Evers, Republicans Close on Budget’s Tax Cut Plan

Gov. Tony Evers. File photo by Jeramey Jannene.

It’s how the Capitol works: A proposed deal by Democratic Gov. Tony Evers to support a middle class income tax cut in return for Republican legislators support for his proposal to spend $4.6 billion more on three state programs went nowhere. This set the stage for some kind of plan with less spending but still some tax cut.

On June 4, Evers and Republicans who control the Legislature broke off talks to negotiate a 2025-2027 state budget that the governor wouldn’t rewrite with vetoes.

On June 12, Republicans tried to meet Evers’ demands for a middle-class income tax cut, but gave the governor little of what he wanted on additional aid to K-12 schools.

Those two changes were made by Republicans on the budget-writing Joint Finance Committee, clearing the way for the next set of tough decisions – on health-care spending, the Universities of Wisconsin budget, prison funding and child care assistance – needed to get a budget drafted by the July 1 deadline.

That eight-day Capitol dance was interesting.

Last week, Assembly Speaker Robin Vos said Republicans were willing to boost spending by mid-2027 for those three programs, but not by the $4.6 billion the governor wants.

“That’s the difference,” Vos said on WISN-TV’s UpFront show. “We were not at zero [increase] on any of those topics. We’re willing to do it, just not as much as he wanted.”

Legislative Fiscal Bureau reports identify the three specific requests by Evers that Vos and Republicans saw as deal breakers:

-Evers proposed $3.4 billion more in general tax dollars by mid-2027 for the State Department of Public instruction, most of which would go boost aid for K-12 schools. It would pay for 60% of special education costs. Evers wanted DPI to get $18.1 billion in general-fund cash over the next two years.

-Evers asked for $697.4 million more in state tax dollars over the next two years for the Universities of Wisconsin, which would bring their state aid total over that period to $3.3 billion.

-Evers asked for $601 million more in state tax funds by mid-2027 for the State Department of Children and Families, most of which would go to child-care centers to help working parents. Evers, who has repeatedly warned of a looming child-care crisis as federal funds end, wants that agency to get $1.53 billion in state funds by mid-2027.

To pay for those spending increases, Evers asked for $2.5 billion in tax and fee increases and drawing down the expected $4.3 billion surplus. But Republicans have promised to cut – and not raise – taxes.

Vos explained Republicans’ problems with Evers’ spending increases.

“We tried to find a way to invest in childcare that actually went to the parents, and to make sure that we weren’t just having to go to a business,” Vos said in the UpFront interview. “We tried to find a way to look at education so that money would actually go back to [K-12] school districts across the state. It just wasn’t enough for what he wanted.”

For his part, Evers last week said that he was disappointed that Republicans ended budget talks, since he had agreed to support their top priority — reducing income taxes.

“I told Republicans I’d support their half of the deal and their top tax priorities—even though they’re very similar to [tax cuts] I previously vetoed—because I believe that’s how compromise is supposed to work,” Evers said in a June 4 statement.

But, he added, “Republicans couldn’t agree to support the top priorities in my half of the deal.”

The impasse freed Republicans to draft their own tax cut and K-12 aid plans, which Republicans on the Finance Committee did.

Republicans voted to increase the number Wisconsin tax payers eligible for the 4.4% income tax, extending it to married couples from $39,150 to $67,300 household income and for single filers with an income of $29,370 to $50,480, meaning they would no longer pay the higher 5.3% rate. This would cost an estimated $640 million. They also voted to exempt the first $24,000 of retirement income for over-67 residents, costing an additional $700 million.

The tax cut will help “working and retired people,” said Sen. Howard Marklein, Finance committee cochair. “This isn’t a high-income oriented kind of thing.”

The problem: Joint Finance Republicans only added $336 million to K-12 spending for the next two years – less than 10% of the additional $3.4 billion the governor proposed. The Republicans’ increase would fund 37% of special-education costs; Evers wants 60%.

So that’s where we are now; What budget deals or deadlocks will the next eight days bring?

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