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A Project of The Annenberg Public Policy Center

Wisconsin’s Trumped Up Deficit

Donald Trump says that Wisconsin has a $2.2 billion budget deficit. It doesn’t.

Actually, the state finished its most recent two-year budget cycle with a small surplus. And the new cycle that began July 1 is covered by a bill providing for another balanced budget, which Gov. Scott Walker signed into law.

It’s true that state fiscal officials had earlier projected that revenues would fall about $2.2 billion short of what agencies were requesting for the new cycle. But agencies don’t always get what they want. The current budget cuts $250 million from the University of Wisconsin system, for example.

Trump, a Republican presidential contender, called into CNN’s “State of the Union” on July 26 and had this to say about Wisconsin and Walker, who is also seeking the GOP nomination:

Trump, July 26: They have budget deficits. He was going to have a lot of big surplus. Well, they have got a $2.2 billion deficit.

Actually, they don’t.

Wisconsin, by state law, is required to have a balanced budget. That means it is prohibited from running a deficit, which happens when a government spends more money than it has.

Trump is referring to a previously projected budget shortfall. That is how much state agencies request in spending minus what the state is projected to make in revenue.

In November, Wisconsin’s Department of Administration, based on revenue projections and state agency budget requests for fiscal years 2016 and 2017, said the state faced a shortfall of $2.2 billion for that two-year cycle (see table 4).

That was after the Legislative Fiscal Bureau projected in January 2014 that the state’s general fund would have about a $1 billion surplus for the biennium that ended June 30. Much of that projected surplus was used to provide additional property and income tax cuts for families and businesses, leaving the state with a surplus of $254,000 when fiscal 2015 ended last month, according to bureau documents.

But to Trump’s claim, the important thing to know is that agency spending requests aren’t automatically granted, as the administration noted in its November projections.

Department of Administration, Nov. 14: For the coming biennium, agency budget requests exceed expected revenues by $1,096 million in fiscal year 2015-16 and by $1,118 million in fiscal year 2016-17, for a total of $2,214 million over the biennium.

While this represents the traditional method for such calculations, such figures are derived under the assumption that ALL agency budget requests will be funded in their entireties. This is a flawed assumption.

The state legislature ended up passing a balanced two-year budget that Walker signed into law on July 12 — more than two weeks before Trump claimed that the state had a deficit.

— D’Angelo Gore