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Report: How Wisconsin Lawmakers Could Spend $4.4 Billion In Additional State Funds

Shot of the Wisconsin Capitol building from the top of a firefighter ladder truck.
Bryan Faust
Adobe Stock
With this $4.4 billion windfall of state revenue, the Wisconsin Policy Forum dug into this money could be spent to address needs facing the state.

As leaders in Madison continue to work towards passing a budget for 2021 to 2023, Wisconsin’s Legislative Fiscal Bureau has announced historic new projections for state revenue over the next two years. The state is expected to take in $4.4 billion more than previously projected in January 2021. The sizable increase comes in the wake of massive federal aid from the American Rescue Plan Act passed in March, as well as sales taxes and corporate tax revenues growing at a rate Wisconsin hasn’t seen for decades.

With this windfall of state revenue, the Wisconsin Policy Forum (WPF) dug into how Democrats and Republicans could use this money in a report titled “A Golden Opportunity For Wisconsin.” Jason Stein works as the Research Director for the WPF and says the report found four major areas where the money could be invested.

1. Infrastructure

“With infrastructure, obviously one of the few things that both parties are really looking at doing is investing in broadband. That is an area of bipartisan agreement,” he says.

Stein says updating water and sewer infrastructure, especially with the goal of replacing lead pipes, and putting more money towards the state’s road system are two other areas of concern that could be addressed through this money.

2. Economic Development & Taxes

Businesses across the country have been working to attract workers as communities begin to emerge from the pandemic but for many businesses it has been a struggle. Stein says one way to help increase the labor market is by investing money into childcare through tax benefits or subsides for parents.

On taxes, he says that resources can be used to simplify and reduce taxes to help businesses but some of the money from the federal government was intended to be spent and could be lost if it only goes towards cutting taxes.

“We do have to be careful on the tax cuts that we don’t run a foul with the federal provisions that could cause us to lose some of this additional federal funding,” he says.

3. Local Governments & Schools

Stein says efforts like reforming the state’s school funding formula have seemed too difficult to achieve without additional funding to continue funding all schools at, at least the same level. Now, he says that proposal is possible.

For local governments, making new investments would help make up for state aid, which has decreased and reduce the reliance on increased property taxes or new sales taxes for municipalities to balance their budget.

4. State Budget & Finances

While Wisconsin’s financial future looks bright right now, that may not always be the case, so he says this money could be used to prepare for the future.

“Things like having higher reserves, paying down debt, replenishing our unemployment fund that put us in a position so that when we have a bad year, or even just an average year, we’re better positioned to take care of people,” he says.

The state’s unemployment fund has been depleted by $1 billion since the end of 2019. The report points to transportation debt as one area in particular to focus on.

This money is not unlimited, so not everything in the report can get done, but Stein says a good amount of it can. It’s now up to political leaders to decide how to invest in Wisconsin over the next two years, he says.

“We obviously can’t do it all but the amazing thing is that we can do a decent chunk of that list that I just recited to you and that’s pretty remarkable,” says Stein.

Joy is a WUWM host and producer for Lake Effect.
From 2020 to 2021, Jack was WUWM's digital intern and then digital producer.
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