Evers unveils spending plan that boosts public schools, water cleanup, child care and cuts taxes

After parceling out tidbits over the last two weeks, Gov. Tony Evers unveiled a proposed 2023-25 state budget Wednesday night that overall increases spending by 23%, cuts income taxes by 10% for four out of five Wisconsin taxpayers, includes a record increase for public education and features proposals touching on virtually every major state program.

Democratic lawmakers, who clapped and cheered at virtually every paragraph of Evers’ budget address, pronounced the two-year, $104 billion plan a common-sense spending outline that would begin to make up for years of disinvestment in some of the state’s most important responsibilities.

“It’s just incredibly pragmatic — it’s not partisan,” said Sen. Kelda Roys (D-Madison), at a brief media session that Democrats on the Legislature’s Joint Finance Committee held after the powerful budget panel took the formal vote to enroll the budget as a bill and then adjourned.

Republicans, who hold a majority of seats in both houses of the Legislature, declared Evers’ proposal to be a replay of his 2021-23 budget two years ago, which they threw out and rebuilt over the spring and early summer in 2021.

“We saw that again tonight,” said Assembly Speaker Robin Vos (R-Rochester) at a Republican press conference after Evers’ budget address. “It was a budget that is absolutely devoid of reality.”

The co-chairs of the Joint Finance Committee, Sen. Howard Marklein (R-Spring Green) and Rep. Mark Born (R-Beaver Dam), said that once again they plan to go back to the base budget, shaping it to their preferences rather than starting with Evers’ plan.

They largely stayed away from detailed critiques of individual provisions, while characterizing it as overloaded with spending and expanded government programs.

Evers’ proposals

The budget would add more than 800 full-time employees to the state’s payroll with proposals to add programs across a broad array of state agencies.

Evers led off his budget address to both houses of the Legislature in the Wisconsin Assembly chamber by promoting a 10% tax cut that he rolled out over the weekend for individuals with incomes up to $100,000 a year or less or married couples filing jointly with incomes up to $150,000.

The tax cut would save 1.9 million qualifying taxpayers more than $200 a year on average, according to the governor’s summary of the plan released earlier this week, or more than $800 million overall over two years. About 80% of Wisconsin taxpayers have annual incomes below $100,000, according to calculations in 2018 by the Institute on Taxation and Economic Policy (ITEP).

Evers also proposed increasing the state’s supplement to the Federal Earned Income Tax Credit, which targets low-income working families, saving about $300 a year on average for 200,000 people, according to the administration. And he proposed expanding the state’s Child and Dependent Care Tax Credit, which would save more than 100,000 filers $260 on average.

Other proposed tax changes include ending a state tax break on income from capital gains for the wealthiest segment of the population. Currently taxpayers can deduct from their Wisconsin taxable income 30% of the net capital gain when selling assets they’ve held for more than a year.

The governor’s proposal would allow that deduction only for taxpayers with incomes below $400,000 for individuals and $533,000 for married taxpayers filing jointly. Eliminating the deduction for wealthier taxpayers would yield more than $330 million over two years.

As Evers announced a week ago, the budget proposes to send 20% of the state’s sales tax revenues back to local governments that he said could help them address local health, transportation and public safety needs. Alluding to Republican lawmakers who have floated a similar proposal, he added, “I don’t care where it came from.”

Largest increase for schools

Evers highlighted the budget’s single largest increase, $2.6 billion for the Department of Public Instruction, which the governor flagged earlier this week. It would be “the largest increase in K-12 schools and education in state history,” he told lawmakers.

That includes money to return the state to fully funding two-thirds of the cost of public education in Wisconsin under a commitment that Republican Gov. Tommy Thompson made a quarter-century ago, and for the state to pay 60% of the cost of special education for students with disabilities.

The budget would increase per-pupil spending in the state’s three private school voucher programs as well as for independent charter schools and for special needs student scholarships to private schools, but it would freeze enrollment in those programs.

In his address, Evers focused on provisions to provide mental health services in all schools. The budget brief from the Department of Administration puts the overall cost for those initiatives at $270 million over two years.

Fixing the darn roads

The Evers budget proposal includes $750 million in grants to further expand broadband internet service across Wisconsin.

