MADISON—When the governor and state lawmakers finally agree on how to erase the state’s $652-million deficit, the "budget fix" is likely to be dominated by stopgap measures, according to a new analysis from the nonpartisan Wisconsin Taxpayers’ Alliance (WISTAX).

In reviewing proposals from the governor, senate, and assembly, WISTAX found that all three want, to varying degrees, to spend surplus, borrow, use accounting "tricks," and transfer monies from other sources to balance the general fund budget.

Wisconsin has some of the smallest budget reserves in the U.S., but the governor and legislators all want to spend more of what little surplus exists. Under all three proposals, Wisconsin’s mid-2009 surpluses would range from 0.2% to 0.7% of spending, leaving no margin for error.

All three also rely on borrowing by reissuing $125.4 million in bonds that were to be paid off. In addition, the governor and senate seek to prop up the transportation fund with $257 million and $50 million in bonds, respectively. Both also want to turn again to tobacco bonds for extra cash.

Assembly Republicans and senate Democrats both seek a $125-million accounting maneuver that would spend school aid dollars but not appropriate money until the following fiscal year.

The governor wants to transfer $414 million from other funds to the general fund, including $243 million from the transportation fund and $125 million from a new segregated hospital-tax fund. All told, the governor has asked to remove $1.4 billion from the transportation fund over the last three biennia. The senate proposes $194 million in fund transfers, with $125 million in hospital taxes leading the way. The assembly seeks no transfers.

Unlike borrowing, accounting gimmicks, and fund transfers, less spending or additional revenues can be long-term budget solutions. Assembly Republicans propose $361 million in spending reductions, while the governor and senate want $87.4 million and $40 million, respectively, in cuts or lapses. Other than a new hospital tax, the governor is asking for $6 million in general fund tax increases and the senate, $126.6 million, mostly in corporate income taxes.

"Whatever the ultimate solution," WISTAX President Todd A. Berry concludes, "the state is likely to face a ‘structural deficit’ of $700 million, $800 million, or more in early 2009." State government has had structural budget problems since 1997.

Now in its 76th year, the Wisconsin Taxpayers Alliance is a nonprofit, nonpartisan group dedicated to policy research and citizen education. For a copy of the WISTAX report, write: 401 North Lawn Ave, Madison 53704; email, wistax@wistax.org; or call 608-241-9789. o