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From Governing’s Wisconsin
For the past few years, Wisconsin has tried an experiment. It may not sound so unusual to some, but in the legislative community of Madison, it’s downright innovative. The experiment? Keeping spending in line with revenues. Unfortunately, it hasn’t been so easy. 
Consider the state’s past. Through the 1990s, Wisconsin cut income taxes by about $1.2 billion a year, committed to fund two-thirds of K-12 education at the state level and oversaw an increase in prison population from 7,000 to about 21,000. Meanwhile, year after year, it relied on surpluses in order to pay for unaffordable long-term increases in its spending. When the economy called a halt to that kind of Ponzi scheme, the state discovered that it was running about $3.2 billion short. As a result, many of Wisconsin’s agencies have been required to cut and cut and cut some more. But even after all that pain, there’s a predicted shortfall of about $1.6 billion over the next biennium. This is something of a disappointment to people who heard their public officials promising to stop the bleeding immediately.
“That was the rhetoric,” says Todd Berry, president of the Wisconsin Taxpayers Alliance. “But the reality is they did a number of stopgap things to put the budget in balance on paper but not to fully address the problem.” A few examples: The state transferred hundreds of millions of dollars to general fund operations from other funds, notably transportation. It restructured its debt to get one-time savings on debt service. And it bonded out money for infrastructure that had historically been paid for with operating revenues. Aside from its deeply rooted spending problems, Wisconsin has a number of strong fiscal attributes, including generally solid debt management, strong internal controls and particularly impressive efforts at using risk management to limit liabilities. Still, in a frantic response to the turn of fiscal events, a number of legislators seem to believe that the only way to make sure Wisconsin stays on the straight and narrow is to follow the route of Colorado’s Taxpayer Bill of Rights — which controls revenues to such a degree that the state’s budgeting is basically done on auto-pilot, with very little capacity to adjust for changing needs. If implemented, this would likely make fiscal problems worse, as it has done in Colorado. In any event, the chronic budget problems have forced state government to make unfortunate trade-offs. One is in the maintenance of infrastructure, which was never particularly strong even when the state was overspending. Wisconsin estimates a $1.2 billion backlog in facilities maintenance, and doesn’t have the capacity to calculate a similar number for its roadways and bridges. Another is in information technology. While IT improvements are nearly always a long-term money-saver, budget writers forced a $40 million cut in IT across the enterprise in the 2003 budget. In human resources, with the exception of weak — though improving — workforce planning, the state does most things moderately well; not the easiest task in the world when an overwhelming percentage of employees are union members. One innovation: The state reorganized health care coverage for its employees by requiring all of them to pay at least a token amount in premiums and giving them a choice among HMOs that made services available. The HMOs had an incentive to keep their costs as low as possible, so they could attract a larger share of the state workforce and benefit from economies of scale. As a result of the new competition, the state is saving millions of dollars. Technology is a significant impediment statewide. Although Wisconsin has made solid steps at improving its technology planning, the systems in place do not support managers’ needs very well. A recent study showed that practically every one of the 52 state boards and agencies has its own technological support tools. “There’s no automated way to compare enterprise-wide HR data or financial data or any other enterprise-wide data,” says Matt Miszewski, the state’s chief information officer. Miszewski adds, however, that the state is taking steps to change that, based in part on a consolidation of servers and networks.
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