New numbers show Wisconsin has $7 Billion now, and up to $10 Billion in 2 years

One day after Governor Evers discussed a number of possible budget initiatives in his State of the State address, the Legislative Fiscal Bureau updated projections on how much money will be available for Evers and legislators to play with.

And the LFB says that we have even more money available that the Evers Administration said we would, when they gave their own estimates 2 months.

Our analysis indicates that for the three-year period, aggregate general fund tax collections will be slightly lower (-$94.2 million) than those of the November 21, 2022, report ($60.7 million in 2022-23, -$74.7 million in 2023-24, and -$80.2 million in 2024-25).

Based upon the November 21 report, the administration's general fund condition statement for 2022-23 reflects a gross ending balance of $6,576.4 million and a net balance (after consideration of the $95.0 million required statutory balance) of $6,481.4 million.

Our analysis indicates a gross balance of $7,100.4 million and a net balance of $7,005.4 million. This is $524.0 million above that of the November 21 report.

The main reason why the year-end state cash is expected to go over $7 BILLION instead of the previously-projected $6.5 billion is because the state isn't going to spend as many state tax dollars in a couple of areas vs what was expected. One is due to federal help lasting longer than expected, and the other is due to a lack of action on something that the WisGOPs in the Legislature set aside to do.

First, the GPR appropriation for the medical assistance program (MA) is projected to end the 2021-23 biennium with a surplus of $774.8 million. The MA lapse estimate of the November 21 report was based on the September 30, 2022, DHS projection of $504.9 million. On December 30, 2022, DHS increased the projection to $774.8 million. This is $269.9 million above that of the November 21 report. This surplus, accumulated over both years of the biennium, is primarily attributable to the higher federal matching rate for MA benefits that has been in effect during the biennium. The federal Families First Coronavirus Response Act of 2020 (FFCRA) provided a 6.2 percentage point increase to each state's Medicaid matching rate for the duration of the federal public health emergency (PHE) for the COVID-19 pandemic. While the 2021-23 GPR budget for MA was established based on the assumption that this higher rate would expire at the end of calendar year 2021, successive extensions of the PHE throughout the biennium have meant that the state has continued to receive more federal matching funds than anticipated, resulting in a reduction in GPR costs. Congress recently amended the FFCRA provision, as part of the 2023 federal appropriations act, to establish a gradual phase-out of the enhanced rate during calendar year 2023, so that the matching rate is no longer tied to the PHE. Under the revised provision, the 6.2 percentage point increase will be in effect for expenditures through the end of March of 2023, and a 5.0 percentage point increase will apply for the final quarter of the biennium.

Second, in the 2021-23 budget act, $202.4 million was set aside in the supplemental appropriation of the Joint Committee on Finance to fund the exemption of the personal property tax if legislation were to be enacted in the 2021-22 legislative session to eliminate the tax beginning with the January, 2022, assessments. Because that did not occur, the $202.4 million will lapse to the general fund on June 30, 2023.

So we've got a bank account that basically looks like this.

Yes, that number at the end of FY 2025 is over $10 BILLION.

And when we include today's LFB report, and put it together with the expenses that were requested by state agencies in that November report to the Evers Administration, you can see that we are maintaining a suplus of well over $1 billion in each of the next 2 years.

It also tells us that we have plenty of room for the initiatives Evers mentioned at the State at the State, even if you add it to the additionalal funding that is already being requested.

*$50 million to help businesses cover expenses such as repairs
*$20 million to recruit, develop, retain teachers and student teachers
*$20 million to increase literacy-related programming
*$10 million for WEDC program to work with industries to retain and attract workers.

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— JR Ross (@jrrosswrites) January 25, 2023

And that is likely to be $1.3 billion TOTAL, not all in one year. Which means we could fund all these things, still do some tax cuts, and barely make a dent in the $7 billion that we're going to carry over into the next budget. Increasing our investments are not going to waste our budget surplus over the next 2 years.

The one way we would blow the budget apart is to put in the GOP's flat tax scheme, which would reduce revenues by $5 billion A YEAR by the time it is fully in place in 2026, causing multi-billion dollar deficits each year, and causing our already-starved services to take on further cuts, and see this state fall further behind. So let's not do that, and instead use this unprecedented opportunity to restore the high level of service and quality of life that Wisconsin used to be known for.