AB237: Bill Text

Analysis by the Legislative Reference Bureau

Under current law, there exists a budget stabilization fund that consists of certain moneys transferred from the general fund. Annually, the secretary of administration (secretary) must calculate the difference between the amount of tax revenues projected to be deposited in the general fund (projected tax receipts) and the amount of tax revenues actually deposited in the general fund during the preceding fiscal year (actual tax receipts). If the projected tax receipts are less than the actual tax receipts, the secretary must transfer from the general fund to the budget stabilization fund an amount equal to 50% of the difference between the projected tax receipts and the actual tax receipts. This annual calculation and transfer continues until the balance of the budget stabilization fund is 5% of the estimated expenditures from the general fund during the fiscal year, as projected in the biennial budget act or acts.

This bill requires that 100% of the difference between the projected tax receipts and the actual tax receipts be transferred to the budget stabilization and that the annual calculation and transfer continue until the balance of the budget stabilization fund is 11% of the estimated expenditures from the general fund during the fiscal year, as projected in the biennial budget act or acts.

In addition, the bill creates an individual income tax budget stabilization fund tax credit, which may be claimed by an individual taxpayer who is eligible for, and claims, the school property tax rent credit (SPTRC). The credit is nonrefundable, meaning that if the amount of the credit exceeds the taxpayer's tax liability no check is issued in the amount of the difference.

The credit is available only in taxable years in which the amount in the budget stabilization fund equals 8% of the estimated expenditures from the general fund during the fiscal year, as projected in the biennial budget act or acts, plus $100,000,000. If the secretary certifies that the amount in the fund is at least equal to that amount, the Department of Revenue determines the amount of the credit that may be claimed in that taxable year. The credit amount is determined by first calculating a percentage by dividing the amount certified by the sum of all projected claims under the SPTRC, and then by multiplying the claimant's claim under the SPTRC by the resulting percentage. The credit amount is then modified so that the amount in the fund greater than 8% of the estimated expenditures from the general fund during the fiscal year, as projected in the biennial budget act or acts, is expended as fully as possible and by rounding down the credit amount to the nearest whole number.

In addition, the bill specifies that moneys in the budget stabilization fund may be used only for the purpose of providing state revenue stability during periods of below-normal economic activity when actual tax receipts are lower than projected tax receipts, for the purpose of paying principal and interest on public debt, and for the purpose of the budget stabilization fund income tax credit.

Finally, the bill prohibits the legislature from passing any bill that would authorize the expenditure of moneys from the budget stabilization fund so as to reduce the balance of the budget stabilization fund below 3% of the estimated expenditures from the general fund during the fiscal year, as projected in the biennial budget act or acts, and requires that at least two-thirds of the members of each house of the legislature approve any other bill authorizing any expenditure of moneys from the budget stabilization fund.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB237, s. 1 Section 1. 13.39 of the statutes is created to read:

AB237,3,2 13.39 Expenditure of moneys from the budget stabilization fund. (1) Except as provided in sub. (2), at least two-thirds of the members of each house of the legislature must approve any bill authorizing the expenditure of moneys from the budget stabilization fund.

AB237,3,7 (2) The legislature may not approve any bill authorizing the expenditure of moneys from the budget stabilization fund if the expenditure of moneys would cause the balance of the budget stabilization fund to fall below 3% of the estimated expenditures from the general fund during the fiscal year, as reported in the summary, as defined in s. 16.518 (1).

AB237, s. 2 Section 2. 16.518 (title) of the statutes is amended to read:

AB237,3,10 16.518 (title) Transfers to the budget stabilization fund and the cash building projects fund.

AB237, s. 3 Section 3. 16.518 (3) (a) of the statutes is amended to read:

AB237,3,17 16.518 (3) (a) Subject to par. (b), if the amount of moneys projected to be deposited in the general fund during the fiscal year that are designated as "Taxes" in the summary is less than the amount of such moneys actually deposited in the general fund during the fiscal year, the secretary shall annually transfer from the general fund to the budget stabilization fund 50% 100% of the amount calculated under sub. (2).

