Yesterday, the Legislature’s nonpartisan budget office released revised tax revenue estimates predicting that Wisconsin’s projected revenues will be higher than previously expected. That’s great news. It means that the Wisconsin’s businesses and individuals are doing better.
But now that there appears to be $636 million more to spend, there is a notion that things can go back to the way they were. Unfortunately, that is not the case. The structural deficit was estimated to be $2.5billion in the current budget year; $636 million begins but does not solve that problem.
Gov. Walker always had two problems: first, in a rotten economy, income taxes (especially corporate income taxes) can fall dramatically. It leaves the state with a huge hole. WPRI has written about the need for a rainy-day fund repeatedly. That’s the short-term problem. Certainly, Governor Walker’s proposed budget solves these issues, because it balances the budget without raiding segregated funds.
The second, longer range problem is that Wisconsin’s government can be much more efficient. This is the longer range problem, and it is the one that is difficult to solve. Unfortunately, its the one that has to be solved for the state to be competitive. This is where the budget reforms that Walker is pushing come in: limiting long-term entitlement spending, limiting work rules that make government inefficient, and getting public benefits and salaries in line with those in the private sector. Because Gov. Walker has proposed (and passed) solutions to these problems, there is serious political upheaval.
That there is $636 million more to spend makes the first problem easier to solve. It does very little to solve the second problem. There are structural problems with the way our government works to make it more efficient. Like changes in the private sector, these are painful. But if Wisconsin is going to be competitive job-creator (we’re up big in category, by the way), we need these changes.