My column for the West Bend Daily News is online. Here you go:
Some headlines are already using misleading words like “shortfall” and “deficit” when describing the state of Wisconsin’s next biennial budget. Those are odd descriptors for a budget that has not been written yet, but it is based on the results of the first step in the budget process. The hard work is just beginning.
Wisconsin’s two-year budget will be crafted and passed next year by the new, enlarged, Republican majorities in the state Legislature. While such dominance by one political party may lead one to believe there will be unanimity of thought, there are actually quite a few areas of severe disagreement between various factions of the Republican Legislature and the governor, including transportation, education and debt load. It will be a lively budget process.
The first step in the budget process is for all of the state agencies to submit their budget requests, or wish lists, to the governor. From those budget requests, the governor prioritizes and builds a budget proposal. The legislature then takes the governor’s proposed budget, washes it through the spin cycle of the legislative process, and hands it back to the governor for signature. After the normal veto/override process, the budget is enacted into law.
But we are still at the first step, which is what led to the misleading headlines. The cumulative total of the state agencies budget requests exceed the projected state tax revenues for the next two years by $693 million. In other words, the wish lists add up to $693 million more than the state expects to extract from us in taxes.
That does not really encapsulate the whole story. While the state agencies requested $693 million over projected tax revenues, they actually requested more than $1.5 billion more than what they will spend in this fiscal year. That is a big wish list. It should be noted the largest share of the requested increase — $707 million — comes from the Department of Public Instruction, which runs independently from the governor’s administration.
First, it should be noted the agency budget requests are just that – requests. As with every budgeting cycle, agencies ask for as much as they can knowing full well that they will not get everything on their list. This is true in families, businesses, governments and everywhere else where wants outstrip the funds available. The governor and the Legislature have a duty to prioritize spending and make sure that the government does not spend more than the taxpayers can afford.
Second, while state agency requests exceed estimated tax revenues by $693 million, the estimated tax revenues are substantially higher than what Wisconsin took from us last year. Despite a number of tax cuts enacted over the past few years, the Wisconsin Department of Revenue expects state tax revenues to increase $1.4 billion over the next two years.
That means the government could spend an additional $1.4 billion in the next budget without raising taxes or adding debt. Or it could fulfill all of the budget requests and borrow the difference between the taxes collected and the money spent.
I urge the legislature to do neither. Despite Republican dominance of the state levers of government for the last two budgets, the state of Wisconsin has increased spending each subsequent budget. If the election of Donald Trump has taught us anything, it is the public is tired of the status quo. We are tired of our government just spending more every budget because that is all they know how to do. We are tired of the same old government insiders just pushing the same old agendas.
Instead of fighting over how much the state of Wisconsin will increase spending, I urge state lawmakers to actually spend less. At the very least, if the state simply kept spending flat, it could use the additional $1.4 billion over the next two years to reduce the state’s debt or, even better, return it to the taxpayers. Wisconsin is still in the top-10 highest-taxed states. The only way to change that is to actually start reducing spending. The tax reductions will follow.
Wisconsin does not have a tax problem. It has a spending problem. If state Republicans are ever going to convert their rhetoric about fiscal discipline into real life, this is the budget to do it.