Even in the best of cases, state budget documents can tax the reader. The good news is state finances are often quite easy to understand once the curtain of bureaucratic language is lifted. This glossary seeks to do that for some of the most commonly used terms.
Accrual accounting—A form of accounting that records obligations to spend funds at the time they are incurred as opposed to when money is actually spent. See also cash accounting.
Amendment—Proposed change to legislation. Simple amendments add or remove language within a bill. Substitute amendments replace all of the language in a bill with new text.
Annual Fiscal Report (AFR)—Yearly financial statements for the state of Wisconsin prepared using cash accounting.
Appropriation—A sum of money that elected officials set aside for a specific purpose such as state aid to schools. Verb. Appropriate
Base—The previous spending level that serves as the starting point for a new budget.
Biennium—A two-year budget cycle for the state. Local governments typically have one-year budget cycles. Adj. Biennial
Bond—Financial instrument by which the state or local government borrows money from investors and repays the money with interest. General obligation bonds are backed by the full taxing and revenue powers of the government while investors in revenue bonds can only count on repayment from certain revenue streams that are pledged by the government.
Budget bill—A piece of legislation that sets tax and spending levels for a two-year period beginning on July 1 of odd-numbered years. It is proposed by the governor, amended and approved by lawmakers, and subject to a governor’s veto, approval, or approval with partial vetoes.
Budget repair bill—Legislation that seeks to address an imbalance arising if expenses unexpectedly are projected to exceed revenues within a two-year budget cycle.
Building Commission—The eight-member panel made up of the governor, six lawmakers, and one citizen that is charged with overseeing the state building program and the capital budget.
Capital budget—Legislation that authorizes and finances state building projects such as new offices or prisons. This two-year budget is separate from the budget bill dealing with the state’s day to day operations.
Capital gains tax—A tax levied on profits from the sale of assets such as real estate or stocks that have appreciated in value.
Cash accounting—The form of accounting used for the state budget in which obligations to spend money are not recorded until the payment is actually made
Classified employee—A government employee who, unlike at-will employees or political appointees, is protected by the state civil service law and can only be fired for cause.
Comprehensive Annual Financial Report (CAFR)—Yearly financial statements for state and local governments prepared using accrual or GAAP accounting.
Conference committee—A panel of lawmakers from both the Assembly and Senate which may meet to resolve any differences between versions of the budget bill passed by both houses.
Fiscal year—The financial year for a government that can be separate from the calendar year. The state is currently in fiscal year 2019, which began on July 1, 2018, and ends on June 30, 2019.
Full Time Equivalent (FTE)—A position or positions adding up to the work assignment of one full-time employee. One FTE would typically account for 40 hours of total work per week by one or more employees, or 2,080 hours per year, and 0.5 FTE would equal 20 hours per week, or 1,040 hours per year.
Generally Accepted Accounting Principles (GAAP)—Standards for financial statements set by independent boards that employ accrual accounting.
General fund—Main fund for state government which takes in revenues such as income and sales taxes and in turn uses this GPR for programs such as school aids, shared revenue, and Medicaid.
Income tax—A tax levied on the income earned by individuals or corporations, with proceeds going to the general fund.
Joint Committee on Finance (JCF)—The 16-member legislative panel responsible for holding public hearings and votes on revenue and spending bills such as the budget, among other duties.
Lapse—Budgeted amounts that go unspent by the end of a fiscal year or budget period and revert back to the fund from which they were appropriated.
Levy limit—A cap placed by state officials on the annual increase in local property taxes for municipalities, counties, and technical college districts.
Medicaid—Set of programs that are jointly funded by federal and state taxpayers and are aimed at low-income residents. Medicaid provides acute medical care to individuals and families (BadgerCare), long-term care in the community to the elderly and disabled (Family Care and IRIS), nursing home care, and prescription drug coverage for seniors (SeniorCare). Also known as Medical Assistance or MA.
Revenue—Money received by the state or local government from taxes, fees for services, aid from the federal or state government, bonds, interest earnings, etc. General purpose revenues (GPR) come from sources such as the income and sales tax and go into the general fund. Segregated revenues (SEG) such as gas taxes are set aside for specific purposes such as road building in segregated funds. Program revenues (PR) come from specific government activities such as college dorm fees.
Revenue caps—Limit imposed by the state on the amount of money that school districts can raise per pupil from state general school aids, local property taxes, and certain other sources.
Sales tax—A tax levied on certain purchases. The 5% state sales tax goes into the general fund. Most counties also levy an additional 0.5% sales tax.
School aids—Payments from the state, generally with GPR, to K-12 districts. General school aids fund overall school operations with a greater share going to districts with lower property values. Categorical aids fund specific programs and priorities and are distributed according to specific formulas rather than property tax wealth.
Shared revenue—State aid payments made to counties and municipalities with general purpose revenue.
Transportation fund—Segregated fund that pays for infrastructure such as highways and bridges using revenues from gas taxes, fees for vehicle registration and driver’s licenses, federal aid, and bonds.
Veto—Action taken by the governor to reject a bill approved by lawmakers. Wisconsin’s governor also has one of the most powerful partial vetoes in the country and can use it with appropriations bills such as the budget to delete individual words or sections or eliminate or reduce dollar amounts.