Monday, July 10, 2023

State take billions out of the bank for 2023-25 budget, but still have $4 billion left.

We got an update today about how much more money will be in the state's bank account after Governor Evers' vetoes. And it's a bit more than I thought.
Wisconsin is projected to finish the 2023-25 biennium with a more than $4 billion surplus after Dem Gov. Tony Evers vetoed the bulk of a GOP income tax cut plan, according to new figures from the Legislative Fiscal Bureau.

That ending balance also will get a boost from the additional interest the state is in line to earn due to the money sitting in the general fund.

LFB projected that includes $51.3 million more in 2023-24 and another $98.5 million in 2024-25 compared to what the state would’ve seen under the budget Republicans sent to Evers last month.
The LFB projections show that nearly $5.5 billion of the projected available funds are used up in this budget, but there's a lot more cushion than there was under either Evers' original budget and under the budget that Republicans passed out of the Joint Finance Committee and later sent to the Governor's desk.

And you can see that almost all of the reduction in the bank balance comes in Fiscal Year 2024 (aka - the next 12 months), due to a lot of one-time General Fund cash payments for items such as more than $1 billion for capital projects and $555 million additional funds sent to the Transportation Fund. Since that isn't repeated in Fiscal Year 2025, we end up with a nearly balanced budget for Fiscal Year 2025.

With the $4 billion available, this allows for a second chance to improve this budget. That can be through adding funds for services like child care or mental health, or by putting in a more reasonable tax cut, whether it's Gov Evers original call for working and middle-class tax cuts, or by splitting the huge 5.3% tax bracket and limiting the tax cut to the first $125,000 in that part of the income distribution.

But maybe that waits until early 2024, when we get an update on the state's revenue picture, as well as see how the economy is holding up, and to see if other adjustments are required at that time. The good news is that we have plenty of cushion available to handle anything, and to make things even better for Wisconsinites.

Or Governor Evers can use that time to make another ask for popular items like Medicaid expansion (matching it with a tax cut?) or better financial aid for Wisconsin college students, or fixing the funding flaw in our voucher program so we pay the full costs of 2 separate school systems. And with new maps hopefully in place, maybe we can get a Legislature that will do things that match what everyday Wisconsinites want and need.

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