$3.3 billion in state's bank for FY 26, and Tiffany, WisGOP raised school prop taxes vs using it

Mid-October is always a big week for Wisconsin budget news, as we get the state's Annual Fiscal Report (AFR), which shows the final numbers on how much the state spent and took in for the previous Fiscal Year, and how much money was in its General Fund.

And we ended up pretty much where we thought we might be when we found out in late-August that the state took in more tax revenues for FY 2026 than what was expected in the 2025-27 budget. These 2026 revenue projections were revised up by the Legislative Fiscal Bureau back in May, and ended up even better than those expectations when the final numbers came in. I also am assuming the same amount of % of revenue growth that the LFB did for FY 2027 from that higher number.

Then in the AFR, we got the final numbers for expenses in FY 2026, which were a few million above projections, but nothing of significance. Put those together, and then assume that FY 2027 has expenses at budgeted levels, and you'll see that the state of Wisconsin is projected to spend more than it takes in, but not by much.

But given that the state carried over $4.6 billion in its General Fund in this current budget, there was still a bit over $3.3 billion in the bank on July 1 of this year, and there is projected to be a bit less than $3.2 billion left over when the new budget cycle begins next July 1.

Know what also got released on October 15 in Wisconsin? The final figures for General Aids to K-12 public schools. And a lot of community school districts are getting less from the state than they did last year.

That's 61% of districts seeing less money in this school year, but amazingly, that's a lower percentage than the 71% that got a cut in state aid for last year. And that was a conscious choice by the GOP Legislature to not increase K-12 school spending in either of the last two years, and have most Wisconsin homeowners face significantly higher property taxes to make up the difference for the declining amount of state aid their local districts are getting.

By comparison, Gov Evers' budget would have used state aid to stop most of the projected property tax increases for schools in the next two years. That included a total General Aid increase of nearly $1.2 billion ($494 million in year 1, $700 million in year 2). If the Legislature had merely given an additional 3.3% a year in state aids (which is approximately the annual rate of inflation between October 2024 and this week reading for Sept 2026), the increase would have been $184 million for 2025-26, and a $190 million increase for this year. Given that the $184 million first-year increase is counted twice vs base spending, that would be a total increase in state aids of $558 million.

Now let's look at the $3.3 billion that's in the General Fund right now and the $3.17 billion that's projected to be there at the end of FY 2027. If you gave that 3.3% increase each year, we would be projected to still have more than $2.6 billion to carry over into the next budget.

This relatively small amount of state aid increases would also have paid for the majority of what Tom Tiffany and WisGOPs claim is a "400-year property tax increase" resulting from Gov Evers 2023 veto that allowed $325 a year in additional revenue limit increases for K-12 schools. We know this because the LFB included this item as part of the K-12 funding and tax cut deal that went down in flames this Spring.

The bill would create a new first draw school aid that would be paid from the existing general school aids appropriation, and increase that appropriation by $302.5 million GPR beginning in 2026-27. Aid would be distributed using a formula under which 25% of the amount allocated would be divided by the average number of pupils enrolled statewide in the previous three school years and distributed to school districts proportionately based on the district's average number of pupils enrolled in the previous three school years. The remaining 75% of the amount allocated would be divided by the average number of pupils enrolled statewide in the current and previous two school years and distributed to school districts proportionately based on the district's average number of pupils enrolled in the current and previous two school years....

Payments from the general aid appropriation are under revenue limits, so the additional aid would provide property tax relief but not additional resources for school districts. Based on current enrollment, it is estimated that the payment would be equal to approximately $387 per pupil.

So using the LFB's math, it would have cost $254 million a year for the GOPs in the Legislature to turn Evers' "400-year tax" to ZERO. The WisGOPs chose not to do that, and that should be repeated every day.

Also, let's not forget that Tom Tiffany opposed that deal back in May because he wanted schools to have even fewer resources, and the suplus should be used for even more tax cuts.

Fuck them kids and teachers, my donors need more tax cuts.

Given that our one and only Governor's debate happens on Tuesday, and that you don't have to worry about a Brewers game getting in the way because they don't play UNTIL THE WORLD SERIES STARTS ON FRIDAY! (sorry, but definitely not sorry), keep these numbers and realities in the back of your mind.

