Contextualizing the Structural Deficit
Most voters likely cringe when they hear that the state of
What Green doesn’t want voters to do is figure out exactly what that structural deficit figure means.
Essentially, the equation being used is this:
Cost of Commitments for Next Budget – Revenues from Current Budget = Structural Balance
The big piece that’s missing from the equation, of course, is the amount that revenues will increase from the current budget to the next budget. The biggest generator of state government revenue is the income tax. As state personal income increases, so too does state income tax revenue. Other revenue sources increase in similar ways.
So how much additional revenue is expected for the next budget?
There’s no way to get an exact figure, but estimates put it at $1.9 billion. This is assuming 5 percent revenue growth, which is on par with the growth experienced in recent years.
In short, the expected increase in revenue is enough to cover the current commitments in the upcoming budget – and then some.
Of course, it’s important to note that current commitments in the next budget can (and likely will) increase, which means some prioritization will need to take place when the budget cycle begins. This is normal.
But the Green Team is claiming that a structural deficit shouldn’t exist at all. As campaign manager Mark Graul put it: “Why don't you get to a point where you don't start in a hole?”
The fact is it’s difficult to have existing revenue levels cover all of the commitments made for a future budget. Just as cost of living for households increases each year, so too does the cost of providing government services. To expect stagnated revenues to cover those increasing costs is asking a lot.
More specific to the Doyle Administration, there’s that pesky issue of the largest deficit in
And it wasn’t just the economic downturn at the start of the 21st century that brought us into a structural deficit. Here are the structural deficit figures from the past decade, courtesy (see page 5) of the Legislative Fiscal Bureau:
1997-1999: $1.532 billion
1999-2001: $1.503 billion
2001-2003: $1.719 billion
2003-2005: $2.867 billion
2005-2007: $1.546 billion
2007-2009: $1.537 billion
When Doyle came into office in 2003, the structural deficit was nearly twice was it is now. And when Mark Green left the state legislature in 1998 – while a Republican governor was in office – the structural deficit was nearly equal to what it is now.
So if Mark Graul is really interested in why it’s difficult to get to a point where you don’t start a budget cycle with a structural deficit, perhaps he should ask his boss.
And if you really want to see fiscal mismanagement that’s truly scary, then you’re going to want to turn your attention to the federal government over the past five years. I know Green has intimate knowledge of that one.