POLITICS

State projects $693 million shortfall

Jason Stein, and Keegan Kyle
Milwaukee Journal Sentinel
Gov. Scott Walker

Madison — Expected state revenue over the next two years will fall $693 million short of what state agencies want to spend over that period, Gov. Scott Walker's administration reported Monday.

Though challenging, this projected shortfall is far less than the $2.2 billion potential gap that Walker and GOP lawmakers faced two years ago. The potential hole in this coming budget amounts to about 2% of the money that the agencies want to spend over the two-year period.

The budget gap this time could be bridged by cutting state agency requests by a smaller percentage than Walker and GOP lawmakers did during his first three budgets, according to a USA TODAY NETWORK-Wisconsin analysis.

"Just as we've done since I've been governor, Wisconsin will have a balanced budget," Walker posted on Twitter. "We will put additional money into public schools, our technical colleges and the University of Wisconsin System in our budget."

The Walker administration report — released every two years after the fall elections — breaks down the projected gap between how much money state agencies want for the 2017-'19 budget and how much money the state actually expects to have. The shortfall is not a real deficit — the state is prohibited from running those by its constitution.

In one area to watch, the state is now expecting tax projections for this current fiscal year to grow by 2.3% — less than the 3.6% that was previously expected.

Agency budget requests

In their budget requests, some state agencies asked for no extra money over the next two years or even requested less than they are currently receiving. In total, agencies requested $424 million in additional state money for the next budget with most of the increases coming from a handful of agencies.

* The Department of Public Instruction, which oversees the state’s K-12 schools, requested more than $500 million in additional state tax dollars, or a 4% increase from its current budget over two years. The agency is led under state Schools Superintendent Tony Evers, an ally of Democrats, and is unlikely to get everything it wants from Walker and Republican lawmakers.

* The Department of Health Services requested a $455 million boost — mainly for Medicaid health programs — and the Department of Corrections requested a $122 million boost.

* The UW System is seeking a 2% increase of $42.5 million and district attorneys are seeking a 25% boost of $22 million.

The next state budget begins on July 1, 2017, and runs to June 30, 2019.

Walker will use the budget requests from state agencies to craft a complete tax and spending plan for the state, which he will send to lawmakers in February. They will then make their own changes to the budget, approve the bill, and send it to Walker, who can use his powerful partial veto powers to further modify the budget before signing it.

State agencies on average received about 97% of the state tax dollars that they requested during Walker's first three budgets since taking office in 2011. That's not surprising since the heads of these agencies mostly serve at Walker's pleasure and are crafting their budget requests according to his instructions.

In addition, the new spending requested by state agencies is often not really new: It's more often to continue existing programs or even to make payments that were promised in the previous state budget by elected officials but not paid for in that budget.

State taxes fall short of expectations

Rejecting even a modest 2% of what agencies are asking for would be enough to balance the budget. But it won't be easy since it will likely mean smaller increases for core state priorities such as schools, prisons and health care and most agencies already have only small requests.

It's possible that state leaders could get new ways to balance their budget from federal leaders in the coming months.

Just as the 2009 stimulus bill passed by Democrats in Washington, D.C., helped Wisconsin Democrats push off budget troubles that year and move on major goals, President-elect Donald Trump and congressional Republicans might push legislation that would help leaders in their party at the state level.

In Democrats' case in 2009, it was additional federal aid for health care, education and infrastructure. In the current scenario, it's more likely to be removing federal requirements so Republicans at the state level can lower spending they would otherwise be required to do. But Trump has also talked about boosting federal spending on infrastructure.