Sometimes an “I told you so” is necessary. Back in January, the LRB projected a surplus and Governor Evers immediately jumped on it and wanted to increase government spending. I wrote a column reminding everyone that you can’t spend a projection. If and when a surplus materialized, we could decide what to do with it. I said:
In January, the LFB estimated that the state will collect $620.2 million more in taxes than the budget estimated. If the LFB is right, that would mean that the state would generate a $620.2 million surplus at the end of the budget – in July of 2021. In other words, the state does not have $620.2 million in extra cash stashed in Governor Evers’ desk. The state might have $620.2 million in additional money sometime next summer – if the LFB’s forecast is correct.
The LFB does a really good job, but it is not a Delphic Oracle with divine sight. It makes estimates based on the economic data available. This changes, however, in unpredictable ways. For example, if the United States elects a communist to be president this year, it is likely that our economy will enter a deep recession, thus undermining tax collections in Wisconsin and any chance of a surplus.
From this basis, we must evaluate Governor Evers’ plan on both a financial and moral basis. Governor Evers wants the Legislature to pass bills to spend $250 million of the projected surplus on government schools. From a financial perspective, it is outright mismanagement to spend money that state government does not have. Evers wants to spend money based on a single financial projection made three weeks ago about where the state’s finances might end up in 17 months.
Tax collections were down $870 million in a single month. The projected surplus is completely gone and the budget is now in a projected deficit. It’s a good thing that the Republicans didn’t follow Evers’ lead, eh?