And remind yourself and others that Tom Tiffany and the GOP chose to allow for property tax increases now and contunued underfunding of our community schools in an attempt to kick back more of the $3 billion in the bank to the same people that already have mega-millions to give to their campaigns.

Inflation bumped up with the pump while real wages dropped in September

Since affordability is allegedly the top issue in this year's midterms, the release of updated inflation data 20 days before the Election Day was going to be a big deal. Especially since we knew gas prices rose for September, and it was only a question of how much inflation went up.

Here was the answer.

Inflation heated up to 3.7% annually last month as energy prices soared, according to the latest Consumer Price Index data.

The latest reading came in hot, accelerating from 3.4% in August and outpacing economists' expected 3.6% jump. On a monthly basis, prices rose 0.6% in September from 0.4% a month earlier.

Gas prices were a particularly large driver of the jump, rising 9.1% month over month. Average prices at the pump hit a record $4.33 last month, according to AAA data, nearly $0.50 above the previous monthly record set in 2023...

"Core" inflation, which strips out volatile food and energy prices and is watched more closely by Federal Reserve officials, was also hotter than expected, rising 2.6% annually, up from 2.4% in August. Monthly core inflation was unchanged from August's hotter-than-anticipated 0.3% but also came in higher than the 0.2% economists were expecting.

None of that seems good, and it continues the run of the highest year-over-year inflation we've had since early 2023.

Dig into the actual report, and it looks like it could have been even worse than the topline numbers indicated. That 0.6% increase in overall prices came in a month where grocery prices allegedly dropped for the second time in the last 3 months (-0.1%), with beef and veal (-1.0%) and dairy products (-0.9%) leading the way. Take out the food index (both with groceries and at restaurants), and everything else went up by 0.7%.

Worse is that the 0.6% overall price increase happened in the same month where there was a paltry increase in average hourly wages of 0.1%. Which means inflation-adjusted wages fell by 0.5%, and continued a slide that started this time last year, and got worse after the US started bombing Iran at the end of February 2026.

And I think that leads to an interesting contrast between the bout of higher inflation we had in 2021 and 2022 vs what we're dealing with today. Real wages fell in both circumstances, but 2021 and 2022 came on the heels of a huge increase in real hourly wages for those who were still working in 2020, those who didn't got high unemployment benefits, and there were stimulus checks on top of it. And wage increases were still running at 5%-6% throughout 2021 and 2022 on top of the gains in 2020.

By comparison, year-over-year increases in average hourly wages have slowly dwindled since the end of 2022. And wage increases have continued to go down even as inflation has rebounded in 2026.

As important as the CPI number was today, I'm even more interested in what the Producer Price Index tells us tomorrow, as that'll tell us if the record diesel prices are starting to be pushed into cost increases in the making of other products. Then those price increases will likely be passed ahead in future months to consumers.

We also will have the release of retail sales for September, which will tell us if the higher gas prices combined with near-zero wage increases from last month caused consumers to slow spending on other items. Americans haven't slowed down yet, and it's allowed the overall economy to keep growing with limited layoffs to date. But with debt costs rising with the prices, you gotta think some Americans pull the plug soon.

Final US deficit at $1.99 Trillion for 2026, and higher than expected

At the end of last weekend, the Congressional Budget Office (CBO) gave their monthly budget update for September. This report doubles as the final figures for Federal Fiscal Year 2026, which ended on September 30. And the CBO says the US budget deficit went up by 12% for FY 2026, nearly reaching $2 trillion dollars.

And that increase in the deficit came in the last 6 months, as the first half of FY 2026 actually had smaller deficits than the previous year.

So what changed? There seems to be three main suspects, with the first being a direct result of Trump/GOP Tax Scam 2.0.

Receipts from corporate income taxes decreased by $70 billion (or 16 percent). The 2025 reconciliation act allows corporations to take larger deductions for certain investments, thereby reducing some payments and offsetting the increases in those receipts that otherwise would have been expected, given the rise in corporate income.

The second is the result of another Trump policy that was so illegally done that the GOP hacks on the Supreme Court shot it down.

