Wisconsin’s budget balance grows by billions as tax revenues rise
Revenue estimates have left the state government with more cash on hand than in any budget cycle in recent memory, a dramatic change from last year when policymakers feared the coronavirus pandemic could lower incomes and force deep cuts in spending.
Projections, if they hold, would leave Wisconsin’s general fund with a balance of $ 2.6 billion at the end of the current budget cycle on June 30, up from $ 1.9 billion forecast in January. Based on the current situation, projections would leave the next biennial budget with a final balance of nearly $ 5.9 billion, a sum virtually unheard of in the state government of Wisconsin.
“The increase in general fund tax revenue in 2021, particularly during the months of April and May, is unprecedented,” wrote the director of the Legislative Office of Finance, Bob Lang, longtime chief of the budget agency.
The latest revenue estimates, which were prepared by Lang for the co-chairs of the Legislative Budget committee, come less than five months after Wisconsin’s latest projections also revealed the economy is recovering faster than expected. .
When previous estimates were released, the coronavirus relief plan signed by President Joe Biden – officially known as the American Rescue Plan Act or ARPA – had not yet become law.
“The main driver behind the increase in estimates is the ARPA, the $ 1.9 trillion stimulus bill enacted in March,” Lang wrote.
Lang noted that the latest coronavirus relief plan included stimulus checks of $ 1,400 per person, enhanced unemployment benefit of $ 300 per week, and funding for a second round of loans from the Check Protection Program. payroll, among other provisions. He also wrote that at the time of the latest income estimates, COVID-19 cases were on the rise across the country, while they are now on the decline as vaccination efforts have gathered pace.
Tuesday’s revenue projections were so good they prompted Gov. Tony Evers to return $ 250 million in temporary cuts to state agencies in the early stages of the COVID-19 pandemic as the budget position of the state looked gloomy. This included returning more than $ 50 million to the University of Wisconsin system and the Wisconsin Technical College system.
In a written statement, Evers also said the money left no doubt that the state could afford to fund many of the budget priorities it presented to the legislature in February.
“I am proud of the work we have done to respond to COVID-19 and put our economy in the best position to recover, which is why there is no excuse for choosing not to fully invest in our children and our schools, broadband, venture capital and Main Street business support, among other critical priorities, which will ensure that we bounce back and better than before this pandemic, âEvers said.
Evers and the GOP leaders have moved quickly from one public disagreement to another since his election, and although the state’s fiscal position has improved, their relationship has not changed. Republicans began budget deliberations by removing hundreds of Evers’ proposals from the budget, and more recently the Republican-led budget committee passed a K-12 spending plan that spent $ 1.4 billion less than what Evers had asked for for the schools.
On Tuesday, several Republican lawmakers released statements suggesting they wanted to use the proceeds for a tax cut, giving little indication that they planned to use it for other spending.
âThis is a unique opportunity to fundamentally reform our tax code and deliver transformational tax relief to the people of Wisconsin,â said Senate Majority Leader Devin LeMahieu, R-Oostburg.
“With so much money already poured into Wisconsin by the federal government, this additional revenue gives us the opportunity to invest in state priorities and lower taxes for hard-working families,” said the president. of the Robin Vos Assembly, R-Rochester.
Senator Dale Kooyenga, R-Brookfield, a member of the Legislative Budget committee, said the size of the budget surplus presented an opportunity to eliminate entire tax brackets as part of a cut tax. Kooyenga has previously recommended to move away from Wisconsin’s long-standing progressive income tax towards a âlump sum taxâ for all taxpayers, regardless of income.
The news of unprecedented tax revenue comes at a time when Wisconsin is also receiving billions of dollars in federal funding under three federal coronavirus relief programs. These funds include a projection $ 2.5 billion which will be delivered by Evers.
What makes the projections released Tuesday even more remarkable is that they do not even take into account the money Wisconsin is required by law to set aside in its fiscal stabilization fund, often referred to as its “fund. for rainy days “. That includes a planned deposit of $ 807 million in the fund this year, leaving it with a balance of nearly $ 1.6 billion.
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