THE NONPARTISAN Legislative Fiscal Bureau this week estimated Wisconsin could be facing a budget shortfall of $1.8 billion by the end of the next biennial cycle, from 2015 to 2017.
Should we panic now?
One might think so if all that is heard is the fevered bleating of the politicians. Democrats are pummeling Gov. Scott Walker and the Republican legislature, citing the estimated shortfall as evidence of financial mismanagement. Republicans are singing out of a different hymnal, saying there is no budget crisis and, in fact, Wisconsin has a surplus.
WELL, NOBODY AND EVERYBODY. How can that be?
After tough budget decisions made early in the Walker administration Wisconsin did roll up modest budget surpluses and chip away significantly at the stateís structural deficit. So, yes, looking back, the stateís books have been firmly in the black.
But a combination of various tax cuts and a sluggish economy driving lower overall collections has created a growing gap between projected state revenue and spending. Thus, the LRBís estimated shortfall of $1.8 billion.
Keep in mind, though, thatís a paper shortfall ó an estimate, a projection. Lots can change between now and 2017 ó faster economic growth, spending cuts, even higher tax collections, or just raising taxes. That $1.8 billion figure is less than Walker faced when he came into office.
THAT DOESNíT MEAN the number isnít real, if state authorities ignore the problems. The LRB makes the estimate so fiscal managers can make necessary adjustments.
Politics is all about sounding alarms and riling the voters. The sky hasnít fallen, at least not yet.