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Agency Budget Cuts and Other State Fiscal Developments
By Wisconsin School Administrators Alliance staff | April 29, 2020
From WisPolitics.com …
The Evers administration estimates the state will save $70 million from agency budget cuts ordered to cope with the financial impact of the COVID-19 impact.
Still, that is only a fraction of the $2 billion the administration has already estimated the state will lose in tax revenue over the coming year.
GOP legislative leaders called the action a prudent move in light of the looming shortfall and pushed for additional actions.
Meanwhile, Gov. Tony Evers called the cuts a “first step.” This week’s order from the Department of Administration to implement the 5 percent agency cuts maintains a hiring freeze for non-essential positions that’s been in place since March 20. It also keeps in place restrictions on travel and a suspension of merit raises for state employees.
Asked about furloughing state employees, Evers said the administration “will take a look at everything” as it tries to manage state finances. But he said the administration was focused on the agency cuts first.
“We think it’s one of our ways to get us in a better place financially,” Evers told reporters today on a conference call.
DOA Secretary Joel Brennan tells WisPolitics.com the GPR lapses will only apply to the first year of the budget.
Brennan expected additional steps once the state gets a better idea of its fiscal picture, especially as states await word on whether the federal government will provide additional aid to offset lost revenue.
GOP Assembly Speaker Robin Vos, a frequent critic of the Evers administration, praised the cut as a “smart, proactive move.”
The Rochester Republican also suggested another prudent move would be to freeze spending in the second year of the biennium.
In its revenue estimate in January, the Legislative Fiscal Bureau pegged spending in 2019-20 at $18.2 billion. That was expected to climb to $19.1 billion in the second year of the budget.
“As we begin work to manage this impending fiscal crisis in Wisconsin, it’s good to see that we’re already on the same page,” Vos said.
Senate Majority Leader Scott Fitzgerald, R-Juneau, chided the guv for running to the media and calling it a “power grab” when the Legislature tried to give itself the ability to make cuts such as these.
“I’m glad he’s come around to our way of thinking with a fiscally responsible move for once,” Fitzgerald said.
The offices of Fitzgerald and Vos didn’t respond today to questions from WisPolitics.com on whether the Legislature would take similar steps to reduce its spending. The Legislature’s GPR appropriation for the biennium is $153.9 million with another $4.8 million in program revenue.
DOA Secretary Joel Brennan says it could take some time before the administration gets a true handle on its fiscal picture.
Part of the reason is because Congress is still debating whether to send additional aid to the states to replace lost revenue.
The state’s solid starting point for the current budget also could help soften the initial fiscal blow.
LFB Director Bob Lang prepared a memo for JFC Co-chair Alberta Darling, R-River Falls, last week laying out the trigger for a budget repair bill.
Under state law, the DOA secretary must notify the guv and Legislature if previously authorized expenditures exceed revenues by 0.5 percent in either year of the biennium. For 2019-20, that’d be about $90 million.
But the state had such a healthy projected balance in the first year of the budget, that revenues would have to drop by more than $1.4 billion before expenditures exceed revenue by $90 million, according to the memo.
That cushion could also mean the state wouldn’t need to dip into the $655 million rainy day fund to make it through the current fiscal year, which ends June 30.
Lang said he is holding off doing a new revenue estimate until the state sees additional tax collection information. That task has been complicated by the delay until July 15 for state and federal taxes to be filed.
See the memo to Darling here.
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