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Governor Walker has given state agencies guidance on how to develop their proposals for Wisconsin’s next budget, giving some glimpses into what the state’s 2015-17 budget might bring.

Wisconsin has a two-year budget. The budget process starts in the summer of even numbered years – like now — when the Governor instructs agencies in how to develop budget requests. Agencies submit their requests to the executive branch by September 15, and the Governor takes the requests into consideration when developing his own budget proposal to submit to the Legislature. The Governor is expected to release his budget proposal in the early part of 2015. For more about the Wisconsin state budget cycle, check the Wisconsin Budget Project’s Budget Toolkit.

For the upcoming budget, Governor Walker recently instructed agencies to assume there will be zero growth in General Purpose Revenue (GPR) appropriations in each fiscal year. In other words, he wants agencies to submit budget requests that are not any higher their budgets were two years ago, even though inflation and other factors have pushed costs up.

The Governor does carve out some exceptions to his zero-growth policy, including ones for:

   

  • State support for K-12 schools. An increase for schools could help ease some of the very deep cuts that Wisconsin has made in education funding. The state budget provided 15% less resources per student in 2014 than in 2008. Only six states made deeper cuts to education over this period.
       
  • Entitlement and related assistance programs in the Department of Health Services, including Medicaid. Medicaid, like other entitlements, has routinely been exempted from spending freezes because there is typically growth in caseloads and increases in the cost per participant. Another factor in boosting Medicaid spending in the next budget is the much higher than expected enrollment of childless adults in recent months, which will create a large shortfall in the BadgerCare budget (unless state policymakers reconsider their decision to reject federal funding that would pay the full cost of newly eligible adults). Of course, just because there isn’t a hard spending freeze doesn’t mean that DHS and the Governor won’t propose policy changes to reduce costs.
       
  • State-level efforts to make sure children are safe in their own homes, or placed in safe foster or adoptive homes. This effort includes the Bureau of Milwaukee Child Welfare, which is run by the state, and has been in the news recently for caseload backlogs and high turnover of employees.
       
  • Employment services for people with disabilities. In the last budget, Wisconsin did not provide the state funding for these services at the level necessary to receive the full federal matching amount. Later in 2013, the legislature backtracked and provided additional state funding, thereby maximizing the federal match for these services. The inclusion of these services on the list of programs exempted from the zero-growth policy may mean that  this time around, the Governor favors providing the full amount of state match for the federal dollars in the budget; and
       
  • Basic cost-to-continue needs for the state’s institutions at the Department of Corrections and the Department of Health Services.

The Governor’s budget instructions also note that “the state has a goal of increasing the ongoing receipt of federal funds where the use of federal funding is consistent with state program goals.” This is an interesting choice of words, given that the Walker administration has made several high-profile decisions to turn down federal money, including funding for improving BadgerCare and for building a high-speed rail line.

Tamarine Cornelius

Originally posted to WI Budget Project on Thu Jul 31, 2014 at 09:45 AM PDT.

Also republished by Badger State Progressive and Democracy Addicts.

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Comment Preferences

  •  Additional "gap-closing" measure (6+ / 0-)

    Poor people will be forced to donate blood for cash, with the WEDC receiving all proceeds to distribute to "job creators" who will outsource work to China.

  •  Sooooo "growing the economy." (5+ / 0-)

    How'd that work out for ya? About those job you promised? You're 140k or so short of that magical number of 250k. Eagle Scouts are not supposed to outright lie are they? I don't think you get merit badges for being indicted , and I'd think conviction would have your name struck from the Boy Scouts records. Lord knows I want you purged from Wisconsin.

    Give blood. Play hockey.

    by flycaster on Thu Jul 31, 2014 at 10:47:14 AM PDT

  •  Republished to Badget State Progressive. (3+ / 0-)
    Recommended by:
    Remediator, Mopshell, exterris

    Thanks for the summary, Tamarine.

