MADISON — Newly released financial statements show the state of Wisconsin closed its 2005-06 fiscal year with a $2.15 billion (b) general fund deficit, according to the Wisconsin Taxpayers Alliance (WISTAX). This is $8.3 million (m) more than in 2004-05 and $231.6m more than in 2003-04, the Madison-based nonpartisan policy research organization said.

To aid public understanding of the size of the deficit, WISTAX pointed out that it was 12.6% of the $17.02b in general fund spending officially reported for fiscal year 2005-06.

The figures are contained in the state’s Comprehensive Annual Financial Report, or CAFR, prepared by the State Controller, reviewed by the Legislative Audit Bureau, and posted on state web pages Tuesday.

Unlike state budgets enacted by the governor and legislature, the CAFR follows generally accepted accounting principles (GAAP) prescribed by the nation’s Governmental Accounting Standards Board. And according to WISTAX President Todd A. Berry, "It probably represents a truer picture of the state’s long-term financial position than a state budget would suggest." Berry noted that, according to state budgeters, Wisconsin ended FY 2006 with a small undesignated balance of $49.2m.

Included in the CAFR are examples of how the state claims a slight "surplus" despite a large GAAP deficit. One of the easiest to understand is the treatment of property tax credits: In December 2004, for instance, credits were subtracted from individual tax bills; however, due to timing peculiarities, the state did not have to budget and pay for the credits until fiscal 2005-06. Two other factors in keeping the general fund afloat were $513.8m in transfers from other funds, including the transportation, utility public benefits, petroleum inspection, environmental, and recycling, as well as deficits in other funds, such as the -$25.6m in the Medicaid Trust Fund.

In addition to increases in the state’s GAAP deficit over the past three years, WISTAX noted that the new state report showed negative net unrestricted assets across all state governmental activities of -$8.24b, up from -$7.71b in 2005. In addition to the GAAP deficit, other obligations that contributed to the net negative asset figure were various kinds of bonding debt that exceeded $8b.

"These are hard concepts to grasp," said Berry. "But if the state closed shop last June, its taxpayers would have collectively owed various parties at least $8b. Whether these debts could have been paid off would then have depended on how much state roads, buildings, and bridges could have sold for."