The Joint Finance Committee (JFC) has a substantial agenda on Wednesday (Jan. 8) when it finally considers the budget items from the committee’s postponed Nov. 6th “section 13.10” meeting, as well as seven of the eight mental health bills that were referred to the committee in mid-November (which I’ll summarize in tomorrow’s WCCF blog post). The section 13.10 portion of the agenda contains seven items, including the following:
- A plan proposed by the Dept. of Children and Families (DCF) and Dept. of Health Services (DHS) in early October, which allocates “income augmentation” revenue – primarily using it to close a portion of the large hole in funding for the state’s welfare-to-work program, known as Wisconsin Works or W-2. (See the LFB analysis here.)
- A Dept. of Public Instruction request for the release of $7.1 million GPR in this biennium for a student information system. (Read more in this LFB paper.)
- A request by the Wisconsin Economic Development Corporation (WEDC) for the release of about $43.7 million from the JFC supplemental appropriations (about $24.4 million GPR and $19.3 million of SEG funds). You can read more in the LFB paper and in a good State Journal article by Matthew DeFour.
The plan for the income augmentation funds submitted by DCF and DHS seeks to use $9.6 million for W-2; $1.7 million for a new family therapy program called the SAFE Milwaukee Initiative, which targets high risk youth in Milwaukee; and $1.2 million as a lapse to the General Fund to meet the DCF lapse requirement.
As I explained several times over the course of 2013, the biennial budget bill cut the W-2 appropriation and siphoned off TANF block grant funding by using it to supplant state funds for the Earned Income Tax Credit. That maneuver built up the General Fund surplus and helped the state cut taxes, while underfunding W-2. The budget assumed that W-2 spending would decline by an average of 1% per month, starting in April, but instead it increased 10% from March through November.
According to the LFB paper about the pending DCF and DHS plan for the income augmentation funds, even if W-2 participation and spending decline by an average of 1% per month from December 2013 until the end of the 2013-15 biennium, the state faces a deficit for the Wisconsin Works program of about $28.5 million, which is three times the amount proposed in the income augmentation plan. (That plan is just for the current fiscal year.) If W-2 spending levels off and remains at the November amount for the rest of the biennium, the shortfall would be about $43 million (not counting the $9.6 million allocation in the DCF/DHS plan now before the committee).
Later this month the state will announce updated revenue estimates for the biennium. If those estimates are significantly higher than previously anticipated (as some people now expect), it would make sense to set aside a portion in reserve for W-2, in the event that there continues to be a large deficit in that program’s funding.
In tomorrow’s blog post, I’ll provide a brief summary of the mental health bills on the January 8th agenda.
Jon Peacock
