The Wisconsin Policy Research Institute

The Wisconsin Budget Process: a Newcomer’s Story

By Nathaniel Inglis Steinfeld

After working for the federal government in Washington, DC for two years, I was excited to move back to the Midwest. Returning to study public policy and law, I specifically came to learn more about state’s rights from the practical, decent state of Wisconsin. This past year I kept a close eye on state news, even more so as the biennial budget process began. How does Wisconsin make the biennial budget? What does the final budget look like?

The Legislative Reference Bureau seems like a better place to start than the federal level Schoolhouse Rock tutorial. The process of creating the Wisconsin budget is fairly simple – it follows the general legislative process, except in this case the process begins with the Governor. As the chief executive for the state, the Governor collects agencies’ estimates on their expenses. Once the Governor matches budget priorities to the expected revenues, the Joint Finance Committee takes the proposal to amend, review, and debate in a small committee. Once voted on by members of the joint committee, each chamber gets a chance to amend, review, and vote on the budget.

So the process itself doesn’t sound too complicated – what about the length of the timeline? Perhaps showing my age, this is the first state budget I’ve followed. The process is clearly not meant to proceed quickly. The purpose of going slowly no doubt comes from the size of the task, compiling all state agencies’ budgets and crafting budget priorities. Why force deliberation? I would imagine (and hope) slowing the process would limit rash decisions and promote a rational and well-justified budget. The biennial budget has long-ranging impacts, so the proposal usually is given plenty of time.

The goal of rationally analyzing and debating the budget takes on special urgency in today’s economic recession. With a $6.6 billion deficit and economic growth slowly regaining strength, improving the economic condition of the state is clearly a fragile task. Fiscal stimulus can ease the pressure of reduced consumption, but the budget deficit makes this plan difficult. In this economic and fiscal situation, a slow, deliberative budget process might be the best hope for improvement.

Yet there seems to be, in my less-than-expert opinion, something missing. The goal of analyzing and debating the budget is no doubt enhanced by discussion—hence we have a representative democracy where many individuals join together to examine proposed bills. Each individual adds to the greater whole through challenging questions, pushing the bills to be as good as possible. With this reading of the system, the partisan, secret caucusing that has been a hallmark of this budget detracts from confronting difficult questions. In a secret government, trust (in the government’s abilities – a difficult thing to gain but easy to lose) is the only insurance of a good outcome.

The many partisan caucuses are not without reason. Large debates are unwieldy, consensus is always difficult, and almost no one can intelligently analyze a large proposal with a constant barrage of questions. Because of these reasons, private caucusing to review the proposals and calculate strategies is built structurally into the game. I assume every budget is discussed within caucuses. This year, however, the caucuses often took all day until open ‘debate’ began at night and continued well into morning.

Now the important question: what’s in the budget? Obviously revenues – taxes and fees – and expenditures – salaries, services, and products – would be the main elements. The budget would naturally reflect the state’s and politicians' priorities. Wisconsin’s emphasis on healthcare and education means those subjects can be found easily in the budget documents. For these big picture items, I understand.

But this year’s 94-page document (I assume similar to previous years’ budgets) includes minutiae on state employee benefits, specific highway intersection repairs, and driver’s license processes, as well as tobacco snuff taxes, capital gains taxes, and adjustments of property values. Wisconsin requires a balanced budget—and only a few of these small items alter revenues and expenditures. As a whole, this must all balance. Adding the uncertainty of incomes, stock market and home values, and unemployment levels, the creation of fiscal estimates must be more art than precise science.

At this point I get hopelessly lost in the process. Perhaps the assumption that 90+ pages of budget alterations address the $6.6 billion deficit and the worst economy in a generation is a reasonable. One could hope that all those uncertainties can be entered into a model and allow for responsible conclusions about the future. But the process seen in the news seems more like a British farce: decisions are made after hours without sleep while meetings are postponed, legislators tally votes, and everyone adds more small projects. It seems politics and deals make the budget, not rational models.

Politics and deals, I suspect from my limited experience, have always defined legislative budgets. This dealmaking process is definitely imbedded in our structural framework – a nature of the checks and balances system. Legislators should pursue the best policies for their districts and their state, as that (ideally) helps the most people.

In principle, I understand. However, the final voting of the committee did not occur until 5:30AM. Small additions and modifications were being added up until that time, including small adjustments in the state regulation of fireworks. These additions done in the middle of the night cannot be held under the highest possible scrutiny. People lose concentration. Quality goes down. This isn’t meant to imply that everything done in the middle of the night is poor (even I’ve gotten good grades on papers written at 5 in the morning, but my papers never determined statewide programs in a bad economy).

This year the priority must be economic recovery. The LFB provides some insight into the future budget gaps (in another 90 page document), but a more open process would submit this important budget to robust testing by more economists. Even the budget deficit – the gorilla in the room – cannot be addressed if economic activity doesn’t resume. Does the current budget adequately support that recovery? I hope reasonable, practical legislators in Wisconsin have produced a decent budget, even if it was amended up until 5AM.

-June 22, 2009

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