In other infrastructure spending, he has proposed paying off $380 million in state transportation revenue bonds. “That means we’ll spend less of your hard-earned tax dollars in the future paying on debt and interest so we can stay focused on fixing the darn roads,” Evers said.

Many of the budget’s proposed new programs would build on initiatives that Evers launched over the last two years with federal pandemic relief funds. The budget includes $319 million to continue the state’s Child Care Counts program, which drew on the pandemic aid to help child care providers cover higher salaries for child care workers without raising tuition for parents, for example. The intent is to make that program permanent.

Another $22 million would continue a pandemic-funded program that provides grants to employers purchasing child care on behalf of their employees.

At the Department of Workforce Development, the budget proposes $200 million in state funds to provide Workforce Innovation Grants, with half the money to focus on the health care workforce in particular.

The innovation grant proposal would continue a program that the administration launched in 2021 with $100 million from the federal American Rescue Plan Act (ARPA), sending money to local community groups creating training programs while addressing potential barriers workers face, such as securing child care or transportation to their jobs.

The governor’s proposals include hiring more assistant district attorneys around the state and raising their starting salaries as well as those of starting public defenders. They also include changes to the juvenile justice system, including returning 17-year-olds accused of crimes to juvenile court rather than trying them as adults.

PFAS cleanup

The budget also puts money into water pollution cleanup, starting with $100 million to address contamination from PFAS chemicals — per- and polyfluoroalkyl substances found in thousands of consumer and industrial products.

In an agency that has been a flashpoint for criticism over the last year, the state Department of Safety and Professional Services, Evers proposes to add nearly 80 new positions to address long-standing complaints about backlogs in issuing occupational licenses.

The added positions would be filled using fees that the agency collects but cannot spend without authorization from the Legislature. The Legislative Fiscal Bureau reported recently that DSPS had a $47 million surplus from licensing fees. Republican lawmakers who have criticized delays have so far declined to endorse hiring more workers with the money, despite sharp increases in the number of license applications that the department must process.

Focus on workers’ rights

Evers is also proposing a host of changes that would expand rights and benefits for Wisconsin workers.

Those include a paid family and medical leave program that would provide 12 weeks of benefits for private as well as public sector workers. The program would be funded by payroll contributions by employers and employees, but to jump start it, the state would spend $242.4 million so workers could avail themselves of the benefit sooner.

The governor is renewing past proposals that were quickly rejected by the Republican leadership of the Legislature’s budget committee. Those include restoring collective bargaining rights for state and local government employees and repealing the state’s so-called right to work law, which blocks unions from requiring that the workers they represent pay dues.

Evers also renewed his past attempts to increase the state’s hourly minimum wage over the next three years to $10.25 and eventually to $15 and to reinstate a state law requiring publicly funded building projects to pay workers the prevailing wage for their trade.

Other previously rejected and revived proposals include one to legalize and tax marijuana and one to expand Medicaid under the Affordable Care Act. That would extend health coverage through BadgerCare to families with incomes up to 138% of the federal poverty guideline instead of limiting it to people at 100% of the guidelines or less.

Reactions

“I think the most important thing about the governor’s budget is his focus on working families and children,” said Sen. LaTonya Johnson (D-Milwaukee), who also sits on the Joint Finance Committee. She cited the proposal to continue supporting child care in particular. “Without that extended funding…. We will be looking at about 25% of our daycares closing. Making sure that we can keep those daycare centers open so our families can work and our kids have a safe place to just thrive and grow is extremely important.”

Rep. Tip McGuire (D-Kenosha) said that by offering his proposed tax cut, Evers was following through on one of his 2022 reelection campaign promises.

“Contrast that with the Republican tax plan that they introduced, the flat tax, which would predominantly benefit the wealthy,” McGuire said, pointing to calculations that $93 million in the GOP proposal would go to “just 32 people in the state of Wisconsin who earn more than $80 million.”

Republicans rejected Evers’ assertion that his proposals reflected popular wishes.

“The budget is not the governor’s budget, it’s the state budget,” said Marklein, the Joint Finance Committee co-chair. “We’re going back to the base budget this time, like we have the last two budgets. We’re going to fund our priorities, address our obligations, cut taxes and prepare for the future.”