Report: WI spending could exceed revenue by $373M in next 2 years

MADISON, Wis. - State spending in Wisconsin is projected to exceed revenue by about $373 million in the coming two years, without taking into account Medicaid costs and new spending requests from state agencies, according to a policy research organization's report released Monday.

The nonpartisan Wisconsin Policy Forum report predicts legislators will have to deal with the state's largest budget shortfall since 2011 when they craft the 2021-2023 biennial budget.

The forum used Wisconsin's projected increases in tax collections and base spending but excluded new spending requests to reach the shortfall figure.

That figure could rise to more than $2 billion when increased health care expenses, other costs and a boost in school aid are added, the report said.

Prisons, schools and the University of Wisconsin System are also expected to need more money, adding to the challenges for Gov. Tony Evers and lawmakers.

The state is expected to have more than $2 billion in reserves when the fiscal year ends in June, but there may be some reluctance among legislators to dip into the reserves that have accumulated over the last decade.

The report notes that the landscape might look difference between now and when budget deliberations begin next year.

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“With the pandemic still spreading, all of these projections remain awash in uncertainty,” the report states. “On the one hand, the state’s tax collections could falter or dire new spending needs could develop. On the other, the situation could also improve if a vaccine and additional federal legislation help to bring about a recovery.”

Evers is scheduled to present his budget on Feb. 16 and legislators will spend the spring and early summer debating and rewriting it. Evers can then reshape it using his partial veto powers.