Wisconsin projected budget shortfall grows to $1.8 billion

Economic Indicators Associated Press

Wisconsin's state budget will be nearly $1.8 billion in the red by mid-2017 based on a new estimate Monday, providing Democrats with more fodder to argue that Gov. Scott Walker and Republicans in control of the Legislature have mismanaged the state's finances.

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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."

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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.

"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."

"No one can ignore the fact the state is headed in the right direction," Vos said in a statement. "Unemployment is down, more jobs are being created and new businesses are opening their doors. The state economy continues to grow stronger under Republican leadership."

Since Walker took office, about 103,000 private-sector jobs have been created in the state after about 133,000 were lost during the recession. The unemployment rate is now at 5.8 percent, the lowest since 2008.

Walker promised during the 2010 campaign to create 250,000 private-sector jobs, a pledge he almost certainly won't meet by the end of this year.

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, while also returning money to taxpayers in the form of income and property tax cuts.

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.

"We will continue to manage the state's finances by putting taxpayers first," Vos said.

But Democratic state Sen. Jen Shilling, a member of the Legislature's budget committee, said the numbers show that Walker and Republicans' approach has failed.

"Our local schools, small businesses and communities can't afford to limp through another round of devastating budget cuts," Shilling said.

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Follow Scott Bauer on Twitter at https://twitter.com/sbauerAP