

The governor, state Senate and the Assembly have all come up with their own plans to fix the state's current $652.3 million budget hole.

But because of the way the plans are structured, the state will end up $700 million-$800 million in the hole at the beginning of the next budget writing cycle, according to the Madison-based Wisconsin Taxpayer's alliance.

The group analyzed the budget fix proposals and found that all of them spend the state's surplus, borrow, use accounting tricks and transfer funds from other programs to fill the hole.

The group's figure is backed up by those from the non-partisan Legislative Fiscal Bureau, which estimates the deficit for the 2009-11 biennial budget currently at $896 million.

"Typically we've been carrying a deficit of $5-$6 million into the next budget, well that has grown into $400, $500, $600, $700 million," said Todd Berry, WisTax president.

"What people don't understand is that there are only one or two other states showing large deficits. Most states don't do this," he added.

Berry noted that by carrying these large deficits it limits the ability of the state to deal with large problems such as fixing the school funding formula and property tax relief.

"It's like carrying a large millstone around your neck," Berry said.

The large deficits are also affecting the state's bond rating, which Berry says is now in the bottom tier of all states.

"This makes it more expensive to borrow money to build roads, college dorms, creating an even bigger deficit," Berry said.

According to WisTax, Wisconsin has some of the smallest budget reserves in the country. However, all three budget-fix proposals spend some of the surplus, leaving little left for the next budget.

The group notes that both the Assembly Republican and Senate Democrat budget fixes include a $125 million accounting maneuver that spends school aid dollars now, but doesn't appropriate that money until the next fiscal year.

Meanwhile, Gov. Jim Doyle's proposal transfers $414 million from other funds such as $243 million from the transportation fund into the state's general fund.

The group notes that in the last three biennial budgets Doyle has asked to transfer $1.4 billion from the transportation budget.

Doyle also wants a $125 million hospital tax.

According to the group, the Senate version wants $194 million in fund transfers and Doyle's hospital tax.

Both Doyle's and the Senate fixes look to increase taxes. Doyle's proposal includes $6 million in general fund tax increases.

The Senate's version looks for $126.6 million in tax hikes, including an increase in corporate taxes, according to WisTax.

The Assembly budget fix focuses on $361 million in spending reductions without any tax increases.

To get out of the deficit problem Berry says that the Legislature and governor must first stop digging the whole deeper by reining in spending and expenditures.

They must also ensure the state has enough revenue and that the state has an adequate surplus and rainy day fund.

WisTax can be found online at www.wistax.org.

Tags: wisconsin_news, budget_deficit, wisconsin_taxpayers_alliance