Collections of customs duties dropped by $22 billion (or 11 percent) relative to the year before. Larger amounts were collected early in the fiscal year, but started to decline in May, when the Administration began to issue refunds related to tariffs imposed under the authority of the International Emergency Economic Powers Act (IEEPA). The refunds were made as a result of a February 2026 decision of the Supreme Court. CBO estimates that during fiscal year 2026 about $130 billion was issued in refunds for tariffs collected under IEEPA.

Those tariff reductions were a main reason that US tax revenues ended up nearly $200 billion below the CBO's projections back in February, along with lower-than-expected corporate revenues - factors that more than offset income taxes coming in better than expected.

The third reason the deficit got larger in FY 2026 was because it costs more to pay for the country's increasing debt.

Outlays for net interest on the public debt rose by $115 billion (or 11 percent) because the debt was larger than it was in fiscal year 2025 and because long-term interest rates were higher. Lower short-term rates partially mitigated the overall rise in payments.

That double-digit increase in interest on the debt came on top of typical 5-8% increases in the "Big 3" expenses of Social Security, Medicare and Medicaid, and other spending from Uncle Sam went up for FY 2026 as well.

The higher deficits and need to sell more bonds to cover it are a main reason behind the spike in Treasury bonds and mortgage rates that we've seen in the second half of 2026. Sure, there's been a decline from last week's peaks in yields, but there's not much of a reason given as to why, and if this week's inflation reports for September come in hot, then it becomes more likely that the Federal Reserve will put in more rate hikes in short-term rates. In addition, a high CPI print on Wednesday will raise deficit projections for Fiscal Year 2027 and beyond, as Social Security would then be set for its highest increase in benefits in 4 years.

I've mentioned before that deficits by themselves aren't a problem UNLESS it results in higher inflation (due to higher demand or deflated dollars), or it raises interest rates and leads to recession due as debt becomes too expensive and demand flags. The dollar has actually strengthened in recent months, so no problem there (although inflation has gone up due to a stupid war in the Mideast constraining oil and gas supplies).

But we also get to see this week what happened to consumer spending in September, after gas prices and the Fed Funds rates both went up. And given how weak wage growth has been, there isn't much to keep everyday Americans to keep up the strong pace they had in the Summer. Combine that with a Bubbly stock market that seems hevily reliant on increasingly expensive debt, and the chances the FY 2027 fiscal deficit exceeds $2 trillion in the next CBO estimates seem to be increasing.

US Debts and their costs keep jumping. But so far it's getting shrugged off

As interest rates in the bond market keep rising, it makes this week’s auctions of new Treasury debt worth checking in on. It includes the 3-year note on Tuesday, benchmark 10-year Treasury note on Wednesday, and 30-year bond on Thursday.

The 3-year auction was for $58 billion in US government debt, and in looking at the auction results from the US Treasury, it shows the yield on those bonds was significantly higher than what was being offered by bidders 3 months ago.

I also notice the coupon rate, which tells us how much interest will be paid on the $1,000 face value of those 3-year bonds, has gone up by a similar amounts of basis points between July and October.

Coupon rate, 3-year Treasury bond
July 2026 4.125%
Aug 2026 4.25%
Sept 2026 4.375%
Oct 2026 4.875%

Given that $58 billion was auctioned off in each of these months, this means the US Treasury is increasing interest payments by $435 million a year for October’s set of 3-year bonds vs July’s set.

That $435 million in additional interest takes the total annual interest payments on these 3-year bond issues from less than $2.4 billion to nearly $2.83 billion. Now multiply that $58 billion by 32.5, and you are around the $1.887 trillion that our budget deficit is projected to be for Fiscal Year 2027.

Multiply the $2.83 billion in interest by that same 32.5 and you get $92 billion in debt payments from new bonds issued this year alone. Multiply that by all the years of previous bonds with interest that we are also paying off (issued between 1997 and 2025) and….YIKES!

You can see where if we run high deficits for years, the costs start to build upon themselves. Which goes to a report that the Congressional Budget Office (CBO) sent to US Senator Jeff Merkeley less than 2 weeks ago, which discussed what would happen if interest rates were higher than earlier projections.

