Surplus? Deficit? Facts? Spin?

February 22, 2011

Nevada City

“I’m a woman, not a corporation.”  Alice DiMecele

I thought of DiMecele today as I tried to find out the actual source of Rachel Maddow’s claim that Wisconsin started the year with a huge surplus.  Jeff Ackerman’s editorial this morning in my home town paper The Union(http://www.theunion.com/article/20110222/NEWS/110229945/1066&ParentProfile=1053) stated that Wisconsin faced a burdensome deficit, much like my dear Cali. I sent notes to both Ackerman and to Maddow about where they got their facts. After a fair amount of dead-end searches, someone on Maddow’s FB site kindly sent me the information. Thanks to her,  I finally found the publication that the quote is based upon–the actual memo.  I have marked with bold text and asterisksthe passage that Maddow and other progressives are now widely quoting .

“State of Wisconsin

FROM: Legislative Fiscal Bureau

One East Main, Suite 301 • Madison, WI 53703 Email: Fiscal.Bureau@legis.wisconsin.gov Telephone: (608) 266-3847 • Fax: (608) 267-6873

TO: Representative Robin Vos, Assembly Chair Senator Alberta Darling, Senate Chair Joint Committee on Finance State Capitol

Madison, WI 53702

Dear Representative Vos and Senator Darling:

Robert Wm. Lang, Director

January 31, 2011

Annually, this office prepares general fund revenue and expenditure projections for the Legislature prior to commencement of legislative deliberations on the state’s budget.

In the odd-numbered years, our report includes estimated revenues and expenditures for the current fiscal year and tax collection projections for each year of the next biennium. This report presents the conclusions of our analysis.

Comparison with the Administration’s November 19/December 27, 2010, Reports General Fund Tax Collection Projections

On November 19, 2010, the Departments of Administration and Revenue submitted a report to the Governor, newly-elected Governor, and Legislature that identified revenue projections for the 2010-11 fiscal year and the 2011-13 biennium. That report, required by statute, identifies the magnitude of state agency biennial budget requests and presents a projection of general fund tax collections.

On December 27, 2010, the administration modified the November 19 report and presented a reestimate of general fund tax collections for 2010-11 and the two years of the 2011-13 biennium.

Our analysis indicates that for the three-year period, aggregate, general fund tax collections will be $202.8 million lower than those reflected in the November/December reports. More than half of the lower estimate ($117.2 million) is due to the impact of Special Session Senate Bill 2 (health savings accounts), Assembly Bill 3 (tax deductions/credits for relocated businesses), and Assembly Bill 7 (tax exclusion for new employees).Compared with the administration’s reports, tax collections are projected to be $12.9 million lower in 2010-11, $139.7 million lower in 2011-12, and $50.2 million lower in 2012-13.

2010-11 General Fund Condition Statement

Based upon the November/December reports, the administration’s general fund condition statement for 2010-11 reflects a gross ending balance (June 30, 2011) of $67.4 million and a net balance (after consideration of the $65.0 million required statutory balance) of $2.4 million.

**Our analysis indicates a general fund gross balance of $121.4 million and a net balance of $56.4 million. This is $54.0 million above that of the administration’s reports. The 2010-11 general fund condition statement is shown in Table 1.“** [For a complete copy of the memo, please email me at lightcapfarm@gmail.com. It is 16 pages long.]

However, there have been two subsequent memos from this nonpartisan office. The second memo is dated 2/14/11 and Lang is again its author. I have again marked where the surplus figure changes, seemingly due to legislation that occurred in the two week period in between memos.

“On January 31, 2011, this office released general fund tax collection and expenditure estimates for 2010-11 as well as tax collection estimates for the 2011-13 biennium. That report projected a net, general fund closing balance of $56.4 million for the 2010-11 fiscal year. In addition, the January 31 report identified a number of 2010-11 appropriation shortfalls.

**Under Special Session SB 11 and Special Session AB ___ (LRB 1426/1), the estimated 2010-11 net, general fund balance is $42.8 million.**

Following this introduction is a table of contents, 2010-11 general fund condition statement, and a list of the general fund fiscal effects for 2010-11. The document then summarizes each of the items of the bills and provides fiscal effects, if any, for 2010-11 and 2011-13.

The bills address the shortfalls indicated in the January 31 report with the exception of the projected $3.5 million shortfall in the private bar appropriation of the State Public Defender. In addition, the general fund condition statements of the bills do not reflect payment to Minnesota under the Minnesota/Wisconsin income tax reciprocity program or consideration of the yet-to-be determined repayment to the Injured Patients and Families Compensation Fund.”

And again on 2/17/11,  another memo from Lang. I have again marked the change in surplus estimate:

“This document summarizes the provisions of the Joint Finance version of January 2011 Special Session Senate Bill 11 and its companion, January 2011 Special Session Assembly Bill 11.

On January 31, 2011, this office released general fund tax collection and expenditure estimates for 2010-11 as well as tax collection estimates for the 2011-13 biennium. That report projected a net, general fund closing balance of $56.4 million for the 2010-11 fiscal year. In addition, the January 31 report identified a number of 2010-11 appropriation shortfalls.

**Under the Joint Finance version of SS SB 11 and SS AB 11, the estimated 2010-11 net, general fund balance is $0.1 million, which includes the effect of a Joint Finance provision that would increase funding for medical assistance by $42.7 million GPR in 2010-11, in order to garner additional federal matching funds that will reduce GPR spending by $49.9 million in 2011-12.

The bills address the shortfalls indicated in the January 31 report with the exception of the projected $3.5 million shortfall in the private bar appropriation of the State Public Defender. In addition, the general fund condition statements of the bills do not reflect payment to Minnesota under the Minnesota/Wisconsin income tax reciprocity program or consideration of the yet-to-be determined repayment to the Injured Patients and Families Compensation Fund.”**

Two things seems clear to me: 1) the state did begin the year with a surplus, although it may bet that pre-existing commitments may have encroached on that figure. As usual people seem to be getting paid to play Fun With Numbers.  2) Maddow and other progressives are quoting the $54 million surplus as if it’s a simple fact, and at the same time they are claiming the issue is partisan, not budgetary. These memos seem to add a shade or two of gray to that assumption.  There can be no bipartisan compromise on any issue if each side sees only black and white. It is the media’s job to give us the grays.

Jeff Ackerman responded to my request about his source with this statement: “I’m sure that will be one of those he said/she said issues. I’m also certain you could get two accountants to come to two different conclusions on the state of Wisconsin’s finances.”  This reminds me of the progressive food activist Will Winter who recently visited Grass Valley for the Sustainable Food Conference, which The Union helped  sponsor. Winter said that if you gave him $100,000 and some data, he could come up with any result you wanted. Having said that, it would be helpful if conservatives like Ackerman and others who are publicizing this supposed deficit could come up with some facts to back it up.  I didn’t come across them today in my searching, but I’ll keep looking. If you are reading this and you have a direct source–not a media source such as Maddow or Fox, but a primary source from which they get their information, please comment here or email me right away at lightcapfarm@gmail.com.

Is this is a union issue?  A budgetary issue? A partisan play for control? We need facts in order to determine the answers. Nothing like facts to quell hysteria. Meanwhile, it’s vital that we keep debating these issues–and debating them with the civility that democracy deserves.

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