Unwrapping the Governor’s Budget Proposal

Spending Rises, Small Ending Balance Introduces Risk

February 2017


The governor’s new 2015-17 state budget proposes increased funding for K-12 schools, the University of Wisconsin System, and local roads. The $76.1 billion spending package from all funds also includes income and property tax cuts, along with a sales tax holiday. But the governor pays for $371 million of spending by drawing down surpluses, raising deficit concerns should the economy slow.

“To every thing there is a season . . . a time to plant, and a time to pluck up that which is planted.”
And so it is with Wisconsin’s economy and state finances. To paraphrase the Old Testament verse: there is a time for boom and a time for bust, a time to spend and a time to save.
If Gov. Scott Walker’s (R) 2011-13 budget, his first, was an austerity budget in a time of economic uncertainty, the 2017-19 edition is different. It relies on an unplanned surplus and anticipated new revenues to fund noticeable spending increases, particularly in the areas of education and health.
This is good news for program beneficiaries who stand to gain from the increases. There is an unanswered question, however: Will the economy and state tax collections continue to grow as forecast? If not, the proposed budget leaves little in reserve with which to stave off deficit and associated spending cuts or tax hikes.