When Wisconsin residents drive on the highway, send their child off to school, or go to the doctor, they are benefitting from federal money spent in Wisconsin that supports a broad range of services. Under a new Congress, Wisconsin may be at risk of losing some of that federal money, making it more difficult for Wisconsin to provide the services that make the state a great place to live, work, and do business.
Wisconsin’s two-year budget that runs from July 2015 to June 2017 includes $21 billion in federal spending. In fact, out of every dollar the state spends in the budget, 29¢ comes from the federal government. Keep in mind that amount, though significant, understates the importance of federal money coming into the state. That’s because that $21 billion figure doesn’t include billions in federal resources that are delivered directly to Wisconsin residents or companies, such as Social Security payments, defense contracts, and the federal Earned Income Tax Credit. Read more
Very Slow Tax Growth Suggests Budget Difficulties Ahead
New tax collection numbers that were released late on December 23 do not bode well for the Wisconsin budget. The November tax figures released by the Department of Revenue (DOR) late last Friday – a week after negative job numbers – suggest significant challenges ahead for state budget writers.
I’m not sure whether DOR released the tax collection data just a couple of hours before the Christmas break in order to avoid public notice, but if that was their plan it worked very well. There doesn’t seem to have been any media coverage of the new numbers. Read more
Wisconsin lawmakers are struggling with how to address a shortfall in the pot of money that the state uses to build and repair highways. There are several possible solutions, but one course of action should be off the table: siphoning off resources slated to pay for the education of Wisconsin schoolchildren or helping people with low incomes get the medical care they need, and redirecting that money to pay for highways.
State lawmakers are in a bind because there is not nearly enough money in the state’s Transportation Fund to keep planned highway projects on schedule. That shortfall is largely due to the fact that Wisconsin’s gas tax has been frozen for the past decade, with inflation eating away at the value of the tax and causing a slow decline in the gas tax revenues into the Transportation Fund.
There are a variety of opinions among lawmakers about how to solve this dilemma. Read more
This Year’s Tax Collections Are Expected to be $351 Million below Original Estimate
A new state report about projected state revenue and the agency budget requests reinforces concerns that the upcoming 2017-19 Wisconsin budget will be another difficult one to balance. The primary problem is that tax revenue growth is well below the level anticipated when the budget bill was enacted in July 2015.
I’ll get to the specific numbers in a moment, but the bottom line is that the state’s large tax cuts, coupled with lower-than-anticipated job gains and revenue growth, mean that as state policymakers develop the next state budget they are going to have to either continue to squeeze spending or close some tax loopholes. Read more
The Combined Effects of Two New Budget Reports Create Significant Fiscal Challenges
New tax collection numbers released yesterday are the second dose of worrisome budget news in Wisconsin this week. Right on the heels of a report showing that the budget balance was well below the anticipated level after the close of the 2015-16 fiscal year, new tax collection figures reveal that revenue fell well short of the projected level during the first quarter of the current fiscal year.
Taken together, the two documents released this week indicate that it could be very challenging to finish the 2016-17 fiscal year in the black. Read more
Despite Delay in Debt Payments, Budget Remains Very Tight
An annual budget report issued yesterday has a little bit of good news for the state, but also disappointing news. The bottom line is that the state’s budget balance grew this year, but by less than the budget bill was counting on. As a result, it could be difficult to keep this year’s budget in the black if tax revenue continues to fall short of the expected level. [See the update below about the new tax collection figures.]
The new Annual Fiscal Report shows that Wisconsin finished the 2015-16 fiscal year with a balance of almost $314 million. Although that’s pretty good news, it’s also a bit disappointing because even though the balance grew by $87 million this year, the budget bill had assumed the state would have about $77 million more in its balance at the end of the 2015-16 fiscal year. Read more
Wisconsin prisons are over capacity and cannot house the additional inmates that incarcerated under a new law toughening penalties for repeat drunk driving, according to state officials. To address the lack of space, the Department of Corrections recently proposed spending $40 million over the next two years to expand contracts with local governments to house state prisoners. The new costs should spur lawmakers to take a hard look at corrections costs and implement strategies proven to reduce prison populations as well as the costs to taxpayers and communities.
Earlier this year, state lawmakers passed a law increasing the severity of the offense of the fourth and subsequent instances of driving while intoxicated. The change means that more people will be sent to prison for repeat instances of drunk driving; the Department of Corrections estimates the new law will increase the number of inmates in the state prison system by 458 inmates at the end of 2017, and by 1,205 inmates at the end of 2018. Read more
Counties in rural northeast Wisconsin send as many people to prison for their size as the urban counties in southeast Wisconsin, according to newly-released figures on prison admissions. High prison admission rates from some rural Wisconsin counties are part of a national pattern in which people from small counties are as likely or more likely to go to prison than people from large counties.
Milwaukee County sends more people to prison for the size of its population than any other Wisconsin county, with 26.4 prison admissions in 2014 per 10,000 residents, according to an analysis in the New York Times. But some rural counties in northeast Wisconsin send almost as many people to prison for their size as Milwaukee County. The five counties with the next highest prison admission rates after Milwaukee County are:
- Forest County, with 26.3 prison admissions per 10,000 residents;
- Marinette County, 25.4 prison admissions per 10,000 residents;
- Kenosha County, 25.2 prison admissions per 10,000 residents;
- Racine County, 24.4 prison admissions per 10,000 residents; and
- Langlade County, 22.2 prison admissions per 10,000 residents.
Disappointing Tax Collections Could Cut into the State’s Small Reserves
State policymakers got some disappointing budget news this week, when the Department of Revenue (DOR) released state tax collection figures late Thursday. The revenue shortfall doesn’t pose imminent budget problems, and I’m somewhat relieved that the shortfall wasn’t larger, but the drop in the 2015-16 tax revenue might pose a problem in the second half of our biennial budget, particularly if the drop is repeated this year.
The new DOR figures show that revenue growth for the last fiscal year (ending on June 30) was $85 million (0.6%) short of the amount projected by the Legislative Fiscal Bureau (LFB) back in January. That January estimate had already been lowered by $29 million below the amount anticipated when the 2015-17 budget bill was enacted a little over a year ago. Read more
Wisconsin is leaner in most types of public sector jobs than all but a few other states, according to a review of employment figures by Governing.
Only three states have fewer public workers working in areas other than education than Wisconsin, according to the analysis. For every 10,000 state residents, Wisconsin has 199 public non-education employees. That’s less than half the number of public employees per population in Wyoming, which had the most public employees for its population size, and 50% less than the number of public employees per population in New York, Mississippi, and Alaska. Only three states had a smaller number of public employees than Wisconsin for their population size.
Wisconsin also ranked relatively low in payroll costs. For every $100,000 in personal income, Wisconsin governments spent $202 in March 2014 for non-education public employees. Only 11 states have lower payroll costs as a share of personal income. Read more