Contradictions infiltrate Gov. Walker’s budget
Republican Gov. Scott Walker’s proposed two-year state budget could recall the goofy hamburger-loving character Wimpy in “Popeye” cartoons: “I will gladly trade you a tax cut now for a budget deficit in mid-2015.”
According to the official summary of Walker’s 2013-15 budget, the governor wants voters who will decide in November 2014 whether he deserves a second term to remember that he cut their income taxes, even if it creates a budget deficit only months later.
--Walker aides say he wants to cut personal income taxes by a total of $342.6 million over two years—$172.6 million in tax year 2013, and $170.6 million in tax year 2014.
--That cut would save a two-income family of four, with annual income of $80,000, about $106 each year.
--But when Walker’s two-year budget ends June 30, 2015, officials project a potential deficit of $188.2 million.
Walker aides shrug off that logic, saying a lot of things—the savings from new “efficient” programs, for example, or an upward bounce in tax collections—could easily erase that projected $188.2 million deficit.
Basically, Walker’s message is: “Mid-2015 is a long, long way off. Thank me for the income tax cut—the first one since the 1999-2001 biennium.”
Two Republican legislative leaders also downplayed the potential mid-2015 shortfall. Two years ago, he and other Republicans proved they can fix deficits as big as $3.6 billion—many times the potential shortfall of $188.2 million in two years, said Assembly Speaker Robin Vos.
For a leader of Republican conservatives nationally who wants his name on the may-run-for-president list, Walker also surprised Capitol Republicans by giving them a budget that raises the so-called GAAP—or Generally Accepted Accounting Principles—deficit by 28.6 percent.
GAAP, a traditional accounting system, measures the gap between spending promises and projected future tax collections.
Other states use GAAP accounting, and Wall Street bond houses use it to monitor whether an entity is a good long-term investment. Wisconsin state government doesn’t count its cash that way.
Walker’s first budget cut our GAAP deficit to $2 billion on June 30. But under his proposed new budget, the GAAP deficit will climb to $2.6 billion by mid-2015.
Walker aides also downplayed that 28.6 percent GAAP-deficit jump.
“Wisconsin has a deficit under GAAP due to the state’s long-term commitment to stabilize and equalize local property taxes,” they said in the official budget summary, adding:
“Payments for shared revenue and local property tax relief are paid during the local government fiscal year but are delayed in the state budget to the state’s subsequent fiscal year. While this mismatch is a major contributor to the state’s deficit under GAAP, the delay has been in place for decades…”
So, when it comes to the growing GAAP deficit, Walker’s excuse is, “Nothing new.”
And if you’re counting potential contradictions in Walker’s budget, consider this one: It estimates that 224,000 Wisconsin residents without health insurance will shop for, and buy, that care from Internet health-care “exchanges” the federal government must set up by Jan. 1.
The irony: Walker has ordered that Wisconsin state government not set up its own exchange.
Walker’s two-year transportation budget offers other ironies.
First, he named a special committee, the Transportation Policy and Finance Commission, which spent two years studying how to fix a 10-year shortfall in highway and other transportation needs estimated to total between $4 billion and $6 billion.
But when the commission did its job and recommended tax-and-fee increases that would total more than $4 billion over those 10 years, Walker’s new budget ignored all of its recommendations.
It’s not the first time a governor has disowned the recommendations of a blue-ribbon panel he appointed. Democratic Gov. Jim Doyle never acted on the recommendations of experts who urged a new system of paying for public schools, for example.
Instead of any of the pay-as-you-go transportation tax-and-fee increases the commission recommended, Walker recommended borrowing about $377 million more to pay for statewide improvements, including rebuilding the Zoo Freeway and Hoan Bridge in the Milwaukee area.
Apparently, adding to long-term state debt is a bad thing if you’re a candidate for governor. But it’s a necessity for a governor laying the groundwork to seek re-election in 21 months.
Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. This column reflects his personal perspective. Email firstname.lastname@example.org.