The state would enter the 2021-23 budget cycle needing to close a $2 billion shortfall if lawmakers approved Gov. Tony Evers budget in full, according to a new analysis by the nonpartisan Legislative Fiscal Bureau.
The projected shortfall, which accounts for both the tax increases and additional spending proposed under Evers’ plan, but not revenue growth or retraction in the next cycle, would be the highest since the projection for the 2011-13 budget cycle. That projection had been made under former Democratic Gov. Jim Doyle.
The estimates are done periodically throughout the budget process and can be based off of the governor’s proposal for the upcoming budget or any other spending or revenue changes passed by the Legislature to determine their long-term effect.
The projected gap in 2021-23 between revenue and spending is about double that of the previous budget cycle, when Republicans controlled both houses of the Legislature and governor’s office.
The projections are often called structural deficits, but are not deficits in the same sense as federal budget deficits because the state Constitution requires that the Legislature pass a balanced budget.
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The fiscal bureau’s long-term budget estimates account for only commitments under current law, provisions of the new proposed budget and maintaining the required statutory general fund balance. The long-term projections are not based on any assumptions for changes in population and economic growth, enrollments, employee compensation, caseloads or inflation.
The budget projections are simply meant as a guidepost for lawmakers during the budget-writing season.
Since 2001 the highest projected budget shortfalls were for the 2011-13 budget, when the state was expected to fall about $2.5 billion short over the two-year budget cycle, and for the 2003-05 budget, when Wisconsin was on track to come up about $2.8 billion short.
In the unlikely scenario that lawmakers passed Evers’ 2019-21 budget as he proposed it, the state would have about $20 million left over at the end of the cycle in 2021.
If the state continued operating under that budget indefinitely, it would fall short by $847 million at the end of the 2022 fiscal year and by another $1.1 billion by the end of the 2023 fiscal year, for a total $1.96 billion shortfall over that biennium.