MacIver News Service
Tax collections for the third quarter fell by over a quarter of a billion dollars in Wisconsin from last year, according to new figures from the US Census Bureau. The data confirms what many already suspected about the state’s financial situation.
In November the Pew Center released a study listing Wisconsin as having one of the most perilous economic conditions in the country. The Doyle Administration responded by claiming the Pew Center was wrong. Department of Administration Secretary Michael Morgan,said in a press release, “While Wisconsin has been affected, like all states, by the national economic downturn, we have balanced our budget by cutting spending and raising revenues as needed.”
However, according to the Census Bureau the State of Wisconsin collected $2.6 billion in the third quarter of 2009 compared to $2.9 billion in 2008.
General sales and personal income were two of the areas hit hardest. Last year the state collected $748 million in general sales taxes. This year it was $679.8 million, a $68 million or 9.2 percent drop.
Personal income tax collections last year were $1.46 billion, compared to $1.29 billion this year. That’s an 11.6 percent drop. Tobacco tax collections also dropped from $110 million to $107.8 million.
Wisconsin made gains in property, fuel, and alcohol taxes. Property tax collections went from $890,000 to $974,000. Fuel tax collections went from $175.6 million to $177 million. Alcohol tax collections went from $9.8 million to $9.9 million. Hunting and fishing license sales also increases. In the third quarter of 2008 the state made $14.7 million. This year it made $15.4 million.
On Thursday, the Wisconsin State Journal reported the state is already withholding $10.1 million in payments to municipalities that help pay for services like police and fire protection.
In an exclusive interview with the MacIver Institute in early December, Senate President Fred Risser admitted one of the challenges in 2010 will be adjusting the state budget to match the state’s financial situation.
“We’re in real trouble fiscally. We’re still using mirrors a little bit to balance the budget, and we’re going to have to find new revenues, I think, or substantially cut back on the services that we now provide,” Risser said. “If the purpose of government is to help those people that need help, we’re going to have to find the revenues to do it.”
All of these developments raise the question as to whether a Budget Adjustment Bill will be necessary to address Wisconsin’s fiscal woes.
According to the Legislative Fiscal Bureau:
Section 16.50(7) establishes a separate process that must be followed if there is a larger revenue shortfall. Under this provision, if at any time after enactment of the biennial budget, the Secretary of Administration determines that previously authorized expenditures will exceed revenues in either year of the biennium by more than 0.5% of the estimated GPR appropriations for that fiscal year, the Secretary cannot address that revenue shortfall by use of the budget estimate process. Instead, the Secretary is required to immediately notify the Governor, the presiding officer of each house of the Legislature, and the Joint Committee on Finance of the revenue shortfall.
Following this notification, the Governor is required to submit to the Legislature a bill containing his or her recommendations for correcting the imbalance between projected revenues and authorized expenditures. Further, if the Legislature is not in a floor period at the time of the Secretary’s notification, the Governor is required to call a special session of the Legislature to take up the matter of the projected revenue shortfall and to submit a bill dealing with the shortfall to the Legislature for consideration at that special session.
Officials at the State Department of Revenue have agreed to an interview with the MacIver Institute after the New Year to discuss the full impact the decline in revenue could have on the state, and we’ll continue to bring you the latest news from Legislative leaders and others in the Doyle Administration.