MacIver News Minute: Budget Deficit Drains Wisconsin's Savings Account

The new Wisconsin state budget has now been in effect for almost 2 months, and the MacIver institute just released its in-depth report about it. This is the 9th state budget that we’ve reviewed, and in many ways, it the worst one we’ve ever seen. We’ll be talking about this for a while, so I just highlight one thing for you today. In last budget, the state promised to give local governments a 20% cut of its sales tax revenue. But the state has yet to make room for that transfer in its budget. So instead, it’s paying the locals out of the general fund surplus - about $1.6 billion a year. You probably remember a lot of people talking about a $4.4 billion surplus earlier this year – well that’s where it’s going. And because of it, we’re expected to end this biennium with just $714 million in the account. That's definitely not enough to keep paying the locals $1.6 billion a year. That means we’ll be going into the next budget cycle with another multi-billion structural deficit, but one that the state won’t be able to cover up simply by dipping into its savings. We’ll have a lot more to say about the budget in the coming weeks, and what the state could do to get us out of this mess.