The Vast Gulf Between Evers, Legislators

Buried in last month’s Department of Administration (DOA) report on state agency budget requests for the next two years are three interesting numbers that total a stunning $803.2 million.

While news reports focused — correctly — on DOA’s estimate that state government will end the current budget with a record $6.5 billion surplus on June 30, the agency also reported what interest alone will be earned on that much cash on hand. Interest on that surplus cash will total $803.2 million over three years – $198.9 million in the year that ends on June 30; $327.4 million in the year that ends in mid-2024, and $276.9 million in the year ending in mid-2025, DOA estimated.

So, while Democratic Gov. Tony Evers and Republicans who control the Legislature feud between February and July over how much to spend in the next budget, state government will be collecting $16.5 million a month in interest.

The interest-earned bonanza is one more sign of the historical season state government begins in two weeks, when Evers is sworn in for a second term and dozens of new legislators join the Assembly and Senate. The 33-member Senate alone will welcome seven new members.

Financially, “the State of Wisconsin is in its strongest position in state history,” DOA Secretary Kathy Blumenfeld reported. And the separate Budget Stabilization Fund, or the “rainy day” account, will be $1.7 billion — also “the largest in state history.”.

The Nov. 8 election kept the Capitol’s shared power in place, with Evers in control of the executive and Republicans in control of the legislative branches of state government.

It also started pre-January public posturing on how that $6.5 billion surplus should be spent. That big a financial cushion has every special-interest group putting out their hands for some more cash.

The most experienced Republican leader, Assembly Speaker Robin Vos, upped the ante by saying he wants a tax cut bigger than the one – $3.4 billion – Republicans crafted, and Evers signed, in the current state budget.

Another $3.4-billion tax cut is the “”absolutely bare bones bottom” change he will accept, Vos told a wispolitics forum. “We think it could be significantly higher than that.”

Vos said all taxpayers would see some cuts. “They all deserve relief..It has to be all brackets.”

Republican Sen. Howard Marklein, co-chair of the Joint Finance Committee (JFC) that will build the Legislature’s budget, will again push for repeal of the personal property tax paid by businesses. And media reports noted that Senate Republicans are also researching a 3.5% “flat” income tax.

JFC tucked $203 million away to pay for repeal of the personal property tax, if Evers will accept that change.

For his part, Evers said the budget he will give the Legislature on Feb. 15 will include $2 billion more for public schools and $600 million for “tax relief.”

That exchange means Evers and Vos start the new year about $2.8 billion apart on the size of the next income tax cut.

Among the dozens of spending disagreements between Evers and Republican legislators, two stand out.

-A new “caregiver tax credit” for a family member caring for a loved one. Two years ago, Evers proposed $100 million to pay for this new credit, saying it would help about 250,000 Wisconsin residents. Although the request was ignored by Republican legislators, the record surplus makes a caregiving tax break more affordable.

-Criminal justice and prison reform, which Evers addressed in 2021 with this statement: “We’ve failed to adequately fund alternatives to incarceration, especially for folks who need mental health services or substance abuse treatment. Our prisons have been overcrowded, which costs more of your tax dollars. And we haven’t given folks enough resources or tools to be safe and successful when they re-enter our communities…

“Perhaps most importantly, we have yet to address the disproportionate impact the last more than two decades of laws have had on our communities of color.”

The criminal justice debate involves legalizing medical or recreational marijuana – two changes Evers asked for two years ago.

If he sensed new support among Republican legislators for legalizing medical marijuana, Evers could signal a compromise by asking for just that change. If he did, the seven new senators – five Republicans and two Democrats – could make it happen.

Steven Walters started covering the Capitol in 1988. Contact him at stevenscotwalters@gmail.com