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Yes, Wisconsin Really Does Have A Budget Crisis

One of the most common refrains I’m seeing from many on the left in their commentary about the Wisconsin situation is the idea that Governor Walker has created a phony sense of crisis in Madison and that Wisconsin’s budget problems aren’t nearly as severe as he claims:

It has taken hold with conviction: the idea that Wisconsin Gov. Scott Walker ginned up a phony budget crisis to justify his bold bid to strip state employees of most bargaining rights and cut their benefits.

A volley of e-mails, blog posts and inquiries to reporters followed a  Madison Capital Times editorial on Feb. 16, 2011, that said no state budget deficit exists for 2010-’11 — or if it does, it’s the fault of Walker and the Republicans in the Legislature.

Liberal MSNBC talk show host Rachel Maddow joined in Feb. 17, accusing Walker of manipulating the situation for political gain.

“Despite what you may have heard about Wisconsin’s finances, the state is on track to have a budget surplus this year,” she said. “I am not kidding.”

She added a kicker that is also making the rounds: Walker and fellow Republicans in the Legislature this year gave away $140 million in business tax breaks — so if there is a deficit projected of $137 million, they created it.

Maddow and others making the claim all cite the same source for their information —  a Jan. 31, 2011 memo prepared by Robert Lang, the director of the nonpartisan Legislative Fiscal Bureau.

It includes this line: “Our analysis indicates a general fund gross balance of $121.4 million and a net balance of $56.4 million.”

Today, Politifact pretty much demolished that idea:

Our conclusion: Maddow and the others are wrong.

There is, indeed, a projected deficit that required attention, and Walker and GOP lawmakers did not create it.

More on that second point in a bit.

The confusion, it appears, stems from a section in Lang’s memo that — read on its own — does project a $121 million surplus in the state’s general fund as of June 30, 2011.

But the remainder of the routine memo — consider it the fine print — outlines $258 million in unpaid bills or expected shortfalls in programs such as Medicaid services for the needy ($174 million alone), the public defender’s office and corrections. Additionally, the state owes Minnesota $58.7 million under a discontinued tax reciprocity deal.

The result, by our math and Lang’s, is the $137 million shortfall.

Also revealed as untrue is the claim that Maddow and others have made that Walker’s tax cut. implemented in the first weeks of his Administration in January, is contributing to the fiscal crisis. This isn’t true for a very simple reason, the tax cut doesn’t tax effect until next year and will not have a budgetary impact until the next two-year budget cycle begins in July. The tax cuts haven’t even gone into effect yet, so the argument that they helped create the real problems that exist in Wisconsin is, like the assertion that there is no crisis at all, simply utterly false.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Chad S says:

    The Unions should take a paycut(and frankly the Governor should be looking to revoke some tax cuts). Taking away their ability to collectively bargain has nothing to do with the budget.

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  2. Have A Nice G.A. says:

    :)

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  3. Jay says:

    Chad, the plan that is in place, their ability to collectively bargain their salaries is still in place.

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  4. Dave says:

    Point taken Mr. Mataconis. I’m still curious how removing collective bargaining rights from the unions will do anything to solve said crisis, though.

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  5. Have A Nice G.A. says:

    *** I’m still curious how removing collective bargaining rights from the unions will do anything to solve said crisis, though.***

    http://www.youtube.com/watch?v=5VtbjmX3Ql4&feature=player_embedded

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  6. rott3n appl3s says:

    you are completely misrepresenting the issue that politifact was addressing.

    maddow’s statement was that wisconsin would have a surplus this year.

    politifact noted that this wasn’t true, that there would in fact not be a budget surplus this year.

    politifact did not refute the claim that walker is attempting to make things seem more dire than they are, as they weren’t even addressing it.

    you might be able to use this as a point in a larger argument about the budget, but as it stands, your headline and the actual content of your article are at odds, which means you’re either being deliberately misleading, or you’re simply mislead.

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  7. Dave says:

    @Have A Nice G.A. – Walker’s not doing a very good job of justifying himself in that video. At best his argument is for -suspending- collective bargaining rights to ensure that the cuts go through. For every other question on collective bargaining he goes back to the issue of benefits (cuts to which I, for one, don’t have a problem with), without addressing the fact that he’s essentially asking to neuter the unions.

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  8. John Burgess says:

    But neutering, then decapitating the unions, is exactly what needs to be done. Without their greed and grasp, the state would not have been in the fiscal crisis it is now in. ‘Getting to root causes’ is the issue here and the root cause is public sector unions.

    Well, pusillanimous congresses are, too, but that’s not what’s on the table right now, except for maybe 14 in Wisconsin.

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  9. Have A Nice G.A. says:

    lol, now they got doctors walking around handing out work slips, WT*????

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  10. Have A Nice G.A. says:

    Dave I guess you missed the part when he talks about the civil service system.

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  11. tom p says:

    Doug, they had a $121 bilion dollar surplus……………… WTF changed? How naive are you? I will be honest: What has changed is my opinion of your intelligence. You will be questioned every inch of the way from here on out.

    I hope you have answers. But I doubt it.

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  12. Terrye says:

    Considering the fact that states all across the country, large and small, red and blue are facing these kinds of problems it should not come as a surprise that Wisconsin would have real problems.

    This is just more magical thinking from the reality based community.

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  13. Terrye says:

    tom:

    I honestly wonder about your reading comprehension. Go back and read what Doug wrote and if you still don’t understand the simple math he is talking about, then I really do not know how anyone can explain it to you.