AB237, s. 4 Section 4. 16.518 (3) (b) 1. of the statutes is amended to read:

AB237,3,22 16.518 (3) (b) 1. If the balance of the budget stabilization fund on June 30 of the fiscal year is at least equal to 5% 11% of the estimated expenditures from the general fund during the fiscal year, as reported in the summary, the secretary may not make the transfer under par. (a).

AB237, s. 5 Section 5. 20.875 (2) (r) of the statutes is created to read:

AB237,4,3 20.875 (2) (r) Budget stabilization fund transfer for tax relief. A sum sufficient equal to the amount certified to the secretary of administration under s. 71.07 (7m) (d), to fund the tax credit under s. 71.07 (7m).

AB237, s. 6 Section 6. 25.60 of the statutes is amended to read:

AB237,4,13 25.60 Budget stabilization fund. There is created a separate nonlapsible trust fund designated as the budget stabilization fund, consisting of moneys transferred to the fund from the general fund under s. 16.518 (3). Moneys in the budget stabilization fund may be used only for the purpose of providing state revenue stability during periods of below-normal economic activity when actual state revenues are lower than estimated revenues as provided in the summary, as defined in s. 16.518 (1), for the purpose of paying principal and interest on public debt contracted under subchs. I and IV of ch. 18, and for the purpose of the tax credit under s. 71.07 (7m).

AB237, s. 7 Section 7. 71.07 (7m) of the statutes is created to read:

AB237,4,16 71.07 (7m) Budget stabilization fund tax credit. (a) Definitions. In this subsection:

AB237,4,18 1. "Claimant" means an individual taxpayer who is eligible for, and claims, the credit under sub. (9).

AB237,4,21 2. "Credit percentage" means an amount calculated by the department by dividing the amount certified under par. (c) 1. by the sum of all projected claims under the credit under sub. (9) in the year to which the claim relates.

AB237,4,25 (b) Filing claims. Subject to the limitations and conditions provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount determined by the department under par. (c).

AB237,5,5 (c) Determination of credit amount. 1. Not later than September 1 each year, the secretary of administration shall certify to the secretary of revenue the amount that is in the budget stabilization fund under s. 25.60 that exceeds 8% of the estimated expenditures from the general fund during the fiscal year, as reported in the summary, as defined in s. 16.518 (1).

AB237,5,7 2. If the amount of the certification is $100,000,000 or less, the amount that may be claimed in that taxable year is zero.

AB237,5,15 3. If the amount of the certification exceeds $100,000,000, the department shall determine the credit percentage for that taxable year. The credit amount shall be determined by multiplying the amount that a claimant claimed under the credit under sub. (9) by the credit percentage, but shall be modified so that the certified amount in the budget stabilization fund greater than 8% of the estimated expenditures from the general fund during the fiscal year, as reported in the summary, as defined in s. 16.518 (1), is expended as fully as possible and that the credit amount for each claimant is rounded down to the nearest whole dollar amount.

AB237,5,20 (d) Certification of amounts claimed. No later than August 15 of the year following the year in which the department determines a credit amount under par. (c) 3., the department shall determine the amount of revenue lost because of credits claimed in the taxable year to which that credit amount relates. The amount of revenue lost shall be certified to the secretary of administration.

AB237,5,22 (e) Limitations and conditions. 1. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB237,5,24 2. Part-year residents and nonresidents of this state are not eligible for the credit under this subsection.

AB237,6,2 (f) Administration. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB237, s. 8 Section 8. 71.10 (4) (dt) of the statutes is created to read:

AB237,6,4 71.10 (4) (dt) Budget stabilization fund tax credit under s. 71.07 (7m).

AB237, s. 9 Section 9. Initial applicability.

AB237,6,11 (1) Budget stabilization fund tax credit. The treatment of sections 71.07 (7m) and 71.10 (4) (dt) of the statutes first applies to taxable years beginning on January 1 of the year in which this subsection takes effect, except that if this subsection takes effect after July 31 the treatment of sections 71.07 (7m) and 71.10 (4) (dt) of the statutes first applies to taxable years beginning on January 1 of the year following the year in which this subsection takes effect.

AB237,6,12 (End)