- Associated Press - Wednesday, October 15, 2014

MADISON, Wis. (AP) - Gov. Scott Walker’s administration reported Wednesday that the state budget ended the last fiscal year with a $517 million surplus, but the forecast going forward remains murky.

The annual fiscal report - a document that typically generates little public attention - took on greater importance in the waning weeks of the tight governor’s race where management of the state’s finances is a key issue.

Walker has argued he deserves a second term because he turned around a budget shortfall of more than $3 billion, while also cutting taxes by about $2 billion. But his Democratic challenger, Mary Burke, says Walker failed the state because the budget the next governor will have to balance is projected to have a $1.8 billion shortfall.

It’s unclear how the numbers released Wednesday will affect that projected shortfall, or whether the Legislature will need to take emergency action to ensure the current budget is balanced by July, as the state constitution requires.

The nonpartisan Legislative Fiscal Bureau said last month that the budget is projected to be nearly $396 million short by the end of June, but that number will change based on actual tax collections and expenditures.

In a sign that the shortfall will be less, Walker’s administration on Tuesday released figures showing that tax collections for the first three months of the current fiscal year were $55.3 million above what was expected.

However, compared with the prior year, the collections were down 2.3 percent. The state Department of Revenue said one factor for why collections were off was due to a 10 percent reduction in income tax collection withholding in effect now that wasn’t last year. That lowered the amount of taxes people paid during the three-month period when compared to the previous year.

And while the last budget year ended with a $517 million surplus, that was $207 million less than what was projected when the Legislature passed the budget in 2013.

Still, Republican legislative leaders were quick to spin the numbers in the most positive light.

“Today’s budget report shows we’re living within our means, finding efficiencies and eliminating waste,” said Republican Assembly Speaker Robin Vos.

The numbers will likely be fodder in the waning days of the governor’s race. Both Burke and Walker are scheduled to debate for a second and final time Friday night in Milwaukee. A Marquette University Law School poll released Wednesday showed the race was tied with only 4 percent of voters undecided.

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Follow Scott Bauer on Twitter at https://twitter.com/sbauerAP

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