New estimate projects $1.8-billion budget shortfall from Walker’s corporate tax cuts

Louis Weisberg, Staff writer

A nearly $1.8 billion budget shortfall projected by a new report released yesterday provides yet more evidence that Gov. Scott Walker and Republicans who control the Legislature have mismanaged the state’s finances, critics say.

The two-year budget that ends in June is projected to be nearly $396 million short after tax collections came in $281 million less than anticipated. The $1.8 billion shortfall is forecast for the next budget, which runs from July 2015 through June 2017.

The Legislature will have to address the deficits next year. All of the numbers are estimates and will change based on actual spending and tax collections in coming months.

Walker and legislative Republican leaders downplayed the latest bad news for the budget, while Democrats pressed them for details about how they planned to address it.

“We have a proven track record of managing the taxpayers’ money well,” said Walker spokeswoman Laurel Patrick. “By continuing to grow the economy, finding further efficiencies in government, continuing to eliminate waste, we will take care of any future structural issues.”

Walker’s Democratic challenger, Mary Burke, a former state Commerce Department secretary and Trek Bicycle executive, said the projected shortfall is the result of Walker’s “irresponsible approach” and “failed stewardship of a lagging economy.”

Walker and the Republican Legislature passed about $2 billion in tax cuts over the past three years, approving broad income and property tax reductions and an income tax cut targeting manufacturers. Critics complained that the lion’s share of the tax cuts went to Walker’s wealthy corporate out-of-state donors while taxes on the poor effectively increased.

“Governor Walker has spent money we don’t have,” Burke said in a statement. “In the business world, if a CEO created this big of a financial mess, he would be fired.”

Republican Assembly Speaker Robin Vos accused Democrats of “looking for dark clouds on a sunny day.”

Since Walker took office, only about 103,000 private-sector jobs have been created in the state after about 133,000 were lost during the recession. Walker pledged during the 2010 campaign to create 250,000 private-sector jobs, a pledge he won’t come anywhere close to meeting. During his 2010 campaign, he urged voters to hold him to his pledge, but now he says that he never meant it to be taken literally.

Under Walker and the GOP, Wisconsin’s job growth has been about half the national average. The state ranks last in the upper Midwest for job creation during Walker’s term.

Although the unemployment rate has fallen, experts attribute that partly to people giving up on seeking jobs as well as people taking low-paying part-time jobs.

Walker and Republicans inherited a roughly $3 billion budget shortfall, which they plugged by making deep spending cuts to schools and local governments. Walker also used the shortfall to argue for passage of a law requiring most public workers to pay more for their pension and health care benefits while also taking away nearly all of their collective bargaining power.

The savings from those higher contributions helped schools and local governments deal with the other spending cuts.

Walker argues, as he runs for re-election, that he made the tough choices necessary to turn around the state’s economy, which his critics contend that he turned around from bad to worse.

Even in the face of the recent negative estimates, Walker and Republican legislative leaders have promised to take a similar approach to bring the budget into balance.

“Our local schools, small businesses and communities can’t afford to limp through another round of devastating budget cuts,” said Democratic state Sen. Jen Shilling, a member of the Legislature’s budget committee. She said the numbers definitively prove that Walker and Republicans’ approach has failed.

The Associated Press contributed to this article

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