Budget Numbers: Is It Really All Smoke and Mirrors by Senator Kathleen Vinehout
“Are we in the red or in the black? What’s the truth? What’s the
reality?” The rural Trempealeau County woman was clearly
frustrated.
“What do the figures really mean?” she asked
me. “Is there a big hole? Or not? Is it all smoke and mirrors?”
Fresh off the rhetoric of the campaign trail, people are
rightly confused about where the state is headed and what numbers are
real. It’s hard to find someone who is not just outright frustrated at
what they see as intentional distortions.
But when spring
comes, lawmakers will be working hard trying to balance what is sure
to be a $70 billion-plus spending plan. Somehow, they will have to
balance the books.
How can we tell what’s real?
Let us begin with hard cash: money coming into state coffers. In a
two-year budget, what’s real – money actually coming in – can be found
in the tax returns of the first year. The state’s budget year
runs July 1 through June 30. It takes a while to tally things and pay
year-end bills. So numbers change a bit while accounts are tallied and
then audited.
Preliminary tax returns show that individual
income tax collection is down by about 2½% and corporate income tax is
down by over 9%. Individual income tax makes up over half of the
general fund. This puts the actual total down about 2% over the budget
estimate.
A sharp drop in corporate income tax collection
is important. There are different theories why. Perhaps companies are
not making money; or too many dollars were given away in corporate tax
breaks.
Just one tax break – the manufacturing and ag tax
credit – cost taxpayers almost half the amount by which corporate
income tax collection dropped. (Tax breaks passed in the last four
years total over 50 separate items and will cost taxpayers an
estimated $1.1 billion next fiscal year.)
So we know things
did not go well in the last fiscal year. Will they get better?
This depends on with whom you talk – but let’s take the least
politically minded entity in the state budget process – the
nonpartisan Legislative Fiscal Bureau (LFB).
When allowed
to do the math without any partisan driven assumptions – and this is
important – the LFB estimates Wisconsin will begin the next budget
process in the red by about $1.766 billion. You may have heard this
number rounded up to $1.8 billion. This is how much money is needed to
fund the commitments in the coming budget.
The number is an
estimate – as all budget numbers are estimates. But it is based on the
best nonpartisan assumptions going forward and follows the conventions
used in estimating past budget ‘starting points.’
In the
final weeks of the campaign there were several other numbers tossed
around. One used by the Governor was that Wisconsin was $535 million
in the black.
The Governor used a memo prepared by LFB to
buttress his claim. In this memo the nonpartisan LFB was directed by
Finance Co-Chair John Nygren to make several assumptions. Namely, “let
us assume Wisconsin brings in more money and spends less.” Not
surprisingly, the numbers were better.
Politifact in
the Milwaukee Journal Sentinel analyzed the ‘$535 million in
the black’ and rated it False. Other factors loom
large in balancing the next state budget. Not included in this
analysis is the mismatch between money coming in for roads and bridges
and money going out.
The Governor and lawmakers
voting for the last budget put nearly a billion in new spending on the
state’s credit card. The transportation fund cannot support this level
of borrowing.
Balancing the next budget will be a
challenge. Needs are great. Tax money given away in the form of tax
breaks cannot be spent on vital services.
To begin an
honest budget discussion, let’s start with the best information and
agree on the facts. To paraphrase Ambassador and former US Senator
Daniel Patrick Moynihan: You can have your own opinion but not your
own set of facts.
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Authorized
and Paid for by Voters for Vinehout, Terri Stanley, Treasurer
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