Fiscal Cliff Deal Leads To Revenue Loss For State

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One side effect of the deal that averted a so-called fiscal cliff in Washington is a loss of more than $200 million in tax revenue for the state of Wisconsin.Whether anyone expected to get it or not, on paper, the Walker administration was planning on $219 million in new revenue from a revival of the estate tax. It’s part of the reason the administration was able to project $1.5 billion in revenue growth over the next two years.

But when Congress prevented the state estate tax from going back into effect, it meant Wisconsin would go without that money. Jon Peacock is a budget analyst with the Wisconsin Council on Children and Families, “So it means a much more challenging time for the legislature for balancing the budget, and it’s going to make it harder to do an income tax cut, which the governor had been talking about.”

Already, new revenue growth was not projected to cover all the spending requests by state agencies. This means that gap would grow.

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Todd Berry with the Wisconsin Taxpayer’s Alliance says it’s something lawmakers and the Governor will have to deal with.But Berry says it’s a relatively small number, “A couple hundred million dollars in revenue one way or another–although it causes the legislature and media to focus–in the scheme of an overall two-year budget is almost rounding error or estimating error. So in that sense it’s not huge.”

The decision by Congress does not affect the current state budget, which is still projected to end with $467 million in the bank between the state’s general fund and a rainy day fund.