Monday, December 14, 2015

Overdue release of revenues still isn't enough data. Sorry

In keeping with the theme of the Walker Administration not being forthcoming on where this state stands economically, check out this from the Wisconsin Budget Project site, where they not only compare the fiscal rules between Wisconsin and Minnesota, but also the fact that Minnesota gets much more data out, and is consistent in when they release of that data.
·Unlike Wisconsin, Minnesota releases data on revenue collections on a regular monthly schedule, and each statement compares the actual revenue collected with the projected amount (which would be extremely useful for budget analysts in Wisconsin).

· Minnesota releases a comprehensive budget and economic forecast twice a year, as well as quarterly updates on revenue and economic projections. Wisconsin used to issue economic forecasts quarterly, but they are now released just once or twice a year, and budget updates are also infrequent.

· In contrast to Wisconsin, Minnesota’s budget projections look four years ahead (currently through FY 2019) and include estimates of future revenue and spending growth.

· Minnesota regularly transfers money from projected surpluses into its rainy day fund, which at $1.6 billion will soon be more than five times the size of Wisconsin’s rainy day fund ($280 million).
Fortunately, one of the missing pieces of that data was revealed this monring, as the Wisconsin Department of Revenue finally released October’s figures for the General Fund. And given what the numbers were, I’m wondering why there was such a delay. Yes, income tax revenues are a little odd because Halloween fell on a Saturday instead of a Friday, which means the numbers are adjusted upward to reflect any income taxes that were received in November but actually were withheld in October (November’s figures will likewise be adjusted down to “normal” as a result). But the numbers were quite strong, particularly for income and excise taxes.

Oct 2015 Gen Fund revenues vs Oct 2014, Wisconsin
Adjusted overall revenues up 6.1%
Income taxes UP 9.35%
Sales taxes UP 1.8%
Corporate taxes UP 9.5%
Excise taxes UP 3.6%

That looks pretty good, other than the sales tax figures (especially since the falling price of gasoline is not subject to sales tax in Wisconsin, so you’d think other sales and their taxes would be going up). But this nice bump in October still leaves us a bit below where we need to be to reach projections for the 2015-16 fiscal year, with the notable exception of excise taxes (insert your own joke why).

FY 2016- revenues to date vs projected increase in budget
Income taxes +6.7% vs 7.1% projected
Sales taxes +1.6% vs. +3.3%
Corporate taxes -4.3% vs -1.1%
Excise taxes +1.1% vs -2.8%
Overall tax revenues +4.0% vs. +4.6%

Of course, this is only 1/3 of the way through the fiscal year, so there is plenty of time to catch up, and given that the approved budget had a projected year-end balance of $161.8 million, and had an extra $135.6 million to play with on top of that (a number which was A BALANCE AND NOT A SURPLUS), there’s no real need to panic about the current state budget (more than you already should have been, anyway).

That being said, November and December are when the major layoffs of late 2015 were announced and/or started to hit, and perhaps that effect will start to be seen on revenues like it has with recent unemployment claims. But for now, I’d put the state’s fiscal picture as “cautiously OK,” for FY 2016 for the time being, with the right to lean pessimistically once/if we actually get updated data from the state.


  1. Thanks for your analysis of the new revenue #s, and for the rest of this post. It would be really helpful if DOR would compare the actual revenue collections to the projection for the months in question. As you no doubt recall, they did that last year during the Governor's race -- when doing so helped make the numbers look better -- but that's the only time I can recall seeing that sort of comparison. That sort of opportunistic release of data by DOR seems to me to be an example of why WI is ranked far below MN among the recent rating of "best run" states.

    1. Yeah, funny how that works, doesn't it?

      Thanks for all the great work you and Tamarine do, Jon. It's motivated more than a few of my columns

    2. Yeah, funny how that works, doesn't it?

      Thanks for all the great work you and Tamarine do, Jon. It's motivated more than a few of my columns

  2. I get why they needed to have the "adjustment" for Oct revenue that landed on Nov 1, and it even makes sense that folks getting paid at the end of the month would make Nov 1 a disproportionately large revenue day... but could the adjustment really be that large?

    $485.3M in Oct / 22 biz days = $22.1M/day
    $187.4M (=8.5 days) all hitting on Nov 1?

    Based on your experience looking at these reports, does that sound plausible?

    1. It does seem like a lot to me as well (it's like 30% of the total), but maybe a lot of people file individual returns at the end of the month. I don't know for sure (maybe Jon or someone else can explain more).

      But November will adjust down by the same amount, so we'll see how it shakes out in the near future.