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For first time in decades, Wisconsin ends fiscal year with positive GAAP fund balance

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Wisconsin ended the most recent fiscal year with a positive balance in the general fund — using a more standard method of accounting — for the first time in at least three decades, Gov. Tony Evers announced Tuesday.

Evers also said Tuesday the state deposited $105.8 million into the state’s rainy day fund, which is to be tapped in times of recession or fiscal emergency, bringing the total to $761.8 million — the fund’s largest balance in state history.

“Our diligence of investing in the issues Wisconsinites care about without running up the state’s credit card has paid off and helps us ensure Wisconsin’s future economic stability, which is as important as ever,” Evers said in a statement. “This is great news for our state and will put us in a stronger position to move our state forward and focus on the priorities of the people.”

According to Wisconsin’s Comprehensive Annual Financial Report, which has been published annually since 1990, the state’s general fund balance reached $1.5 million as of June 30 under what are known as generally accepted accounting principles, or GAAP accounting.

That’s an increase from a roughly $763 million deficit the previous year, and the first time Wisconsin has ended a fiscal year with a positive GAAP fund balance since the state began issuing a comprehensive annual financial report, Evers said.

In 2010, at the height of the Great Recession, the GAAP deficit had grown to nearly $3 billion, according to the Wisconsin Policy Forum, but has declined since largely due to austerity measures in 2011 that increased public employee contributions to pension and health insurance premiums.

Wisconsin’s budget must be balanced by law, but state bean counters have been using a different method to keep track of funds, known as cash modified accrual accounting, for state budgeting purposes each fiscal year.

The method tracks revenues and expenditures over a 12-month period, but leaves out money the state owes in the next period for current expenditures — the equivalent of a household buying something with a credit card in one month, but not having the cash to cover it until next month.

Governors in past decades have used various budget gimmicks, such as pushing state aid payments to municipalities and school districts for the current year into the next year of a budget cycle. That practice allowed governors to say the state budget was “balanced” under cash accounting, but it exacerbated the GAAP deficit.

About 30 years ago, the state started also using the GAAP system, which takes into account those future obligations. Using GAAP, spending is counted in the year in which the commitment is made.

Despite the positive balance, the nonpartisan Wisconsin Policy Forum reported earlier this month that the state could face the most challenging budget session in a decade next year as spending is projected to exceed revenues by about $373.1 million — without taking into account Medicaid costs and new spending requests from state agencies.

To make up the $373.1 million difference, which amounts to about 1% of spending over the next two-year budget, Wisconsin may be forced to spend down reserves, adopt spending cuts or tax increases, delay payments or draw on federal funding.

The Forum’s report does not include the projected $1.1 billion cost of maintaining Medicaid services, additional spending on COVID-19 measures or increased state aid to K-12 schools, the University of Wisconsin System, local governments or prisons.

Fave 5: State government reporter Mitchell Schmidt shares his top stories of 2020

Choosing my five favorite stories of 2020 seems almost paradoxical.

This year has felt like one exhausting slog of pandemic stories, state Legislature updates and, oh yeah, a presidential election thrown in for good measure. Thanks to a split government, there's been no shortage of politically-charged stories here in Wisconsin and the partisan divide has, maybe unsurprisingly, felt as wide as ever throughout the COVID-19 pandemic.

I don't know if "favorite" is the best way to describe them, but here are a few stories from 2020 that stood out to me:

Back in March, Gov. Tony Evers issued the state's first public health emergency in response to the then-emerging pandemic. At the time, Wisconsin had reported eight total cases of COVID-19.

As the pandemic progressed, positive cases and deaths climbed and state lawmakers battled over the appropriate response. In May, the Wisconsin Supreme Court struck down Evers' stay-at-home order, a decision that still resonates today with the state's coronavirus-related measures.

One story I was particularly excited about before I officially started working for the State Journal was the 2020 Democratic National Convention in Milwaukee. However, like most things this year, the pandemic drastically altered that plan.

In non-pandemic news, the state in October formally denied billions of dollars in state tax credits to Foxconn Technology Group — a story we managed to get before any other outlet in the state through records requests and sourcing.

Lastly, in November I worked on a story about how GOP-drawn legislative maps once again disproportionately benefited Republicans in state elections. Wisconsin is headed toward another legal battle next year when the next batch of 10-year maps are drawn.

Feel free to read my top stories below, or check out my other state government articles from this year, (by my count, there have been more than 300 so far).

Also, thanks to all the subscribers out there. This year has been challenging on so many people, so your support is so much appreciated.


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