Wisconsin's 2007-2008 Final Budget Deficit: $2,500,000,000

WISTAX:

It usually goes unnoticed, but each year at this time, the state issues its Comprehensive Annual Financial Report (CAFR) prepared by the state controller using generally accepted accounting principles (GAAP). This year's CAFR puts the state's 2008 GAAP deficit at $2.5 billion. Relative to population or state income, Wisconsin has the largest GAAP deficit of all 50 states.

N o newspaper, pundit, major Web site, or broadcast outlet covered it. No politician or pressure group commented on it. Yet release of the state's official financial statements for the most recent fiscal year contained a major news item: Wisconsin closed its books on 2007-08 with a $2.5 billion (b) deficit.

CAFR reports official deficit

The deficit figure is buried in the state's Comprehensive Annual Financial Report (CAFR). The report was prepared by the state controller, audited by the Legislative Audit Bureau, and recently posted on a state government Web site (ftp://doaftp04.doa.state.wi.us/doadocs/2008CAFR_Linked.pdf).

Much more on the proposed deficit spending trillion dollar Obama "splurge" here.

George Lightbourn: The Dodgy Thinking Behind the State Budget Bailout:

Did government avoid this tsunami of overspending? Of course not, it bellied up to the trough and blithely went about spending money it simply did not have. We all know about the skyrocketing federal debt, but state governments have found ways around their balanced budget requirements. For example, Wisconsin state accountants recently closed the books on the last fiscal year showing a deficit of $2.5 billion. That was the deficit as of July 31, before the current recession hit full stride.

When we see state government carrying a deficit of that size from year to year, it should set off warning lights. State government spending is unsustainable even in good times. It is logical then to use this time of fiscal stress to confront the unsustainable level of state spending, to reassess, to change, to shrink. It would be good for everyone to have government spending reduced to a sustainable level. But that is probably not in the cards.
Paul Krugman, the columnist for the New York Times who was recently awarded the Nobel Prize for economics, articulates the philosophy that will drive the thinking as to how Wisconsin will address its budget crisis. "It's true that the economy is shrinking. But that's the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending too," wrote Krugman. Krugman's line of thought is not only wrong; it stands to make Wisconsin's long-term prospects much worse.

Posted by Jim Zellmer at January 6, 2009 3:33 AM
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