Wisconsin ended its most recent fiscal year with a $3.3 billion surplus in its general fund, surpassing earlier projections by $350 million, according to the state's Annual Fiscal Report. This surplus, combined with a $2.1 billion balance in the state's rainy day fund, has sparked renewed debate in Madison over how these funds should be allocated. The discussion has become especially heated after the Wisconsin Senate narrowly voted down a major surplus spending bill, leaving the future use of the surplus unresolved.
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The central dispute revolves around whether the surplus should be used to fund tax cuts or to increase spending on education. Both major political parties have put forward sharply contrasting proposals, reflecting broader ideological differences over fiscal policy and state priorities.
The current surplus represents a significant increase in Wisconsin's financial reserves. Since Governor Tony Evers took office, the rainy day fund has grown by $1.75 billion, providing the state with a substantial fiscal cushion. However, recent state budgets have been shaped by ongoing disagreements between Evers, a Democrat, and the Republican-controlled Legislature. Lawmakers have repeatedly reduced the governor's proposed spending levels, emphasizing fiscal restraint even as revenues have exceeded expectations.
Senate Rejects Surplus Bill
A key moment in the ongoing debate occurred when the Wisconsin Senate voted 18-15 against a $1.8 billion budget surplus bill. The bill had previously passed the Assembly by a 61-32 margin, illustrating the divide between the two chambers. The legislation was the result of negotiations between Governor Evers, Assembly Speaker Robin Vos, and Senate Majority Leader Devin LeMahieu. It included several major provisions: an income tax refund for residents, elimination of state income tax on overtime and tips, $300 million in special education funding, and $300 million in general school aid to replace property tax funding. Despite bipartisan negotiations, all Senate Democrats and three Senate Republicans opposed the measure, leading to its defeat.
The rejection of the bill has left the fate of the surplus undecided. Supporters of the measure argued it would provide immediate relief to taxpayers and schools, while opponents raised concerns about the long-term impact on state finances and the adequacy of funding for key programs.
Competing Proposals for Surplus Use
The debate over how to use the surplus has become a central issue in the state's political landscape, particularly as the gubernatorial race approaches. Republican candidate for governor Tom Tiffany has pledged to cut state income taxes by 10% for families earning less than $150,000, eliminate taxes on tips and overtime, and return surplus funds directly to voters. Tiffany and his supporters argue that tax relief is the best way to ensure the surplus benefits working families and stimulates economic growth.
In contrast, Democratic candidate David Crowley has focused on increasing state funding for schools. Crowley contends that boosting education spending could help reduce local property tax burdens for residents, while also investing in the state's future workforce. He and other Democrats argue that the surplus provides an opportunity to address longstanding needs in education and other public services.
Governor Evers has highlighted Wisconsin's strong fiscal position in public statements, crediting bipartisan efforts for achieving both tax cuts and investments in infrastructure, education, and healthcare, all while maintaining fiscal discipline. In a recent statement, Evers said:
"Weβve worked hard over the last eight years to cut taxes for working families and seniors, deliver historic investments in our kids and schools, expand high-speed internet, fix our roads and bridges, support veterans and farmers, and make child care and healthcare more affordableβand we did all of that while still saving taxpayer dollars where we could, paying down our stateβs debt, and staying well within our means."
β Tony Evers, Governor of Wisconsin
Tax Revenue and Budget Trends
The state's Annual Fiscal Report showed that Wisconsin collected 3.4% more in taxes during the last fiscal year, finishing 2% above revenue estimates. This increase in tax collections contributed to the larger-than-expected surplus. Despite the robust revenue growth, recent budgets have been smaller than those proposed by Governor Evers, reflecting the Legislature's ongoing emphasis on spending restraint and conservative fiscal management.
The debate over how to use the surplus is expected to remain a central issue in the upcoming gubernatorial race and in legislative discussions. Both parties are likely to continue using the state's fiscal health to advance their policy priorities, whether that means returning money to taxpayers, investing in education, or a combination of both. The outcome of these debates will shape Wisconsin's budget priorities and fiscal strategy for years to come.
