Wisconsin’s rainy day fund is so small that our state government could operate for little more than a week with what it has socked away for hard times.
Only six other states — including the basket case of Illinois, which couldn’t operate for even a day — had smaller financial cushions last year, according to the National Association of State Budget Officers.
So it was reassuring to hear state Rep. John Nygren, R-Marinette, a leader of the Legislature’s budget committee, call for more responsible budgeting in the wake of an unexpected windfall of state revenue.
State government expects to collect $753 million more in tax dollars than previously estimated, according to the nonpartisan Legislative Fiscal Bureau. And under a smart state law signed by former Republican Gov. Scott McCallum in 2001, at least half of unanticipated tax collections must be transferred to the state’s rainy day fund. For the state’s fiscal year ending on June 30, that would mean $291 million must be deposited into the current emergency fund, which now holds $325.4 million.
That might sound like a lot of money. But the current cushion contains less than 2 percent of what the state will spend this fiscal year in general tax dollars.
Nygren last week said he’d like to put all of the unexpected money into the state’s rainy day fund to hedge against a future economic recession.
“It’s not fun, but it’s the reasonable and responsible thing to do,” Nygren said.
Unfortunately, some of his Republican colleagues who control the Legislature would rather go on a spending spree. Senate Majority Leader Scott Fitzgerald, R-Juneau, suggested the money be spent on tax cuts and infrastructure. Fitzgerald also has suggested he’s willing to undermine McCallum’s law, which serves as a strong incentive for fiscal responsibility.
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Cutting off the relatively meager amount of money going into the state’s backup account would be a mistake. If not for McCallum’s rainy day fund, the state’s savings account would be virtually empty. And the next time state leaders ran into a recession or emergency, they would have little to fall back on, prompting steep cuts in vital public services and higher taxation.
Democratic Gov. Tony Evers has proposed paying off $53 million in state debt, spending $33 million more on worker training and technical colleges, and transferring the rest of the windfall to the rainy day fund. That’s more fiscally responsible than Fitzgerald’s grab-and-spend approach.
Yet Nygren’s suggestion is best — especially when you consider the influx of money isn’t anticipated to continue. State officials say the surge in revenue is largely due to businesses shifting their income across fiscal years in response to federal tax law changes. So the extra dollars are a one-time addition of cash.
State leaders should listen to Nygren, sock the money away and adopt a state budget with a bigger rainy day fund to fall back on.