Using Standardized Accounting Principles, State Budget Picture Worsened Last Year

Based on a widely used set of accounting standards, Wisconsin’s budget picture looks to have deteriorated last year.

The budget typically ends each fiscal year in the black, but when Generally Accepted Accounting Principles — also known as GAAP — are applied, then it has long run a deficit. The GAAP deficit had been shrinking under Gov. Scott Walker, but last fiscal year it grew from about $1.4 billion to $1.8 billion.

Dale Knapp with the Wisconsin Taxpayers Alliance said the biggest reason for the increase is that lawmakers and the governor, expecting a big jump in tax revenue, decided to cut taxes.

“That extra revenue that we were expecting didn’t come through, and as a result, essentially they had to draw down the balance that they did have,” said Knapp.

Knapp said GAAP accounting is useful because it gives an apples-to-apples comparison with other states, most of which run surpluses. Bond houses use GAAP accounting when they decide state bond ratings.