LFB Projects $1 Billion Structural Deficit Heading into 2019-21 Biennium

In a March 23 memo, the Legislative Fiscal Bureau (LFB) projected the state will have a structural deficit of over $1 billion in the 2019-21 biennium.

To develop this estimate, LFB used the 2018-19 base revenues and expenses and adjusts for changes in the governor’s proposed 2017-19 budget. LFB then compares the modified expenditures against revenues in the next biennium. The estimate does not consider the potential for revenue growth, or the increase in expenses due to several factors, including caseloads, population estimates or inflation.

LFB’s estimate of the deficit is an increase from the Walker administration’s estimate of $735 million. The $1 billion structural deficit is higher than the $211 million structural deficit projected at the beginning of the 2017-19 biennium, but is still the third lowest since 1999.

In response to LFB’s analysis, Joint Finance Committee co-chair Sen. Alberta Darling (R-River Hills) said that, like in previous budgets, revenue growth would likely partly or totally erase the deficit.