Our Views: Wisconsin showing progress toward better budget
With the 2014 gubernatorial race heating up, Republicans are touting their budget balancing efforts while Democrats are claiming shortfalls.
The State Controller’s Office just released its Comprehensive Annual Financial Report, and it offers good news. For the second year in a row, the state reduced its deficit when using generally accepted accounting principles (GAAP). Yes, the state still had a deficit of $1.7 billion on June 30, according to the report, but that’s down from $2.2 billion a year ago and a staggering $3 billion two years ago.
Wait a minute, you might say. I thought the state constitution required lawmakers to balance the budget? Technically, that’s true. However, since the mid-1990s or so, governors from both parties—with legislative support—have done that with tax and fee increases and accounting tricks and by plundering one-time monies and pillaging supposedly segregated funds. These tactics created larger problems in ensuing years.
The biennial budget shows cash coming in and going out. It does not, however, include a balance sheet that lists all assets and short- and long-term liabilities. It’s like balancing your checkbook at month’s end without considering that you ran up a big credit card bill to buy those goodies under the Christmas tree.
Publicly traded companies must use GAAP, and many other businesses do, also. The state requires local governments to use these strict standards to protect taxpayers and basic services. Yet the state doesn’t use GAAP. Doing so would place future obligations squarely on the state’s balance sheet.
There’s more good news in the state’s financial picture. The rainy day fund, which ran dry just a few years ago, got another pile of cash and now contains more than $250 million. That should help the state weather an economic cloudburst—if not a flood of problems.
Todd Berry, Wisconsin Taxpayers Alliance president, sees clouds on the horizon. He told the Wisconsin State Journal that the controller’s report did not reflect tax cuts that Republicans adopted. He also noted that the fiscal cushion remains small and leaves little room for error should the volatile global economy sour.
Nonetheless, the legislative caucus of certified public accountants, consisting of four Republican assemblymen, was right to tout the progress the controller’s report showed. In a CPA Caucus news release, Rep. Howard Marklein of Spring Green said that “the dramatic improvement in Wisconsin’s balance sheet stands in stark contrast to the direction in which Illinois is heading.”
Added Rep. Dale Kooyenga of Brookfield: “We are doing a much better job of improving our balance sheet and making sure we have the cash on hand to pay our bills. Every day across Wisconsin, families work hard to ensure their bills are paid and their budgets are balanced at home. It’s certainly something we can continue to improve upon, but it is promising to see we have reduced our GAAP deficit to its lowest level in over a decade.”
Much work remains to truly balance the state’s budget, but the progress is worth celebrating.