As part of their analysis, the LFB looks ahead to the next budget cycle (2011-2013) and estimates the amount of money needed to produce a balanced budget under current law combined with the budget that is about to be enacted. The result is sobering:
for 2011-12, the general fund would need to generate $1,107 million in order to meet current commitments and those of ASA 1 to AB 75, maintain the required statutory balance, and balance the budget for that year. In 2012-13, $1,151 million ($44 million over the $1,107 million in 2011-12) would need to be realized. These amounts could be generated by revenue increases (growth or tax increases), appropriation reductions, or some combination of the two.That is to say, Wisconsin is digging not one, but two $1.1 billion dollar holes for its future self.
If our governor and legislature are unable to curb spending in the midst of the worst economic crisis since the Great Depression, when will they ever stop spending? Even if you believe deeply in the stimulative power of government spending as antidote to recession, there was a better way for our state to respond. With the federal government engaged in a massive spending spree, Wisconsin could have used this opportunity to put its own fiscal house in order and let the federal government do the spending (and incur the debt) to help offset the economic downturn.
Wisconsin Democrats would have been wise to take a lesson from Rahm Emmanuel and not let this crisis go to waste. Spending should have been slashed and federal stimulus money used to reduce the pain on the most vital areas of spending. Instead, the stimulus money is partially offsetting the tax increases that are necessary to support continued high levels of government spending, but this is a one time only offer.
Filling this future budget hole with growth in the midst of a global economic downturn seems unlikely. The unwillingness to confront excessive government spending now will only make things worse in the future. There will eventually be a day when our state government is no longer able to kick the can down the road, apparently that day is not in 2009. See you in 2011.