Structural Deficit Projected in 2017 if Economic Growth Rate is Zero
August 2, 2013 | MacIver News Service[Madison, Wisc…] If all of Wisconsin’s economic factors were frozen right where they are now, the Legislative Fiscal Bureau (LFB) predicts the state’s general fund will increase its surplus over the next two years before ending in deficit in 2017, according to a memo released on Thursday.
The current budget is expected to end with a $91 million surplus, but the 2015-17 budget is projected to have a $545 million deficit.
However, the Fiscal Bureau has predicted a structural deficit for every budget since at least 1997 with one exception.
The last budget (2011-13) had a $2.5 billion deficit to overcome from the previous biennium’s finances. The largest deficit since 1997 came during the 2003-05 biennium at $2.9 billion.
The estimates by LFB do “not reflect any potential revenue growth or other appropriation changes.” As the MacIver News Service reported previously, moderate economic growth will erase the structural deficit, but stagnant or negative economic growth could make the structural deficit larger.
Property taxes are also expected to increase by less than one percent in each year of the biennium. Increases of $29 are projected in both 2013-14 and 2014-15, however, the median-valued home is expected to increase in value by more than $3,500 over the two-year period.
The increases are similar to Governor Scott Walker’s first budget, where property taxes were raised by $28 and $27, or less than one percent each year. Although, the slight rise for Wisconsin taxpayers is far less than under Walker’s predecessor.
Under Governor Jim Doyle, property taxes in his last budget jumped $93 and $123, an increase of 3.3 percent and 4.2 percent respectively.
The memo from the Fiscal Bureau explains that part of the increase in property taxes is due to a boost in funding for K-12 public education in the budget.