New estimates from the nonpartisan Legislative Fiscal Bureau released Wednesday show the state ending the current fiscal year with a $7.1 billion surplus — $524 million more than Democratic Gov. Tony Evers’ administration projected in November.
The LFB analysis cited several factors that contributed to the $524 million difference, the most significant of which is the state’s projected Medicaid fund surplus. Due in large part to the continuation of enhanced federal matching funds enacted during the COVID-19 pandemic, the state’s Medicaid fund is projected to end the fiscal year with a $774.8 million surplus — $269.9 million more than the Evers administration expected in November.
Additionally, the 2021-23 state budget included $202.4 million to offset the repeal of the state’s personal property tax, which was to be done in separate legislation. Because the tax was never eliminated, that money will return to the state’s general fund.
Other factors include a $60.7 million increase in projected tax collections compared to the November report. Although tax collections are expected to be up in the current fiscal year, they are projected to be $74.7 million lower in the first year of the upcoming state budget, and $80.2 million lower in the second.
Over the three-year period (the current fiscal year and the two years of the next state budget), all general fund tax collections are expected to be $94.2 million lower than projected in November with the exception of individual income taxes and taxes on vapor products. The largest decrease in projections comes from sales and use taxes.
In addition to the projected $7.1 billion surplus, the state’s “rainy day” budget stabilization fund holds its highest balance in state history, at $1.7 billion.