State Revenue Well Below Projections
Quietly released report shows anemic tax collections, points to budget problems.
Wisconsin State Capitol. Photo by Rosina Peixoto.
New tax collection numbers that were released late on December 23 do not bode well for the Wisconsin budget. The November tax figures released by the Department of Revenue (DOR) late last Friday – a week after negative job numbers – suggest significant challenges ahead for state budget writers.
I’m not sure whether DOR released the tax collection data just a couple of hours before the Christmas break in order to avoid public notice, but if that was their plan it worked very well. There doesn’t seem to have been any media coverage of the new numbers.
Here are a few key figures from the latest tax data:
- Total tax collections in November were 2.3% below the amount collected in November 2015.
- For the first five months of the current fiscal year, total tax collections are just 1.2% above the total for the same portion of the prior year, and that’s well below what is needed to hit budget projections.
- Sales tax collections, which are a significant barometer of the state’s economic health, are up just 1.0% this year.
- Individual income taxes are up 3.5%, but corporate income and franchise taxes are down 22%.
For state policymakers, the DOR report contains Grinch-like numbers, though corporations probably don’t see it that way. Their taxes actually decreased by about 217% in November, compared to the same month of the prior year. If you didn’t think tax revenue could decrease by more than 100%, you aren’t alone. I was very surprised to learn that corporations actually received $9 million more in tax refunds last month than the income and franchise taxes they paid to the state.
To put the latest revenue numbers in context, keep in mind that the state needs 3.7% tax growth this year to reach the revenue level projected by the Legislative Fiscal Bureau (LFB) last January. Revised revenue projections released by the Dept. of Administration (DOA) in November reduced the estimate for the current fiscal year to just 2.3%, which they estimated would reduce the balance at the end of this budget period to just $104 million.
Spending has also been less than anticipated, and some of that trend was already factored into the November projection of a $104 million balance. However, I won’t be surprised if a new Dept. of Health Services report that will be released within the next week will further reduce the Medicaid spending estimate. A downward trend in Medicaid caseloads and costs could help minimize the corrective measures needed to keep the budget in balance, if revenue collections don’t get a positive bounce.
Governors are often able to find short-term solutions to keep a budget in balance at the end of a biennium, without great difficulty. The much more difficult problem is that lower-than-projected revenue growth in the second year of a budget period means the previously anticipated tax collections in the next biennium will probably have to be lowered by a significant amount. In addition, the use of short-term solutions, such as drawing down budget reserves, means that some of the revenue growth in the following biennium has to be used simply to get the state back to where things had been.
State revenue collections can bounce around from month to month, so perhaps tax growth will be far stronger over the rest of this fiscal year than during the first five months. The state’s budget experts in the Fiscal Bureau and the Walker administration have access to far more data than I do, and perhaps they will have some positive news to share with us in late January when the LFB releases new revenue projections for the current fiscal year and the following two years. I certainly hope so, but the latest revenue trends and new job numbers suggest otherwise.
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It will be tough year. Since Obama, the businesses have gone south.
We have had only about 2% growth.
Bad news as the growth in Medicaid will suck up all the cool money. What about roads, UW system and K12 will be tough.
The article says corporations’ “taxes actually decreased by about 217% in November, compared to the same month of the prior year.”
Is that a typo or some kind of new math???
How (short of Madison actually paying corporations) can taxes decline by more than 100%?
No Dumb Dohnal, NO.
Obama didn’t pass the giveaways at the state level that allowed corporations to get more in tax refunds than they paid in corporare taxes.
Obama didn’t tank sales tax growth, low-wage Walker/WisGOP/WMC policies did.
Maybe if Wisconsin’s rich and the corporate paid a fraction of what they have taken from the rest of us in this state, maybe we’d be able to fix the roads, fund the UW, and not have K-12 schools have to go to referenda just to keep the lights on.
OWN THE FAILURE, WisGOPs. And enjoy the exploding budget deficit that will become official next month
@Tom D “If you didn’t think tax revenue could decrease by more than 100%, you aren’t alone. I was very surprised to learn that corporations actually received $9 million more in tax refunds last month than the income and franchise taxes they paid to the state.”
WCD still blames Doyle for Wisconsin’s problems, and Trump has yet to take office and he is already blaming Obama for future problems. Priceless.
Wisconsin has few rich people, they have left for no income taxes, long time ago, and if you wish to see the rest leave like KClark then raise taxes on them some more.
Overall the sales tax results are low, cause the economy is slow, that is the first measure.
Thankfully Walker and the GOP turned around the negative growth of Doyle to positive growth, but more and more the high income people and the companies head south where there is much smaller tax costs.
No Dumb Dohnal, NO. In fact, we are adding jobs and growing revenues at a slower pace now than we were when Walker took over from Doyle 6 years ago.
