A bit more money for Wisconsin, as final 2025 numbers come in

We got the final numbers for the 2025 Fiscal Year in Wisconsin with this week's release of the Annual Fiscal Report. And things ended up even better than we thought they would, when it comes to amount of money the state had in the bank for its General Fund.

The state ended the 2025 Fiscal Year with a balance of $4.606 billion, nearly $268 million above what was originally budgeted, and more than $322 million above what was projected in May’s revenue estimates from the Legislative Fiscal Bureau. The extra General Funds appeared because overall spending was about $147 million under what was in the state budget, tax revenues were $88.6 million higher than predicted, and other departmental revenues and transfers also ended up above budgeted amounts.

This will allow for a little more cushion in this current 2-year budget cycle, although we are still on track to have that $4.605 billion dwindle to less than $1 billion by the time the budget ends.

The Fiscal Report also has this annual breakdown of General Fund expenses and revenues, which can be illuminating when you look at the trends over time. I decided to start with Fiscal Year 2010, the last year before Scott Walker and the GOP took over state government, and then take snapshots of every 5 years since then, to compare to how things are now.

In addition, let's remember that the Consumer Price Index went up by 46.6% in those 15 years, so file that away as you consider these numbers. And also note that we have had almost uninterrupted economic growth for the last 15 years, other than when the COVID pandemic took hold in 2020 (and we had largely recovered economically from that within 18 months).

On the revenue side, we've seen steady increases in individual income tax revenues of around 20% per 5 years. But we've seen a much quicker increase in both sales and corporate tax revenues, especially in the last 5 years as inflation picked up.

Other taxes in the state have consistently made up around $1.2-$1.3 billion of the state's total revenue throughout these 15 years, but note how excise taxes have plummeted (as those are often based on amounts of consumption and not prices), while insurance taxes have more than doubled.

As for expenses, like most states, Wisconsin's largest expense is aid to local K-12 public school districts, and the second-highest is for the state's share of Medicaid costs. But note that what is paid to public schools barely changed at all between 2010 and 2015 (Walker's first term), and while things aren't as flat over the last 10 years, most of that increase is categorical aids for special education, per-pupil aid and high-poverty or rural sparsity aids. Meanwhile, Wisconsin saw an increase of nearly 58% in funds spent on Medicaid and related Medical Assistance over the last 5 years, as the extra coverage from the Feds ended, and other COVID-era help faded away.

Over the last 15 years, K-12 public school funding and Medicaid have consistently made up about half of the state's General Fund expenses. But you can see that K-12 public schools take up and increasingly smaller share of that 50%, while Medicaid now accounts for nearly 1 out of 5 dollars of what the state pays out in its General Fund.

2 agencies are part of the next highest group of state expenses - Corrections and the UW System. Both were each just over 8% of state expenses in 2010, and while Corrections have largely stayed near that proportion of expenses, the UW System has dropped to less than 6% of total state cots. Conversely, what the state sends to local governments to reduce property taxes rose from just over 6% in 2010 to more than 10% in 2020, before settling above 8% for 2025. Another set of aids to local governments is shared revenue from the state, which deteriorated throughout the 2010s, but had a sizable increase in 2025 after a wide-ranging reform bill was signed into law.

I'd say the declining share of both K-12 public education and the UW System is quite a tell of priorities of what our state's done over the last 15 years.

But another type of education funding has had a giant leap in state funding over the last 15 years - vouchers for students that attend private schools, as well as charter schools. Vouchers only existed in Milwaukee and took up barely more than 1% in overall state GPR expenses in 2010, but now they take up more than 3% . Meanwhile, individual tax relief like the state's Homestead and EITC credits have declined to less than 1% of state expenses, as has funding relating to school costs for the state's Technical College System.

Seems like another trend that might need to be corrected in the coming years, eh?

So those are the numbers here in Wisconsin. Given the shrinking amount of money available, whoever is the next Governor and whoever runs the Legislature after 2026 is likely to have more constraints than we had have in the last few years. And maybe some of these trends of the last 15 years in both taxing and spending need to be revisited.