By Rep. Penny Bernard-Schaber
As you’ve probably seen by now, the non-partisan Legislative Fiscal Bureau has projected that the State of Wisconsin will finish the current fiscal year with an almost $400 million budget deficit, and will be facing a $1.8 billion deficit over the next two years. The Fiscal Bureau adjusted their projections as a result of actual tax collections over the last year coming in $300 million less than expected. At the beginning of the year, however, the Fiscal Bureau was projecting a surplus of more than $1 billion. Going from a surplus to a deficit in less than a year was the result of a number of shortsighted decisions on the part of Gov. Walker and the Republicans in the Legislature. We’ll still be paying for these decisions years from now.
During the 2013-15 budget deliberations, the Fiscal Bureau warned legislators that the revenue they projected was one-time revenue and unlikely to continue into the upcoming budget. Unfortunately, Republicans in the Legislature ignored this warning. Instead of using the one-time money to make investments in job growth—for example, by increasing funding for job training to help workers fill available jobs—or even to build up the rainy-day fund, they used it to pass permanent tax cuts that shifted the state’s tax burden toward the middle class.
An analysis by the non-partisan Institute of Taxation and Economic Policy shows that 2/3rds of the tax cuts went to the top 20% of taxpayers who have the highest earnings. The majority of taxpayers received a tax cut of $83 per year or less, while the top 1% received almost $2500 on average. Instead of taking an opportunity to make an investment in the middle class that could help jump start our economy, Gov. Walker and the Republicans in the Legislature chose to give a tax cut to the people who needed it the least, digging Wisconsin’s long-term fiscal hole even deeper.
Another mistake that helped create this budget deficit is Gov. Walker’s refusal to accept federal money to expand BadgerCare. Wisconsinites pay taxes to the federal government, but we currently rank as one of lowest states in terms of the return we get back from our dollars paid in. If Gov. Walker and the Republicans in the Legislature had taken advantage of the opportunity provided by the Affordable Care Act, we could have covered 87,000 more people while saving $206 million. On top of the direct savings, a recent study performed by the University of California has demonstrated that every dollar spent on Medicaid generates two dollars’ worth of economic activity. Expanding BadgerCare could have spurred economic growth in Wisconsin, leading to increased revenue and a smaller deficit.
The most disappointing part of the news about the budget deficit is the broken promise it represents. Gov. Walker assured us that the sweeping changes he and the Republicans in the Legislature proposed—to worker’s rights, education funding, environmental regulations, the tax code, and so on—were absolutely necessary, and that the bitter partisanship that has divided our state would be justified because in the end we would have a balanced budget and 250,000 new jobs. Yet after seeing the results of the Republican agenda over the last few years, I’m left with the question: did Wisconsin really go have to go through all of that divisiveness just to be last in the Midwest in job growth and end up with a $1.8 billion deficit?
Penny Bernard-Schaber is currently the Assembly representative from the 57th Assembly District and a candidate for Senator from the 19th Senate District.