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Wisconsin State Tax Collections Fall Far Short of Projections

12:14 pm in Uncategorized by WI Budget Project

$281 Million Revenue Shortfall in 2013-14 Will Mean a Big Jump in the Structural Deficit

A dollar bill cut into shreds, with a calculator

New revenue figues show a major shortfall in Wisconsin.

Wisconsin lawmakers got bad budget news today, when the Legislative Fiscal Bureau (LFB) released state tax collection figures showing that revenue collections fell $281 million (2.0%) short of projections during the fiscal year that ended on June 30. Rather than growing by 1% as anticipated, state tax collections fell by 1%, and that will cause a substantial jump in the state’s structural deficit.

State lawmakers banked on revenue growth when they wrote Wisconsin’s two-year budget and followed up with additional tax cuts. It’s not clear at this point what will result from a substantial revenue shortfall, but one potential outcome is the state could face a new round of damaging budget cuts. What makes the state’s new budget challenge very disappointing is that it could have been easily avoided if lawmakers hadn’t rushed early this year to use every bit of increased revenue projections for another round of tax cuts, without setting funds aside for an adequate budget cushion.

Although sales tax revenue nearly met expectations – falling short by $11 million, or 0.2% – individual income tax revenue was almost $179 million below the anticipated level (a 2.5% shortfall), and corporate income tax collections came in $97.7 million (9.2%) less than expected.

The $281 million shortfall is very worrisome for a number of reasons:

  • The budget provided very little margin of error because it left a closing balance of only $165 million at the end of the biennium (which is just $100 million more than the $65 million required minimum balance). Each of the last several budget bills has postponed the statutory requirement that would significantly increase the minimum annual cushion (known as the “statutory balance”) that legislators are required to set aside.
  • The state was expecting 3.5% revenue growth in the second half of this biennium (i.e., the 2014-15 fiscal year); and now that the 2013-14 base level is 2% lower than anticipated, it will take 5.6% growth in tax 2014-15 collections to hit this year’s target of $14.7 billion (without even closing the 2013-14 shortfall).
  • If tax collections do grow by 3.5% in 2014-15, as previously anticipated, the shortfall will grow by about $291 million this fiscal year, for a total shortfall of about $572 million (or $472 million after subtracting the budget bill’s $100 million “net balance”).
  • On top of these problems, the Dept. of Health Services has projected a $93 million GPR shortfall in the Medicaid budget for 2013-15; and the gaming revenue being withheld by the Potawatomi tribe may also exacerbate the state’s fiscal challenges.

The Fiscal Bureau had calculated in May that the state was facing a “structural imbalance” or structural deficit of $642 million GPR in the next biennium (2015-17), and the reduced revenue estimates will probably add substantially to that problem. That figure represents the amount of revenue growth that would be needed in the next biennium simply to freeze spending – without factoring in any of the increased costs from factors such as inflation and rising numbers of people needing state services.

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On Pins and Needles Waiting for New Tax Figures in Wisconsin

10:55 am in Uncategorized by WI Budget Project

Financial charts, a calculator and a folded pair of reading glasses

Is Wisconsin’s Department of Revenue delaying bad news?

For the past month or so I’ve been scratching my head wondering when we would get an update from the WI Department of Revenue on state tax collections during the fiscal year that ended on June 30th. I’m not the only one who has been anxiously awaiting those numbers; four Democrats in the state Senate sent a letter yesterday to Secretary Huebsch asking when the FY 2013-14 revenue numbers will be released.

The letter signed by Senators Larson, Hansen, Shilling and Wirch notes that “last year the June numbers were released on August 23rd.” (You can see that DOR press release here.) The letter adds:

Given the numbers we’ve seen to date, the delay is already fueling concern that they will show a revenue shortfall. How significant that shortfall is could have a wide ranging impact not only on future budgets but the current budget as well.

