The Legislative Fiscal Bureau recently released a memo providing updates on Wisconsin budget and unemployment insurance numbers.
The memo reports that Wisconsin’s tax collections for the first nine months of the current fiscal year (through March) increased by 5 percent over the same period for 2018-19. However, numbers for April and May show significant reductions in collections due to the coronavirus pandemic’s impact on the economy. For the first 11 months of the current fiscal year (through May), collections are down $380 million.
Preliminary tax collection information for May shows a continued reduction in collections, but a decline significantly less than shown in the April collection report. May tax collections were at $1.3 billion, $66 million below collections in May 2019. April collections were $870 million below collections in April 2019.
Sales tax information shows that sales and use tax collections for May were down 10 percent from the previous year, nearly identical to the April numbers. According to the LFB memo, this indicates the possibility that the economic contraction in certain industries began even before Gov. Evers issued the statewide Safer-at-Home order in March.
A full picture of Wisconsin’s tax collections will not be available until July, as the state extended the tax filing deadline to July 15 due to the COVID-19 pandemic.
A January 2020 LFB report estimated that the balance of Wisconsin’s general fund would be $1 billion on June 30. The latest LFB memo reports that the balance will “undoubtedly decrease” but some factors may mitigate a drastic decline in the 2019-20 balance:
- $189 million will no longer be transferred to the state’s “rainy day” fund and will instead remain in the general fund.
- The Department of Administration recently asked agencies to reduce spending.
- The Evers administration has rescheduled debt repayments.
- Wisconsin’s rainy day fund will have a balance of $656 million by the end of the 2019-20 fiscal year. The Legislature can pass legislation to provide agencies access to those funds.
Wisconsin’s unemployment rate jumped from 3.1 percent in March to 14.1 percent in April, the highest month-over-month increase recorded since data began in 1976. There have been 636,998 unemployment claims in Wisconsin from March 15 to June 6, a 1,099 percent increase from the same period in 2019. Average weekly claims continue to exceed the weekly initial claim level during the Great Recession.
However, the memo notes that continuing unemployment claims have been decreasing weekly since April 18. There has been a 19 percent decline in continuing claims since the April peak.