Wisconsin finances are fine for now. But 2020 has shown has fast this can change

Yesterday, Tony Evers' Department of Administration released a huge document related to the upcoming state budget. This combines all of the budget requests by state departments, and then adds in projections for state revenues for the 2021-23 Fiscal Years.

Given our current loss of jobs and looming end of federal help at the end of this year, I was concerned that the DOA's outlook could be especially bad. But it isn't, particularly for this Fiscal Year.

The Department of Revenue's estimates of general purpose tax revenues for fiscal years 2020-21, 2021-22, and 2022-23 are summarized by individual tax source in Table 2. For fiscal year 2020-21, overall state tax revenues are forecasted by the Department of Revenue to be $17.664 billion, which represents an increase of $132 million above the 2019-20 fiscal year tax revenues....

Based on projections, the state's general fund balance at the end of fiscal year 2020-21 is projected to be $1.222 billion (see Table 3). This projection is based on the Department of Revenue's revised fiscal year 2020-21 tax revenue estimates and the final budget for fiscal year 2020-21. Estimates of departmental revenues, sum sufficient appropriations and lapses have been updated based on the latest available information.

Obviously, there is a long time and a lot of variables (COVID, economic and otherwise) between now and the end of June, let alone what the next 2 years might look like. But as you can see, there are two main reasons there is so much money projected to be carried over.

1. That continued increase in corporate tax revenues, which the Legislative Fiscal Bureau says is largely due to more Wisconsin businesses calling themselves "corporations" after the GOP Tax Scam in DC gave a big tax cut to corporate rates at the Federal level (which begs the question - How massive a break are corps getting from the Feds if they're willing to increase their taxes at the state level?)

2. Look at those $954.6 million in lapses in spending for this Fiscal Year. Some of this is due to the $300 million in budget cuts that Evers ordered earrlier this year, when there were concerns that the COVID recession was going to hammer the state's finances, and some of this is due to the feds covering some of the state's expenses through the CARES act and other COVID-related assistance.

But if we have $1.2 billion that is set to be left over on June 30, it sure seems like we could afford the $541 million in state dollars that Evers is prepared to spend in order to deal with COVID and related economic issues. Again, this could change drastically if money gets cut off from DC, and we have to spend additional funds to deal with the 170,000 additional Wisconsinites that on Medicaid compared to where we were in March, and related needs.

You can see that if every budget request gets OK'd, we'd be over by around $1.2 billion in both Fiscal year 2022 and Fiscal Year 2023, which makes for a deficfit of $1.14 billion by the end of the 2021-23 budget. Obviously, not every budget request is going to go through for the full amount, but it's similar to what faced Evers when he came into office, and seems manageable as things stand today.

But if 2020 has taught us anything, "as things stand today" could be very different than what we could be looking at in a few weeks, let alone 2 years from now. And if October's job losses in Wisconsin are an indicator of a rough COVID winter and a double-dip recession (which is now being talked about on a national level by Fed policymakers), the $1.22 billion in the state's bank account that we're supposed to have could go away quickly.

EDIT- I almost left out the best part of yesterday's report.

Finally, the projections are also affected by developments related to the Wisconsin Economic Development Corporation's (WEDC) 2017 contract with three Foxconn affiliates ("Foxconn") for a project in Mount Pleasant, located in Racine County. Under the 2017 contract, Foxconn may earn annual capital and job creation tax credits related to the construction of a Generation 10.5 Fabrication Facility in an Electronics Information and Technology Manufacturing Zone (EITMZ) in Southeastern Wisconsin. The State of Wisconsin and local partners have invested significant resources in real estate, site development, and infrastructure over the last three years in furtherance of the project. However, based on Foxconn's activities in calendar years 2018 and 2019, WEDC has determined that Foxconn has not been eligible for credits under the contract, with the 2019 eligibility determination currently subject to a good faith negotiation period with Foxconn that will lapse at the end of November 2020. WEDC's non-eligibility determinations will likely continue, as the company also does not appear to be on track for credit eligibility based on its calendar year 2020 activities. Based on these realities, the projections contained in this report assume no payment of EITMZ credits to Foxconn in fiscal years 2020-21, 2021-22, and 2022-23.

Translation - "THOSE MAGIC BEANS AIN'T GONNA AMOUNT TO ANYTHING!"