And it was under Walker where Diane Hendricks saw her state income taxes shrink to $0…while she was giving GOP candidates millions.
I know you weak-minded, excuse-making righties think math is a liberal plot. But it’s not, and it shows the failure in black and white. OWN IT
Rich people aren’t fleeing Wisconsin. There’s no evidence to support that. WCD as per usual provides no links or sources. Walker has had 6 years. It is not Doyle’s fault that Wisconsin’s economy isn’t better. We have been “Open for Business” since Walker took office and what do we have to show for it?
After 8 years of Doyle we were down 130,000 jobs after 6 years we are up over 200,000 jobs, difference of 330,000. The national economy has been slow but right now we have the highest number of peoel ever in Wis. working. Sales taxes are not growing cause of slow economy growth only 2% not Doyel, Obama. The wealthiest have changed there residence south fro years.
I love how Ms. Digest constantly applies logic to Wisconsin that she must change when explaining all our bordering States economic performance, as they have the same constraints and Obama that we do.
Wisconsin desperately needs a new revenue source. Thankfully there is an obvious states’ rights, free market, personal liberty/responsibility solution that should be right up the Republican’s alley. The Wisconsin Legislature should do its job and listen to the strong 60% bipartisan majority of Wisconsinites who want to immediately end the state’s utterly failed Prohibition of cannabis as other more freedom loving and egalitarian states have already done (and all of Canada is about to do) and legalize, tax and regulate this vast and growing Black Market and use the estimated 90-100 million collected annually in taxes to help pay for our crumbling roads and infrastructure as well as invest in education or in many other necessary state functions. Prohibition does not work. We tried. We spent 2 trillion since 1970. It still doesn’t work. Most people hate it. It just allows a wild west black market to thrive while making drug cartels filthy rich, just like alcohol Prohibition, and we get stuck with a huge bill for a totally failed war on an herb which is in every school and neighborhood anyways. Cannabis should be treated as a public health and safety issue, much like alcohol and tobacco and not a criminal justice one. In addition to the tax and personal liberty windfalls, the state would save millions in long overdue criminal justice reform annually, help cut down on the opioid epidemic ravaging the state as well as cut down on the drunk driving epidemic saving lives and Wisconsin could actually afford to fix its roads and schools, all while creating a much more safe, healthy society for all. It sure beats raising taxes again as Speaker Vos wants to do or borrowing and passing the debt with intetest yet again as Walker wants to do. So much for Republicans being “fiscally conservative”. So much for them embracing “limited government”, personal freedom/responsibilty or states’ rights. Prohibition is a wildly unpopular failed policy and idea from a bygone era. Legalize tax and regulate cannabis and just fix this revenue shortfall!
Legalizing weed (which I fully support) would really generate up to $100 million in annual revenue in WI?
Yes. Recent estimates are now at around 90-100 million annually for Wisconsin. Bear in mind the actual tax revenue that has been collected by state’s that have already wisely legalized have come in far above the estimates as well. Wisconsin has had a large and thriving black market for cannabis for decades. This is reality and it was created by a huge demand for cannabis by our own citizens. It’s time to stop waging a war on the and instead end the abject failure of Prohibition and tax and regulate this black market already in place in our state. Spread the word and write your legislators. This reefer madness needs to stop.
The 90-100 million estimate is a little older and more conservative. A more recent and accurate estimate puts Wisconsin at around 159 million annually assuming a 25% tax rate like Washington State’s! That is a consistent revenue stream, every year! Wow that would go a long way to helping solve Wisconsin’s revenue shortfalls! 60% of Wisconsinites support but oh well, Walker, Vos and the Republicans know better than the peopIe I guess? Send them an email and tell them to wisen up.
Few thing more stupid than to legalize another vice. Why not whores, coke, heroin, fentanyl too. Stupid idea dummies to wreck society.
Not to quibble but I find this interesting. So in the fiscal year ending June 30, Colorado reported $70 million in tax revenue from marijuana. http://time.com/4037604/colorado-marijuana-tax-revenue/
The states are about the same size. How would Wisconsin raise more than that? A higher tax? More pot smokers here?
What about alcohol WCD? Should we ban it? It does far more damage than weed.
It depends on the tax rate and structure Vincent…
Sorry so called “conservative digest” but it’s already everywhere in the state. Legalizing just puts the drug cartels out of business. You big government loving high tax nanny state control freaks need to wake up. Prohibition does not work. If you think does you should start advocating for bringing alcohol prohibition back so the beer barons and gangstrs can run the wild west black market. It is a far more deleterious drug than reefer afterall. Or shall we prohibit firearms too? Why just think of all the things we could ban! Just thinkbof all the great new regulations and laws!? You don’t need to like cannabis to support ending the undeniable failure of Prohibition. Time to deal in reality. Reality is we can’t arrest or legislate our way out of this issue. It’s time to end Prohibition. If you disagree that is okay but you need to acceot are on the wrong side of history.
