Tuesday, November 21, 2006

It's Budget Report Day!

Well, actually, it was yesterday. How did you celebrate it?

Some GOPers celebrated by falsely claiming that the timing of the state budget release is suspect since it comes just two weeks after the election. In reality, the timing of the release is statutorily-driven, not campaign-driven.

According to Section 16.43 of the Wisconsin State Statutes: "The [DOA] secretary shall compile and submit to the governor or the governor-elect and to each person elected to serve in the legislature during the next biennium, not later than November 20 of each even-numbered year, a compilation giving all of the data required by s. 16.46 to be included in the state budget report, except the recommendations of the governor and the explanation thereof."

These reports have been released on the same day -- November 20 -- over at least the past three bienniums (I didn't look back any further than 2000). So the timing of the release this year is not at all suspect or out of the ordinary.

But taking a trip down memory lane is instructive on more issues than just timing.

Interestingly, the projected budget gap for the 2005-2007 biennial budget was exactly the same as this year's projected budget gap. But since the budget as a whole is larger in the 2007-2009 biennium, the projected gap for the upcoming budget actually represents a smaller figure proportionally than the last projected gap heading into 2005-2007.

On November 20, 2004, the Journal Sentinel ran a front page article by Patrick Marley and Stacy Forster titled "Deficit is $1.6 Billion, State Says." Here's a snippet:

The report from Administration Secretary Marc Marotta said state tax revenue would grow in the first year of the budget to more than $11.8 billion, an increase of $489 million, or 4.3%. In the second year, it would rise to $12.4 billion, up $548 million, or 4.6%.

The budget runs from July 1 to June 30, 2007.

Some officials said they expected more of a pickup in revenue as the economy rebounds. But Doyle said the figures were based on conservative projections to avoid counting on money that doesn't materialize, as his predecessors did.

Although overall revenue will rise, state agencies' budget requests surpass it, creating the $1.6 billion deficit.

Doyle said he will not raise taxes, so he must whittle back the requests so he can submit a balanced budget to the Legislature early next year.

The Legislature then would make its own adjustments and ship the spending plan back to Doyle, who has broad authority to veto portions of the budget.

In addition to their budget requests, agencies have given Doyle plans for how they would handle 10% cuts to their administrative spending. If implemented, those plans -- which include a vast reorganization of the Transportation Department -- would cut spending more than $150 million and trim 1,400 jobs.

For the most part, Doyle said agencies shouldn't expect to see their full budget requests fulfilled. He said he plans to turn toward the 10% reduction plans "right away" as he puts together his budget.

All of the same could be said this year. But it wasn't. No clear explanation of what the projected budget gap actually means was provided in today's front page JS article. Instead, it's simply referred to as a "deficit."

(Side-Note: While the word "deficit" has been used in the past, it's somewhat misleading to call it that when there isn't even a budget, yet.)

Taking a trip a little further back in time proves even more interesting.

When the state DOA under Scott McCallum released its very conservative projected budget gap of $2.6 billion on November 20, 2002 -- the largest in state history, which included an actual deficit of around $300 million for FY 2002-2003 -- the resulting Journal Sentinel story didn't even make the main section, instead landing in the Metro section.

And even then, the title of the article -- written by Steve Walters and Dennis Chaptman (dated 11/21/02) -- was "$2.6 Billion Deficit for State Projected," with the keyword "projected" prominently displayed. No "Deficit is," as the 2004 and 2006 titles have read.

(Side-Note: The actual budget gap in 2002 ended up being more than $2.6 billion because the McCallum administration significantly over-estimated the revenue growth in 2003 and 2004, placing it at 5.3 percent and 5.8 percent, respectively, which, in turn, lowered the projected budget gap amount. By contrast, Doyle's 2004 figure took a more conservative approach by wisely under-estimating revenue growth at 4.3 percent in 2005 and 4.6 percent in 2006. Doyle's administration is again estimating low revenue growth figures for the upcoming biennium -- 3.6 percent in 2007 and 4 percent in 2008.)

Going back two years before that to November 20, 2000, when the Thompson administration announced the state was facing a projected budget gap of $574 million in the upcoming biennium, the Journal Sentinel coverage didn't even use the word "deficit" once in the title or text of its article.

The title of that 2000 article, written by Steve Walters and Richard Jones (dated 11/21/00), was "Tax Cuts May Put Squeeze on State," referencing the state tax cuts from earlier that year that soaked up the remaining surplus from the 1990s.

I'm not trying to push some big conspiracy that the Doyle administration is being treated more harshly by the state's biggest daily than previous administrations (although I do think there's some truth to that argument, at least during the election season).

Rather, it's important to point out that projected budget gaps are nothing new in Wisconsin -- and neither are budget reports being released on the statutory deadline that comes a couple of weeks after an election.

Of course, the $1.6 billion projected gap is not great news. It would be nice if we could run a significant surplus. But the $1.6 billion figure is also not jaw-dropping bad news, either, and a little context does go a long way toward demonstrating that point.

In short, it will be up to the governor and the legislature to prioritize during the budget dealings next spring, just as it is every two years in Wisconsin. Not every state agency will get everything it wants -- in fact, most probably won't.

You can find a list of what state agencies are requesting for the upcoming biennium on pages v-vi of this document. If you see an agency you think deserves the funds it's requesting (or, perhaps, one that doesn't), between now and next spring is the time to tell your state legislators and governor about it.

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Side-Note: I don't provide links to the older articles because the JS is now charging for archived articles beyond 14 days old. I gave the authors and dates of the articles in case people are interested in checking on them.

UPDATE: Jay takes the shock and awe righties head on in this post -- check it out. Carrie also has more here.

LATE UPDATE: Dave Diamond has the latest on Doyle's projected Christmas deficit. Well worth the read.

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