MacIver Budget Blog | March 17, 2015
Two interesting memos were published by the Legislative Fiscal Bureau (LFB) today. The first is an analysis on tax and fee changes proposed in Governor Walker’s budget. Taxes would go up by $39 million over the biennium, but all of that is from repealed or delayed tax credits. This helps to cement an astonishing fact about the the Governor’s proposal. There are absolutely no new taxes. By contrast, Governor Doyle’s last budget included $2 billion in new taxes and a $1.5 billion property tax hike.
A few fees would increase if the governor’s budget passes unaltered. Campers at Wisconsin’s state parks would see their nightly camping fees go up $2 a night and vehicle charges would go up by $3 a night. The governor also seeks to clamp down on fraudulent unemployment insurance payments by increasing the surcharge on erroneous payments from 15 percent to 40 percent. Overall, fees would go up by just $8.6 million over two years.
What the tax and fee memo does not include is equally as important. The Governor’s budget proposal includes $315 million in property tax relief and fully implements the Manufacturing and Agriculture Credit. These provisions, paired with a few other minor changes, make total net tax relief $462 million over the biennium.
The second LFB memo is a four-year outlook on the health of the state’s General Fund. The General Fund is the pot of money that comes from General Purpose Revenues such as income taxes and sales taxes. Legislators and the governor have the most control over the General Fund because they have the ability to increase or decrease tax rates to bring in more or less revenue.
In short, things look pretty good. The memo shows the General Fund will be $123 million in the black at the end of the 2015-17, or $58 million if you deduct the required $65 million “statutory balance.” Looking ahead to the 2017-19 biennium, the memo predicts an even bigger surplus. It estimates the General Fund will be left with a $499 million surplus, a total that includes the statutory balance deduction for both years. Without that deduction, there would be $629 million in the bank according to LFB.
There are a few fine print items to consider. The LFB’s prediction for 2017-19 assumes no unusual happenings in the economy and no other law changes. It is stressed that the numbers are only estimates and can change.
But still, $500 million in the bank is a great place to be. Remember the last time we had that much leftover at the end of a biennium? It was in 2013 and it led to an across the board income tax cut that kept more money in taxpayer pockets. In fact, taxpayers have benefitted from $2 billion in tax relief since Governor Walker took office in 2011.