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State Revenue Projections Awfully Optimistic PDF Print E-mail
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Written by Joint Finance Committee Democrats   
Saturday, 21 January 2017 10:34

walker-state-denialLFB revenue prediction driven by assumptions about the national economy, budgeting at that level may be overly optimistic as Wisconsin continues to lag behind other states.


MADISON – On Wednesday, the Legislative Fiscal Bureau (LFB) released their annual 2017 state revenue update.  State revenues for the current fiscal year 2017 are estimated to come in $281.4 million below what was approved in the 2015-17 budget. The numbers are also $152.1 million what was re-estimated a year ago in the 2016 LFB revenue update.  Revenue growth for the current budget year 2017 is expected to be just 2.7%, well below the original budgeted growth of 3.8% and the LFB projection of 3.2% made last January.  Lower than expected income tax revenue and corporate income tax revenue are the main drivers of the lower estimates.

gordon_hintz“Lower than expected revenue is a reflection that Wisconsin’s economic growth rate continues to lag behind the national economy,” said Rep. Gordon Hintz (D-Oshkosh). “The projected state revenue growth rate for FY2017 has declined with every estimate.”

The slower than expected revenue in the report was masked by unexpected savings that came as a result of lower Medicaid expenses and one-time agency savings.  The end result is a projected net ending balance of $362.2 million.  The $362.2 million includes $101 million of savings from a debt payment that Gov. Walker skipped last May. Gov. Walker skipped another $108 million debt payment in February of 2015 that inflated the 2015-17 beginning balance.

katrina_shanklandd“The projected budget year-end balance being championed by Republicans comes in spite of lower than expected state revenue,” said Rep. Katrina Shankland (D-Stevens Point). “When you consider that $209 million of borrowing should be included in that balance, the fiscal picture is hardly impressive.”

The LFB revenue update also increased their revenue projections for the 2017-19 biennium. The projections were made on the assumption that 5.4 million jobs will be added nationally over the next three years, that U.S. unemployment would decline to 4.1% by 2019, that GDP growth would average 2.4% a year over the next three years, all while the country experiences a growing trade deficit.

“While I hope the assumptions about the national economy come true, I am also aware of Wisconsin’s recent disappointing economic growth rate compared the U.S.” said Rep. Hintz, “Budgeting for 7% revenue growth over the current fiscal year to the 2018-19 budget may be optimistic, considering the current budget’s revenue is expected to come in well below what was passed in the original budget.”

Last Updated on Saturday, 21 January 2017 12:28
 
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