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In his proposed 2019-’21 budget, Gov. Tony Evers has increased spending for roads and infrastructure, as well as special education, and included raises for state employees, among other changes.
In all, the budget tallies some $83.5 billion. But does it increase taxes and create a deficit?
State Sen. David Craig (R-Town of Vernon) thinks so.
"Gov. Evers’ proposed budget has massive tax and fee increases, yet he spends even more on his way to a nearly $2 billion deficit," Craig said via Twitter on April 2, 2019.
Is Craig right?
Yes and no.
More on the budget
We reached out to Craig seeking backup for the claim, but his staff did not respond. That said, it’s pretty clear what he is referring to in his tweet.
Let’s start with the tax part of the equation. Does Evers’ proposed budget include tax and fee increases?
The nonpartisan Legislative Fiscal Bureau, considered the gold standard on state fiscal matters, issued a report on April 1, 2019 that says that answer is yes.
In some cases, tax increases in Evers’ budget are offset by other changes.
For instance, the gas tax would increase by eight cents, going up from 32.9 cents to 40.9 cents. At the same time, the plan calls for repealing a law that requires retailers in many cases to sell gas at 9 percent above the wholesale price, which Evers argues will bring the cost of gas down overall.
The budget scales back an agricultural and manufacturing tax credit, one put in place by Republicans. It uses some of that money to help pay for an income tax cut for the middle class.
But as the Milwaukee Journal Sentinel reported March 14, 2019, Evers’ budget includes a net increase of more than $1 billion in tax hikes over the two year period.
But what about the deficit part of the claim, where Craig said Evers is spending "more on his way to a nearly $2 billion deficit."
That’s where the apples meet the oranges.
In the first part of his claim, Craig is referring to Evers’ proposed two-year budget. By law, that budget must be balanced. And it is.
So where does the $2 billion come from?
That number comes from the fiscal bureau, but it refers to what is commonly called the "structural deficit." That’s something that has long existed.
In short, the structural deficit measure comes from mapping out spending and income trends into the future to create a projected gap (or surplus) for years down the road.
The LFB report says Evers’ budget would balance for 2019 and 2020, but the spending patterns it establishes would create a shortfall of $847 million for 2021.
The Department of Administration also includes projections. Its tallies show a potential shortfall of $1.1 billion in 2022 and about $1.9 billion by 2023.
Of course, there are many things that can happen between now and then: The economy may improve more than expected, and bring in more in tax revenues. Or, inflation could be higher than anticipated, making it more expensive to run state government.
In other words, the picture could get better or worse.
In that respect, the structural deficit numbers are hypothetical ones: Evers will again have to submit a balanced budget for the second half of his term.
That said, the numbers are a real measure that provides an indication of how fiscally sound the state’s finances are overall.
When Gov. Scott Walker took office in January 2011, he talked about facing a $3.6 billion structural deficit. It was based on projected tax revenue and spending costs, including budget requests that had already been made by outgoing Gov. Jim Doyle’s staff.
In fact, Wisconsin has long had a structural deficit. According to the fiscal bureau, it has existed for at least the last 10 budget cycles, or about 20 years.
What’s the best view?
"Part of this is politics and part of this is stating the truth," said Craig Maher, a public affairs professor at the University of Nebraska-Omaha, who has studied Wisconsin public spending and budgets.
"The governor is running a (structural) deficit, but remember the state of Wisconsin has been running that deficit for 20 years. If you look at any administration prior, there has always been this deficit so this isn’t something new generated by Governor Evers."
Though the state has previously faced structural deficits in the past, the one proposed by Evers is larger than some earlier ones.
Maher noted that states, unlike the federal government, are required to put forward balanced budgets by law. The federal government, in contrast, can run an annual deficit which, in turn, adds to the long-term national debt.
That’s where the apples-oranges mixing by Craig goes awry.
He compares the current budget to potential long-term issues in future budgets, making it sound like the plan before the Legislature would leave the state $2 billion in the red during the budget period itself.
Craig said Evers’ budget increases taxes and creates a deficit of about $2 billion.
The budget does increase taxes. But it has to be balanced by law.
That said, projected numbers do show Evers would start the next two-year budget, beginning in July 2021, with a projected gap of $1.96 billion. That number will change based on the performance of the economy and other factors.
We rate this claim Half True.
State of Wisconsin, Budget in Brief, February 2019
WMTV, Gov. Scott Walker: Wisconsin wraps up 2017-18 fiscal year with $588M surplus, Dec. 21, 2018
Legislative Fiscal Bureau, 2019-21 and 2021-23 General Fund Budget, April 1, 2019
Phone interview with Craig Maher, Public affairs professor at the University of Nebraska-Omaha, April 12, 2019
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