I share the concern about the potential for a revenue shortfall. A Budget Project Blog post I wrote in June about the reduced tax collections from January through May explains why the downward trend in tax collections has been worrisome, and why the June numbers have taken on increased importance:

If the current trends continue over the last month of the fiscal year ….we will come up short for the current fiscal year by roughly $200 million. And since the budget assumes about $500 million of tax growth in the second year of the biennium, we can ill afford to begin that fiscal year at a level that is $200 million below the anticipated starting point.

Although the Senators’ letter was correct that the tax collection figures for FY 2012-13 were released sooner last year, that hasn’t been the case every year. For example, the FY 2011-12 numbers were released on September 5, 2012. For me, the bigger disappointment this year was that DOR didn’t release tax collection numbers specifically for June, as it did the prior year (in this July 12, 2012 press release). Although DOR hasn’t always issued a comparable set of June tax figures, the revenue trends this year have made it frustrating not to have any update since the May tax collection numbers.

That said, I think any questions about the timing of the revenue numbers for the last fiscal year will soon be inconsequential – once those numbers are released. I applaud the Senators for drawing attention to the fact that these are important figures to be watching for, and for asking the DOA Secretary what the state will do if there is indeed a revenue shortfall.

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Breaking with Tradition in Wisconsin: What it All Means

12:24 pm in Uncategorized by WI Budget Project

The underside of the Wisconsin Capitol Dome

Legislators are making life harder for Wisconsin families.

Over the past week, the Wisconsin Budget Project has highlighted a piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website. This is the conclusion to the report.

Breaking with Tradition in Wisconsin

Over the last three and a half years elected officials have made dramatic changes to how Wisconsin supports its schools, communities and workforce. Lawmakers have reduced investments in public schools and higher education, despite the role education plays in individual financial success and building a strong economy. They have cut taxes for Wisconsin taxpayers with the highest incomes, but raised taxes on seniors with low incomes and on working families. They decided to provide health insurance to fewer people at higher cost. And lawmakers also made it harder to obtain important safety-net benefits like unemployment benefits and food stamps, during a period when families continue to struggle to emerge from the deepest recession in 80 years.

Lawmakers claimed that many of these changes would give the Wisconsin economy a boost and create jobs. But instead, job growth in Wisconsin has lagged both the region and the nation as a whole. We believe that these changes will have long-term negative effects on our state, that they are not in the best interests of our children and families, and that they are not in keeping with Wisconsin’s values of opportunity, responsibility, and community.

To construct a strong economy in Wisconsin, we need to create opportunities for everyone to thrive. Lawmakers should build on our long history of making the kind of investments in our schools and communities that create broad-based prosperity and help make Wisconsin a good place to do business and raise families. We should build on Wisconsin’s legacy of investing in the state’s future, rather than turning away from it.

You can access the rest of the report here.

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Wisconsin Taxpayers Would Save Even More than Expected by Expanding Medicaid

12:01 pm in Uncategorized by WI Budget Project

Piggy bank with stethoscope

Expanding medicare would benefit Wisconsin taxpayers even more than expected.

Expanding BadgerCare coverage to all adults below 138% of the federal poverty level (FPL) would save significantly more money for Wisconsin taxpayers than previously estimated. According to a memo prepared last week by the Legislative Fiscal Bureau (LFB), expanding BadgerCare but would save state taxpayers an estimated $206 million during the 2013-15 biennium, compared to current law, but would cover 87,000 more adults than the state now expects to insure via BadgerCare at the end of the current fiscal year. That savings is $87 million more than the LFB calculated when the budget bill was being debated.

To put this news a little differently, by rejecting federal funding that would finance the full cost of providing BadgerCare to all newly eligible adults up to 138% of FPL, state lawmakers cost Wisconsin taxpayers $206 million in the current biennium and far more than that in the next biennial budget. One of the things making this news particularly significant is that the Department of Health Services estimated in late June that the state is facing a $93 million GPR deficit in the Medicaid budget. Expanding BadgerCare to more adults (including many of the 63,000 people who lost coverage in April) could potentially eliminate the need for significant Medicaid cuts, if state policymakers moved quickly.

