Wisconsin Set for ‘Unprecedented’ $4.4 Billion Windfall

As a new estimate puts $4.4 billion more than previously estimated into politicians’ hands for the next state budget, Wisconsin lawmakers face a standoff about how to spend the extra money.

The estimate from the nonpartisan Legislative Fiscal Bureau comes after an initial January estimate, and projects more than $4.4 billion in state revenue than previously thought over the next three years–separate from another $2.5 billion from federal pandemic aid that is entirely up to the governor to spend.

This time, the new estimate includes record-setting state tax revenues from April and May that have shifted the picture of what the post-pandemic state revenue picture will look like. An LFB official called it “unprecedented,” and said the new projection was because of “vastly improved economic forecasts for the remainder of this year and the next two years.”

Gov. Evers responded Tuesday morning by immediately lifting agency budget requirements for the 2020-2021 fiscal year, meaning state departments–like the UW System which had to cut $45 million–no longer have to trim millions from their 20-21 budget. In total, the governor had directed the Department of Administration to find more than $250 million in cuts across 18 state agencies this year, a now-lifted requirement–and money that will have to be spent quickly by the end of the fiscal year.

“I think Democrats are open to a tax cut,” Assembly minority leader Gordon Hintz said in an interview. “I think we have the resources. But let’s maximize the resources that we have…this is a one-time opportunity to reinvest in broadband, reinvest in our infrastructure, get more money in the classroom to address opportunity, address mental health, and then look at ways to put money in more people’s pockets with a targeted income tax cut.”

Republican legislative leadership immediately pushed back on using the extra funds to expand government, calling the windfall temporary and saying the funds should instead find their way back directly to taxpayers.

“If we recklessly spend this new money and grow taxpayer obligations in an unsustainable way, we risk future fiscal stability – a stability Republicans have spent a decade cultivating,” Joint Finance Committee co-chair Howard Marklein said in a joint statement with budget leaders and Senate majority leader Devin LeMahieu.

LeMahieu also took the opportunity to call for ways to use the money to reduce tax burdens. “Hard-working taxpayers gave the state a massive surplus,” he noted.

“This is a temporary jump in tax revenue—sound financial planning would require this money is not spent on more government programs but returned to the taxpayer.” Senate president Chris Kapenga (R-Delafield) said in a statement. “There is no magic money tree, folks.”

According to the Associated Press, Speaker Robin Vos after meeting with Sen. LeMahieu will target a $4 billion tax cut, but isn’t sure yet which taxes will be targeted.