Wisconsin faces $370 million budget shortfall, report says
MILWAUKEE (CBS 58) -- The non-partisan Wisconsin Policy Forum released a report Monday that states Wisconsin is projected to lose at least $370 million during the next two year budget, and could lose nearly $2 billion.
The projection would be the largest budget gap since 2011. The group said part of that shortfall can be attributed to COVID-19.
“Because we have had the pandemic hit, and been thrown into a recession, tax revenues are not growing as quickly, and are not projected to grow as quickly,” WPF researcher Jason Stein said.
State Sen Chris Kapenga, R-Delafield, said the state has been saving money for the last 10 years for a situation like this, and those savings should be able to bridge the gap.
“We’re at $760 million in the rainy day fund specifically for this type of situation should we need to use it to bridge a gap," Kapenga said. "So we’re very thankful we took some precautions.”
But a rainy day fund can only be used once, and a state COVID-19 relief package would cut into it.
The Wisconsin Policy Forum said there might be a need for the state to increase taxes or cut services, which could trickle down locally.
“There could be a decision of either reducing services at the local level, or finding efficiencies at the local level, or increasing property taxes,” Stein said.
State Sen Chris Larson, D-Milwaukee said he agrees the rainy day fund should be used, but it might not be enough, and he’s hoping the Biden administration will pass a relief package at the federal level.
“Hopefully that does include state and local governments," Larson said. "More importantly, if there’s going to be some direct assistance that meets the need of some people who are suffering right now.”
The last few times the state had a budget shortfall this large, it was run by either all Democrats or all Republicans. The current divided government could prove a tougher political challenge to make significant budget changes.