Madison Think Tank Criticizes Fiscal Decisions In State Budget

The Wisconsin Budget Project is calling for using an expected budget surplus for a bigger rainy-day fund instead of more tax cuts.

A critique from the Madison-based think tank lists a series of allegedly short-sighted fiscal decisions in the recently approved state budget. Project director Jon Peacock says the biggest problem is delaying boosting the state’s financial reserves until 2019. He says while that makes the current structural deficit look smaller, it doesn’t comply with a state provision enacted 10 years ago that requires the state to keep a fund balance of 2 percent of state tax revenues.

“Most states aim to have at least 5 percent set aside for a rainy day and Wisconsin hardly sets aside anything,” says Peacock. “So if the state has some additional revenue we hadn’t anticipated, we need to put some aside and increase that requirement to have larger reserve fund.”

The Budget Project’s critique also accuses the legislature of creating a $108 million hole in the transportation budget that may require patching in the future – a budget fix that will make it harder to keep state reserves at 2 percent.

But Scott Manley of the Wisconsin Manufacturers in Commerce calls the accusation laughable. He says the Budget Project didn’t criticize similar transportation budget shifts under Governor Jim Doyle’s administration.

“They were fine with fiscal mismanagement four years ago and even praised it under Governor Doyle,” says Manley. “Now we have a much more fiscally sound budget under Governor Walker and now suddenly that’s not good enough.”

But Peacock says the current budget is tipped too much towards tax relief at the expense of long term planning.