The Legislative Fiscal Bureau (LFB) now projects that Wisconsin will end the 2023-25 biennium with a $4.3 billion surplus, an increase from the $4 billion forecasted in November. The revision is largely driven by an expected $894.3 million increase in tax revenue, primarily from higher sales tax collections. LFB attributes the increase to updated economic forecasts, which account for inflation and consumer spending trends, including potential effects of proposed federal tariffs. Additionally, LFB anticipates an extra $1.85 billion in tax collections over the next two years.

The updated projections provide state leaders with additional flexibility as they craft the next budget. Governor Tony Evers and Republican legislative leaders have signaled differing priorities for the surplus, with GOP lawmakers emphasizing tax relief while agencies have requested increased funding for state programs. Assembly Speaker Robin Vos has suggested using at least $2 billion of the surplus for tax cuts, while the state’s Department of Public Instruction has put forward a significant funding request for education. Evers is set to introduce his budget on February 18, with discussions expected to focus on balancing tax policy, state investments, and long-term fiscal sustainability.