The non-partisan Wisconsin Policy Forum today released a new report titled: “K-12 trends offer caution as tough budget choices loom.” Among the key findings is that while spending on public education nationwide from 2008 to 2018 increased by 23%, it grew only 15% in Wisconsin, placing us 38th in the country. This slower growth in spending is partly reflective of the decline in spending on fringe benefits for school staff post Act 10.
The report also notes that without a significant number of school districts having successfully passed referenda to increase educational spending Wisconsin would be ranked even lower.
The report speculates on what if any role these trends will play when policymakers begin state budget negotiations in the midst of a pandemic that has impacted the state’s economy. You can see the full report here.
Some concerning findings from the report: (more…)
The non-partisan Legislative Fiscal Bureau (LFB) has provided the much-anticipated look at state tax collections for fiscal year 2019-20, which ended June 30, 2020 (also known as the first year of the current biennial budget). The LFB memo, released today (8/31), states that tax collections were actually up 1.1% over the previous year but still below earlier estimates by 0.6%. This is welcome news and may lessen the need for a budget repair bill this fall.
The increase in tax collections means the state was also able to make an additional deposit in the state’s rainy day fund of $105.9 million which will be helpful in what still appears to be an even more challenging fiscal year 2020-21. The second year of the current state budget, which started July 1, 2020, includes the bulk of funding increases for schools and other programs that were provided in the state’s two-year spending plan.
The LFB memo does not include estimates for fiscal year 2020-21 because, as a practice, the LFB does not publish early estimates in election years.
See the LFB memo here. The state Department of Revenue also released numbers here.
State Rep. John Nygren, co-chair of the Legislature’s powerful, budget-writing Joint Committee on Finance, appeared this morning on a Zoom webinar sponsored by the Badger Institute to address the state’s fiscal condition. It was the most candid look at state finances we have had in a long time.
While Rep. Nygren indicated that state revenues have stabilized and the fiscal reality is better than he would have thought likely when the pandemic began back in March, the veteran Marinette Republican emphasized that most of the negative impact on state revenues due to the COVID-19 pandemic will be felt in the second year of the current 2019-21 biennium.
Rep. Nygren repeatedly noted that any decisions that can be made now to reduce spending in the second year of the current two-year state budget will make the next biennial budget easier so lawmakers will not have to make cuts (or such big cuts).
Addressing his comments at one point specifically to school leaders, the longtime JFC chair said, “My advice to schools is to reduce expenditures in the current school year so that you have cash on hand… so you have some cushion going into the next budget.”
Budget news? Rumblings from the Capitol suggest that we may be getting closer to the release of updated estimates regarding the state’s fiscal condition. Indeed, some Capitol observers have speculated we may have some news as soon as early next week, noting that one of the co-chairs of the state’s budget writing Joint Committee on Finance is scheduled to speak publicly on Tuesday about the condition of the state budget. Whether this is an indication that an official LFB memo may on its way or simply reflects the co-chair’s personal opinions remains to be seen.
Memos from the non-partisan Legislative Fiscal Bureau (LFB) released earlier this summer have detailed the decline in state tax revenues, but have also noted difficulties in making year-over-year comparisons because tax collection numbers were affected by the extension of income and franchise tax filing deadlines from April to July 15 in 2020. As those tax returns are now in, it will be easier to produce numbers on the extent of the decline.
The following is from a new report from the Wisconsin Policy Forum:
“Because of higher state spending in areas like health care for low-income residents and slower growth in local government and school district revenues, the latest Census Bureau data show state government expenditures are now almost equal to the combined amount spent by schools, municipalities, counties, technical colleges, and other local governments in Wisconsin. The effects of the pandemic are unclear but the trend should be considered by policymakers as they contemplate COVID-19 responses and the next state budget.
“In other words, the balance of spending in Wisconsin has shifted to something much closer to an even split between local government services (such as K-12 schools, police and fire, local roads, and housing) and state services (such as health care for low-income residents, prisons, state highways, and the University of Wisconsin System). (more…)
Gov. Tony Evers today directed the Department of Administration (DOA) to identify $250 million in cost savings at state agencies for the current fiscal year. He had previously ordered a 5% cut to state operations in late April. From a release from the Governor’s office:
“The governor’s proactive directive is an effort to ensure the state is in a stronger position to weather revenue impacts from the COVID-19 pandemic, while also ensuring critical services remain accessible to Wisconsin residents. Earlier this summer, also at the direction of Gov. Evers, DOA announced the implementation of $70 million in cost savings for FY19-20 across 18 of Wisconsin’s largest state agencies. (more…)