Monday, November 21, 2022

$9.75 BILLION? How did Wisconsin get this much in the bank?

2-3 weeks after general elections in Wisconsin, the state’s Department of Administration summarizes all of the requests from state agencies for the upcoming state budget, and projects how many revenues will be available to pay for it.

We got those numbers for 2023-25 today, and it reiterated that we are in unchartered territory in this state.

A report released today by the Wisconsin Department of Administration (DOA) estimates state revenues are expected to moderately increase over the next biennium, with a record-high surplus and an all-time high Budget Stabilization Fund. DOA projects a gross general fund balance of $6.576 billion at the end of the current fiscal year. This record-setting figure does not include the roughly $1.734 billion currently in the state’s budget stabilization (“rainy day”) fund.

State general fund balances for the next biennium are estimated to be $8.421 billion at the end of the 2023-24 fiscal year and $9.757 billion at the end of the 2024-25 fiscal year.
These are incomprehensible numbers. Let’s look at the report and see how we got there.

What’s remarkable is that the DOA report assumes a sizable increase in costs over the next 2 years.
…If all requests were approved, agency budget requests alone would increase total spending (on an all funds basis) from the adjusted base of $44.165 billion in the current year to $47.669 billion (7.9 percent). For fiscal year 2024-25, agencies are seeking $48.856 billion, an increase of $1.187 billion (2.5 percent over fiscal year 2023-24.

Requests for GPR expenditures of $20.808 billion are included in fiscal year 2023-24 and $22.148 billion in fiscal year 2024-25. These figures reflect overall agency annual GPR requests of $1.143 billion (5.8 percent) in fiscal year 2023-24 over fiscal year 2022-23 and an increase of $1.339 billion (6.4 percent) in fiscal year 2024-25 over fiscal year 2023-24.
That seems like a large increase in spending, but let’s not forget that some of this is to make up for the loss of COVID relief funds from DC, and some of it is to “catch up” from the jump in inflation in 2021 and early 2022 which was never accounted for in the 2021-23 state budget.

I’ll add that the overwhelming majority of that requested increase is from the Department of Public Instruction, which was announced by Superintendent Jill Underly back in September with approval from Governor Evers. And the amount of K-12 school spending and where it goes is sure to be one of the central fights in this upcoming budget debate.

I think it’s appropriate to graph out how this breaks down, because it reiterates how we not only have a lot of money in the bank, but we have a structural surplus where well over $1 billion more is expected to come into state government vs what is being spent.

Not that we didn't know there was a ton of money available, but these new and larger estimates mean tbhe door is wide open to try serious and needed reforms to how we handle a lot of things in this state. It is a once-in-a-generation situation to do real change that doesn’t involve screwing over Wisconsin workers, and actually benefits the great majority of us and our communities.

So what do we do with it? I'll need some space to go into that one, so let's just step back and appreciate the absurd amount of money that the State of Wisconsin has and is projected to have available to it, and I'll get to the solutions in a bit.

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