In the first scenario, the average interest rate on federal debt would increase until it was 1 percentage point higher than in CBO’s extended baseline (before incorporating effects on the broader economy, known as macroeconomic effects, that would further increase interest rates). CBO estimates that under those conditions, deficits and debt would be larger:

• Primary deficits over the 2026–2036 period would be about $178 billion larger overall than they are in CBO’s baseline. In 2056, the primary deficit would be 2.6 percent of GDP, 0.4 percentage points larger than in the extended baseline.

• Total deficits over the 2026–2036 period would be about $1.5 trillion larger overall than they are in the baseline. In 2056, the total deficit would be 14.0 percent of GDP, 4.9 percentage points larger than in CBO’s extended baseline.

• Debt held by the public in 2056 would be 222 percent of GDP, 47 percentage points larger than in CBO’s extended baseline.

What was the baseline 10-year interest rate that CBO projected for Fiscal Year 2026 (which just ended last week)? 4.1%. And for FY 2027 (which we are now in)? 4.3%.

Now what is the 10-year trading for on the markets these days?

Uh oh….

Also, copied in on this CBO memo? It’s the current chair of the Senate Budget Committee!

Remember when this guy claimed the US debt was America’s biggest threat instead of vaccines? Funny how tens of millions of dollars in election assistance from Diane Hendricks and the Uihleins helped to get RoJo’s mind off of the debt. (Giving himself tens of millions in tax cuts along the way also helped).

Yet the Bubbly stock market keeps powering through these higher debts and interest rates, which seems odd given how strung out on debt a lot of these companies are. But as long as businesses and consumers keep spending despite the higher borrowing costs, the US economy will keep growing. And the debt and its higher rates will be more of a stat instead of an economic problem.

I just don’t understand how it keeps going, as prices rise faster than wages, and the costs of debt keep going up for everybody. There’s a point where markets and people just say NO MORE, right?

Recent Brewers runs haven't done much for Milwaukee Co budgets. Is this year different?

Great sports weekend here in Wisconsin, topped off by this.

That also included two packed houses at American Family Field, and that hit guarantees at least one more home game in Milwaukee (and more than one should the Brewers finish off the Padres this week). Which means a lot of money was being spent in the Milwaukee area for this weekend.

But how much more, and how much was actually being added to the economy and local government tax revenue in that weekend? Milwaukee’s tourism organization has a number with that.

Each postseason Brewers game at American Family Field will generate an estimated $3.55 million in direct spending at hotels, restaurants and other area businesses, according to Visit Milwaukee. That publicly funded nonprofit group promotes Milwaukee as a travel destination.

That figure, which doesn't include money spent at the ballpark, rises to $5.1 million for each game when it takes into account the multiplier effect. That includes re-spending of those dollars within the local economy by vendors/suppliers and households that benefit from direct spending.

"We expect a beautiful October," said Josh Albrecht, Visit Milwaukee chief marketing officer.

The direct spending estimate per game includes lodging, $641,634; transportation, $551,301; food and beverage, $655,410; retail, $870,201; recreation, $682,244, business services, $145,402, and space rental, $5,570.

Well that’s pretty good, and as mentioned, that doesn’t count what those 44,000+ fans are paying for tickets, food, gear, and other items at the ballpark.

In theory, that should cause a sizable increase in local sales taxes. But it doesn’t appear to be the case, if you look at the combined November and December sales tax distributions in Milwaukee County for the last three years (which would reflect sales taxes paid in September and October).

Interestingly, Milwaukee County’s additional 0.4% sales tax has to be tracked due to that money being earmarked for pension costs, with any remainder going to law enforcement and fire protection services. So the Wisconsin Department of Revenue still reports how much was raised with the original 0.5% sales tax, so we can go apples-to-apples on this. Combined Nov and Dec sales tax distributions, Mke Co. Using 0.5% sales tax base.
2023 (2 Brewer home playoff games) $18.128 million
2024 (3 Brewer home playoff games) $16.968 million
2025 (5 Brewer home playoff games) $16.191 million

Those are three straight declines, which is odd and unexpected due to inflation. But I’ll also add that sales tax revenues were level between 2023 and 2024 for the first 10 months of the year, and were up nearly 7% in the first 10 months of 2025, so it shows how sales taxes distributions can be jumpy in a short time period.

