Tamarine Cornelius
Wisconsin Budget

Federal Cuts Could Hurt State Programs

Federal dollars account for 29% of state budget.

By , Wisconsin Budget Project - Jan 6th, 2017 10:17 am
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Donald Trump, Paul Ryan and Mike Pence. Photo from the Office of the Speaker of the House.

Donald Trump, Paul Ryan and Mike Pence. Photo from the Office of the Speaker of the House.

When Wisconsin residents drive on the highway, send their child off to school, or go to the doctor, they are benefitting from federal money spent in Wisconsin that supports a broad range of services. Under a new Congress, Wisconsin may be at risk of losing some of that federal money, making it more difficult for Wisconsin to provide the services that make the state a great place to live, work, and do business.

Wisconsin’s two-year budget that runs from July 2015 to June 2017 includes $21 billion in federal spending. In fact, out of every dollar the state spends in the budget, 29¢ comes from the federal government. Keep in mind that amount, though significant, understates the importance of federal money coming into the state. That’s because that $21 billion figure doesn’t include billions in federal resources that are delivered directly to Wisconsin residents or companies, such as Social Security payments, defense contracts, and the federal Earned Income Tax Credit.

Federal Money Accounts for Nearly a Third of Wisconsin's Budget

Federal Money Accounts for Nearly a Third of Wisconsin’s Budget

Just over half of federal dollars that flow through Wisconsin’s state budget support health services for children, seniors, and many other Wisconsin residents, adding up to $11.6 billion in the 2015-17 budget. The lion’s share of the federal health money goes towards providing health care coverage families and individuals with low incomes, through the state’s Medicaid and BadgerCare Plus Program.

The second-largest portion of the federal money in the state budget goes to support higher education, primarily by underwriting research at the UW System in areas of study such as health, energy, and agriculture. The state budget allocated $3.6 billion in federal money for higher education in Wisconsin in the 2015-17 budget, 17% of the federal dollars spent in the budget.

Another significant portion of federal dollars in Wisconsin’s budget are directed towards improving public education for K-12 students. Federal money provides resources used to promote academic achievement of students from families with low incomes, and to provide services like special education instruction and transportation for students with disabilities. The state budget distributed $1.8 billion in federal money for K-12 schools in the most recent two-year budget, eight percent of the federal dollars allocated in the state budget.

Significant amounts of federal dollars also flow through the budget to support Wisconsin’s transportation infrastructure, child safety and protection services, and workforce development.

More than Three-Quarters of Federal Dollars Spent Through Wisconsin Budget Support Health Care and Education

More than Three-Quarters of Federal Dollars Spent Through Wisconsin Budget Support Health Care and Education

There is a lot we don’t know about what the new U.S. Congress is planning to do, but the statements of Congressional leaders and their past actions give a warning that federal funding for key public services – including federal money spent through the states – may be on the chopping block. The House of Representatives, led by Wisconsin’s own Representative Paul Ryan, has passed budgets in the past that include huge cuts to federal spending that fund a wide range of needs and priorities. At the time, control of the federal government was divided between Democrats and Republicans, and the draconian budget cuts included in the House budgets did not pass into law – but now, with a Republican-controlled Senate and Presidency, those cuts are more likely to happen. The resulting reduction in federal money coming into Wisconsin could lead to deep cuts in the public services that fund the state’s health, education, and transportation systems, and promote economic opportunity for Wisconsin residents.

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