LFB Memo Shows Budget Shifts up to $383 Million from Intended Purposes 

A Wisconsin Highway

Is Wisconsin shifting too much money to transportation?

When Scott Walker was running for office three years ago, he vowed to “end the practice of raiding segregated state funds to pay for other programs.”  Walker added, “If taxpayer revenue is collected for a specific purpose such as building and maintaining roads, it should be used for that purpose and that purpose only.”

What constitutes a “fund raid” is a subjective matter, which seems to depend in part on the beholder’s opinions about the importance of the funding being shifting or “raided” and also on how that funding source is labeled.  Putting semantics aside, the nonpartisan Legislative Fiscal Bureau prepares a summary of budget provisions that shift sources of revenue with the intent of using those funding sources “for purposes other than those for which the fund has traditionally been used.”  A Fiscal Bureau memo issued in mid-June tallied 14 such funding transfers, which authorize the shifting of up to $383 million.

Here are the biggest transfers in Wisconsin’s 2013-15 budget, which was signed by the Governor last month:

  • $133 million transfer from the General Fund to the Transportation Fund. This move is in addition to a one-time transfer of $125 million from the General Fund to the Transportation fund in the 2011-13 budget;
  • Up to $76 million in potential lapses from program revenue appropriations of state agencies to the General Fund. This lapse actually replaces a larger lapse that was passed in the last budget and was scheduled to go into effect in the 2013-15 budget;
  • Up to $50 million in interest-free loans from other funds to the Unemployment Reserve Fund. The federal government requires that employers pay additional taxes into the Unemployment Reserve Fund if the balance drops below zero. Loaning money to the Unemployment Reserve Fund from other funds would keep taxes low for employers, but also reduce future resources for the state’s jobless workers;
  • $58 million from University of Wisconsin System’s reserves to the Higher Education Aids Board, swapping out an equal amount of GPR. This move by the Legislature came as a reaction to the news that the UW System had accumulated significant reserves despite a reduction in state support. This transfer is designed to draw down the UW System’s reserves; and
  • $32 million from the Petroleum Inspection Fund to the Transportation Fund.

This Legislative Fiscal Bureau memo has more information on additional fund transfers. The memo does not include past transfers that have been established in current law. For example, the 2011-13 budget required that 0.25% of General Fund tax collections be transferred to the Transportation Fund each year, a which results in a loss of about $71 million a year for the General Fund.

One thing that stands out about these fund transfers is that the Legislature is continuing a trend begun in the 2009-11 budget of beefing up the Transportation Fund at the expense of the General Fund. This results in fewer resources for Wisconsin’s public schools, communities, and health care, and more resources for highways. (Our May 2013 blog post, “People Are Driving Less, but Wisconsin Still Emphasizes Highway Spending,” questions whether Wisconsin should continue its focus on new highway construction given changing trends in transportation.)

Some legislators justify shifting resources from the General Fund to the Transportation Fund by pointing to transfers made in the other direction in the past. But over the past 12 years, transportation programs have had a net gain of more than $300 million from transfers. That means that the Legislature has more than made up for past transfers away from transportation programs. Additional transfers move resources away from the purpose for which they were originally intended.

For more, go to www.wisconsinbudgetproject.org.

Photo by Doug Kerr released under a Creative Commons Share Alike license.