Thanks to a robust economy, Wisconsin’s Legislative Fiscal Bureau has projected that Wisconsin will collect more taxes than the state budgeted by the end of the biennial budget next summer. The news prompted Gov. Tony Evers to call the Legislature into a special session to waste money we do not have on stuff we do not need.
The state passed the biennial budget last year that is in effect from July 1, 2019, to June 30, 2021. Those dates are important. The budget estimates tax collections based on the tax policies and sets sending based on the estimated taxes. Periodically, the state’s LFB will evaluate actual tax collections as compared to the budget estimates and forecast whether the state will collect more or less than the budget estimated.
Still awake? Hang in there. In January, the LFB estimated that the state will collect $620.2 million more in taxes than the budget estimated. If the LFB is right, that would mean that the state would generate a $620.2 million surplus at the end of the budget – in July of 2021. In other words, the state does not have $620.2 million in extra cash stashed in Governor Evers’ desk. The state might have $620.2 million in additional money sometime next summer – if the LFB’s forecast is correct.
The LFB does a really good job, but it is not a Delphic Oracle with divine sight. It makes estimates based on the economic data available. This changes, however, in unpredictable ways. For example, if the United States elects a communist to be president this year, it is likely that our economy will enter a deep recession, thus undermining tax collections in Wisconsin and any chance of a surplus.
From this basis, we must evaluate Governor Evers’ plan on both a financial and moral basis. Governor Evers wants the Legislature to pass bills to spend $250 million of the projected surplus on government schools. From a financial perspective, it is outright mismanagement to spend money that state government does not have. Evers wants to spend money based on a single financial projection made three weeks ago about where the state’s finances might end up in 17 months. What if the economy shifts and the surplus does not happen? What if the LFB just got it wrong? If the Legislature votes to spend the money and the surplus does not materialize, the money is still spent. They will have to find another way to pay for it.
On a moral basis, we already had a debate about the budget through our elected representatives. Out of that process came the spending and taxes that we, the people, collectively thought was necessary to fund state government. Evers already proposed that we spend more. The Legislature passed a budget and Evers signed it. If there is a surplus, there are only three things that should be done with it: pay down debt, save it in the rainy day fund, or return it to the people.
Paying down debt is never a bad thing, but if the state is just going to replace it with more debt and spending, then it is counterproductive. Thanks to years of good fiscal management when Republicans controlled all of state government, the state’s rainy day fund is already adequately funded. That leaves the last option: Give it back to the people. The state overcharged for its services and should give the people their change.
Finally, it is not just that Governor Evers wants to spend money we do not yet have. It is that he wants to pour it into the bottomless pit of government schools for no benefit. The governor lists 14 spending items directed at government schools from general state aid to grants. Nowhere does he even pretend that the additional spending will improve educational outcomes for the kids. Even Evers appears to know that more spending will not result in better education.
In fact, Wisconsin spends more on government education than at any time in its history, and yet, test scores and student performance continue their steady decline. It is a travesty that liberals like Governor Evers continue to spread the lie that more money leads to a better education because it distracts from advancing policies that will actually improve education for our children. Governor Evers’ spending plan is a boon for government workers, special interest groups, and school construction companies, but it once again leaves our kids behind.
The Legislature should ignore Evers’ folly and close the special session as soon as it opens. If the surplus does actually materialize as the LFB projects, then the Legislature should return it to the people.
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