The LFB paper, which was prepared for Senator Shilling, indicates that if lawmakers decide next spring to cover parents and childless adults up to 138% of the poverty level, effective in January 2016, state taxpayers would save between $261 million and $315 million over the last 18 months of the 2015-17 biennium.

Based on the LFB numbers and my own calculations, it appears that covering 87,000 more adults in BadgerCare could have saved state taxpayers a total of between $545 and $618 million over the period from April 2014 through June 2017.  Although it’s now too late to achieve all of the potential savings, state lawmakers can still take advantage of the Affordable Care Act to reduce costs very substantially in the next biennium.

In addition to the costs savings, there are many other compelling reasons to expand BadgerCare (see WCCF’s “Top Ten” list),  rather than expecting adults who are slightly above the poverty level to purchase more expensive private coverage through the new  insurance Marketplace.  Another recent news item reinforced those reasons – when we learned last month that only 19,000 of the 63,000 people who lost eligibility for BadgerCare have gotten insurance through the Marketplace. (Read more here.)

In November, people in many parts of Wisconsin will be able to vote on an advisory referendum regarding whether the state should accept the federal funding that would ensure that far more Wisconsinites have insurance, while also saving state taxpayers upwards of $261 million in the next biennium, and balancing the Medicaid budget. Let’s hope there is a robust debate on that issue, and let’s demand that policymakers who oppose taking the federal funds offer alternative plans for getting the state’s Medicaid budget back into balance.


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Breaking with Tradition in Wisconsin: Nutritional Assistance

12:22 pm in Uncategorized by WI Budget Project

Shopping Cart rushing through the aisles

More hunger in Wisconsin due to FoodShare cuts.

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.


Over the last four years, lawmakers have limited the number of people who could receive FoodShare assistance, also known as food stamps, by:

  • Prohibiting legal immigrants who have been in the U.S. for less than five years from receiving FoodShare. This move saved the state $380,000 a year, or about 0.003% of the state’s General Fund budget, and eliminated FoodShare benefits for 1,400 low-income residents;19 and
  • Requiring able-bodied adults who are not parents to work or participate in a work program in order to receive FoodShare benefits. This requirement is expected to reduce the number of people receiving FoodShare in Wisconsin by about 31,000. This move will reduce the amount of federal dollars coming into the state, and will actually cost Wisconsin an additional $8 million per year, due to the additional resources needed to administer the work program.20

You can access the rest of the report here.

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Breaking with Tradition in Wisconsin: BadgerCare

12:17 pm in Uncategorized by WI Budget Project

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.


In the last four years, state lawmakers have made substantial changes to the BadgerCare program, which provides health care coverage to low-income individuals and families. The most dramatic change, which took effect in April 2014, was to cut the income eligibility limit for adults in half, to the federal poverty level (FPL), or $19,790 for a single parent with two children.

The cut in eligibility yields savings that offset part of the cost of extending coverage to at least 100,000 childless adults below the poverty level, many of whom had been on a BadgerCare waiting list. But the cut – which knocked more than 60,000 parents off BadgerCare – could have been avoided if the state had accepted federal funding that would finance the cost of covering newly eligible adults with incomes up to 138% of the federal poverty level ($27,130 for a family of three).

A decline in the number of parents enrolled in BadgerCare and Transitional Medical Assistance (TMA) began earlier, after the 2011-13 budget bill granted the Department of Health Services (DHS) sweeping authority to make cost-cutting changes, even if those changes conflict with state law or administrative rules. In July 2012, DHS used that power to make a number of changes affecting adults, including raising BadgerCare premiums and expanding them to more parents. Although most adults above 100% of FPL lost their BadgerCare eligibility in April 2014, Transitional Medicaid serves a dwindling number (14,753 in June 2014) of parents above that income level.

