The Good and Bad of Walker’s Budget

Gov. Scott Walker’s proposed 2017-19 budget offers a mix of good news and bad news. The good is that it projects increased state revenues and decreased Medicaid costs, a big driver of state spending in recent years. The not-so good is that it spends all new revenues and more, leaving the state with a minimal balance in two years.

These are some of the observations in a report by the Wisconsin Taxpayers Alliance (WISTAX), The Governor’s Proposed State Budget: A First Look, available now at wistax.org.

The governor introduced his 2017-19 budget in early February. The legislature will devote the next five months to reviewing and amending it. The budget would spend $76.1 billion from all sources, with about half coming from state general purpose revenues, mainly income and sales taxes.

Wisconsin will begin the 2017-19 budget period in July with a projected $435 million surplus. However, the governor’s budget proposes spending $371 million of that surplus during the next two years, ending with a balance of $81.7 million, about 0.5 percent of expenditures, or the equivalent of less than two days’ operating costs.

State budget experts often recommend states keep a balance of at least five percent of expenditures, a target Wisconsin has only met once since 2001.

Because the budget funds spending with the one-time surplus, expenditures exceed ongoing revenues. This creates “structural imbalances” of $155.2 million in 2018 and $216.1 million in 2019.

WISTAX is a nonpartisan, nonprofit organization devoted to public policy research and citizen education.