The state is now projected to have nearly $1.7 billion in extra revenue to assemble the next two-year budget.
Legislative Fiscal Bureau projections Thursday increased the expected gross balance at the end of the biennium to $484.7 million, $136.6 million more than what the Department of Administration had projected in its November estimates.
The LFB also ratcheted down the expected revenues for the 2013-15 biennium, largely because the state’s estate tax won’t return.
The new numbers come as Gov. Scott Walker prepares his two-year budget plan for a Feb. 20 unveiling.
Earlier this week, Walker and Assembly Speaker Robin Vos (R-Rochester) said they were targeting a middle-class income tax cut in the range of $300 million to $350 million, reflecting the smaller surplus estimated in November for the current biennium.
The governor said Thursday the projected surplus will “will allow hardworking Wisconsin taxpayers to keep more of the money they earn because I plan to move forward with an income tax cut targeting the middle class.”
But his statement didn’t address whether he would plow the additional money expected at the end of this biennium into an income tax cut.
Vos also referenced the planned income tax cut saying in a statement: “Now, it’s time to give taxpayers some much needed relief, as much as we can possibly afford, while still providing the essential services to our citizens.”
The Joint Finance co-chairs credited GOP action last session for the larger surplus.
“The revenue numbers prove we are moving in the right direction. Moving forward on the budget, we will continue to work in a cautious and conservative manner to make sure that taxpayers’ funds are spent wisely,” Sen. Alberta Darling (R-River Hills) and Rep. John Nygren (R-Marinette) said in a joint statement.
Senate Minority Leader Chris Larson ( D-Milwaukee) countered the GOP reaction to the budget numbers by arguing they show the cuts made in the budget were unnecessary.
“Sounds like the projected $484 million budget surplus means that the devastating cuts to education, healthcare, local government from the last budget were unfair, unfounded, and, most importantly, unnecessary,” Larson said. “Wisconsin’s middle class families now know the only purposes these cuts served were to divide our communities.”
The LFB attributed the bump for the 2011-13 biennium to a projected increase in tax collections of $37.1 million compared to the November estimates, and an increase of net department revenues of $35 million plus a drop in net appropriations of $64.5 million.
That dip includes a reduction in debt service payments, a projected lapse in the SeniorCare program and the reduction of the cost for various refundable tax credits.
The LFB also notes a drop of $296 million in the expected tax collections in 2013-15, though the bulk of that decrease was expected. DOA noted in its November report that $219 million of the expected GPR growth for the biennium would materialize if the state’s estate tax came back. The report also noted action by the federal government in the so-called “fiscal cliff” negotiations could prevent that from happening, and the deal that Congress approved did just that.
Democratic Party of Wisconsin Chair Mike Tate said, “When it comes to this ‘surplus,’ Scott Walker is not using the same measuring stick he himself used for political benefit against the previous administration. By that standard, Wisconsin remains hundreds of millions of dollars in debt. Just like his phony math when it comes to his jobs failures, you can always count on Scott Walker to cook the books in his favor.”
For ongoing coverage of the state’s budget, visit WisPolitics.com, a media partner of BizTimes.