The Wisconsin Budget Process
The Biennial Budget
Wisconsin has a biennial budget. This means that the state budget usually includes information about how money will be spent for a two-year period, from July of an odd‑numbered year through June of the next odd-numbered year. Chart 13 shows the budget periods for the coming years.
In Wisconsin, the Legislature makes most of the decisions about what should be included in the budget, with substantial input from the Governor. The Legislature and Governor, not to mention the two political parties in the Legislature, often have different priorities in terms of how to raise and spend money. This can make for contentious negotiations before the budget is finally enacted.
The state budget is the one bill that must be signed into law. No money can be expended without first being appropriated in the budget, with a few exceptions discussed in the next section. Chart 14 shows a graphical representation of the process. The entire process of developing a budget starts in the fall of even numbered years, when state agencies must submit their budget requests to the Governor. These requests are not just wish lists; usually the agencies are given guidance by the governor in terms of limiting their overall spending or promoting certain services. The Governor then uses those requests to propose a state budget, usually in about February of the odd-numbered years. The Governor outlines the highlights of his proposal in a budget address.
From there, the budget process moves over to the Legislature. Its first stop is the Joint Finance Committee, which is made up of legislators appointed by leaders in both houses of the Legislature. The Joint Finance Committee conducts a series of hearings around the state, so regular people can come and give their input on the budget. Once they’ve gathered information from those hearings and other sources, the Joint Finance Committee prepares its own version of the budget. That can be quite different from the Governor’s proposal.
The next stop for the budget is either the full Assembly or the full Senate, which are houses of the Legislature. One house takes the Joint Finance version of the bill and allows members to propose amendments and changes and to debate their ideas on the floor. Eventually the full membership of that house votes on the entire bill. Once they pass their version of the budget, the bill moves over to the other house of the Legislature, where the whole process takes place again. If the two houses end up passing versions of the bill that are significantly different from each other – which they often do – then a Conference Committee consisting of members from each house is usually appointed to iron out the differences between the two.
Once the Conference Committee comes up with a compromise version of the bill, it goes back to both houses for approval. No amendments or changes are allowed at this point; just a yes or no vote.
After both houses pass the budget bill, it lands on the Governor’s desk. In Wisconsin, the Governor has the power to make line-item vetoes, which means he can cross out whole items, change dollar values, or delete language to make things more to his liking. The Legislature has the power to override the Governor’s veto, but it takes a two-thirds vote of both houses to do so, and that rarely happens. Finally the budget is signed into law.
The budget is supposed to be finalized by July 1 of the odd-numbered year, because that’s when the revenue and spending levels set by the new budget are set to go into effect. Sometimes, though, the budget process drags out longer, and it’s not unusual for the budget to not be signed until the fall of an odd-numbered year. If the budget is late, revenues and spending are carried over at the level in the previous budget until the new budget is finally signed.
Interim Adjustments to the Budget
Once adopted, the Wisconsin budget provides spending authority for two years, but it can be modified during that period. There are three main ways of modifying the budget:
(1) Separate legislation. The Legislature can pass bills over the course of the biennium that affect revenues or spending.
(2) A budget repair bill, which may be needed if the biennial budget falls out of balance. The Governor and Legislature rely on revenue estimates when proposing the biennial budget, but if economic conditions deteriorate drastically, there may not be enough revenue to carry out planned spending.
State statutes specify that when planned spending exceeds revenue by a certain amount, a budget repair bill is needed. The Governor must submit his recommendations for handling the shortfall to the Legislature, which then passes a budget repair bill that is subject to the Governor’s line-item veto. When the budget falls out of balance but does not meet the statutory requirement for a budget bill, the Governor often directs state agencies to reduce their spending, without needing approval from the Legislature.
(3) Changes approved by the Joint Finance Committee. Under certain circumstances, this legislative committee may approve supplemental spending over the course of the biennium.
Does Wisconsin Have a Balanced Budget?
The Wisconsin Constitution requires that the state pass a balanced budget, where estimated revenues are equal to or greater than estimated spending. By this definition, the state budget is in balance.
Even with a balanced budget, Wisconsin has a structural deficit. A structural deficit occurs when ongoing revenues are less than ongoing spending. The structural deficit represents the gap between the amount of revenue raised and the amount of money needed to continue existing programs.
There are several ways the state can find itself with a structural deficit, yet still have a balanced budget. One common way in Wisconsin is to use one-time revenues to support ongoing costs. The Governor and Legislature are well versed in this technique. For example, their budget proposals might transfer money from a segregated fund to the General Fund, or delay a payment from one year to the next year in order to keep the budget in balance. Structural deficits also grow when lawmakers adopt deferred or phased‑in tax cuts that haven’t been paid for.
The problem is that although some sources of revenue are one-time, spending almost never is. Even big purchases like land or buildings are spread out over many years through the use of bonding, and thus have ongoing costs. Supporting ongoing services with one-time revenue sources will work for a while, but it will lead to a structural deficit and long-term difficulties.
Wisconsin has a long history of structural deficits. We have already used up many of our one-time revenue sources and will have a harder time supporting services in the future.
How to Participate in the State Budget Process
If the way the state raises and spends money matters to you, and if you are concerned about our state’s public priorities and how we support those priorities, then you may want to make your voice heard about issues related to the state budget.
There are several ways you can have an impact on the budget process:
- During gubernatorial and legislative campaigns, raise the issues you’re concerned about as part of candidate forums and debates. Make sure you vote and get others to vote as well.
- While the Governor is preparing his budget proposal, contact the Governor’s office to urge him to support the programs/initiatives you’re most concerned about. You can also contact his office later in the budget process to voice your opinion on potential vetoes.
- The Joint Finance Committee holds hearings throughout the state on the budget. You can testify on an issue that’s important to you, or submit written testimony.
- Contact your legislators to make sure they know your position on issues that are important to you.