CHICAGO — A projected $1.8 billion gap in Wisconsin's next two-year budget has Gov. Scott Walker on the defensive as he seeks re-election.
The latest polls show the Republican incumbent and his Democratic challenger Mary Burke are locked in a tight contest.
The latest revenue estimates came earlier in September from the non-partisan Legislative Fiscal Bureau. The report warned the state faces a $396 million shortfall instead of a $165 million surplus when it closes the books on the current biennium on June 30, 2015 and a $1.8 billion gap in its next biennial budget cycle that begins July 1, 2015, representing 5.8% of the budget.
The bureau had last estimated the next biennial gap at about $640 million. The deficit growth is due to revenue collections that lag estimates and the impact of a $540 million tax cut package approved by lawmakers earlier this year.
"Governor Walker's fiscally irresponsible approach and his failed stewardship of a lagging economy have resulted in a state budget picture that is a mess," said Burke, a businesswoman and cabinet member in former Gov. Jim Doyle's administration.
Democrats this week amplified the attacks against Walker and Republican lawmakers who hold a legislative majority, charging that state agency budget requests will push the deficit up to $3 billion. Plugging a transportation fund deficit and education funding requests could add another $1.2 billion.
"It's time we balanced our state budget responsibly and made the necessary investments to grow our economy and strengthen local communities," said state Sen. Jennifer Shilling, D-La Crosse.
Republicans have countered that agency requests are merely requests and a formal budget won't be proposed until early next year.
Department of Administration Secretary Mike Huebsch this week reported that tax collections for the first two months of the new fiscal year and criticized Walker's opponents for adding agency requests to the red ink estimate.
"We are in a stronger financial position than forecasted," he wrote. "Wisconsin's economy and our revenues continue to grow."
Republicans say Walker eliminated a more than $3 billion deficit inherited from a Democratic administration and returned portions of subsequent budget surpluses to taxpayers.
"Thanks to our responsible choices, the most recent fiscal year ended with a surplus of $443 million and the largest rainy day fund balance in state history," of $280 million, said Senate Majority Leader Scott Fitzgerald, R-Juneau.
The latest independent poll from Marquette University released Wednesday show Burke and Walker running neck and neck among registered voters with 5% undecided. All Assembly seats are up for election as are 17 of 33 Senate seats.
In addition to budgeting differences, Burke and Walker differ on Medicaid expansion under federal healthcare reform. Walker has refused federal subsidies to expand Medicaid while Burke believes the state should participate.
The state won praise in recent rating reports for improving its structural imbalance by reducing the use of one-shots to balance its books. Some analysts did raise concerns over the impact of the tax cuts. All four rating agencies assign double-A level ratings to the state's GOs.
"The state's fiscal position coming into fiscal 2014 was stronger than it had been in recent history," said Standard & Poor's analyst Gabriel Petek. "The state's recently enacted tax reductions reduce its capacity to absorb weaker-than-expected revenue performance, but current economic and revenue projections indicate adequate fiscal performance through the remainder of the 2013-2015 biennium." The state's credit also benefits from a fully funded pension system.
