Higher LFB revenues can help pay for extra state costs of Tax Scam 2.0

Near the end of this week, the Legislative Fiscal Bureau told Wisconsinites we ended up with slightly more revenue than what was projected back in May.

Preliminary information regarding general fund tax collections for the 2024-25 fiscal year is now available. According to the Department of Revenue (DOR), collections totaled $22,362.6 million in 2024-25, which was 4.8% higher than the previous year.

This office's final estimate of 2024-25 tax collections, projected on May 15, was $22,274.3 million. Actual collections were $88.3 million, or 0.4%, above the estimated amount.

That’s good and needed, as the extra $88.3 million will give a little extra breathing room by boosting how much is carried over into this budget.

And because the state budget that was signed in early July only had $770.5 million of cushion built into it when it was signed into law, this allows for a bit more room to avoid having to make more budget adjustments. The now-$858 million cushion will be especially crucial in case we fall into a recession in the next 2 years, and we have a budget shortfall due to a lack of income and higher needs for assistance.

The $88 million+ beat on revenue estimates came almost entirely from income taxes ($31.1 above estimates) and corporate taxes ($51.1 million over estimates). That would indicate higher incomes and corporate profits than expected, so I have confidence that Wisconsin’s economy was holding up at least through June.

This state will likely need all the fiscal help it can get, because the Evers Administration mentioned this week that Big Bunch of BS from DC is going to push a lot of additional costs down to the Wisconsin state government. Those costs will include $70 million between now and when this budget ends on June 30, 2027, and another $214 million in future budgets. Here's where the Evers Administration says some of those shifted costs would come from.

$72.4 million per year to offer employment training services to Medicaid members to meet the red tape work requirement, effective December 31, 2026, similar to the services provided to FoodShare members through the FoodShare Employment and Training Program (FSET).

$14.6 million per year in increased FSET costs because more adults will need to meet the work requirement, in addition to systems updates and costs associated with implementing the new red tape work requirements for FoodShare members, which were effective immediately when the bill was signed on July 4, 2025....

$11.4 million per year to hire additional FoodShare quality control staff at the state and county level to review cases before they are confirmed to identify and address errors in order to achieve and maintain a payment error rate under 6 percent (the Evers Admin says having an error rate over 6% would cost over $205 million a year, so they say this would be a good investment) ....

$43.5 million per year to make up for the reduction in the federal share of costs to administer the FoodShare program, which is effective October 1, 2026. These costs are expected to grow over time.

You can click here for a more detailed list of how Tax Scam 2.0 will increase spending and regulation for the State of Wisconsin, but I'll just say that it's typical Trump/GOP to get headlines by appearing to cut taxes at the federal level, and then try to avoid accountability by pushing the higher taxes and spending cuts down the state level.

There wasn't much for new staffing in the Wisconsin state budget for the chages that Tax Scam 2.0 was going to impose onto them, so this might be something to clean up for the 6-8 months that the State Legislature will be available for in the rest of this session. And certainly it seems like something Democrats in the Legislature should be pushing on, and reminding both the voters and their GOP colleagues at the state level that we are going to have to pay for the red tape that Trump/GOPs in DC have caused.