Boom! Wisconsin coffers projected to be $912 million better than expected
By M.D. Kittle | Wisconsin Reporter
MADISON, Wis. – In arguably the most significant sign to date of Wisconsin’s resurging economy, new estimates show the state’s general fund is expected to be nearly $912 million richer than originally expected by the end of the current biennium in June 2015.
The state is expected to close the two-year budget with a general fund balance north of $1 billion, according to a report issued Thursday by the nonpartisan Wisconsin Legislative Fiscal Bureau.
Gov. Scott Walker joined a chorus of Republican lawmakers in insisting the state give back the better-than-expected revenue to the people it belongs to.
“This additional revenue should be returned to taxpayers because it’s their money, and my administration will work with the Legislature to determine the most prudent course of action,” Walker said in a statement.
MUCH MORE: Gov. Scott Walker is calling for more tax cuts after a report issued Thursday projects the state’s general fund will finish the biennium $912 million better than expected.
Before the ink dried on the impressive estimates, lawmakers began lining up to make suggestions on how to spend the money. Republicans want to see more tax relief – on top of the $1 billion in tax cuts, including $700 million in income tax reduction, built into the current budget.
“The consensus is to give as much back as we can. How that gets done is the question, but it’s a fun problem to have,” said Bob Delaporte, communications director for Sen. Alberta Darling, R-River Hills, co-chair of the Legislature’s budget-writing committee.
“In the coming days, many ideas on how to provide this tax relief will come forward,” Assembly Speaker Robin Vos, R-Rochester, said in a statement. “It is my hope that most of the surplus dollars will go toward property tax relief.”
Buoyed by unexpectedly higher revenue last fall, the Republican-led Legislature passed – and Walker signed – a $100 million property tax relief bill. Democrats begrudgingly supported it, many complaining that too much of the tax cut went to the wealthiest Wisconsinites.
They continued to make lemons out of lemonade Thursday, picking at Wisconsin’s jobs creation numbers, well below the 250,000 jobs Walker pledged the state would create during his first term in office – although the most reliable jobs data lags by several months.
“Taxpayers need a balanced approach that rebuilds the rungs on the ladder of success and provides targeted tax relief and long-term financial security for the middle class,” said Assembly Minority Leader Peter Barca, D-Kenosha, in a statement.
“The current Republican approach has dropped Wisconsin from 11th to 37th in job creation. Yet with a large surplus, Gov. Walker and Speaker Vos have shown no interest in using any of it to help create jobs or restore funding Republicans cut from job training and public schools,” Barca added.
While Barca and fellow Democrats have bashed Walker on the jobs numbers, a report issued by the Wisconsin Taxpayers Alliance last month showed employment followed the same sluggish pattern of growth for Walker’s predecessor, Democrat Gov. Jim Doyle, during the non-recession period of 2004-07.
Rep. John Nygren, R-Marinette, co-chair of the Joint Finance Committee, said cutting taxes is making Wisconsin much more attractive to business and workers, and the proof of that is in the strong revenue numbers.
“It’s all about us getting more competitive to show the rest of the country and citizens we’re serious about changing our tax climate,” he said.
The vast majority of the $912 million – $892.7 million – came from tax collections, particularly sales, corporate and income tax collections.
State revenue has been on a roll. Last month, the state Department of Revenue reported tax revenue climbed 4.6 percent between July and November, the first five months of the 2014 fiscal year. Without factoring in the real-time adjustment, general fund tax revenue were up about 8.4 percent, or $400 million higher than the same period last fiscal year.
Sales tax revenue grew by 8.3 percent through November, a key indicator of a strengthening economy.
“Certainly, after six months of actual collection, you can’t ignore what’s coming in the till,” said Bob Lang, director of the fiscal bureau, when asked whether the revenue figures are the result of an improved state economy.
In their exuberance, nobody seems to be talking about using some of the better-than-expected revenue to buy down Wisconsin’s $1.7 billion deficit under Generally Accepted Accounting Principles.
Nygren says bonding rates are so low in a low-interest economy that lawmakers must ask, “Does borrowing make more financial sense” right now than paying down debt?
Walker spokesman Tom Evenson said the governor is focused on returning additional state revenue to taxpayers in the form of income and property tax cuts.
“The governor will unveil a full and comprehensive plan during his State of the State address next week,” Evenson said in an email to Wisconsin Reporter.
Contact M.D. Kittle at email@example.com
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