As the proposed 2007-09 state budget has worked its way through the legislature, it is readily apparent that our elected officials, regardless of title or party, have said little or nothing about the fundamental condition of state finances. By contrast there have been countless press releases focusing on detail—specific tax increases, individual program changes, and so on.
Nevertheless, the people have a right to know. According to Wisconsin’s Comprehensive Annual Financial Report, or CAFR, the state ended the most recent fiscal year with a $2.15 billion deficit. Unlike state budgets that do not account for all future commitments, thus masking our true financial condition, the CAFR prepared by the state controller’s office must follow generally accepted accounting principles (GAAP) from the nation’s Governmental Accounting Standards Board and recognize these obligations.
This explains why state budget officials said the 2006 general fund balance was $49.6 million, while the controller put the deficit at $2.15 billion. Last year, Wisconsin was one of only three states with a GAAP deficit and, relative to population, it had the largest deficit in the nation.