Despite the sharp drop in enrollment of parents in BadgerCare, the net result of the state policy changes and indirect effects of the federal Affordable Care Act (ACA) has been an increase in total BadgerCare enrollment. And because about a third of the parents who lost BadgerCare coverage were able to purchase subsidized insurance plans through the health insurance Marketplace, there should be a decrease in the number of uninsured Wisconsinites. Nevertheless, the decision to reject the federal funding and only partially expand childless adult coverage has many drawbacks, including:

Accepting the full federal funding and covering adults up to 138% FPL would yield BadgerCare coverage for about 85,000 more adults than the Governor’s plan, yet was projected to save state taxpayers $119 million during the current biennial budget period.

Since Marketplace coverage is significantly more expensive for low-income adults than BadgerCare, the restrictions on eligibility will be a financial hardship for thousands of families, and many of the affected adults are likely to go uninsured; and

Because the enrollment of childless adults has exceeded expectations, the state Department of Health Services projects a much larger shortfall in Medicaid funding, and more than $200 million in cuts to state and federal Medicaid spending will be necessary if lawmakers continue to refuse the federal funds for Medicaid expansion.

DHS tried to use the authority it was granted in the 2011-13 budget bill to make changes that it estimated would cause at least 29,000 children to lose their BadgerCare coverage; however, the Obama Administration rejected those changes because they conflict with “maintenance of effort” provisions of the federal health care law that require states to protect coverage of kids until 2019. Nevertheless, the 2013-15 budget bill codified the BadgerCare changes for kids, enabling those measures to go into effect once the maintenance of effort requirements no longer protect children’s coverage.

Although most of the proposals that would directly affect BadgerCare for children have been delayed by federal law, the changes that are affecting parents seem to be indirectly reducing kid’s coverage.   Over the first six months of 2014, the number of children over the poverty level who are enrolled in BadgerCare has dropped by more than 24,000 – a decrease of 13.6%.

On a more positive note, state lawmakers passed a number of worthwhile measures relating to mental health care during the 2013-14 session. For example, the 2013-15 budget bill appropriated $29 million in new state funds for mental health programs and created an Office of Children’s Mental Health to improve the integration of mental health services provided to children and monitor performance.

You can access the rest of the report here.

Breaking with Tradition in Wisconsin: Higher Education

12:10 pm in Uncategorized by WI Budget Project

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.


Wisconsin can create jobs and build a better economy for everyone by investing in our state’s higher education system and increasing the number of people in Wisconsin who have college degrees. Right now, only 26% of Wisconsin adults have a four-year college degree, compared with 29% nationally, according to the Census Bureau. Some neighboring states like Minnesota (32%) and Illinois (31%) also have higher shares of their population with college degrees than Wisconsin.

Despite the growing importance of higher education to economic success, the Legislature has cut investments in our university system over the last four years. This contributed to tuition hikes of 5.5% in 2012 and again in 2013. Since then, tuition has been frozen as the state spends down university system reserve funds.

In 2011, the Legislature eliminated in-state tuition for undocumented immigrants who are otherwise qualified Wisconsin students. This move saved very little public money, but made it much harder for undocumented students to attend college. In Wisconsin, in-state undergraduate students pay about $10,000 per year to attend UW-Madison, while out-of-state students – and now undocumented students who grew up in Wisconsin – pay $27,000 per year.

The Legislature also made deep cuts to the technical college system at a time of rising enrollments. Lawmakers reduced support for students by about $45 million a year between 2010 and 2014, based on amounts budgeted for the technical college system in the state’s two-year budget bill.

You can access the rest of the report here.

Breaking with Tradition in Wisconsin: Public Schools

11:58 am in Uncategorized by WI Budget Project

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.

Public Schools in Wisconsin

Investments in Wisconsin public schools lay a foundation for the state’s economic growth. By ensuring that Wisconsin students have access

to a high quality education, we can create a future workforce that is well-qualified and globally competitive.

