New Economic Information Cause for Optimism, Caution

The last several days have brought an unexpected round of welcome news for Wisconsin’s economy and state revenue collections.  While these events are cause for encouragement, they do not mean we are at an end of our severe fiscal problems and economic woes.

The first bit of news was a report that Wisconsin has jumped 17 spots to 24th in Chief Executive Magazine’s annual survey of the best and worst states in which to do business in America.  The survey’s respondents, 500 CEOs from around the country, based their answers on things like taxation, regulation and workforce quality.  Wisconsin’s rise was the largest of any state.  Illinois, which recently passed a massive income tax increase, fell to #48 on the list and has dropped 40 places over the last five years.

What leaders in the business community think of Wisconsin’s business climate is important.  These individuals will base future decisions on growth and expansion upon the degree of confidence they have in the individual states’ attitudes toward private enterprise.  The Chief Executive Magazine survey shows that Republican efforts to reform government and re-open Wisconsin for business are, in fact, being noticed nationwide and are being received positively by job creators.

The second piece of good news was a nonpartisan Legislative Fiscal Bureau report that stated revenue collections have increased above expectations by $233 million over the last few months, and expected revenues over the 2011-13 biennium are expected to be $403 million higher than anticipated.  This is good news, but we must be cautious not to treat these additional revenues like play money.  Our state still faces a multi-billion budget deficit and still has hundreds of millions of dollars in unpaid bills that need to be addressed.

Specifically, the State of Wisconsin still owes the Patient’s Compensation Fund $200 million for ex-Governor Jim Doyle’s illegal raid of that fund in 2007.  That amount will likely rise substantially due to lost interest and lawyer’s fees.  In addition, Wisconsin still owes the State of Minnesota $58.7 million that was due December 1, 2010 for an expired tax reciprocity agreement.  On top of that, we will eventually have to find a way to pay off about $1.2 billion in unemployment money we’ve borrowed from the federal government.

The unexpected $636 million will make it a little bit easier to balance the state budget, but it does not change the fact that we still have a deficit well in excess of $3 billion, a huge debt problem and an economy struggling to emerge from recession. 

Over the next few weeks, the State Capitol will be crawling with lobbyists carrying shopping lists and insisting that we blow this new revenue on their pet projects.  However, I remain committed to paying our bills and meeting our current obligations – not creating new ones that will create even more fiscal problems for our children and grandchildren.

To contact me with any questions or comments or to sign up for my regular e-updates, please send an e-mail to Rep.Knodl@legis.wi.gov or call me at (608) 266-3796.