On Aug. 31, Wisconsin’s Legislative Fiscal Bureau (LFB) published a report with the state’s preliminary tax collections for 2019-2020, and the news was surprisingly good. 

Despite the havoc COVID-19 wreaked on the economy, state tax collections totaled more than $17.5 billion, up 1.1% from the prior year and only 0.6% less than projected in January, according to figures from the state Department of Revenue. 

The state shifted the filing dates for individual and corporate taxes from April to July (aligning with federal changes) and LFB Director Bob Lang told the Wisconsin State Journal tax collections “got a little stronger and stronger each month.” Lang expects the LFB’s final report, scheduled to be released in October, will closely align with the current version and the state will likely end the fiscal year with a “relatively large” balance. 

How is that possible? 

Wisconsin, due to prudent fiscal policy enacted in 2001 by Republican Gov. Scott McCallum and adhered to by every governor since, has amassed a significant balance in its rainy day fund. The 2001 law requires the state to deposit at least half of any unexpected tax revenue into the fund as a safeguard, and the fund has grown substantially over the past decade of economic growth. 

Another reason, according to reporting by the Chippewa Herald, is the state’s split government. Over the past 20-some months of governing, Democratic Gov. Tony Evers and the Republican-controlled Legislature have managed to pass a grand total of 69 laws. During the 2017-2018 legislative session, Republican Gov. Scott Walker and the Republican-controlled Legislature passed 370 bills into law. The relative stalemate caused by split government meant that back in early spring—before the coronavirus pandemic hit the state—the two sides couldn’t agree on how to spend a $400 million projected surplus... so that money went into the rainy day fund. 

So, while Wisconsin will still face difficult financial decisions in the months and years ahead as the state, nation, and globe climb out of a COVID-shaped fiscal hole, the Dairy State is well-positioned to begin a recovery. 

Read the LFB’s full report here.