State Budget Surplus Shrinking But Still Huge

Assembly Speaker Robin Vos, right, shakes hands with Gov. Tony Evers before the State of the State address Tuesday, Jan. 23, 2024, at the Wisconsin State Capitol in Madison, Wis. (Angela Major/WPR)

Wisconsin’s budget surplus will be less than what was projected six months ago.

The state is predicted to have a surplus of $3.25 billion by the end of the current budget cycle, according to a new estimate of the state’s general fund from the nonpartisan Legislative Fiscal Bureau.

That’s nearly $800,000 less than what was projected when the current budget was signed last June.

Jason Stein, research director at the Wisconsin Policy Forum, said the surplus is still large enough to give lawmakers and the governor some options. Republicans have called for more tax cuts, while Democratic Gov. Tony Evers has proposed new spending.

“The state’s extremely bright financial picture dimmed a little bit,” Stein said. “On the whole things are still very strong with regard to state finances, but there was a little bit of a weakening compared to where we thought things were at six months ago.”

The state is projected to collect less tax revenue while spending has increased. The fiscal bureau is now expecting the state will collect $422 million less than previously expected from both individuals and corporations.

This estimate from the bureau included spending that has passed since June, as well as bills currently working their way through the legislature. That includes $423 million for building projects on University of Wisconsin system campuses and other items.

Republican leaders said the new estimates show there is still enough of a surplus to deliver more tax cuts.

“These estimates are consistent with what we expected when we crafted our budget. We created a responsible budget that protects taxpayer resources, while making important investments in our state,” Sen. Howard Marklein and Rep. Mark Born wrote in a statement. “With over $3 billion in the bank and $1.8 billion in the state’s rainy day fund, it is critical for us to return a portion of these funds to the people of Wisconsin.”

Earlier this week, Republicans called for tax cuts that would total $2.1 billion during this budget cycle and $1.4 billion every year after that.

“There’s a lot of room to do one-time spending increases or one-time tax rebates and there is less, but still significant room, to do ongoing spending increases or ongoing tax cuts,” Stein said.

Stein said state revenues grew very rapidly during and immediately after the pandemic.

“They’re not (growing) now, and there’s no real prospect for them doing that in the near future, absent some sort of tax increase by the state,” he said.

When asked for a response to the revised estimate, a spokesperson for Evers pointed to this week’s State of the State address.

In that speech, Evers called for funding a variety of programs, including child care, expanded Medicaid coverage for new mothers and investing in education.

Wisconsin’s budget surplus is shrinking but still large was originally published by Wisconsin Public Radio.