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...while one state builds a budget surplus

By Lucia MouatStaff writer of The Christian Science Monitor / February 3, 1984

Madison, Wis.

It's the kind of sudden rags-to-riches turnaround that could leave some taxpayers a bit befuddled. Just one year ago freshly elected Wisconsin Gov. -Anthony Earl made the rounds of major newspaper editorial boards in the state to explain the bind he was in by inheriting a $300 million-plus deficit from former Gov. Lee S. Dreyfus. Tax hikes and spending cuts, said Governor Earl, were mandatory.

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A few weeks ago the new governor made the rounds again. This time he explained that the deficit was blossoming into a huge surplus - projected at $ 553 million by mid-1985. He doesn't want to pare down that cache with new spending programs, tax changes, or refunds.

Many other states, from California to Minnesota, have been riding this same down-again, up-again fiscal roller coaster. They, too, have recently found their treasuries unexpectedly well stocked. Earl says this is one area in which states have outperformed the federal government.

''We have surely shown a leadership role in how to deal with fiscal difficulties,'' he says. ''If the federal government had done in any measure what most of the states had had to do in terms of expenditures and taxes, we wouldn't have had this terrible deficit policy.''

All around, these new state surpluses are the result of the economic recovery and of in-state belt tightening and tax increases. In Wisconsin, for instance, where personal income shot up 35 percent beyond the national average last year, spending cuts were made, salaries were frozen, and a temporary 10 percent surcharge was put on corporate and personal income taxes.

Accordingly, here in ''America's Dairyland,'' as this state's yellow auto license plates still dub it, one of the hottest topics of debate these days - both in the Legislature and at family dinner tables - is what, if anything, to do with the newfound surplus.

Former Governor Dreyfus, a Republican who inherited a huge surplus when he took office in 1979 and promptly sent out taxpayer refunds, has argued that having a ''cookie jar'' only tempts lawmakers to spend it.

''That's absolute baloney,'' retorts Earl, a Democrat, during an interview in his Capitol office. ''It's only true if you make it a self-fulfilling prophecy.''

In the past, he explains, state surpluses have been spent to roll off other, ''more onerous'' taxes. He hopes to do the same - and perhaps to make Wisconsin's personal income tax, long one of the nation's highest, more ''progressive.''

But he says he won't tackle that or any major new spending programs until he is very sure that the surplus is real (''It's not yet money in the bank.'') and that the fiscal crisis is past. He wants to make no changes until the next biennial session of the Legislature, in 1985.

He says he is well aware that many members of the Legislature, controlled by a Democratic majority these days, have pet spending and tax-reform ideas of their own. But he brands many of these as ''too ambitious to be credible.'' And he adds that ''the Republican minority has a great grab bag that would choke a horse.''

He says he and most legislators agree that the time is ripe to roll back the temporary tax surcharge. And he says he thinks his view on holding the surplus intact will also prevail ''without its coming to a test of wills.''

''Everywhere I go, people say, 'For the love of Pete, don't give it all back - don't go through another scheme where we get another check in the mail.'