State of Wisconsin Ended its Fiscal Year with a Record $4.3 Billion Budget Surplus

Wisconsin ended its fiscal year with a record $4.3 billion budget surplus.

The state Department of Administration released the numbers Friday covering the 2022 fiscal year, which ended on June 30. The state’s rainy day fund also hit its highest number in Wisconsin’s history at $1.73 billion.

Jason Stein, research director for the Wisconsin Policy Forum, said the surplus was generated as the state saw higher-than-expected tax revenues, with taxes flowing into the general fund growing by 5 percent. That growth was driven largely by increases in sales tax revenues. He said that that increase was likely helped by inflation, which drove up the cost of goods, in turn pushing up sales tax collections.

“It’s a little different when you do have those really rapid rises in consumer prices, because that’s going to, in some degree, drive up the surplus somewhat artificially,” Stein said.

Although the state cut state income taxes this year, overall income tax revenue fell by less than 1 percent.

At the same time, Stein said, spending from the state’s general fund was 2 percent less than budgeted. He said that seems to be because the state spent less than expected on Medicaid for low-income residents. He said that spending may have been offset by the flow of federal pandemic money for programs.

He said with a surplus of this size, state leaders could make significant changes.

“The state could do things like really overhaul our tax system, cut taxes. They could use the money to overhaul the way schools are funded. It could use the money to make big investments in infrastructure. It could use the money to help ensure the state is more financially sustainable,” Stein said.