Clearing the Air on the State Deficit
Before every biennium, the Legislative Fiscal Bureau examines fiscal commitments for the upcoming state budget and determines how much more revenue will be needed to meet those commitments above the current revenue levels.
How much more revenue will be required above and beyond the current levels has been referred to in the media as a “structural deficit” (and that phrase was repeated on this blog), but that’s actually not accurate. In fact, this figure is simply known as an “advanced commitment” because it involves the cost of future commitments based upon current revenue levels.Here’s a chart from a recent Department of Administration report that shows the level of “advanced commitments” over the past decade:
The 2003-2005 figure (red) represents the “advanced commitments” Governor Doyle faced upon entering office in 2003. The 2007-2009 figure (light blue) is what Doyle or Green will face for the upcoming biennium, which appears on par with figures in the late 1990s, but in fact represents a smaller portion of the state budget as a whole because revenue levels are higher today than they were a decade ago.
Another figure that is being tossed around by conservatives is $2.6 billion, which they claim is the size of the current state deficit. This figure is based upon a special request by State Senators Mike Ellis (R-Neenah) and Robert Cowles (R-Allouez) to add anticipated expenditure increases in school aids, Medical Assistance, and state employee compensation to the advanced commitment figure outlined above.
This $2.6 billion figure has been subsequently compared to the $3.2 billion deficit Doyle faced when he entered office. Republicans, in turn, make the claim that Doyle hasn’t done much at all to help the deficit because it’s only 19 percent less than it was four years ago.
This comparison is flat out false.
As the recent DOA report makes clear, the $2.6 billion figure cited by Ellis and Cowles DOES NOT include expected revenue increases, which amount to $1.9 billion over the next biennium.
The $3.2 billion figure Doyle faced in 2003, however, DOES include projected revenue increases for that biennium.
So, in reality, the $3.2 billion figure should be compared to the current figure of $700 million, not $2.6 billion. And that shows us that Doyle, in fact, decreased the budget hole by nearly 80 percent since taking office.
And to put that into broader perspective, the current $700 million figure – relative to the percentage of total estimated spending, including projected increases – represents the 3rd smallest figure since the 1989-1991 budget.
Considering four years ago the figure was the worst it has ever been in
But something tells me the GOP doesn’t want to hear any of that – at least not in an election year that sports an incumbent Democratic governor.