State Agency Budget Requests Exceed Expected Revenue by $693 Million

On Nov. 21, the Department of Administration (DOA) released a report on agency budget requests and revenue estimates for the 2017-19 biennium.

As in previous years, these budget requests exceed the revenue projections for FY 2017-19. DOA Secretary Scott Neitzel notes this “imbalance” in the opening letter of the report, stating as in the past, not all state agency budget requests will be included in the governor’s budget.

DOA estimates revenues will increase by 2.9 percent in FY 18, totaling $15.888 billion and by 3 percent in FY 19, totaling 16.370 billion. However, general fund agency budget requests exceed the revenue estimates by $250.2 million in the first year of the upcoming biennium (FY 2018) and $442.8 million in the second year.

Neitzel points out in his letter that most of the additional spending increase is due to the Department of Public Instruction, which requested $508 million additional GPR and the Department of Health Services, which requested $450 million more GPR for Medicaid.

In October, DOA announced that the state ended FY 2016 with a $331 million balance. The November report projects a smaller year-end cushion in FY 2017, with the state ending the current fiscal year with a $104 million balance.

The November DOA revenue estimate will provide the backdrop for the governor as he puts together his budget for the 2017-19 biennium. As in past budget years, the focus will be on the big-ticket items – education, Medicaid and transportation.

2017-19 budget development in full gear

The governor and legislators have been publicly weighing in on the transportation budget for several months. Assembly Republicans, including Speaker Robin Vos (R-Rochester), have publicly pushed for a discussion of all options, including revenue increases, in the transportation budget. Gov. Walker has pledged that he will not increase taxes to generate transportation revenue.

On Tuesday, December 6, Assembly Transportation Committee Chair, Rep. Keith Ripp (R-Lodi) will hold a public hearing on the Wisconsin Department of Transportation’s 2017-19 Biennial Budget Proposal. Only invited organizations will testify at the hearing, but all written comments are accepted.

In advance of the meeting, the Legislative Fiscal Bureau (LFB) has prepared a summary of DOT’s budget request. Per the LFB, by the second year of the next biennium the debt service will grow to 22.9 percent of the transportation fund revenue. In the 2015-17 biennium, Republican lawmakers and Gov. Walker settled on $850 million in bonding to fund road projects.