Wisconsin’s official financial statements, released each December by the state controller’s office, provide telling information about state finances and fiscal health. The latest release shows Wisconsin with a general fund deficit approaching $3 billion, outstanding debt up nearly 250% since 1994, and unrestricted net assets—those available to pay creditors—of nearly -$10 billion. When these measures of fiscal health—along with bond ratings—are compared with those of other states, Wisconsin ranked among the five worst states in 2010.
We can’t say we didn’t know. In early 2001, national bond rating firms warned state officials about emerging budget imbalances brought on by sagging revenues, unrestrained spending commitments, and small budget reserves. Unfortunately, the words of caution were ignored, and the ensuing 10 years were dogged with recurring biennial budget deficits, rapidly rising Medicaid spending, little or no budget reserves, and, of course, lower bond ratings.
During those years, state officials patched state budget holes by:
- using one-time monies from a tobacco settlement, the transportation and other restricted funds, and federal stimulus appropriations;
- restructuring and extending state debt; and
- pushing spending into future years.
Although governors and lawmakers took credit for “balanced” budgets, these actions raised a legitimate concern: What has happened to the fiscal health of Wisconsin?
The best source for a dispassionate answer to this question is the state controller’s office. Every December, it publishes the Comprehensive Annual Financial Report (CAFR), 250 pages of mind-numbing detail that includes the state’s official financial statements. The CAFR is much like the annual reports that public companies provide their shareholders. But, unlike those filed by publicly traded companies, the CAFR’s annual release receives scant attention.