CHICAGO - Wisconsin faces an $824 million shortfall to meet baseline costs anticipated in the next two-year budget, according to a report from the Legislative Fiscal Bureau.
The report, requested by lawmakers, looked at the state's ability to meet existing costs. The report figures on an assumption that a $132 million gap expected at the end of the current biennium June 30 would be closed prior to the start of the next budget cycle.
The bureau used the administration's estimates from November on tax collections and departmental revenue estimates. The bureau will offer up its own updated tax collection estimates for the current fiscal 2014-15 biennium and the next cycle next month.
The report is the latest to offer insight on state finances as Gov. Scott Walker prepares a new two-year budget. Walker's administration recently warned that the state faced a $2.2 billion gap headed into the next two-year budget cycle if it were to meet agency requests.
State agencies requested $37.2 billion in spending for fiscal 2016 and $38.4 billion for the second year of the budget. Those requests represent 6% and 3% growth, respectively, over the current budget cycle and are each about $1.1 billion more than expected revenues.
Wisconsin closed out the last fiscal year with a $517 million balance and $279 million in its reserve account. The state earlier this year anticipated a $1 billion budget surplus, prompting Walker and his fellow Republicans who control the Legislature to adopt $600 million of tax cuts.
Moody's Investors Service recently revised Wisconsin's outlook to positive on its Aa2 rating. Moody's said the state could win an upgrade from Aa2 if recent budgetary and liquidity strides remain on course and result in a stronger balance sheet and reserves. The outlook change recognizes the state's improved liquidity position, conservative management of retiree benefits that limits future budgetary pressures, and reductions in the state's long-standing negative fund balance based on generally accepted accounting principles, Moody's said.
The state's GOs are rated AA by Fitch Ratings, AA by Standard & Poor's and AA by Kroll Bond Rating Agency. They all assign stable outlooks.
