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Save it For a Rainy Day

The Wisconsin Budget Project suggests it's time to start putting more money in the state's budget cushion.
The Wisconsin Budget Project suggests it's time to start putting more money in the state's budget cushion.
May 15, 2013

MADISON, Wis. - About a decade ago, Wisconsin lawmakers passed legislation to raise the required minimum balance in the state's general fund, but lawmakers have postponed implementing it four times.

Other states do much better in saving for a rainy day, said Jon Peacock, director of the nonpartisan Wisconsin Budget Project. Wisconsin's reserve requirement now amounts to less than one-half of 1 percent of the annual state budget, he said.

"The recommended level is at least 5 percent," he said, "and in fact 26 of the 50 states have at least a 5 percent reserve, so we trail well behind."

Prompted by the recent publicity surrounding the University of Wisconsin System's reserve fund, Peacock said how much reserve money is necessary can be argued but all can agree that having a budget reserve is a good idea.

"And yet state policymakers, for their budget as a whole, are not doing that," he said. "If we can do something positive out of the university controversy, it's to take a much closer look at the state's reserve, and to finally acknowledge that they're way short of what they ought to be."

Last week's announcement that the state's revenues will be $575 million more than anticipated over the next two years should be an incentive to put some of it away in the budget reserve, Peacock said, adding that having higher-than-anticipated revenue poses a risk.

"If legislators decide to spend every cent of that, it's going to actually increase the structural deficit - the hole in future budgets," he said. "To avoid doing that, we need to set aside a portion of this money and increase the state's reserve."

It made sense to put off building up reserves when the state had a huge budget imbalance, Peacock said, but now that the imbalance has been erased, there's no reason not to move forward on implementing a law passed a decade ago.

Peacock said there's no longer a reason to keep stalling.

More information is online at

Tim Morrissey, Public News Service - WI