Every October, state government issues its Annual Fiscal Report (AFR) for the fiscal year ending the prior June 30. The latest AFR shows Wisconsin closed its books for the 2014-15 state fiscal year with a general fund surplus of $135.6 million. Compared to annual general fund spending of $15.5 billion, that surplus is a modest amount. However, notes the Wisconsin Taxpayers Alliance (WISTAX), compared to the $283.4 million deficit forecast last January, this is a noticeable improvement.
The state’s general fund comes largely from income and sales tax receipts. The AFR showed that the state’s 2014-15 general tax collections grew by $593.1 million (4.3 percent) over the previous year, which WISTAX notes is moderate in historic terms.
Spending from the state’s general fund, which is the funding source for state aid to public schools, increased by 5.6 percent in 2014-15 from $14.67 billion to $15.5 billion.
A large portion of the increase in General Fund spending was due to a jump in state aid to technical colleges—from $108.1 million to $511.1 million—as lawmakers “bought down” technical colleges levies. WISTAX notes that spending on technical colleges is now the state’s seventh largest general fund program and a new source of pressure on the state budget. This is because if lawmakers want to hold those levies at the new lower level they will have to repeat this investment in tech college aid each year going forward.
While K-12 school aids remained the largest general fund program, representing $5.34 billion (34.8 percent) of general fund spending during the 2014-15 fiscal year, growth in state spending on Medicaid puts it firmly in second place, representing $2.52 billion (16.4 percent) of general fund spending. Together, these two programs represented 51.2 percent of the General Fund budget.
For comparison purposes, in the last fiscal year prior to the recession (2007-08), state K-12 school aids also totaled $5.34 billion, which at that time represented 38.5 percent of general fund spending, while Medicaid spending in 2007-08 totaled $1.68 billion or 12.1 percent of general fund spending.