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Wisconsin’s general fund balance was operating at a deficit under Generally Accepted Accounting Principles from 2000 through 2019, according to the state’s nonpartisan Legislative Fiscal Bureau.
In 2020, the fund had a positive balance -- about $1.5 million -- for the first time in decades.
Gov. Tony Evers’ proposed 2021-23 budget, much of which Republicans have on the cutting room floor, would return the fund to a deficit in fiscal years 2022 and 2023.
Wisconsin’s state government is diving into another battle over how its budget will look for the upcoming two-year period.
In February, Gov. Tony Evers, a Democrat, proposed a $91 billion spending plan for 2021-23, seeking to expand Medicaid, roll back Act 10-era collective bargaining limits, legalize marijuana and raise the minimum wage -- among scores of other items intended to put the state back on its feet after the coronavirus pandemic.
On May 6, 2021, the Republican-controlled Joint Finance Committee stripped nearly 400 items from Evers’ budget, with the co-chairs saying it included "a tremendous amount of excessive spending, pet projects, tax increases and divisive non-fiscal policy."
Democrats say Evers’ budget would fix long-standing problems in the state and honor measures that are widely popular with voters. But Republicans say their plan would keep Wisconsinites from facing a higher tax burden.
They’ve also argued that the governor’s budget would send the state’s general fund back into a deficit based on a common accounting standard, after its 2019-21 budget created the first positive balance by that standard that the general fund had seen since 2000.
Staff of Sen. Howard Marklein, R-Spring Green, created a chart showing as much that several members of the Republican caucus have shared on social media.
Is the claim correct?
Let’s dig in.
The chart cited depicts Wisconsin’s general fund deficit dating back to 2000, at which time the deficit totaled around $1 billion based on Generally Accepted Accounting Principles, or GAAP.
The line peaks in fiscal year 2010-11, when the general fund deficit was nearly $3 billion, by this measure.
In 2020, the chart shows a negative deficit — or rather, a positive general fund balance. An arrow then indicates that Evers’ proposed 2021-23 budget would return the general fund to a deficit.
"Gov. Evers’ budget is a ‘bounce back’ to larger GAAP deficits," Sen. Duey Stroebel, R-Saukville, tweeted along with the chart on April 7, 2021.
Adam Gibbs, communications director for the office of Senate Majority Leader Devin LeMahieu, R-Oostburg, provided an analysis from the nonpartisan Legislative Fiscal Bureau that bears some of the claim out.
The analysis, which Marklein requested in December 2019, indeed shows the state’s general fund had been in deficit since 2000, with the largest — $2.99 billion — during fiscal year 2010-11. It ends with fiscal year 2017-18, at a $1.25 billion deficit.
The general fund deficit for the following year is detailed in Wisconsin’s Comprehensive Annual Financial Report. In 2019, it was just under $800 million in deficit.
In 2020, the tide turned and the general fund reached $1.5 million under those standard accounting principles, according to the Comprehensive Annual Financial Report for the fiscal year ending June 30.
At the time, Evers credited his government for working on issues important to Wisconsinites "without running up the state’s credit card." It was the first time Wisconsin had reached a positive GAAP fund balance since the state began issuing the comprehensive annual financial reports, he said.
Evers’ 2021-23 budget in brief, released in February 2021, outlines a return to the general fund deficit over the next two years.
In 2021, the estimated closing GAAP fund balance is still positive, at about $921 million. In 2022, it’s estimated at a deficit of nearly $2 million. In 2023, the estimated deficit is about $938 million.
This deficit doesn’t mean the state’s budget isn’t balanced — in fact, Wisconsin is required by law to pass a balanced budget where estimated revenues are at least equal to estimated expenditures.
The GAAP system, however, counts future expenditures at the time that the state commits to spending on them, even if they won’t be paid until the next budget cycle. The state’s other method of accounting, called cash modified accrual, doesn’t count expenditures until it comes time to pay them.
Members of the state’s Republican caucus claim that Evers’ proposed budget would return the state to a GAAP fund deficit, after its first positive balance in the fund in decades in the biennium prior.
The Legislative Fiscal Bureau analysis shows the fund’s deficit through fiscal year 2018, and the state’s annual financial report shows it turning around in 2020. In the Department of Administration’s estimation of the next two years, the deficit would return in 2022 and persist through 2023.
We rate this claim True.
Milwaukee Journal Sentinel, "Tony Evers proposes rollback of Act 10 in budget that boosts school spending by $1.6 billion and raises $1 billion in taxes," Feb. 16, 2021
Milwaukee Journal Sentinel, "Wisconsin budget battle begins: GOP lawmakers plan to remove hundreds of items from Gov. Tony Evers' proposal," April 30, 2021
Milwaukee Journal Sentinel, "Budget-writing committee begins work by stripping hundreds of Evers' items out," May 6, 2021
Email exchange with Adam Gibbs of the office of Senate Majority Leader Devin LeMahieu
Legislative Fiscal Bureau memo, 2017-18 general fund deficit under Generally Accepted Accounting Principles, Dec. 11, 2019
Wisconsin Comprehensive Annual Fiscal Report for the fiscal year ending June 30, 2019
Wisconsin Comprehensive Annual Fiscal Report for the fiscal year ending June 30, 2020
Wisconsin State Journal, "For first time in decades, Wisconsin ends fiscal year with positive GAAP fund balance," Dec. 23, 2020
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