Budget committee co-chairs on potential compromise and Evers’ proposals

The Republican co-chairs of Wisconsin’s powerful Joint Finance Committee (JFC) discussed potential areas for compromise in the upcoming two-year budget, while casting doubt on several of Gov. Tony Evers’ budget proposals on Tuesday.  

Rep. Mark Born (R-Beaver Dam) and Sen. Howard Marklein (R-Spring Green) will spend the next several months leading Wisconsin’s budget writing process. The lawmakers, at an event hosted by WisPolitics, said Evers’ proposed budget includes too much spending, and they plan to be cautious and focus on tax reform for the upcoming budget. 

“We’re going to work from base, and build a budget that invests in the priorities of Wisconsin and has tax reform and, much like the last two, has the opportunity to be a bipartisan budget because it’s a good budget that folks can be proud of and get behind, and that has things he wants to see in a budget, and that we want to see in a budget,” Born said. 

Born said there is some agreement about what issues need to be addressed, but when it comes to finding solutions “the devil is in the details.” 

“When I say agreement, that doesn’t mean we’re going to do what the governor asks,” Born said. “We agree that these are issues that need to be worked on or invested in.” 

Shared revenue is one area of agreement, Born said, with lawmakers and Evers both supporting a new source of revenue to help fund local governments. Republican leaders and Evers have publicly supported the possibility of reserving up to 20% of Wisconsin’s sales tax revenue to send back to local governments. According to Evers’ proposal, this could boost state aid to local governments by about $500 million. 

Marklein added, however, that there will need to be reforms — including of Milwaukee’s pension system — before more money is put into shared revenue. 

“We’re working on it. We’ve got a number of legislators that have been working on this for months now,” Marklein said. “I believe we’re not going to put hundreds of millions of dollars more into shared revenue without there being reforms.” 

Born agreed, saying legislative leaders don’t want to give local governments more money to do the same things.

Evers expressed confidence about the potential for increasing local government funding earlier Tuesday. “It’s going to happen,” he said at an event hosted by the Wisconsin Counties Association. 

The Republican lawmakers also said it’s unlikely they’ll support Evers’ proposed local sales tax option. 

Evers included a provision in his budget that would allow Milwaukee County, which alongside the city of Milwaukee is Wisconsin’s largest state aid recipient, to impose an additional 1% sales tax on top of the 0.5% local sales tax it already has. The plan would also allow Wisconsin’s other counties and municipalities with populations over 30,000 to potentially adopt an additional 0.5% sales tax. Counties are already allowed to levy a 0.5% sales tax, so this would mean a total 1% sales tax for counties that adopt the additional tax. 

Born said local governments already have the option to go to referendum to raise property taxes, and that they don’t want to raise taxes any more. The sales tax option, according to Evers’ plan, is meant to allow counties and municipalities to diversify local revenue sources and empower local governments to fund police and fire protection, EMS, transit, roads, and other important services. 

The leaders, while emphasizing the need for additional permanent tax cuts, said it’s unlikely that Republicans’ proposed flat tax is something that will pass in this year’s budget.

Senate Majority Leader Devin LeMahieu introduced a bill earlier this year that would phase in a 3.25% income tax for all Wisconsinites over several years. The plan would cost Wisconsin around $5 billion in the first two years, around $4 billion in the third year and around $5 billion each year after. 

“For years already, we’ve been building towards doing things with our tax structure to work towards a flat tax,” Born said. “It will probably be unlikely to get to a full flat tax in this budget, but I think the goal is to continue to do things that work towards that.”

In previous budgets, the tax rates for Wisconsin’s middle two brackets have decreased. 

Born said a flat tax is necessary to keep Wisconsin competitive among its Midwest neighbors. Four midwestern states — Illinois, Indiana and Michigan — currently utilize a flat tax system. Iowa is in the process of phasing to a flat tax system. 

Evers called the proposal a “poison pill” at a separate event Tuesday morning. He has previously said he would veto any plan to shift Wisconsin to a flat tax. 

Evers’ tax proposal includes 10% tax cuts for people earning $100,000 or less a year, breaks for family caregivers and low- and moderate-income workers and some tax hikes that are targeted at wealthy people and profitable businesses.

Marklein said there will be a permanent tax cut included in the budget, but the size will depend on the obligations of the state and they don’t yet know the specifics. He also mentioned the personal property tax as one tax they’re still working towards repealing. 

Education and mental health are other areas where the lawmakers said there will likely be some additional investments, however, they didn’t provide details about potential numbers. 

“Just like every other area of the economy right now, [schools are] getting hit by inflation, so they certainly are going to need some new money. Whether it’s bus contracts or teachers’ wages and things, they’re not any different than any other part of the economy so there’s certainly a need for more money,” Born said. 

Born said plans to keep the Brewers in Milwaukee were dropped into Evers’ proposal “like a bomb” with no discussion with lawmakers beforehand. Evers included $290 million for the upkeep of American Family Field, where the Milwaukee Brewers play, in his budget proposal. Born said that the Legislature will take the next several months to research and consider the issue. 

Once the JFC is finished with its work, the Legislature will vote on the spending plan and send it to Evers to be signed. “Our work will be done by then,” Marklein said of the budget deadline of July 1.