To answer that question, we sought to present a bare-bones budget, one that showed a starting place for the budget process before most decisions are made and one that could be readily compared with previous years. To do so, the Wisconsin Policy Forum started with the projected increases in tax collections along with the base spending levels within the state’s main fund. After including certain routine adjustments but excluding all new spending requests by state agencies, we find general fund revenues are currently projected to exceed budgeted spending by a staggering $6.8 billion over the two-year cycle running from July 2023 to June 2025. The excess revenues amount to just under $3 billion, or 15.3% of spending, in year one of the budget and more than $3.8 billion, or 19.6% of spending, in year two. These numbers do not factor in the rising cost of present services so they should not be seen as representing the state’s actual surplus, which will be less after accounting for those costs.But after 2 years of increased inflation and some diminishing of federal help from COVID aid programs, there is going to be a need to spend at least some of those extra funds. And the Policy Forum goes over some of the places that extra spending may go to.
However, the WPF numbers shown in Figure 1 do not factor in the projected expense of maintaining current services within Medicaid health programs – an estimated $754.7 million over the next two years – or include additional funds for K-12 schools or local governments, prisons, the University of Wisconsin System, or pay raises for state workers to reflect rapid inflation. New spending appears particularly likely for Medicaid and aid to schools and local governments, which are facing rising inflation, tight state property tax limits, and the end of federal pandemic aid.I also like how the Policy Forum breaks down the different spending options, to illustrate just how much of the $6.8 billion would be used up in various policy choices.