Frederica Freyberg:

The ace of state budget number crunching who’s seen his share of capitol turmoil is Bob Lang. He’s the director of the Legislative Fiscal Bureau and has been for more than 40 years. He guides budget writers through their numbers and attaches fiscal notes to legislative bills which undersells, by a lot, his role. It’s a non-partisan position in a very partisan world, but it also takes extreme financial savvy and expertise. We turn to Bob Lang for that now. Thanks for being here.

Bob Lang:

Thank you.

Frederica Freyberg:

So we were just off reporting about this deal hatched for the shared revenue package. Why would budget negotiations have had to wait for that bill to be hashed before proceeding?

Bob Lang:

We sort of have two tracks going on. The shared revenue is really track one. It started prior to the budget even being introduced. There’s an interest on the part of the governor and an interest on the part of the legislators to dedicate a portion of the state sales tax to local governments in this program we call shared revenue. In a very brief background, the state enacted the first income tax in the country in 1911. At that time, the state prohibited local governments from having a local income tax but pledged in 1911 that the state would share its revenues with local governments. Hence, the shared revenue program that has been there forever. And much of the time it was there, it actually was taking portions of sales taxes and other taxes and dedicating them to local aid to local governments: towns, villages, cities, counties. So for the last 20 years or so, there’s really been no increase in shared revenue payments to local governments. We’ve gotten off the formulas that were there and they’ve been basically quite flat. And so the governor and the legislature both felt we should dedicate a portion of sales taxes. One cent of the five cents. It’s about a $1,500,000,000 a year. We would dedicate to local governments for a number of local government programs. One of them being the shared revenue formula. And so that bill had another major component and that was to attempt to assist the city and the county of Milwaukee, because they’re dealing with some serious fiscal issues there. So the two main elements were the amount of money given back to local governments and ways to address Milwaukee’s situation, both in the county and in the city. And it was a separate track. Now the budget began, budget came in February 15th. Joint Committee on Finance has been working on it really since then. We’re very seriously working on it now. Hope to finish by July 1. But it was sort of a 2-track process and they became sort of intertwined a day or two ago.

Frederica Freyberg:

That’s right, intertwined because they also announced the K-12 funding package kind of at the same time.

Bob Lang:

Right.

Frederica Freyberg:

How complicated are fitting all these pieces together in a spending bill this big with so many moving parts?

Bob Lang:

Well, it’s not a simple task clearly. So when we have two bills, the money will be one bill. Another bill will be aspects that will require money in the second bill, and so we’re sort of navigating ourselves through this sort of 2-step process.

Frederica Freyberg:

You just said that because things are now kind of moving, unclogged, they’re moving along quickly, you think that the work will be completed by July 1, which of course is the start of the new fiscal.

Bob Lang:

I think the legislature is very set on passing the bill through the Finance Committee and both Houses of the Legislature by July 1, and they’re on target to do so.

Frederica Freyberg:

So as to this biennial budget, by any measure, it could be regarded as budget writers working with a massive surplus, this $7 billion surplus. Where did that come from?

Bob Lang:

It’s really interesting. It really came about through the pandemic, and I think in March or so of 2020 when everybody thought everything was going to collapse, the federal government came in with numerous bills that really helped not only governments but individuals and businesses. And the state of Wisconsin in total, we probably got about $58 billion. Some of it went to individuals, checks. Some of it went on unemployment insurance, checks that were increased. Some of it went to help businesses, some of it went to help governments. And during that time, we had inflation starting to creep up and basically our sales tax collections were looking strong, and then because of the help that the federal government gave to businesses and others so they wouldn’t really go under and we’d keep payrolls there, income taxes and corporate taxes were really strong. So we actually ended the 2021 fiscal year with about $2.6 billion, which was a large number for us in terms of a balance. The end of 2021/’22, it went to $4.3 billion and now it’s about $7 billion that we expect within about two and a half weeks on June 30th of this year. So it’s really accumulated over that period of time. But as you indicated, it is the largest amount of surplus money that the state has ever had going into a budget period.

Frederica Freyberg:

I wish we could talk more about that but our time is up. Good luck to you and the budget writers in the final throes of this biennial process.

Bob Lang:

Thank you. I enjoyed being here. Thank you very much.