Wisconsin now has even more money to play with

We already knew that there was a lot of money in the State of Wisconsin’s bank account, but we found out today that we have even more.

State tax collections continued to exceed expectations in the 2020-21 fiscal year as the state took in $319 million more than what the Legislative Fiscal Bureau had projected just two months ago.

In June, LFB had anticipated $19.25 billion in general fund tax collections in the second year of the budget. Instead, tax collections came in at nearly $19.6 billion.

LFB Director Bob Lang said the bump was due to two factors. One factor was corporate tax collections came in higher than expected after businesses made their estimated payments at the end of June before the fiscal year closed. The second was a better handle on sales tax collections for the fiscal year after additional reports from retailers.

It continued a run of higher-than-expected revenues for the fiscal year despite the COVID-19 pandemic. When the budget was signed in July 2019, LFB projected the state would take in more than $17.6 billion during 2020-21. Instead, LFB’s preliminary tally of tax collections came in at nearly $19.6 billion.

Not all of that extra money will be able to spent, as the Legislative Fiscal Bureau noted that the state’s rainy day fund is going to get a major boost.

Under s. 16.518 of the statutes, half of any excess of actual general fund tax collections in a fiscal year over the amount estimated at the time of enactment of the biennial budget must be deposited into the budget stabilization fund at the close of the fiscal year. Under this provision, it is estimated that, for 2020-21, $967.4 million will be transferred to the budget stabilization fund.

This means that the rainy day fund will have nearly $1.73 billion in it and earning interest, for whenever it needs to be used. The rainy day fund is now so big that the state actually won't be able to put any more money into it, even if revenues come in high in the future.

Yes. Automatic trigger cuts off after rainy day fund balance hits 5% of budgeted expenditures for fiscal year. Will be at nearly 9%.

— JR Ross (@jrrosswrites) September 2, 2021

Even with the huge rainy day fund deposit, there still is a lot of money carried over into the 2021-23 budget that started on July 1, leaving a lot of cushion to deal with whatever needs or wants might come up in the next 2-4 years.

This also means that there could be more taxing and spending decisions to be made ahead of the 2022 elections, if we choose it to be. Dem Assembly Leader Gordon Hintz is certainly hoping there is more to be done in terms of funding public schools.

“It is remarkable that with continued strong economic news the Republican Legislature could add almost zero new funding for K-12 public school classrooms. Today’s news should serve as another opportunity to invest in our future at a time of increased need so local school districts are not forced to make cuts or ask voters to raise property taxes.”

There’s certainly enough money around to put in a dent in the more than $5 billion in property taxes that go into K-12 public schools, and to restructure the way we fund schools in general. And it would be a reform that I think many Wisconsinites would be in favor of.

The best part is that we don’t need to raise state taxes in any way to do this, and we can lay the groundwork for a strong debate and message on the issue beyond “fund schools more” (even though that needs to be done as well). I would hope Gov Evers and the Legislature don’t waste the next 14 months campaigning when they can actually put the billions we have to good use.