Here’s some more reading on tax revenue solutions for you. Happy New Year’s to you!
http://taxfoundation.org/article/marijuana-legalization-and-taxes-lessons-other-states-colorado-and-washington
Those are really strong points Caligula and they represent exactly how I feel about it. WCD is 75 and his ideas about pretty much everything are straight out of the ’50s. Also, is there a proposal in existence for WI and marijuana legalization & taxation?
Yeah don’t sweat the Prohibitionists. Just keep positive and keep telling the truth. Most of them are slowly drinking themselves to death in Wisconsin anyways so time is on our side. There is no Initiative and Referendum system in Wisconsin which is how every other state ended tje failure of Prohibition. Melissa Sargent puts forth bills every year but the Legislature has no conviction or integrity so a vote isn’t even allowed. Unless the Legislature starts doing its job and starts listening to the strong majority of Wisconsinites on this issue and repeals cannabis itself, as it should, we would have to have a consitutional amendment put forth which takes two legislative sessions in Wisconsin I believe for it to go to a referendum. That is highly unlikely, no pun intended. The best thing you or anyone else can do is write your legislators, all of them. They are not reading this, you need to contact them. Then get your friends and familybto do the same. Then join MPP, NORML and other anti-prohibition groups and start advocating for positive change at everywhere opportunity you can. SE Wisconsin NORML is a great group! Check them out! This can seem daunting but fear not, we shall endeavor to persevere and we will succeed by repealing these failed, life destroying, discriminatory, outdated dranconian laws!
“Individual income taxes are up 3.5%, but corporate income and franchise taxes are down 22%.”
— I’d be curious to know what corporate profits are for those corporations paying less in tax than 2015.
If things are really so bad as to see that kind of reduction you’d think it’d be a more visible problem.
Just think of what it would do for Cheetos sales.
So a columnist from the “Wisconsin Budget Project” has no ever-loving idea how the Wisconsin budget process works. That’s so weird.
Really Jason? How does it work? Enlighten us.
You really are a walking embodiment of the Dunning-Kruger effect, aren’t you. OWN THE FAILURE, son.
US News and World Report places Milwaukee 6th worst city n country for auto theft, violence. The Left cannot run anyhting.
Conservative Digest is right. There are no rich people left in Wisconsin. They are all on the west coast making millions in the legal cannabis industry….
Forget cheeto sales, think of the 18,000 new jpbs for Wisconsin!
Conservative Digest has obviously never been to Seattle or Portland Oregon!? Along with SF, these are the most liberal cities in the country and they have by far, the lowest violent crime rates in the country for big cities!? They also have booming economies, thriving business climates, multibillionaires everywhere etc…WA State is usually #1, Walker’s WI is usually dead last or waaay down the list. Oh yeah they have legal cannabis as well. Not a huge fan of big governmemt nanny state bureacrats, left or right personally but facts are facts. Wisconsin=FAIL.
What?! Walker’s warmed-over Trickle-Down Economics of cutting taxes for corporations and the One Percent are not trickling up and meeting Wisconsin’s budget needs? How can that be?
They’ll just have to find more ways to Soak the Middle Class to keep sparing the likes of Diane Hendricks, Chris Abele and others who “smartly” pay no state income taxes.
Under the leadership of Obama and Bush, the last ten years we have seen the working peoel go down hill almost 10% in tha time. That is why we have Trup.
In Wiscosnin Walker took Negative job growth, with Doyle and the high taxing Leftie from minus 130,000 lost jobs at end of 8 years to a positive over 250,000 jobs to the higher number of peoel working in our history.
The exception has been Milwaukee with huge crime increase, unemployment, MPS National Disgrace, bad roads, heroin epidemic and on and on. You have lot to do here Milwukwee native, get to work, or better et get out cause the more you do the worse it gets.
Caligula, great, either move there or get some of their leaders here, as the one in Milwaukee, the white, liberal, male racists that run it are worthless.
I’d just note that the global recession hit during Doyle’s term, hence the jobs losses. Further, Walker’s economy has not created the 250,000 jobs promised.
Ok I will make some calls. 🙂
Excuses, always excuses. fact it cam end of Doyles time prior to that he did not any better.
So anything good in Wisconsin is because of Walker and anything bad is because of Doyle, even though he hasn’t held office for six years? Makes perfect sense. Very sound logic. But yes it’s Walker critics who are making excuses, not the person blaming Doyle, the man who left office in 2010.
Dumb answer Vince that is why i never answer you. nothing to say.
What’s dumb is blaming everything you think is bad in the state on a man who hasn’t been governor in 6 years. It doesn’t get any dumber than that. I’m sure the heroin problem is Doyle’s fault somehow.
Vincent is correct.