Top Programs in GPR Spending
Every year, the state spends money on public services and programs such as education, social services, transportation, and economic development. This spending must be approved every two years by the Legislature and enacted by the Governor in the biennial budget. The last section of this budget guide goes into more detail on the process by which the budget is agreed upon.
The General Fund gets the most attention of any state fund because it has the most flexibility and because it supports the general functions of state government. Other sources of revenue are earmarked for particular services and programs. Chart 7 shows the percentage of GPR spending for various state programs. It’s worth noting that four main programs – school aids, the UW System, Corrections, and Medical Assistance – make up two-thirds of GPR spending. In this sense, much of the available money is already committed to support key programs where costs generally grow and where reducing spending is very difficult.
The biggest category of spending from this fund is K-12 education, which makes up 40% of the General Fund budget. Schools in Wisconsin are financed through state aid, local property taxes, federal aid, and other local revenues such as fees. In fiscal year 2010, the state covered 64% of school costs.
Medical Assistance/BadgerCare, the state corrections system, and support for the UW System each make up about 9 or 10% of GPR spending. Property tax credits, which are paid to local governments to help keep property taxes lower, and shared revenue, which represents aid to counties and municipalities, each make up 6% of GPR spending. The remaining 21% of GPR spending supports a variety of public services.
Keeping Up With Current Needs
The state budget has to increase every year just to maintain adequate funding for programs such as education and health care, with no new services added. How can this be?
There are several factors affecting spending that the state has no control over, some of which are shown in Chart 8. Factors like population growth, inflation, and an increase in health care spending mean that the state budget must grow every year just to keep providing the same level of services. A “flat” budget with no increase in spending would in fact likely decrease assistance available to struggling families, since costs continue to increase.
10. Wisconsin Department of Administration.
11. U.S. Department of Labor, Bureau of Labor Statistics.
12. Growth in Health Care Costs, Congressional Budget Office Testimony, Statement of Director Peter Orszag, 2008.
Relationship Between State and Local Spending
In Wisconsin, counties, municipalities, and school districts also provide services. Counties primarily provide services in the areas of health and human services, public health, courts and jails, highways, and rural law enforcement. Cities, villages, and towns provide services in the areas of emergency services and public safety, public works, community development, building regulation, and quality of life services like libraries and parks.
The single largest funding source for local governments is tax revenue, including revenue from property taxes and a 0.5% sales tax for most counties. The next largest funding source is money from the state government. As the state reduces the aid it provides, local governments are likely to increase revenue from other sources, like property taxes and fees for public services. Local assistance made up 57% of state GPR spending in fiscal year 2010.
There are several reasons the state provides significant funding to local governments:
- Some local services are provided to residents of other communities. For example, streets in major cities serve commuters from other areas. Aid from the state helps offset these costs.
- The amount of revenue accessible to school districts varies considerably from district to district. Without funding from the state, schools in different parts of the state might be funded at very different levels. State aid helps reduce some of these differences.
- Local governments provide a wide variety of services that are required by state law. State aid helps reduce the cost of these services to local governments.(1)
1. Information in this section is from Municipal and County Finance, Wisconsin Legislative Fiscal Bureau.