$4.3 bil in the bank now, $5.3 bil by next June. Opens door to real changes, if we want.

This news wasn't too much of a surprise on Friday, but I still think it needs to be pointed out.

Attention fellow budget geeks: The final accounting of the '21-22 FY shows Wisconsin had a $4.3 billion surplus as of June 30 as tax collections came in $975 million above what had been expected and expenditures were $376 million less.

See the release:https://t.co/2K7eAdhmp6

— JR Ross (@jrrosswrites) October 14, 2022

How did this happen? About 2/3 was due to the $2.8 billion we already had in the bank. Most of the rest of it was due to much-stronger than expected tax revenues (which were already hundreds of millions of dollars above what was in the 2021-23 budget), and we also spent less state tax dollars than expected (mostly due to the Feds covering a higher % of Medicaid expenses due to COVID emergency measures).

Also interesting is that the surplus would have been even bigger, except a sizable chunk of money is set aside to be used in year 2 of the biennium.

All 3 of the state's main tax revenue sources beat the numbers that were assumed in the original 2021-23 budget, and the already-higher estimates that the Legislative Fiscal Bureau gave in January. This includes individual income taxes nearly matching FY 2021's totals despite significant income tax cuts being put in place, and corporate income taxes continuing their unprecedented increases.

So let's go off of the revenue picture that we have today, and then make the following assumptions.

1. Income tax revenues increase by the same 5% assumed in the 2021-23 budget.

2. Sales tax revenues increase by the same 3.1% assumed in the 2021-23 budget.

3. Corporate taxes shrink back to the $2.585 billion that the LFB assumed in the 2021-23 budget.

If you go with that (and those are very conservative assumptions), and assume all other tax revenues meet budgeted levels, revenues will be $1.334 billion above budgeted levels. We'd also exceed expenses in FY 2023 by almost exactly $1 billion, pushing the balance at the end of the 2021-23 budget to $5.3 billion.

That would open the door to a significant restructuring of taxes in Wisconsin. Either by removing all of the cuts to shared revenues over the last 14 years, and/or removing the property tax as the main method of funding schools and local governments. We also could consistently increase the use of General Funds for roads, highways and transit, instead of relying on gas taxes and registration fees.

What we shouldn't do, is this.

Michels said "inflation is running out of control" and he plans to implement "massive tax reform" by lowering the income tax and eliminating the personal property tax on businesses. https://t.co/Ulh8FALvFH

— Wisconsin State Journal (@WiStateJournal) October 4, 2022

Giving away our surplus to the rich and corporate wouldn't just be regressive garbage that would hurt our state's economy, it would be a gigantic waste of a once-in-a-lifetime opportunity to update the way we fund our services in this state, fixing a system that has long been outdated, constrictive and inequitable.