That said, it doesn’t seem that there has been a significant impact on Milwaukee County’s budget based on the Brewers’ playoff appearances of the previous three years. Which makes me wonder how much of the economic impact is displacement of other spending that happens, either within Milwaukee County itself or in the nearby area.

However, we haven’t seen what has happened in a longer Brewers run, particularly if they could get more than 5 playoff games at home and especially if the Crew were to make the World Series (gasp!). Along with the additional game-related revenues, you’d see more outside media and related out-of-staters coming into town and staying in the Milwaukee area if the Brewers made the Series.

If the Brewers qualified for the Series (we’ll know soon enough, won't we?), the Milwaukee County Board could in theory make an adjustment to David Crowley’s 2027 budget and remove part or all of the $7.87 million in increased property tax revenues with the idea of a one-time boost in sales taxes. But it seems risky, as the effect of recent Brewers playoff runs hasn’t had a noticeable effect on Milwaukee County sales tax revenues.

That said, I’d love to find out what a month’s worth of playoff games would do. And have this next month repeat what happened in another year when there was an open Governor’s race in Wisconsin at the same time that Dems stood to make big gains in midterms.

That’s also in a game vs a California team where the Crew was trailing 3-2 at home. And Jim Gantner and Sal Frelick look pretty similar coming around 3rd and diving into home, don’t they? Also happened to be preceded in scoring by Number 22 (RIP Charlie Moore).

I’ll take a repeat of 1982 this October, outside of the double-digit unemployment. Hopefully the good guys win the Big One this time, should they get that far.

Medicaid deficit drops in Wisconsin! But it'll be back up soon enough, and Sconnies will pay more.

This week marked the end of the 3rd Quarter of 2026, which allowed for another update in the projections for Wisconsin’s Medicaid budget. These reports come in every three months, and back on June 30, we were projected to need an additional $322.4 million in state tax dollars (known as GPR among budget folks) to pay all the bills in that program between then and June 30, 2027.

So do we need even more money for Medicaid now?

…Overall, the Department projects an improvement of $53.2 million compared to the GPR shortfall projected in June.

That brings the shortfall down to $269.2 million, and it’s the first time that deficit has shrunk in the 15 months of this budget cycle.

How did that happen? Because of a lack of spending on Medicaid services at schools.

Since the June update, we have taken additional measures that have had the net effect of reducing the projected biennial deficit. Federal revenue claimed for school medical services are governed by s.49.45(39), which requires the Department to pay 60% of the federal share for allowable charges for services to school districts. Consistent with Chapter 20 language for Medicaid appropriations, because the program remains in a projected deficit, the Department used the federal revenue amounts not allocated to school districts for FY 26 to offset GPR costs for Medicaid benefits…This is consistent with the statutory intent that federal revenue be used to offset the non-federal (GPR) share of Medicaid benefits. The Department plans to take the same approach in FY 27.

Retaining these revenues improved the projected deficit by $122.4 million GPR. This approach does not affect the amount of revenues that school districts receive for Medicaid services under current state law.

So this is a one-time deal, at least until next June. And if the backfill was over $122 million, why didn’t the deficit go down by that much?

In addition, this projection updates expenditure trends across multiple service lines for the remaining quarters of FY 27 based on additional expenditure and revenue data since June. These updates have the effect of increasing costs by $69.2 million GPR.

Which means the deficit will likely be going back up when we get the next report at the end of this year. These numbers also include assumptions of some people being cut off of Medicaid in the coming months due to red tape and other barriers, to help pay for the giveaways to the rich and corporate in Trump/GOP Tax Scam 2.0.

Let's also remember that the state's Medicaid and SNAP food assistance costs are scheduled to go up by another $2 billion in the next 2 years. That's mostly due to those higher costs of health care, but also is boosted because Tom Tiffany and the rest of the Republicans in DC pushed more of SNAP's costs onto state taxpayers.

