Wisconsin closed out the last fiscal year with a record $1.18 billion positive balance based on accounting measurements that had long showed the state in the red.
The state in fiscal 2020 recorded its first positive balance using generally accepted accounting principles since it began publishing an
That modest $6.7 million balance is dwarfed by the fiscal 2021 balance.
The fiscal 2020 positive balance marked a reversal of fortunes as the state had long recorded deficits that weighed on the state’s ratings along with a lean rainy day fund and general fund balance, both of which also showed robust growth in fiscal 2021.
“This report shows just how far we've come since the state reported a GAAP deficit of $1.25 billion in 2017-18 — the last full fiscal year before I became governor,” Gov. Tony Evers said in a statement.
Republicans who hold the legislative majorities have countered that the state’s improving fiscal picture is due to their efforts to hold the Democratic governor’s spending proposals in check and bolster the economy. The two sides have butted heads over Evers’ budgets, spending plans, and COVID-19 public health mandates including stay at home orders early in the pandemic.
Headed into the New Year, the capital finance office has one deal already in the works. The state plans a $25 million master certificates of participation transaction that would sell the second week of January, said capital finance director David Erdman.
PNC Capital Markets is lead manager with AmeriVet Securities and Ramirez & Co. as co-managers. Baker Tilley Municipal Advisors is the municipal advisor and Foley & Larder is bond counsel with Ice Miller serving as underwriters’ counsel.
The state also “continues to monitor refunding opportunities through either taxable advance refunding or tax-exempt forward delivery options,” Erdman said.
An improved balance sheet fueled by rising tax collections led to a more than $2 billion budget surplus for fiscal 2021 which closed June 30.
That drove a record level deposit of $967 million into the state’s rainy day fund, formally known as the budget stabilization fund, pushing it up to a
Collections came in $319 million above revised estimates and $1.9 billion over the adopted budget.
“Looking ahead, Wisconsin's recovery is expected to continue along with the overall national economy,” Department of Administration Secretary Joel Brennan and State Controller Carol Herwig wrote in the introductory letter to lawmakers and Evers.
Unemployment hit peak levels early in the COVID-19 pandemic during the spring of 2020 but was down to 3.9% in September, a figure below the national average of 4.8%. Revenues grew across tax categories in fiscal 2021 increasing by 11.6% over fiscal 2020 with individual income tax collections rising 6.2%, sales taxes by 9.2% and corporate income taxes surged by 59%, according to the annual financial statements.
The letter noted the summer upgrades from Kroll Bond Rating Agency, which raised the state’s general obligation rating to AAA from AA-plus, and S&P Global Ratings which raised it to AA-plus from AA. The state’s credit profile also benefits from a fully funded pension system.
The state is operating on a two-year $87 billion budget.
Kroll said its upgrade reflected “the state’s substantial liquidity, evidenced by a near tripling of budget reserves over the past three years; continuing healthy revenue growth, despite substantial tax cuts; and an ongoing post-COVID-19 recovery, fueled by a mature and expanding economy and favorable business climate.”
The state's GOs are also rated Aa1 with a stable outlook by Moody's Investors Service and AA-plus with a stable outlook by Fitch Ratings. All four ratings carry a stable outlook.
