Wisconsin’s latest budget projections brought good news, with the state now projected to end the 2021-23 fiscal biennium with a $3.8 billion surplus. As we reported in January, Wisconsin ended its most recent fiscal year with a balance of $1.18 billion, its largest positive balance ever as calculated using Generally Accepted Accounting Principles (GAAP). The state also revised its income tax withholding tables and announced a record-high lottery and gaming credit to offset property taxes for Wisconsin homeowners.

According to a January 25 memo to legislators from the nonpartisan Legislative Fiscal Bureau, the state is expected to end the current fiscal biennium on June 30, 2023 with a $3.8 billion surplus, nearly $2.9 billion more than the most recent projection. LFB attributes most of the increase to a $2.5 billion increase in expected sales, income, and corporate tax collections and a nearly $340 million drop in appropriations. Because the state’s budget stabilization or “rainy day” fund has a balance over $1.7 billion, none of the surplus funds will be automatically transferred to that account.

On January 27, a few days after issuing a press release acknowledging the new fiscal projections, Gov. Tony Evers (D) announced a proposal to direct about $1.7 billion of the projected surplus towards tax relief and education spending:

• “Allocate $815.7 million toward a surplus refund of $150 for each Wisconsin resident.”
• Allocate $102.5 million to “create a nonrefundable caregiver tax credit for qualified expenses incurred by a family caregiver to assist a qualified family member.”
• Allocate $29.3 million to “increase the newly created Wisconsin nonrefundable credit match on the Child and Dependent Care Credit from 50 percent of the federal credit to 100 percent.”
• “Invest nearly $611 million in K-12 education.”
• “Provide $111 million for the University of Wisconsin System.”
• “Provide $28 million for the Wisconsin Technical College System.”

A more detailed summary of the legislation, drafted as LRB-5877, can be found here. Sen. LaTonya Johnson (D-Milwaukee) is listed as the bill’s lead author.

Republican leaders in the Wisconsin Legislature quickly rejected the governor’s proposal. Senate Majority Leader Devin LeMahieu (R-Oostburg) said that “Senate Republicans will not gamble with a projected state surplus to fund Tony Evers’ re-election gimmicks,” noting that the governor already has control over hundreds of millions in federal relief funds that he can disperse without legislative input.

Assembly Speaker Robin Vos (R-Rochester) made similar comments, with both leaders indicating they want to wait until the 2023-24 legislative session to spend any surplus funds. Speaker Vos told reporters that he wants to use the money “to do a massive tax cut,” and to “fill in any gaps when federal funding at the governor’s disposal is used up.” He didn’t provide additional details on what those proposals might look like.

In response, Gov. Evers argued that his proposal is not a “reelection thing” and that Wisconsinites facing increased costs because of the pandemic and inflation “need help making ends meet and can’t wait until the next biennial budget.”

Similar proposals have been implemented in the past. In 2018, Gov. Scott Walker (R) signed legislation including a $100-per-child sales tax rebate and creating a one-time weekend sales tax holiday. In the 1990s, Gov. Tommy Thompson (R) signed one-off pieces of legislation including a rebate based on the school property tax credit and later a sales tax rebate using surplus funds.