Lastly, the extra budget costs do not include the burden many Wisconsinites will have to take on, as they wil be paying more out of pocket for health care costs and premiums next year. Filings indicate Obamacare premiums in Wisconsin will rise by 21% after Trump/GOP has messed with health care so much over the last 2 years. Upstream of that, recent estimates have both employer and employee health care premium costs rising by 8-10% for 2027, putting a burden on people in a time when they can least afford it.

Seems like a good time to remind people that David Crowley is one of many Democratic candidates at the state level who wants to add competition to the state's health care market, which could lower that $2 billion in additional costs that the state Department of Health Services would have to pay.

Open BadgerCare enrollment to any household that wants it, using federal Medicaid matching funds to cover portions of cost.

Use a sliding-scale premium based on income, with targeted subsidies for small businesses, farmers, gig workers, single parents, and college students.

Make BadgerCare comprehensive — medical, dental, and vision — focused on preventive, primary, and mental health care.

Ensure no one is out of network by supporting provider participation with incentives, especially for rural communities.

Seems to be a much better solution to Wisconsin's increasingly costly health care than what passes for Tom Tiffany's plan, which is.....tell people a little more on how much their health services are gonna cost?

Will that help any Wisconsinite pay for those services? OF COURSE NOT! Do you seriously think Tom Tiffany is going to help you afford health care as your costs keep going up? HAHAHAHAHA!

But Tiffany might make health care more "affordable" for the state's budget by cutting it even more, so that there'd be funds available for more giveaways to the 3 billionaires that have funded 90% of his campaign.

Vote accordingly, folks.

Back to "low-hire, low-fire" for September. But lousy wage growth is the real problem

We've seen a lot of strong macroeconomic numbers for August, including an initially reported gain of 162,000 jobs in that month. But gas and especially diesel prices kept spiralling higher in September, and it made Friday's jobs report one of the first indicators as to whether things had changed as Summer ended.

It now looks like August's big gains were a fluke, and September now has fewer jobs reported than what was reported for the previous month.

The US labor market hit a soft patch in September as the economy added just 29,000 jobs and the unemployment rate increased to 4.2%, new Bureau of Labor Statistics data showed Friday.

The latest jobs report – and the final official employment snapshot before the midterm elections – also showed that recent months’ hiring was weaker than previously thought and that wage growth slowed, putting Americans’ paychecks further behind the 8-ball at a time when inflation has accelerated.....

September’s job gains marked a slowdown from August, when a downwardly revised 133,000 jobs were added. (Economists had previously cautioned that August’s surprisingly strong gains likely reflected some seasonal factors that overstated hiring activity.) In addition, July turned negative, with 10,000 jobs lost (previously a 21,000-job gain).

Well that's no good, and when you average these numbers out over three months, we're back to the tepid levels of job growth that we have had for most of 2026.

But one positive in this report is the continued growth in construction jobs in September (+11,000), and manufacturing has also been reporting gains in jobs recently (+9,000).

On the flip side, how lousy would the US jobs market be if we didn't have all these AI data centers pumping up construction jobs (and what happens when that Bubble inevitably pops)?

Moving over to the household survey that determines the unemployment rate, we had a slight nudge up from 4.1% to 4.2%. But that was for the "good reason", as the labor force grew by a (seasonally-adjusted) 485,000 and the number of people employed was up by 406,000. However, I'd add that the gains in the last 2 months seem to be a regression from the big declines we saw earlier in the Summer, and the number of people participating in the labor force and working is merely back where things were 6 months ago.

But to me, the bigger story came later in the jobs report. And it was the continuance of a bad trend.

That's the 12-month growth in average hourly wages, and it's down to 3.0% after a lame 0.1% increase in September. That puts us back in pre-2020 levels of wage growth with much higher inflation than we had in the 2010s. And do you see that getting any better any time soon? Me neither.

I'm not overly concerned with what I saw in the US jobs report for September from the payrolls and unemployment rate. It just confirmed we're still in this "low fire, low hire" mode that we've been in for most of Trump 2.0. But the lack of wage growth means that Americans fell even further behind in September as regular gas surged well past $4 at the pump, and you'd have to think that Republicans are going to feel the anger from those voters that are having any economic advancement be further out of reach, no matter if they still have their jobs.