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  14. uhh? says:

    Wow, 137 million dollars is a lot of money relative to a state budget!

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  15. uhh? says:

    Of course Politifact also referred to the deficit as “not historically large,” but Doug cut that part out. We wouldn’t want any context seeking into our binary, vacuum-existent analysis of the situation. All budget deficits are equally dire, and it is entirely reasonable to refer to any deficit as a “crisis” regardless of its size.

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  16. Bob in Zion says:

    One of the other glossed over issues is “this year” really only refers to about 4 months. The next 2 year budget cycle begins 1 July, with a 3.6 billion dollar deficit if everything stays “as is”.

    Wisconsin’s balanced budget requirement is a bit lax, in that it only refers to the general fund. So, to balance that over the last 8 years the former govenor and democratic controlled legislatures continually raided segregated funds such as the pension fund, transportation fund and other to balance the general fund. Unfortunately, all of those bills are also coming due.

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  17. Axel Edgren says:

    Walker is right in saying unions have to make temporary concessions.

    But he is also trying to get a permanent hamstringing of unions in while he can, because unions support democrats.

    This means he and everyone who support him are sick in the head and have to be b-r-o-k-e-n.

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  18. Brummagem Joe says:

    Of course WI has a budget problem although it’s by no means one of the most serious in the country but Walker made it worse by these tax cuts just in the same way the Republcans in Washington while screaming about deficits actually made them worse by insisting on the rollover of all the Bush tax cuts. The fact the cuts don’t take effect until the next fiscal year hardly means they are irrelevant. In any case this revolt by state workers is not about budget cuts it’s about Walker’s attempt to abrogate workers CBR’s.

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  19. jwest says:

    Axel,

    Collective bargaining only works when you have two parties with opposing interests. In private industry, the unions want to get as much as possible and management wants to give as little as possible.

    In the public sector unions want to get as much as possible, but the elected officials (especially if they were elected with union support) don’t have any incentive to deny ridiculous benefit demands. This is compounded by the fact that benefits are paid in the out years, long after the elected official has left office.

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  20. Marty says:

    Collective bargaining for educators is banned in four states: South Carolina, North Carolina, Georgia & Texas.

    Last year, Wisconsin ranked number 2 in overall ACT/SAT scores.

    South Carolina – 50th
    North Carolina – 49th
    Georgia – 48th
    Texas – 47th

    Sounds like a great plan, Gov. Walker!

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  21. Axel Edgren says:

    jwest, unions are not the only ones who can use financial support of officials etc. to get theirs. That’s one of the problems in the US

    If Walker had tried to castrate corporate influence on politics along with that of the unions, I would have been all for it. But he didn’t, so he can go to hell.

    When there were democrats in charge they managed a fiscal crisis without shafting unions, and Walker could apparently afford tax cuts for corporations (who are sure to hire more now – that is a physical law after all). So this is about ideology and politics and not unavoidable accounting/fiscal reality – Walker doesn’t need to crush unions but he really really wants to and he doesn’t want to admit to Koch and his party that he couldn’t get a nationally important subjugation of unions done in his own state.

    http://www.tnr.com/article/politics/83829/Wisconsin-public-employees-walker-negotiate

    “Yet this contention is every bit as bogus as the alarmist arguments put forth by the anti-union crusaders of the 1970s. Contrary to Walker’s assertion, there is no direct correlation between public-sector collective bargaining and yawning state budget deficits. According to data gathered by the Center for Budget and Policy Priorities, while Wisconsin projects a state budget deficit of 12.8 percent for FY 2012, North Carolina, which does not allow government workers to bargain, faces a significantly higher deficit: 20 percent. Ohio, whose Republican governor John Kasich has also made clear his desire to roll back collective bargaining, has a deficit that is only about half the size of non-union North Carolina’s. Clearly, then, state budget deficits we are now witnessing are not the product of collective bargaining, but rather reflect the differential impact of the current recession on individual states, as well as the integrity of state fiscal practices (such as whether they raise enough in taxes to pay for the essential services they provide).”

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  22. jwest says:

    Axel,

    The budget deficits of the states are clearly a product of union collusion with democrat elected officials granting gold-plated benefits and pensions, coupled with featherbedded work rules and staffing.

    Now that the public sentiment has turned decidedly against unions, crushing them makes perfect sense.

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  23. Axel Edgren says:

    How can you write when you are too dumb to read?

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  24. anjin-san says:

    I wonder if Walker and the GOP legislators have yet submitted a plan for cutting their pay and benefits. After all this is a crisis, and drastic measures are called for…

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  25. […] taxes" in early January 2011, this did NOT lead to a current shortfall in Wisconsin's budget. Yes, Wisconsin Really Does Have A Budget Crisis http://politifi.com/news/Yes-Wiscons…s-1646496.html __________________ Hey, hey, ho, ho, Dick […]

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  26. Ross Wagner says:

    I live in Wisconsin and there is no budget crisis. What is happened is partisan warfare and Scott Walker gave huge multi-million dollar tax breaks to the Koch brother’s special interest in California. This article is nothing but Republican rhetoric and propaganda and twisted truths by FOX news. I am Republican and I have severe buyer’s remorse from voting for Scott Walker. He is nothing but a pawn for the same people who got us into the Great Recession. I can’t believe he is going after our schools and not the police and firemen unions. Walker is a disgrace and all of those who support his union busting are clearly misinformed.

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