Since 2011, Wisconsin has made deep cuts in state support for public schools, while at the same time placing strict limits on the degree to which districts can raise their own money through property taxes. The result is that there are far fewer resources for students in Wisconsin public schools than there were before 2011.

Changes to the state retirement system and collective bargaining rules have allowed districts to cut compensation for teachers and other school employees, and some have done so to avoid scaling back academic programs. Other school districts have been forced to eliminate courses in core subject areas.

Cuts in state support of education among the largest in the country

Wisconsin’s public education cuts are among the deepest in the country. The state budget provided 15% less resources for public schools per student in 2014 than in 2008, according to the Center on Budget and Policy Priorities, a nonpartisan research organization. Only six states, mostly in the South and West, made deeper cuts over this period, measured as a percentage change in spending per student. When measured as dollars lost per student, Wisconsin’s cuts to public education were second only to Alabama.13

The budget cuts were more severe for school districts with high numbers of students living in poverty. Those districts had their state support reduced by $703 per student in the 2011-12 school year, while the lowest-poverty districts lost just $319 per student.14 The cuts to poorer districts were larger because high-poverty districts receive a bigger share of their total revenue from the state.

A tight lid on local support for public schools

In addition to making deep cuts to state support for education, lawmakers restricted the degree to which districts can raise property taxes to make up for the loss in state support.

Before 2011, school districts were typically allowed to increase their budgets by between $200 and $300 per student each year. School district budgets are mostly made up of support from the state combined with local property tax revenue. Starting in the 2011-12 school year, the Legislature put strict limits on school district budgets, which limited property tax increases. The Legislature required most school districts to cut their budgets by 5.5% per student in 2012, and has allowed only small increases since then.

Act 10 brought pay cuts for teachers and other school employees

In 2011, lawmakers limited collective bargaining rights for public employees and increased the amount that public employees must contribute to health and retirement benefit costs. The result was that teachers and other school district employees received significant pay cuts, and school districts saved on personnel costs.

For some districts, the pay cuts to teachers were big enough to counteract the reduction in state support. Other districts had to make cuts to core academic subjects to balance their budgets. According to a 2011 survey of school districts:

  • Public school staff was reduced by 5.7% in high-poverty districts in the 2011-12 school year, compared to 1.1% in low-poverty districts;15
  • Eighty-seven percent of students attended districts that cut staff;
  • Sixty-seven percent of students attended a school that reduced the number of teachers in classrooms to make ends meet;
  • Nearly half of students attended districts that cut core academics in the wake of the state budget cuts; and
  • More than 4 out of 10 students attended districts that increased class size.16
  • Budget cuts to schools slowed job growth in Wisconsin. The state lost 3,600 jobs in public K-12 education between 2010 and 2012, according to the Quarterly Census of Employment and Wages.

Expanded resources for private schools

At the same time it was decreasing support for public schools, the Legislature significantly expanded the state’s private school choice program, also known as school vouchers. This program allows students from low- and moderate-income families to attend private school with the state paying the tuition.

Prior to the 2010-11 school year, only students attending Milwaukee Public Schools were eligible for tuition vouchers. The Legislature expanded the voucher program in a number of ways since 2011, including:

  • Removing enrollment limits in Milwaukee and raising the family income threshold for Milwaukee students to 300% of the poverty level – about $72,000 for a family of four;
  • Adding vouchers in the Racine Unified School District, for students with family incomes under 300% of the poverty level;
  • Allowing students in other parts of the state to receive vouchers, if they have family incomes below 185% of the poverty level. For the 2014-15 school year, participation in the rest of the state is capped at 1,000 students. Nearly three-quarters of students who received vouchers from the statewide expansion previously attended private schools.17

The Legislature funds the Milwaukee Parental Choice Program in part by cutting the amount of public support for Milwaukee Public Schools.

