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State faces $2.2 billion deficit heading into 2015-17 budget cycle

State faces $2.2 billion deficit heading into 2015-17 budget cycle

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Gov. Scott Walker’s administration is projecting a $2.2 billion deficit heading into the 2015-17 budget cycle.

That’s a sizable hole for Walker, who is contemplating a 2016 presidential run, to climb out of as he crafts his budget proposal due out early next year. Achieving a balanced budget will require scaling back program requests, especially if he wants to cut taxes further.

“We will continue to protect Wisconsin taxpayers, provide a good value to those taxpayers, and live within our means,” Walker spokeswoman Laurel Patrick said. “Gov. Walker will introduce a balanced budget early next year focused on growing the economy and moving people from government dependence to true independence.”

The deficit reflects how much departmental budget requests exceed projected revenues. It is included in a summary of biennial budget requests provided by the Department of Administration to Walker as he prepares an executive biennial budget for release in early 2015.

State agencies have asked to spend $37.2 billion in 2015-16, or 6.1 percent more than the current year, and $38.4 billion in 2016-17, or a 3.3 percent increase over the first year of the biennium.

“The numbers put out today show what it would cost to fund everyone’s wish list,” Assembly Speaker Robin Vos said. “The reality is that’s not going to happen. We will continue to manage the state’s finances by making prudent decisions and doing what’s best for Wisconsin and its taxpayers.”

The deficit amount is nearly 13 times higher than the $171.4 million deficit that was projected for the 2013-15 budget in November 2012. The same report in 2010 prepared by Gov. Jim Doyle’s administration projected a $2.2 billion deficit for the 2011-13 budget, including $1.5 billion in spending that exceeded revenues, about $528 million in lost federal Medicaid funding and a $200 million repayment to a patient compensation fund.

Senate Minority Leader Jennifer Shilling, D-La Crosse, said state families should be concerned about the budget figures.

“The slash-and-burn approach to budgeting over the past four years clearly hasn’t worked,” Shilling said. “Rather than digging a deeper budget hole, we need to invest in education, worker training and economic infrastructure to create jobs and build toward a brighter future.”

Part of the reason for the large deficit in the next biennium is that spending in the current fiscal year is expected to exceed revenues by about $650 million.

The state began this year with a positive general fund balance of $516.9 million but is now projected to end with a negative balance of $132.1 million, not counting a statutorily required $65 million fund balance. That projection assumes a 5 percent increase in revenues for the current fiscal year, though through the first quarter the state is 2.3 percent below projections.

“The challenges of fiscal year 2014-15 are largely a result of adverse federal tax law changes commonly referred to as the federal fiscal cliff, which impacted many states,” Huebsch wrote. “However, through continued prudent management of agency resources, the shortfall noted above will be addressed and the current biennium will end in balance.”

Jon Peacock, director of the Wisconsin Budget Project, said the $2 billion in tax cuts enacted in recent years also share the blame .

“If lawmakers insist on making additional tax cuts, that will require even deeper cuts in the traditional sources of Wisconsin’s strength, such as our public schools and universities,” Peacock said.

The 2015-17 deficit projection is in many ways artificial, said Todd Berry, president of the Wisconsin Taxpayers Alliance. It includes hundreds of millions of dollars in new spending requested by departments that won’t be approved. Requests include nearly $600 million for transportation , nearly $700 million for K-12 schools and more than $760 million to maintain Medicaid service levels.

The figure relies on revenue projections that will change as more economic data becomes available over the coming months. The projection assumes a 2.68 percent increase in revenues in 2016 and a 4.11 percent increase in 2017.

The Legislative Fiscal Bureau, the nonpartisan state budget scorekeeper, won’t release its budget projections until January, Director Bob Lang said.

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