Wisconsin surplus projected at nearly $4.3B as Evers prepares next state budget

As Gov. Tony Evers puts the finishing touches on his next state budget proposal, projections show Wisconsin is expected to see a surplus of around $4.3 billion. 

It sets the stage for a familiar battle, with the Democratic governor calling for investments in priorities like education and child care and leaders of the Republican-controlled state Legislature calling for tax cuts.

The $4.3 billion projection comes from an analysis by the nonpartisan Wisconsin Legislative Fiscal Bureau, which suggests state tax revenues will be nearly $895 million higher than expected throughout the next two-year budget cycle. The report credits that to a national economy that grew faster than expected in 2024 and modest increases in state sales tax revenue.

While the surplus is large, it’s not exactly new. Two years ago, Evers and lawmakers began the budget cycle with a projected $7 billion surplus. And even after they passed a new budget that increased spending and cut some taxes, the state ended last fiscal year with $4.6 billion in the bank.

Those figures refer to the state’s general fund, which is like its main checking account. There’s an additional $1.9 billion in reserves in Wisconsin’s rainy day fund.

Expect another round of battles over spending, tax cuts

Evers will give his two-year budget address on Tuesday, but he’s already given indications of how he’d like to spend some of the state’s excess money. During his State of the State Address on Jan. 22, Evers vowed to put hundreds of millions of dollars toward student mental health services, child care and violence prevention.

After Evers’ speech, Wisconsin Assembly Speaker Robin Vos, R-Rochester, said it amounted to “a whole lot of things that are not going to happen in Wisconsin.”

The Republican-controlled Joint Finance Committee has all but scrapped Evers’ recent budget proposals and written their own. In a statement reacting to the state’s revenue projections, Sen. Howard Marklein, R-Spring Green, and Rep. Mark Born, R-Beaver Dam, who co-chair the panel, said they are encouraged but cautious about the future.

“Our cost-to-continue remains substantial and even with these expected revenue increases, we must remain vigilant when crafting a budget for Wisconsin,” their joint statement said.

They also said the multi-billion dollar surplus “remains here in the state coffers instead of the pockets of hard working Wisconsinites” because Evers has vetoed the bulk of GOP tax cut legislation.

“These estimates show that not only can we continue to fund our obligations and priorities, but that we can also give substantial tax relief to hard-working Wisconsinites,” they said.

Former budget committee co-chairs say one-time money can be a benefit and potential burden

While fights over a multi-billion state surplus have been common in recent years, it hasn’t always been that way.

John Nygren and Mark Miller have both been in the hot seat during state budget negotiations before. Nygren, a former Republican state representative from Marinette, co-chaired the Legislature’s budget committee from 2013 until 2020. Miller, a former Democratic state senator and Senate minority leader, co-chaired the panel from 2007 to 2010.

Miller told WPR that when he helped run the powerful committee, he never had a budget surplus to pull from to keep the state’s finances in order.

“We just basically entered into a negative budget using one-time money,” Miller said. “And that was money that came from the feds.”

Miller’s tenure on the finance committee coincided with the Great Recession, which left states reeling as the nation’s housing market collapsed. He said a temporary infusion of stimulus funds from the federal American Recovery and Reinvestment Act was vital to balance the state’s finances. 

“It was risky, but that was the only way we could keep sort of the funding going forward for schools,” Miller said.

If he had a surplus to work with, Miller said he would have liked to invest it in public schools and state colleges.

Part of the current budget surplus can be attributed to other pots of one-time federal funds that were approved at the federal level by President Donald Trump and former President Joe Biden to offset the financial effects of the COVID-19 pandemic.

Nygren, who now works as a lobbyist for the Wisconsin Association of Health Plans, said using one-time money for ongoing expenses “just creates an ever bigger hole in the future.”

“Now, you could use those resources for things like building projects, paying off debt — those type of things,” Nygren said. “Those are one-time expenses. But committing them towards things like education or other ongoing costs kind of becomes problematic for the committee and for the governor moving forward.”

Nygren also noted that a tax cut, as it’s scored by the Legislative Fiscal Bureau, “is an ongoing expense as well.”

Nygren also knows what it’s like to oversee the finance committee process during one-party rule and split government. For five years of his tenure, Republicans held the Legislature and governor’s office. During Nygren’s last two years as co-chair, Evers was governor. He said split government makes it “a little more difficult” for spending increases to come to fruition.

“So, I think this process is just so up in the air right now, not only because of the makeup of the Legislature and the governor’s office, but also because of the fact that the big number out there is one-time money, not ongoing revenues,” Nygren said.