Updated Dec. 8 at 11:04 a.m. CST
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.
“I would say this is the toughest state budget we've had in a decade,” says Jason Stein, the research director for the Wisconsin Policy Forum.
That figure could rise from $373 million to nearly $1.5 billion when increased health care expenses including Medicaid are added says Stein. In addition, 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.
But this may not all have to fall on the state budget. The federal government could help provide funds for programs like Medicaid and alleviate the deficit in the state budget.
“If the federal government provided additional aid to state local governments, that's something that could help the state budget. If the state were to expand Medicaid programs and receive additional federal funds available under the Affordable Care Act, that could have a substantial impact, although Republican lawmakers in the past have said that that's not something that they want to do,” says Stein.
The state is also 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.
This points to a change from the last major budget issues during the Great Recession. In 2009, Democrats had full control of the state government. In 2011, that control swung entirely to the Republicans. Now, with a Democrat in the Governor’s mansion and Republicans controlling the legislature, they will have to work together to pass a new budget.
The report notes that the landscape might look difference between now and when budget deliberations begin next year and Stein says that the handling of the pandemic is directly tied to the issue of the budget.
“If the pandemic got worse, that's going to make our economic and budget challenges more difficult. If the vaccine is particularly effective and delivered effectively, that could make the problem more manageable. So there's just a very high level of uncertainty,” he says.
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.