Eva Robelia, Communications Officer, 608-261-2271
MADISON-The Wisconsin economy continues to show signs of growth, according to the Department of Revenue’s latest Wisconsin Economic Outlook Report, available at www.dor.state.wi.us. Statewide, both employment and personal income are higher compared to last year and are expected to show comparable or higher growth in 2006. Another positive sign of a strengthening economy is a significant increase in individual and corporate income tax collections.
“Governor Doyle’s Grow Wisconsin Plan to make Wisconsin more attractive to businesses has led to more jobs and higher incomes,” said Revenue Secretary Michael L. Morgan. “It shows that the Governor’s strategy for growing the economy, encouraging investment, and not raising taxes is paying off for Wisconsin.”
The national economy has slowed earlier than previously anticipated under the weight of high oil prices. Prior to a series of weak reports in April, the economy was not expected to slow until the last half of 2005. While first quarter Gross Domestic Product (GDP) growth was expected to come in close to 4 percent, initial estimates suggest it was closer to 3.1 percent. Overall GDP growth of 3.4 percent is still expected in 2005, before slowing to 2.9 percent in 2006. The key reasons to anticipate weaker growth are an easing of spending growth by stretched consumers and a softer housing market.
But the forecast remains a positive one for the Wisconsin economy and the living standards of Wisconsin residents. Wisconsin employment is expected to continue to grow, with particularly strong growth in the service sector. Wisconsin personal income is expected to grow by 5.3% in the next two years.
In addition, state revenue collections show signs of a strengthening economy. State general purpose revenue (GPR) taxes collected by the Department of Revenue during the first ten months of fiscal year (FY) 2005 was 7.0 percent higher than the comparable period in FY 2004, increasing from $7.872 billion to $8.422 billion. Based on collections through April, it currently appears that FY2005 GPR tax collections will be reasonably close to the $11.449 billion estimated by the Legislative Fiscal Bureau in May 2005.
During the first ten months FY05, individual income tax collections increased 8.4 percent relative to the same period a year ago from $3.988 billion to $4.324 billion. The largest component of individual income tax collections is withholding from wages and salaries, which, through April, increased 4.7 percent from $4.008 billion to $4.196 billion. This reflects growth in wage and salary income which has accelerated this year as the Wisconsin employment situation has improved.
Through April, corporate collections increased 17.5 percent from $512.0 million a year ago to $601.4 million. This follows the large increase in corporate income tax collections experienced last year. The major source of corporate collections – estimated payments – increased 18.1 percent from $475.8 million to $562.1 million. This is a good indicator that the profitability of Wisconsin’s corporate sector is continuing to improve.