How can Wisconsin break its cycle of structural budget deficits?
Why or why not? A structural deficit is a commitment to fund programs into the future without the revenue to do so. Wisconsin can break its cycle of structural deficits, first, by understanding the multi-year budget consequences of government decisions and, second, beginning to exercise steady fiscal restraint. Part of the problem is that the State expanded its programs during years of robust revenue growth during the 1990s. The state’s two main revenue sources, the income tax and the sales tax, automatically respond to the level of economic activity. There were few limits on either spending increases or tax rate reductions during this time of strong economic growth. The inevitable result, once the economy slowed and the revenue boom ended, was structural deficit that we now face. Future budgets should project the long-term fiscal impacts of both additional state spending and state tax cuts since both contribute to the eventual fiscal crisis, especially during times of economic expansi
