The Wisconsin Policy Research Institute

First Fix the Budget Process

By George Lightbourn

“Scott McCallum has been spending too much time with his friend Rosy Scenario. That is exactly the kind of wishful thinking and dishonest budgeting that got us into a $2.8 billion hole to begin with.” Candidate Jim Doyle in 2001

“Those who cannot remember history are condemned to repeat it.” George Sanatayana

It is too bad for Governor Doyle and too bad for Wisconsin that he did not heed this wisdom of Santayana.

The $2.8 billion deficit facing Governor Doyle when he came into office in 2002 has now grown to $5.4 billion. This is a frightening number for all of us. This state budget deficit amounts to $900 for every person in Wisconsin.

Some would have us believe that this deficit is fixable. It is not, at least not without stinging all of Wisconsin with higher taxes and service cuts.

The sad fact is that a good share of this deficit was largely preventable. A little planning would have salted away some reserves. Our leaders seem astonished that the economy experiences recessions from time to time.

In 2003 the WPRI published a report calling for budget reforms to address exactly the scenario that is currently playing itself out. This has been a decade littered with painful, missed opportunities. Budget after budget has been signed into law based on rosy scenarios. It is as though no one in the Capitol thought another recession would ever occur.

Here are some of the common sense recommendations we made in 2003 while the last recession was still fresh in our minds. We suggest that state government should adopt the following reforms:

Set long-term spending limits to guide each two-year budget. Do not spend every dollar that comes into the treasury. Even the simplest cobbler shop understands the need to plan for the down times.

Build up respectable budget reserve; not the miniscule ½ of one percent cushion of the current budget. No one should think such a small amount will do any good in a recession.

Never ever use one-time funding to pay for programs you know are not one-time.

Balance every budget on the basis of GAAP (generally accepted accounting principles). The accounting professionals have developed these accounting principles to ensure honesty in budgeting. Virtually every local government and school district is required to use GAAP standards. No cutting corners. No shenanigans.

If these changes seem to go too far, then we would ask that just one reform be adopted. We ask that the Governor and Legislative leaders pledge to balance the next two- year budget using GAAP standards. This single reform would breathe fresh air into Wisconsin’s budget process. It should have been done after the last recession in 2001. It must surly be done now.

-December 8, 2008

First Fix the Budget Process

By George Lightbourn

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