
State officials began the 2011-13 budget process facing a more than $1.2 billion first-year structural hole, a rapidly growing Medicaid program, and modest revenue increases. The result was a state budget that:
- Shifts general fund spending from education and most other programs to Medicaid, primarily.
- Has fewer federal dollars than in 2009-11, but still more than in preceding years.
- Closes a 15-year structural deficit and replaces it with a small surplus entering the 2013-15 budget season.
- Leaves the state with little fiscal breathing room should the economy—and tax collections—turn south.
This year’s state budget process was painful, the result of more than a decade of fiscal denial by governors and lawmakers of both parties. For years, the state “balanced” its budget in name only, eschewing long-term planning, building almost no financial reserves, and relying on accounting tricks and one-time monies to get by.
An economic recession and a sluggish recovery only exacerbated the problems, leading to divisive disagreement about where the state should head long term. In the end, the budget created new challenges for local governments, schools, and public employees. But it also eliminated the state’s structural deficit for the first time since 1996, providing hope that Wisconsin may now be able to plan for the future rather than pay for the past.