Wisconsin Revenue Forecast Improves

CHICAGO – As Gov. Scott Walker prepares to release a new budget next month, Wisconsin expects $454 million more in general fund taxes will be collected through the next two-year budget cycle.

The non-partisan Legislature Fiscal Bureau's projections estimate the state will collect $63.4 million more in the current fiscal year that ends June 30, $145.3 million more in the next fiscal year and $245.9 million more in fiscal 2019. The new biennium begins July 1. The figures are up from what the administration had projected in a November report.

The bureau said the $63 million along with lower than expected spending – primarily on Medicaid – will bolster the state's net ending balance this June 30th by $322 million to a $362 million, providing additional funds for the next budget cycle.

"These growing revenue numbers are a sign that what we're doing in Wisconsin is working. While this is certainly good news, our budget priorities will remain the same. We will increase funding to public education at all levels, continue tax relief, and reward work," Walker said in a statement.

Walker's budget address is set for Feb. 8. Based on prior estimates, the state was facing a nearly $700 million gap between what state agencies wanted to spend and expected revenues although those were initial requests and not yet part of the budget.

"Wisconsin is on solid ground," state Sen. Alberta Darling, R-River Hills, and state Rep. John Nygren, R-Marinette, the co-chairs of the Joint Finance Committee, said in statement. "This re-estimate proves that our reforms are working; the state is spending less on burdensome regulation while holding the line on taxes for Wisconsinites across the state."

Democrats countered that assessment and suggested that the positive balance was inflated.

They argued the figures show that revenue growth for the current budget year is expected to be just 2.7%, below the original budgeted growth of 3.8% when the budget was adopted. Projected growth in the next biennium lags the nation, a sign the state economy is not as strong as Walker contends, Democrats said.

Democrats said the ending balance is rosier because the administration decided against paying off $101 million in debt. The state opted to put off paying off a similar amount a year earlier.

"The projected budget year-end balance being championed by Republicans comes in spite of lower than expected state revenue," said Rep. Katrina Shankland, D-Stevens Point. "When you consider that $209 million of borrowing should be included in that balance, the fiscal picture is hardly impressive."

The capital finance office previously defended the move to leave the commercial paper in place because of the low rate paid on the CP program.

In his seventh state of the state address earlier this month, the Republican governor pledged to cut tuition at the University of Wisconsin system and recapped his past tax cuts that he said totaled $4.7 billion. Walker also touted the state's $18 billion of investments in roads and bridges since he took office, but DOT reports and some lawmakers including Walker's fellow Republicans who hold a legislative majority say the state's current funding levels fall far short of what's needed.

Assembly Speaker Robin Vos on Thursday laid out a legislative agenda that calls for $300 million more in funding for state highways in the next budget. He supports raising the state's gasoline tax or vehicle registration fees. The plan also calls for lowering other state taxes by the same amount to offset the increase. Walker is opposed to tax increases for transportation.

"We can cut taxes, fix our roads and prioritize education," Vos said in a statement. "It's a win, win, win situation, and everyone, including the governor, can keep their promises to taxpayers."

The state carries general obligation ratings in the mid-double-A category with one – Moody's Investors Service – assigning a positive outlook. The state currently operates on a two-year $72.7 billion budget.

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