Wisconsin’s budget basics

According to the National Association of State Budget Officers (NASBO), Wisconsin’s total expenditures in fiscal year (FY) 2020 were $51.8 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2020 were $2.3 trillion, ranging from $4.7 billion in Wyoming to $337.7 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Wisconsin’s combined state and local direct general expenditures were $54.8 billion in FY 2018 (the most recent year census data were available), or $9,434 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,801.

Wisconsin’s largest spending areas per capita were public welfare ($2,257) and elementary and secondary education ($2,099). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Wisconsin’s combined state and local general revenues were $51.9 billion in FY 2018, or $8,938 per capita. National per capita general revenues were $10,071. Wisconsin uses all major state and local taxes. After federal transfers, Wisconsin’s largest sources of per capita revenue were property taxes ($1,680) and charges ($1,482), such as state university tuition and highway tolls.

Wisconsin’s politics

Governor Tony Evers, a Democrat, was elected in 2018 with 50 percent of the vote. The next gubernatorial election is in 2022.

Wisconsin has a divided government. Republicans control both the Assembly (61 Republicans to 38 Democrats) and Senate (21 Republicans to 12 Democrats). All Wisconsin Assembly seats are on the ballot in 2022 because members serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2022, and the other half will be up for election in 2024.

Wisconsin’s budget institutions, rules, and constraints

Wisconsin uses a biennial budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Wisconsin further limits both spending and revenue growth. These are binding rules and require a legislative supermajority or vote of the people to override them. Wisconsin also requires a supermajority vote for any legislation that increases the state’s general sales, individual income, or corporate income tax. Wisconsin limits both total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Wisconsin’s recent fiscal debates

• Wisconsin is one 14 states that have not accepted funds for expanding Medicaid eligibility created by the Affordable Care Act. The Urban Institute estimates that if Wisconsin had accepted Medicaid expansion, it would have received 13.9 percent more federal Medicaid funds ($744 million), and its state spending on Medicaid would decline 4 percent, saving the state $100 million. The state would spend less on Medicaid after accepting expansion because the federal government would pay a higher share of the costs for some existing Medicaid enrollees in Wisconsin. (In all other nonexpansion states, accepting Medicaid expansion would increase state spending on Medicaid, but savings, such as from lower spending on uncompensated care, would fully or largely offset the costs.) Expanding Medicaid was Governor Evers’s top priority in 2019, but Republican legislators remain adamantly opposed, saying they’re against “expanding welfare.” Governor Evers plans to push for Medicaid expansion again in the 2020 legislative session.
  
• In 2017, then-governor Scott Walker, a Republican, announced that Taiwanese manufacturer Foxconn would receive $3 billion in state tax subsidies and $1 billion in local tax incentives to locate its new manufacturing facility in Wisconsin. The governor and company said the megadeal would purportedly bring 13,000 jobs and $10 billion in capital investment to the state. However, Foxconn has fallen well short of its promised investments and hiring. Governor Evers’s administration began trying to renegotiate the deal in 2019, but it’s not clear that safeguards were put in place to protect Wisconsin were the company to not deliver on its promises. The deal has emerged as a cautionary lesson for state economic development strategies.

Wisconsin’s current budget

Wisconsin enacted its FY 2020–2021 biennial budget in July 2019. Over the two-year period, the budget approved $37.6 billion in general-fund spending and $81.5 billion in total spending.

Governor Evers did not release a budget adjustment proposal in calendar year 2020, but he cut state spending (for the current fiscal year) by $70 million in April and another $250 million in June. Governor Evers also put out a budget message in June asking state agencies not to request higher spending (from the general fund) in the upcoming biennium.

Governor Evers released his FY 2022 budget proposal in February 2021 and gave his State of the State address in January. Over the two-year period, the governor proposes $41.8 billion in general-fund spending and $91.0 billion in total spending. Overall, the governor’s proposal would increase spending about 10 percent over the current fiscal year. However, some of the governor’s proposals, such as significantly increasing K–12 education funding and expanding Medicaid, were in his previous budget proposal and were rejected by the Republican-controlled legislature. Governor Evers proposes paying for his spending increases in part by limiting some business tax credits, increasing capital gains taxes on high earners, and legalizing and taxing marijuana sales.

For more on Wisconsin’s budget, see

• the Wisconsin Department of Administration,
  
• Open Book Wisconsin,
  
• the Wisconsin Legislative Council, and
  
• the Wisconsin Legislative Reference Bureau.

Wisconsin’s economic trends

Wisconsin’s per capita income (per the Bureau of Economic Analysis) was $55,487 in 2020, ranking 25th among the states. It was below both the national average of $59,729 and the Great Lakes regional average of $55,823. The state’s median household income (five-year estimate) was $61,747 in 2019, ranking 23rd among the states and below the national average of $62,843. Wisconsin’s poverty rate was 11.3 percent in 2019 (five-year estimate), below the national rate of 13.4 percent.

Although Wisconsin’s averages tell a story about the entire state, Wisconsin is composed of diverse localities. For example, the city of Milwaukee’s median household income was $41,838, and its poverty rate was 25.4 percent; the city of Mequon’s median household income was $116,486, and its poverty rate was 5.2 percent.

Wisconsin’s unemployment rate has historically been below the national average, and in recent years it has been among the lowest in the country. (See how COVID-19 is affecting state employment and earnings data.)

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Wisconsin, the average unemployment rate in 2020 was 5.7 percent for white residents, 16.2 percent for Black residents, and 11.7 percent for Latino residents.