Yes, Wisconsin Really Does Have A Budget Crisis

Doug Mataconis · · 26 comments

One of the most common refrains I’m seeing from many on the left in their commentary about the Wisconsin situation is the idea that Governor Walker has created a phony sense of crisis in Madison and that Wisconsin’s budget problems aren’t nearly as severe as he claims:

It has taken hold with conviction: the idea that Wisconsin Gov. Scott Walker ginned up a phony budget crisis to justify his bold bid to strip state employees of most bargaining rights and cut their benefits. A volley of e-mails, blog posts and inquiries to reporters followed a Madison Capital Times editorial on Feb. 16, 2011, that said no state budget deficit exists for 2010-’11 — or if it does, it’s the fault of Walker and the Republicans in the Legislature. Liberal MSNBC talk show host Rachel Maddow joined in Feb. 17, accusing Walker of manipulating the situation for political gain. “Despite what you may have heard about Wisconsin’s finances, the state is on track to have a budget surplus this year,” she said. “I am not kidding.” She added a kicker that is also making the rounds: Walker and fellow Republicans in the Legislature this year gave away $140 million in business tax breaks — so if there is a deficit projected of $137 million, they created it. Maddow and others making the claim all cite the same source for their information — a Jan. 31, 2011 memo prepared by Robert Lang, the director of the nonpartisan Legislative Fiscal Bureau. It includes this line: “Our analysis indicates a general fund gross balance of $121.4 million and a net balance of $56.4 million.”

Today, Politifact pretty much demolished that idea:

Our conclusion: Maddow and the others are wrong. There is, indeed, a projected deficit that required attention, and Walker and GOP lawmakers did not create it. More on that second point in a bit. The confusion, it appears, stems from a section in Lang’s memo that — read on its own — does project a $121 million surplus in the state’s general fund as of June 30, 2011. But the remainder of the routine memo — consider it the fine print — outlines $258 million in unpaid bills or expected shortfalls in programs such as Medicaid services for the needy ($174 million alone), the public defender’s office and corrections. Additionally, the state owes Minnesota $58.7 million under a discontinued tax reciprocity deal. The result, by our math and Lang’s, is the $137 million shortfall.

Also revealed as untrue is the claim that Maddow and others have made that Walker’s tax cut. implemented in the first weeks of his Administration in January, is contributing to the fiscal crisis. This isn’t true for a very simple reason, the tax cut doesn’t tax effect until next year and will not have a budgetary impact until the next two-year budget cycle begins in July. The tax cuts haven’t even gone into effect yet, so the argument that they helped create the real problems that exist in Wisconsin is, like the assertion that there is no crisis at all, simply utterly false.