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Wisconsin set to end fiscal year in $280 million hole, face up to $2 billion shortfall by 2017

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MADISON, Wisconsin — Gov. Scott Walker will have to plug a roughly $280 million budget shortfall by the end of June, and the state faces a two-year deficit that could be as large as $2 billion, based on new estimates released Friday by the nonpartisan Legislative Fiscal Bureau.

The budget poses both a problem and opportunity for Walker as he begins his second term and positions himself for a potential 2016 presidential bid. Walker touts his management of a roughly $3 billion budget shortfall four years ago when he speaks to conservatives around the country, and now he faces another large deficit in the face of a possible presidential run.

Deep cuts across state government are likely, which would please fiscal conservatives, but it will be difficult for Walker to follow through on promised tax cuts. Walker and Republican legislative leaders have stressed for weeks that difficult decisions lie ahead.

Wisconsin's two-year shortfall hits about $2 billion when state agency requests — which will certainly not be filled in full by Walker or the Republican Legislature — are taken into account. The budget will be about $650 million short by mid-2017 just to continue spending at current levels.

Walker is set to release his roughly $68 billion, two-year budget on Feb. 3 and the Legislature will make changes to it over the next several months.

Co-chairs of the Legislature's budget committee issued a joint statement attributing the current budget woes to the $2 billion in tax cuts passed during Walker's first term, which they supported.

Democrats have criticized Walker and Republicans on their management of the budget, while the governor and GOP lawmakers have said it was right to return the money to taxpayers when the state was running a surplus.

"Rather than focusing on creating jobs and balancing the budget, Republicans have ignored these issues and allowed a $283 million deficit to balloon under their watch," said Democratic Senate Minority Leader Sen. Jennifer Shilling.

Walker will not be releasing an emergency budget plan to balance the $283 million shortfall for the year that ends June 30, his spokeswoman Laurel Patrick said in an email. The state constitution requires the budget to be balanced, meaning that savings will have to be found over the next five months to make up the deficit.

When Walker took office in 2011 the state faced a roughly $3 billion budget shortfall, based on agency requests. Walker used that as rationale to force public workers to more for their health care and pension benefits, while also effectively ending nearly all collective bargaining. He also made deep cuts to public schools, the University of Wisconsin and technical colleges, and across state government.

As the economy improved, Walker focused on returning surplus tax collections by cutting income and property taxes.

The latest budget figures were released the day before Walker was to join other GOP White House hopefuls at separate event this weekend in Iowa and California. Democrats renewed their criticism that Walker is distracted by his political ambitions and instead should be focused on fixing the state's budget problem.


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