My column for the Washington County Daily News is online. Here you go:
Huzzah, huzzah! The State of Wisconsin finished its last budget with a $579 million surplus. That is great news both in real and in political terms, but it also gives some perspective to some unpleasant truths.
There is no reason to understate the fact that $579 million is a lot of money. A lot. If Wisconsin had ended the budget with a $579 million deficit, it would have been considered a crisis and woeful example of incompetent fiscal management. But the fact that it is a surplus confirms the converse. Namely that the state of Wisconsin is in terrific fiscal health and its finances are being competently managed.
What is perhaps more important is that this budget surplus is merely one in a string of recent budget surpluses. Gov. Scott Walker and the legislature have been managing the state budget successfully for almost a decade and it is not going without notice around the nation. Just last week, Both Fitch Ratings and Kroll Bond Rating Agency upgraded the state’s bond rating to AA+. Fitch noted that, “the fiscal 2011-2013 budget marked a turning point, with extensive structural budget actions and the resolution of several lingering fiscal challenges.”
Fitch’s commentary is a heady tonic as Walker gets ready to officially announce his run for a third term in office. Whichever Democrat wins the nod to challenge Walker in the general election will have to make the case that budget surpluses are bad and the state’s bond rating is too high.
Walker and the legislature must now decide what to do with the surplus. There is a very easy answer to that: give it back to the taxpayers — $579 million is almost exactly $100 for every man, woman, and child in the state. Taxpayers would no doubt appreciate a $100 credit for each member of the household on their state income taxes next year. In any case, given the fact that the legislature just completed the new budget, which is balanced and not reliant on a surplus from the previous budget, they should reject the urge to spend it on things whose priority failed to garner funding in the current budget.
While $579 million is a fortune in real terms, it is only a small fraction of the state budget. The previous state biennial budget was $72,635,547,000. The $579 million surplus was, then, is about 0.8 percent of the entire amount. The 2017-2019 budget that just passed the legislature projects to spend $75,590,563,100. The surplus is only 0.77 percent of that budget.
It is worth remembering some of the heated debates that raged over the budget and delayed its passage by months. One of those debates was over the fictional budget shortfall for transportation that was estimated at anywhere between $400 million and $1 billion depending on who one asked. In order to fill that budget gap, the legislative Republicans separated into three camps.
The first camp was headed by Speaker Robin Vos and some Assembly Republicans who wanted to raise taxes to spend more on transportation. The second camp was represented by the Senate leadership and wanted to borrow more to cover the shortfall. The third, and smallest, camp of Republicans wanted to delay or reprioritize transportation projects to spend within the money already available.
In the end, the Republicans struck a compromise that did a bit of everything. They increased taxes on people who drive electric and hybrid vehicles, reprioritized some projects and borrowed a lot of money. In hindsight, that entire debate could have been rendered moot had they just prudently managed the resources available as they did demonstrated in the previous budget.
That fact raises the question, why were any Republicans ever even proposing a tax increase? Why any of them proposing more borrowing? Why were some of them so unwilling, in the context of a $76 billion budget, to reprioritize spending to fill what amounts to less than 1 percent of the state budget? Republicans should rightly be commended for their fiscal management these recent years, but some of them have drifted very far from their conservative moorings if they are reaching for tax increases and debt as a measure of first resort.
A $579 million surplus may be a lot or little depending on the perspective, but there is no argument about it being a good thing for Wisconsin. The taxpayers are continuing to reap the rewards of the conservative revolution begun at the dawn of this decade.
The better answer is to use the surplus to pay down the debt.