Sunday, February 20, 2011

Correction: It's a Ginned-Up "Crisis," but Scott Walker Isn't Entirely to Blame for Wisconsin's Budget Gap

It's been widely reported that Scott Walker inherited a $120 million budget surplus, and then promptly created a budget deficit in order to break the backs of Wisconsin's public employees' unions. On Friday, I quoted Ezra Klein of the Washington Postexplaining that Walker had " signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it turned a surplus into a deficit."

Politifact did an analysis of this issue which shows that Walker in fact inherited a manageable, long-term budget gap and then spun it as an imminent crisis that must be addressed this year.

The reports stem from a a Jan. 31, 2011 memo prepared by Robert Lang, the director of the nonpartisan Legislative Fiscal Bureau, that was picked up by the Associated Press and a number of other outlets. It does state that Wisconsin was on course for a surplus this year, which the media reported that in good faith. The issue is what Politifact refers to as the memo's "fine print."
[It] 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.
None of this changes the fact that Walker dishonestly portrayed his union-busting bill as a budget fix. The provision stripping state workers' right to negotiate for better benefits wouldn't take effect until their existing contracts expire, meaning that it would have zero impact on the state's bottom line in the immediate future. The savings from shifting more pension and health-care costs onto workers -- which the unions have already agreed to -- would amount to just $30 million. Finally, an uncontroversial provision in the bill would restructure the state's outstanding debt, saving $160 million -- more than enough to close the gap this year.
Politifact adds:
To be sure, the projected shortfall is a modest one by the standards of the last decade, which saw a $600 million repair bill one year as the economy and national tax collections slumped.

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