    Screw John Galt. Who's John Doe?

    by Mike Kahlow on Thu Jul 31, 2014 at 03:21:14 PM PDT

  •  Hmm (2+ / 0-)
    Recommended by:
    Mopshell, ranton

    GPR revenue in FY14 was last estimated by the LFB in May to be $14,830m while GPR gross appropriations were $15,014m.

    Except we know that sales tax revenue at least has fallen $27m short of January's projections, and the withholding component of income tax collections isn't keeping pace with total projected income tax revenue either.  Unless non-withholding, corporate and other taxes pick up their slack in the last month or two of FY14, we might be something like $200m short versus revenue projections.

    In FY15 (which began July 1st), GPR gross approprations are to rise to $15,883m, but even if revenues rise by the $454m projected, with a base some $200m lower than estimated there'd be a shortfall of $799m.

    With the transfers from the General Fund to (principally) the Transportation Fund of $205m over the current budget biennium, the difference is made up by the pre-existing balance in the General Fund and unspent money from state agencies being returned.  Even between them we probably won't make it to the end of FY15 with a positive General Fund balance.

    If 2015-2017 (FY16-FY17) appropriations are frozen at FY15 base levels, i.e. $15,843m, then Wisconsin will need to grow revenues by $1,518m over the biennium, or about 3.3% a year, in order to cover it.

    That's not too unlikely to happen: total GPR tax revenues grew by 4.7% and 4.2% in FY12 and FY13, after all.

    But if Medicaid is specifically not subject to the freeze, that's looking to be $93m over budget in 2013-15 already, now estimating a childless adult enrollment of 135,000 by the end of June next year instead of the initial 99,000 estimate for the 15 eligibility months out of 24 budget months, so that'll probably be running about $93m x 24/15 x 2 ~ $300m ahead of current appropriations assuming a linear ramp-up, even if the cost of healthcare conveniently freezes and net enrollment ceases at the 135,000 mark too.

    Then there's the $1.1 billion that the Transportation Fund will need in 2015-17 to meet higher debt service, Zoo Interchange, Hoan Bridge and normal maintenance obligations.  Unlike the General Fund, there is virtually zero prospect of its revenue streams picking up since the inflation-indexing of the gas tax was ended in 2006 and consumption plateaued at about the same time.

    Can General Fund revenues rise enough to produce $1,518m to cover frozen appropriations, $300m+ to cover Medicaid obligations, and $1,100m to cover the hole in the Transportation Fund?  That would require revenue growth of 6.3% each year.  That's never even been approached on Walker's watch... except for the FY11 budget year revenues which grew at 6.4% he inherited from Doyle whilst vilifying it at the same time.

    That was whilst exiting the Great Recession, and GDP growth has been nothing like it since.  In the absence of tax rate increases the chances of meeting Wisconsin's obligations and plans in full in 2015-17 without packing unbearable debt onto the Transportation Fund are zero, even with the general agency GPR freeze.

    The Transportation Fund problems were perfectly predictable many years ahead of time; January's projected surplus that our Republican leadership decided to give away before seeing if it would become real or not was just irresponsible election year stunt.  This $3 billion structural deficit hole is of Walker's own making.

    Fake candidates nominated by the GOP for the recalls: 6 out of 7. Fake signatures on the recall petitions: 4 out of 1,860,283.

    by GeoffT on Thu Jul 31, 2014 at 04:28:29 PM PDT

    •  But, but , but...we got that $46 average tax-cut (2+ / 0-)
      Recommended by:
      GeoffT, Jollie Ollie Orange

      because of an ANTICIPATED $977 million surplus by June 30, 1915!  Walker is political-opportune pond scum.

      Robber Baron "ReTHUGisms": John D. Rockefeller -"The way to make money is to buy when blood is running in the streets"; Jay Gould -"I can hire one half of the working class to kill the other half."

      by ranton on Thu Jul 31, 2014 at 07:38:40 PM PDT

      [ Parent ]

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