Lawmakers raised the dollar amount of tuition vouchers to keep up with inflation. This is in marked contrast to the public school system, for which the state is now providing 15% less in support per student than in 2008.

A generous new tax break for private school tuition

The Legislature has given a new tax break to the families of other private school students, separate from the expansion of the private school choice programs.

Parents of students in private school may deduct up to $10,000 in tuition expenses from their income, starting in 2014. The total cost of the new tax break is $30 million a year, according to the Legislative Fiscal Bureau, and there are no income limits on who may claim the benefit. On average, private school students come from families with higher incomes than those of public school students. Wisconsin’s tax break for private school tuition is among one of the most generous tax breaks of this type in the country.18


You can access the rest of the report here.
13“Most States Funding Schools Less Than Before the Recession,” Center on Budget and Policy Priorities, May 20, 2014.
14“Making Matters Worse: School Funding, Achievement Gaps and Poverty under Wisconsin Act 32,” University of Wisconsin ELPA Policy Brief, May 2012.
16“Falling Support for Schools Threatens Wisconsin’s Future,” Wisconsin Budget Project, January 9, 2012.
17“DPI: 73 Percent of Statewide Voucher Students Already Enrolled in Private Schools,” Wisconsin State Journal, October 30, 2013.
18“Wisconsin’s New Private School Tax Break Most Generous in U.S., State Schools Superintendent Says,” Milwaukee Journal Sentinel, June 27, 2013.

Breaking with Tradition in Wisconsin: Jobs

9:34 am in Uncategorized by WI Budget Project

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.


Governor Walker’s administration has placed a high priority on job creation, but job growth in Wisconsin has been slower than the national average and neighboring states.

Governor Walker pledged to create 250,000 new private-sector jobs in his first term. As of May 2014, Wisconsin was only 40% of the way to that goal. At that point, there were seven months left in his four-year term.7

Private sector employment in Wisconsin increased 4.0% between December 2010 and December 2013, based on the most reliable jobs figures available. Over this same period, the U.S. averaged private sector job growth of 6.6%. If Wisconsin added jobs at the same pace over this period as the national average, we would have an additional 57,000 private sector jobs in Wisconsin as of December 2013.

During this same period, Wisconsin has had the slowest job growth of our neighboring states. Illinois, Iowa, Minnesota, and Michigan all added private sector jobs at a faster pace than Wisconsin did between December 2010 and December 2013.8

As of the spring of 2014, the U.S. has more jobs than it did before the recession. For Wisconsin, that achievement has not yet occurred. Some neighboring states, such as Minnesota, have already returned to or exceeded pre-recession employment levels.

Investments in strong schools, safe communities, and a healthy workforce can help spur the economy, and the Legislature’s decision to reduce these investments has likely contributed to Wisconsin’s lackluster job growth.

No action on minimum wage

Policymakers took no action to raise Wisconsin’s minimum wage, which has remained stuck at $7.25 since 2009.

Several neighboring states have either raised their minimum wage or taken steps towards raising the wage. The Republican-controlled Legislature in Michigan approved an increase in the wage, and in Minnesota it is scheduled to increase to $9.50 by 2016. In Illinois, residents can vote on whether the minimum wage should be raised, after lawmakers there voted to put the question on an advisory referendum.9

Raising the minimum wage to $10.10 an hour would give a raise to one out of every five Wisconsin workers and would benefit 234,000 children in Wisconsin, all of whom have a parent who would get a raise. Nearly 8 out of 10 Wisconsin workers who would benefit are age 20 or older.10

Three-quarters of Wisconsinites support increasing the minimum wage, according to recent polls.11

New obstacles to qualify for unemployment benefits

Over the last four years, while our job creation numbers lagged the nation and the region, state lawmakers have made unemployment benefits more difficult to obtain.

