The Wisconsin Rainy Day fund will receive a $50 million transfer — the largest deposit in the fund's history since its inception over 25 years ago.
Gov. Jim Doyle announced the large transfer into the fund Tuesday after a thorough documenting of state income from taxes and expenditures.
The rainy day fund was created in the midst of an economic slump to stabilize the state budget. The Legislature’s approval is required in order to spend any money in the fund.
According to a release from Doyle's office, the fund currently houses $780,000. Of those funds, Doyle deposited $472,000 in the 2004-05 fiscal year.
"The largest deposit to the fund to date [occurred] as a result of efforts by the governor to sell state property, including aircraft and fleet vehicles," Carla Vigue, aspokesperson for Doyle said in a release.
Michael Morgan, secretary for the Wisconsin Department of Administration, said in a letter to the governor Monday that Doyle has worked hard to increase the size of the rainy day fund.
"When you became governor … the balance in the state's rainy day fund was slightly more than $1,000, or less than one-one hundred thousandth percent of the general fund," Morgan wrote in the letter.
Though a law passed in 2001 mandated the large deposit, this is the first year the state had a large surplus to add to the fund. Bob Lang, director of the Legislative Fiscal Bureau, said in a letter to members of the Joint Finance Committee that the state's surplus from taxes was more than anticipated.
"Actual collections were $22.1 million higher than the current estimate," Lang said in his letter.
But even with the $50 million deposit, the rainy day fund does not have the $65 million mandated by the Wisconsin state legislature. Linda Barth, spokesperson for the Department of Administration said beginning in 2001, law mandated all excess funds be added to the account.
"Statutes require if you meet your ending balance and still have money left over, you need to put half of that into the rainy day fund," Barth said.
The addition to the reserve fund, Barth added, may help the state's bond ratings.
"When the state goes and borrows money, it has bond ratings, and it helps our bond ratings if we have a little money set aside," Barth said. "The transfer could have a favorable impact on the state's bond ratings."
Morgan added in his letter that Doyle's budget plan–which has yet to be passed by the legislature–has provisions that will help the state's poor bond ratings.
"The key financial responsibility elements of your initial budget proposal…combined with this first ever transfer to the state's rainy day fund will possibly put Wisconsin in excellent position for an upgrade in the state's bond rating," Morgan said in his letter.
The deposit is a sign of economic stability and growth in the state and shows the Wisconsin government is capable of spending only within their means, Barth said.
"This is a real milestone for Wisconsin and a testament to Governor Doyle," Barth said. "It really shows we are on the right financial path and we have shown a lot of financial responsibility."
