This week Legislative Fiscal Bureau (LFB) released three memos to provide additional analysis and information on the impact of Governor Walker’s proposed 2015-2017 budget. The memos included a summary of state tax and fee modifications included in the budget, an examination of the use of certain segregated funds and a projection of the general fund condition statement for 2015-2017 and 2017-19 biennia based on the recommendations included in the governor’s budget bill (AB 21/SB 21).

According to the LFB analysis, the governor’s proposed budget would increase net taxes and fees by $48 million over the biennium. Of the $48 million, $39.3 million is due to net tax increases and $8.6 million is due to net fee increases. The largest tax increase ($21.8 million over biennium), is due to a delay in Act 229, which expands current law to allow retailers, under certain circumstances, to claim bad debt adjustments on behalf of affiliated credit card lenders.

In addition, the LFB included a summary of budget proposals that would boost current tax revenue. According to this summary, the governor’s increased tax collection measures generate an additional $124.7 million over the biennium. The majority of this increase ($113.5 million) is from a proposal to expand auditing activity by adding 102 positions to support additional auditing activity and tax collection.

The next memo provided by the LFB included a detailed list of segregated funds used for a purpose than the purpose than what it was originally intended. In total over the biennium, $302.2 million in segregated funds are designated for another purpose other than the original intended purpose. This includes over the biennium, $44.3 million of uses in the Conservation Fund, $82.2 million in the Environmental Fund for uses such as nonpoint debt service and nonpoint program staffing and $54.5 million in the Petroleum Inspection Fund to be transferred to the Transportation Fund.

The final memo generated by LFB included an analysis of the 2015-2017 general fund condition statement under the governor’s proposed bill. The net balance of the general fund at the end of fiscal year 2015 is projected to be $92 million and the net balance for fiscal year 2016 is $123 million. Removing the opening balance in FY 2016, and just focusing on the revenues and net appropriations, the general fund is estimated to end the year in 2016 with a balance of $31 million.

Using this FY 2016 as a base, the LFB examined the general fund in the next biennium, 2017-2019. The 2017-2019 projections did not assume any additional revenue growth or reflected changes in appropriations due to caseload changes and enrollment trends. The only adjustments made to the 2017-2019 projection includes obligations under current law and provisions in the proposed 2015-2016 budget. Based on these assumptions, the LFB projects the general fund to end with a $300 million surplus in FY 2017 and $199 million in FY 2018 – a total biennial balance of $499 million. For the past ten years, this is the most favorable surplus projected by the LFB using the same set of assumptions.