Better accounting gives clearer picture of Wisconsin’s fiscal health

We’re told the Wisconsin state budget is in good shape. The books are balanced, they tell us. We even ran a surplus, so the state provided a tax rebate to those with children living at home, and suspended the sales tax on a number of back to school purchases. We must be doing well, right? It depends on what kinds of accounting methods are used. Wisconsin does not use what are called Generally Accepted Accounting Principles, which is a more thorough way to balance the books. Instead, Wisconsin’s budget process uses some budget tricks to show the books are balanced. When using generally accepted accounting principles to determine the state of Wisconsin’s fiscal health, the picture isn’t nearly as rosy as the current budget suggests. In fact, when using the more thorough accounting method, Wisconsin has a budget deficit of $1.6 billion. That deficit trails only Illinois and California, and makes Wisconsin only of only ten states running a budget deficit. The disparity in real fiscal health compared to what the politicians boast about is the recent trend of skipping debt payments as a way to balance the budget. Governor Walker has put off more than $700 million in debt payments over the last seven years, allowing him to continue to say the state is on solid fiscal footing. But skipping debt payments means millions more in deferred interest, money that then can’t be spent on roads or schools. Our politicians may tell us the state is in good fiscal shape, but the real numbers tell a different story. Wisconsin should join the majority of states and begin using new accounting practices to give us a truer picture of the state’s fiscal health.