One day after Gov. Evers in his State of the State Address proposed over $1 billion in new spending, the Legislative Fiscal Bureau (LFB) released a memo showing the state will end the current fiscal year with a projected $7.1 billion surplus, $524 million more than previous estimates. The LFB cited several factors that contributed to the $524 million difference, the most significant of which is the $775 million projected Medicaid (Medical Assistance) fund surplus due in large part to the continuation of enhanced federal matching funds enacted during the COVID-19 pandemic. A second factor is a $202 million appropriation set aside by the Legislature to fund the repeal of the personal property tax. That money was never used because the proposal wasn’t signed into law. Another factor is a $60.7 million increase in projected tax collections compared to the same earlier estimates.
It is noteworthy, however, that the LFB estimates project state tax collections to be $74.7 million lower in FY24, and $80.2 million lower in FY25 and that is without factoring in the potential impact of proposals to cut income taxes significantly. Event considering those tax cuts, the state is expected to experience revenue growth of about $1.2 billion during the upcoming 2023-25 biennium, significantly less than revenue growth in the 2021-23 biennium. In light of projections about lower tax collections, those potential tax cuts and the sustainability of proposed increases in state spending will be focal points for debate over the upcoming 2023-25 state budget.
Responding to the new projections, Joint Committee on Finance (JFC) co chairs, Sen. Howard Marklein (R-Spring Green) and Rep. Mark Born (R-Beaver Dam), issued a press release touting conservative budgeting for the state’s fiscal situation and urging the governor to keep spending in check.
“The updated projections underscore the importance of responsible Republican budgeting,” Rep. Born said. “Our state continues to be in a strong financial position because of conservative fiscal management, despite these projections showing signs of economic uncertainty ahead. It is more important than ever to make sure we continue smart budgeting to ensure we can fund our priorities now and in the future.”
Sen. Marklein noted that “one-time money that has been pumped into our state by the federal government” has had a significant impact on the surplus. The JFC’s Senate co-chair promised to “fund our core priorities and obligations while protecting Wisconsin’s checkbook.”
The latest estimates also confirm that state’s Rainy Day fund continues to hold a record $1.7 billion.
Read more: Cap Times: Wisconsin’s projected budget surplus grows to $7.1 billion