(The Center Square) – Wisconsin’s new state budget, already criticized by some Republican lawmakers, has drawn additional critique as a spending plan.
The Wisconsin Policy Forum last week released its examination of the 2023-25 state budget. The group bills itself as a “nonpartisan, independent policy research organization.”
“Drawing on a massive state surplus, lawmakers and Gov. Tony Evers approved a 2023-25 budget that cuts property and income taxes, overhauls the funding framework for local governments and the transportation system, boosts K-12 school aids, raises state worker pay, and prioritizes affordable housing,” the report says. “The final version, however, did not provide for large funding increases for higher education and child care, upgrades to the Milwaukee Brewers stadium, or an expansion of Medicaid health coverage. Partial vetoes by Evers sharply scaled back the income tax cuts, leaving larger state reserves and the possibility for further compromises.”
The Policy Forum looks at what it calls the “sharp” increase in spending in the new budget.
“Under the JFC plan, gross appropriations from all revenue sources will grow to $98.66 billion over the two years, an increase of $10.33 billion, or 11.7%,” the Policy Forum says. “Appropriations from general purpose revenues (GPR – mainly income and sales tax collections) would rise to $44.41 billion over the two years, an increase of $4.02 billion, or 10.0%. That is the largest percentage increase since the 2005-07 budget.”
JFC is an acronym for the legislative Joint Committee on Finance; GPR is an acronym for general purpose revenue.
That spike in spending drew criticism from Republican lawmakers, including state Sen. Steve Nass, R-Whitewater, who said the new budget “will take this state from a $7 billion structural balance to a $2.5 billion structural deficit at the start of the next budget period.”
The Policy Forum came to the same conclusion.
“The state’s reserves are projected to drop for a simple reason – the sharp increase in appropriations and more modest increase in state tax revenues together will mean that the state spends more than it takes in,” the report says. “After several years in which the state ran substantial surpluses, it will essentially run a projected deficit of roughly $2.5 billion in fiscal year 2024 and about $279 million in 2025.”
The report also details the tax cut that Evers cut out of the budget.
“The budget would reduce state and local taxes by more than $1 billion over the next two years,” it says. “However, related legislation could increase sales taxes in Milwaukee and Milwaukee County and allow local school districts to increase their property tax levies into the future.”
The report also focuses on Wisconsin’s new shared revenue expansion.
“Starting in 2024,” the report says, “nearly every municipality in the state will receive at least a 20% increase in a component of shared revenue known as county and municipal aid. The vast majority of municipalities and counties will see an even larger percentage increase based on a formula that favors less populous communities.”
The Policy Forum report also looks at what wasn’t done in the new budget, including a Medicaid expansion, funding for the Brewers’ ballpark, and a paid family leave program.
“The good news for both sides,” the report says in conclusion, “is that a final budget not only has been adopted on time, but has preserved much of the state’s massive surplus, thus leaving the possibility at least of future compromises on child care, higher education, income tax cuts, and more in the weeks and months to come. Citizens have a rare opportunity to raise their voices in favor of the bargain that they would prefer. In the meantime, state residents can take comfort in the fact that even as economic worries have risen along with interest rates, the state remains in a strong fiscal position to weather whatever challenges may arise.”
