A report released this week by the Wisconsin Policy Forum (WPF) shows that while most states prioritized using federal funding, including American Rescue Plan Act (ARPA) and CARES Act funds, on unemployment programs and bolstering their own budgets, Wisconsin went in a different direction.
Wisconsin’s state and local governments were approved for $4.86 billion in fiscal recovery funds. So far, half of that total has been received with the second half coming this May.
The state has prioritized aid to small businesses and industries affected by the pandemic, as well as public health.
“With state tax collections strong, Wisconsin has not needed to use ARPA recovery funds to close state and budget gaps,” according to the report.
By contrast, other states have so far used approximately 23% of their ARPA funds to replace lost revenues and support state operations. Wisconsin has devoted nearly 58% of its ARPA funds to economic development while other states have only devoted 5%.
Wisconsin has set aside $1.33 billion for addressing the pandemic’s economic impacts, including $303 million to small businesses through Wisconsin Tomorrow grants, $222.8 million through We’re All In grants to small businesses and $40.2 million to restaurants, $100 million for farms, and $92.5 million to hotels and other lodging businesses.
“Though Wisconsin received less in ARPA recovery funds than most states and a smaller amount than originally anticipated, the state’s finances are weathering the pandemic relatively well,” reads the report. “Wisconsin’s unemployment rate remains below the national average, tax collections have been robust, and the state is projecting an unprecedented surplus.”
States also used 13.5% of their total awarded funding for restoring depleted unemployment reserves and 9.7% for water and sewer infrastructure. Wisconsin did not allocate any ARPA funds to either of those purposes but did set aside $113.5 million to modernizing its unemployment system and $120 million of the state’s own tax collections to replenishing the unemployment fund.
The biggest priority by far within Wisconsin when it comes to federal funding has been public health and pandemic response, with $1.96 billion allocated by Gov. Tony Evers’ administration. Testing and vaccines has seen the most funding at $457.2 million spent or obligated.
“Going forward, state leaders should be well-positioned to continue to avoid use of the one-time ARPA monies to plug ongoing shortfalls in the state budget – a move that would create new budget gaps when the funds are exhausted,” according to the report.
WPF recommends state leaders invest federal monies into policy priorities including but not limited to infrastructure needs, enhancing affordable housing, and continuing to boost unemployment reserves.