They have:

  • Expanded the reasons for which jobless workers could be denied unemployment benefits;
  • Increased the job search requirements for people who are out of work; and
  • Required that workers be unemployed at least a week before receiving unemployment benefits. Since most jobless workers find a job before reaching the end of their benefits, this measure has the effect of reducing the duration of unemployment benefits for most people. In total, it reduced unemployment benefits for job seekers by about $50 million a year.12

You can access the rest of the report here.

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Breaking with Tradition in Wisconsin: Taxes and Budgeting

8:55 am in Uncategorized by WI Budget Project

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.


Wisconsin lawmakers have passed dozens of tax cuts since 2011, many aimed at people who earn the most. Low income taxpayers have received much smaller tax cuts, and some may even be paying higher taxes than they did before 2011. The emphasis on tax cuts has thrown the state’s upcoming budget out of balance, contributed to rising debt, and diverted money that would otherwise go to the state’s rainy day fund to cushion the blow of the next economic downturn or some other unforeseen event.

Many tax cuts, but those with the lowest incomes miss out

Wisconsin lawmakers have cut taxes 43 times since 2011, draining $1.9 billion in revenue for education and other priorities over that period.1

Few of the tax cuts require businesses to create jobs in order to qualify.

 Among the largest tax cuts were:

  • An income tax rate reduction, included in the state’s two-year budget that passed in 2013, which reduced revenue by $648 million over two years;
  • A 2013 property tax cut of $100 million; and
  • A 2014 tax package that further cut income tax rates and also included another property tax cut. The combined package reduced revenue by $507 million over two years.


Those three tax cuts didn’t do much to lower tax bills for Wisconsin’s lowest-wage earners. The 20% who earn the least – a group with an average annual income of $14,000 – received an average tax cut of only $48 in 2014. In comparison, taxpayers in the top 1% of earners in Wisconsin, who had an average income of more than $1.1 million, received a tax cut of $2,518 on average.2

Fully half the value of the three large tax cuts went to the top 20% of taxpayers by income, and the remaining 80% of taxpayers shared the other half. The bottom 20% of taxpayers by income received only 4% of the value of the three large tax cuts.

It’s also important to note that Wisconsin taxpayers with the lowest incomes pay a larger share of their income in state and local taxes than do taxpayers with the highest incomes. In other words, under our state’s tax laws, those who can least afford it devote a bigger share of their income to pay for services such as schools, roads and bridges, and public safety.


It’s also important to note that Wisconsin taxpayers with the lowest incomes pay a larger share of their income in state and local taxes than do taxpayers with the highest incomes. In other words, under our state’s tax laws, those who can
least afford it devote a bigger share of their income to pay for services such as schools, roads and bridges, and public safety.

Tax hikes on working families and seniors
Policymakers raised taxes on working families and low-income seniors.

In 2011, the Governor and Legislature made significant cuts to two tax credits: one aimed at helping working parents lift their families out of poverty, and one that keeps property taxes affordable for people with low incomes, particularly seniors. Those cuts effectively raised taxes by reducing tax refunds for people who qualified for the credits. Combined, these tax increases resulted in an additional $170 million in taxes paid over the last four years by working families and people with low incomes.3

Rising debt levels
By borrowing money, the state can spread out the costs of big road, building, and other capital projects over many years. But if the state issues too much debt, future repayments will rise, it will be more difficult to balance future budgets, and high debt repayment costs will leave fewer resources for making other investments in Wisconsin.

In 2011, state lawmakers delayed debt payments and pushed those borrowing costs into the future. As a result of decisions like that over the last four years and even earlier, debt repayments reached a record high in 2014. The state has traditionally tried to keep principal and interest payments under 4.0% of tax revenues, but in 2014, they consumed 5.26% of General Fund tax revenues.4

Some progress, but state’s budget cushion still too low
Over the past four years, Wisconsin has made significant progress toward establishing a meaningful budget reserve, but levels are still too low. Lawmakers used money that would normally be deposited in a budget reserve to fund tax cuts.

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