Tuesday, October 21st, 2014
Mostly True
Darling
Says the 2011-13 state budget eliminates the structural deficit "for the first time in decades."

Alberta Darling on Monday, June 20th, 2011 in an interview

State Sen. Alberta Darling says the 2011-13 state budget eliminates the structural deficit “for the first time in decades.”

Republicans who control the state Legislature are touting their just-completed work on the 2011-2013 state budget.

State Sen. Alberta Darling, a co-chairwoman of the legislature’s Joint Finance Committee, has been especially vocal about the virtues of the $66 billion spending plan. As one of nine senators facing recall elections over their actions on the separate collective bargaining bill, she’s also been the target of criticism for her votes.

"I think this budget really does put us in the right direction -- phenomenally," Darling said in a June 20, 2011, meeting with Journal Sentinel editors and reporters. "It’s phenomenal what’s been accomplished in terms of debt and deficit reform and restructuring."

Darling added: "We’re in the black for the first time in decades."

To be clear, the budget has to be "in the black" every year when it is passed. The state constitution says it must be balanced. Darling was talking about the "structural deficit," which is a relatively new way of measuring the state’s future fiscal health.

The structural deficit measures the future imbalance between spending and tax revenue as laid out in state law. So you can have a balanced budget, but one built upon assumptions that are projected to result in a deficit later on.

We’ve been hearing about that problem for years.

Darling, Walker and others argue their predecessors made the state budgets balance by using one-time maneuvers -- such including the state’s share of federal tobacco settlement money, and diversions of funds for transportation and medical malpractice insurance.

"All these approaches only delayed the day of fiscal reckoning to make the budget balance, leading to the structural deficit," said Walker, in the message accompanying his budget introduction.

So, is Darling right?

Did Walker and the Legislature resolve -- for the first time in decades -- the underlying problems, as well as balance spending for the two-year period that begins July 1?

The size of the structural deficit is determined by the non-partisan Legislative Fiscal Bureau, considered by both parties to be a neutral scorekeeper on budget matters. The agency started doing the projections with the 1997-99 budget.

The agency takes a look at the budget as proposed, amended and passed, said agency director Robert Lang. He begins his estimates with a baseline -- the second year of the current budget, which is adjusted based on previously approved law changes or legal commitments. The new budget is then factored in.

"It takes out speculation," Lang said of the structural deficit estimates. "It puts out a marker based on current revenues and projections."

Agency reports show for the past 14 years show the highest structural deficit was $2.8 billion for the 2003-05 budget, and the lowest was $1.49 billion for the 2007-09 budget.

A report issued June 13, 2011, said the 2011-13 budget as approved by the Joint Finance Committee would result in a $306 million surplus.  The Legislature changed very little of the committee’s work. Lang’s office will evaluate the budget again now that Walker’s vetoes are completed and the budget signed.

Here was Lang’s assessment based on the earlier action: "We’ve had structural deficits since I started doing this, and now there’s a structural surplus."

So Darling’s right on that account: the budget has a structural surplus and not a deficit.

The budget does include the changes in pension and insurance payments state workers -- a law enacted before the budget was considered that did not take effect until after it passed -- that helped reduce the budget gap. Those changes are viewed as permanent, not one-time fixes, Lang said.

Lang’s office has only 14 years of records covering a total of nine budgets, including the most recent one. No budget in this time frame showed a surplus, until the current one.

In making her statement, Darling said the structural deficit was fixed for the "first time in decades." When we talked to her, she said she misspoke when she said "decades."

As aide Bob Delaporte said: "The point was that it’s in the black for the first time in a long time."

Fair enough.

Since the structural deficit was not measured before 1997-99, we can’t say just when the structural deficits began.

What’s the bottom line?

In talking about the structural deficit, Darling claimed lawmakers delivered a budget "in the black for the first time in decades." The budget lawmakers sent to Walker is projected to have a $306 million surplus. The Legislative Fiscal Bureau report on structural deficits says there’s not been a budget with a structural surplus dating back to when it started recording such things 14 years ago. Darling may have overstated how far back the problem goes, but no one knows for certain and that does not change the underlying point of her statement.

We rate her statement Mostly True.