Wisconsin budget: Projection shows $138 million improvement, giving needed boost for GOP

MADISON - Giving a much-needed shot of good news for Wisconsin Gov. Scott Walker, a new report projected the state budget will come in $138 million better than previous predictions.

The Legislature's nonpartisan budget office estimated that Wisconsin would reach June 2019 with $385 million in its main account, better than the $248 million that had been previously expected.

The improvement amounts to just under 1% of the state's annual spending, or about enough money to run the state's operations for three days.

"Our economy is strong, consumers are confident and revenues are up $137.5 million," said Sen. Alberta Darling (R-River Hills), co-chairwoman of the Legislature's budget committee. "It's clear that our reforms and careful budgeting are working."

The money hasn't come in yet, so the budget balance could still change over the next year and a half. But the improved projection provides a positive talking point for Walker and GOP lawmakers as they grapple with their party's stunning defeat in a special election Tuesday in northwestern Wisconsin.

The Legislative Fiscal Bureau said that the improved projection was a result of tax collections coming in $76 million higher than expected and the state spending $98 million less than expected because of favorable debt refinancing.

Assembly Minority Leader Gordon Hintz (D-Oshkosh) said the state still faces a substantial projected shortfall in the next state budget even if the economy doesn't suddenly slide into recession.

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"We're in the second longest period of economic expansion in U.S. history," he said.

State tax revenue is doing well enough on other fronts to make up for a $49 million the Walker administration predicts will be lost as a result of the federal tax cuts signed last month by President Donald Trump. The decrease largely results from allowing businesses to immediately deduct some purchases of equipment and other goods.

If these numbers hold, the state will use part of that improvement in the budget to make an estimated $38 million deposit into the state's rainy day fund. That would bring the total in that fund to $322 million.

These numbers could help encourage lawmakers and Walker to proceed with proposals already before them.

That includes an $80 million plan by the governor to replace the state's troubled youth prison, Lincoln Hills School for Boys, with a series of smaller institutions around Wisconsin. Rep. Evan Goyke (D-Milwaukee) first proposed the idea.

Walker and Assembly GOP lawmakers have also put forward a multimillion-dollar plan to help schools in rural areas and districts with smaller budgets.

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That bill has so far not gotten traction with Senate Republicans. The proposal could get a boost from the extra budget revenue — and the poor showing by the GOP in Tuesday's special election.