The state of Wisconsin ended its fiscal year last June with a $2.71 billion budget deficit, a new state report shows.
That’s an 8 percent increase over last year’s deficit of $2.5 billion. The report shows the financial challenges ahead for the next state leader who will take over in January 2011 after Gov. Jim Doyle leaves office.
The figures on the shortfall in the state’s main account differ from those in most state reports, which simply figure how much cash the state has. This report, which is prepared according to generally accepted accounting rules, also takes into account spending that the state has promised to make in the future.
A week before Christmas, an important report appeared on a Wisconsin government website. There were no press releases from Madison politicians. No headline news stories.
Yet no public official, taxpayer, or citizen can afford to ignore the report’s bottom line: According to its just-released financial statements, state government closed its 2008-09 books with a $2.71 billion deficit in its general fund.
To many readers, this might come as a surprise. By law, state government is supposed to balance its budget. On paper, it does. However, for more than a decade, governors and legislators of both parties have “balanced” budgets through use of accounting maneuvers, timing delays, borrowing, and billions in one-time money.
When the state controller, a CPA, prepares the state’s official financial statements, he must follow generally accepted accounting principles, or GAAP. That means he must reverse the budget gimmicks and accurately represent the state’s true financial condition. When he does this, the budget’s black ink turns red.