Wisconsin’s latest fiscal outlook estimates the state will wrap up the current fiscal year later this summer with a $7.1 billion surplus, more than half a billion dollars higher than previous projections released just two months ago.
The updated projections, released Wednesday by the nonpartisan Legislative Fiscal Bureau, come less than 24 hours after Democratic Gov. Tony Evers delivered his 2023 State of the State address, in which he proposed spending some of the surplus to cut taxes for the middle class and increase spending on K-12 schools, workforce initiatives and water quality.
Republican leaders immediately criticized the cost of Evers’ proposals. Their main goal this coming budget session is on cutting taxes, specifically by replacing the state’s progressive income tax structure with a flat 3.25% tax — a proposal Evers has strongly opposed.
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Assembly Speaker Robin Vos said he’s “open to being persuaded” on some of the governor’s ideas, but reiterated that Republicans’ top priority this coming budget session is cutting taxes.
Evers will formally unveil his 2023-25 biennial budget proposal next month. Vos, R-Rochester, has already signaled plans to strip the governor’s proposal down to its base and start over from scratch, as GOP lawmakers have done in Evers’ two previous budget proposals. The final two-year spending plan will ultimately be sent back to Evers for consideration.
“These new projections make it clear we can answer the governor’s calls for improvements in public safety, middle class tax relief, and investments in our public schools,” said Sen. Dianne Hesselbein, D-Middleton. “They also show cause for caution in the years ahead. This is a time for effective investments, not reckless tax schemes that bust future budgets.”
The projected $7.1 billion general fund balance is the result of increased tax collections and reduced expenditures, primarily due to increased federal funding to the state’s Medicaid fund — marking a nearly $270 million projected increase over previous projections released in November, according to the report.
“The surplus is significantly impacted by the one-time money that has been pumped into our state by the federal government,” Sen. Howard Marklein, R-Spring Green, co-chair of the Joint Finance Committee, said Wednesday. “We will continue to fund our core priorities and obligations while protecting Wisconsin’s checkbook.”
Another roughly $202 million that was set aside in the 2021-23 biennial budget process intended to cover the elimination of the state’s personal property tax will lapse back into the general fund on June 30. Both Democratic Gov. Tony Evers and Republicans, who control the Legislature, proposed eliminating the tax, which businesses pay on furnishings and equipment, but failed to reach an agreement on the matter.
The updated projections also note that estimated tax collections for the current fiscal year are almost $61 million higher than projections provided by the Department of Administration in November.
Wisconsin has about $1.73 billion in the budget stabilization fund, a rainy day fund to be tapped in times of emergency. It is the fund’s largest amount in state history and more than five times the fund’s balance at the end of fiscal 2018.