A potential $636 million boost to the state’s coffers the next three years has Republican leadership at the Capitol optimistic about the future but wary of changing course during the ongoing budget debate.
The nonpartisan Legislative Fiscal Bureau on Wednesday released a revised estimate of state tax revenues showing Wisconsin collecting an additional $233 million this fiscal year, $204 million the next year and $199 million in 2012-13.
Officials with the agency said the increase is likely due to an improving economy, a stronger stock market and higher business profits.
To some, the good news offered hope that Gov. Scott Walker and the Republican leadership would back off from harsh cuts proposed in the 2012-13 budget, including about $1 billion from public schools and higher education, and an earlier measure limiting public sector collective bargaining, expected to save $330 million over three years.
But on Wednesday Walker said he intended to use the additional funds to continue paying off state debt, including the nearly $60 million owed Minnesota under a canceled tax reciprocity deal and more than $200 million needed to pay back a state fund that helps pay excessive medical malpractice claims.
“We are going to do what families have been doing all across Wisconsin,” Walker said. “We are going to pay our bills.”
State Sen. Alberta Darling, R-River Hills, and state Rep. Robin Vos, R-Rochester — co-chairs of the Legislature’s powerful Joint Finance Committee — echoed the governor’s sentiments, as did Senate Majority Leader Scott Fitzgerald, R-Juneau, who said the money “shouldn’t be burning a hole in anybody’s pocket.”
But Assembly Minority Leader Peter Barca, D-Kenosha, said the revised estimate should cause Republicans to rethink their approach to the budget this year, which he said focuses too much on divisive issues like voter ID and school vouchers and not enough on economic development and job creation.
“We are on the wrong track, in terms of what we are debating here every day,” he said.
Barca said the revised estimate proves Democrats — who controlled both houses of the Legislature and held the governor’s office — were on the right track last session.
“This is not something that just happened over the last couple of weeks,” he said. “This has been a growth pattern.”
Walker’s two-year spending plan, introduced in March, includes $28.7 billion in state money and slashes the perennial imbalance between revenue and spending — known as the structural deficit — some 90 percent by 2013, from $2.5 billion to $250 million.
Critics said the proposal cuts too much, too quickly. They said there are other ways to address the $3.6 billion shortfall Walker faced when he came into office other than slashing education, potentially knocking more than 50,000 people off BadgerCare and making deep cuts in aid to counties and municipalities.
“We’re not talking about using the money for new programs or to boost spending,” said Mary Bell, president of the Wisconsin Education Association Council. “We’re talking about offsetting the extreme cuts proposed to our public schools that will lead to larger class sizes, fewer programs and staff layoffs.”
Walker’s proposal has met with approval by conservatives, who praised the governor for drafting a document that relies on straight budget cuts as opposed to one-time infusions and targeted fund raids. A 2009 report from the conservative Wisconsin Policy Research Institute found that between 2001 and 2008, the state spent more than it collected and used nearly $2.4 billion from one-time sources such as the state’s tobacco company payout, the transportation fund, and funds meant to help the environment and injured medical patients.
A key part of the governor’s budget hinged on passage of his controversial collective bargaining measure. The proposal, currently stuck in the courts, would allow municipalities to offset state budget cuts by imposing higher contributions on employees for health care and pension payments.
But a recent survey by the League of Wisconsin Municipalities concluded the collective bargaining legislation would pay for only about 61 percent of the 2012 funding cuts in his budget proposal.
Todd Berry, president of the nonpartisan Wisconsin Taxpayers Alliance, said the state was in a similar position in 1979, 1994 and 2005: coming out of an economic downturn and finally seeing a little light at the end of the tunnel. Berry said leaders then chose to spend the money.
“The question I have is: Have our politicians learned anything from our history?” Berry said. “We will see if this time they will be fiscally mature.”