JFC completes work with cuts to income taxes and UW budget, increases in state employee pay

The Joint Finance Committee (JFC) voted to cut state income taxes by $3.5 billion and reduce the University of Wisconsin system budget while raising pay for state employees as lawmakers wrapped up their work on the 2023-25 state budget Thursday.

The committee voted 12-4 along party lines to recommend the budget for approval by the Legislature. It will likely go to the full Legislature for a vote next week. If passed, the budget would be sent to Gov. Tony Evers, who could use his line-item veto power to make changes before signing it into law. 

Eliminating a tax bracket 

The Republican tax cut plan compresses Wisconsin’s progressive income tax rates to three brackets from four. Democrats on the committee lambasted the plan for disproportionately benefiting the wealthy. The tax cut passed on a 12-4 vote.

The average income tax cut under the plan will be $573 per tax filer, representing a 15.1% cut across all filers, according to Republican lawmakers. 

“I want to highlight that this is a middle class tax cut,” Rep. Terry Katsma (R-Oostburg) said during the meeting. 

For most taxpayers, tax-cut benefit will fall below the average savings cited by GOP

While Republican lawmakers tagged the plan as a “middle class” tax cut, Wisconsin’s highest earners will receive the biggest cut. The tax rate for Wisconsin’s top bracket, which includes single filers making over $304,170 and joint filers making over $405,550, would fall to 6.5% from 7.65%, a 1.15-percentage-point drop. 

Wisconsin’s two middle brackets would be compressed to one that encompasses earners whose incomes range from $13,810 and $304,170 for single filers and $18,420 to $405,550 for joint filers, all of whom would have a 4.4% tax rate. 

Currently, single filers with incomes from $13,810 to $27,630 and joint filers from $18,420 to $36,840 have a 4.65% rate. Single filers with incomes from $27,630 to $304,170, and joint filers from $36,840 to $405,550 have a 5.3% rate.

 The tax rate for the lowest tax bracket — which includes single filers making up to $13,810 and joint filers making up to $18,420 — would fall to 3.50% from 3.54%. 

Democrats pushed back on the Republicans’ characterization of the cut as helping the middle class, after not extending direct support for child care centers or adopting Evers’ paid family leave proposal and instead cutting taxes for Wisconsin’s wealthiest earners. 

“They are making Wisconsin a place that is unattractive and inhospitable to women and to families,” Sen. Kelda Roys (D-Madison) said ahead of the meeting. “And I think we see it in the legislation that they’re pushing. We see it in the budget decisions that they’re making.” 

Roys said during the meeting that Wisconsinites would “see through” the financial decisions made by Republicans on the committee.

“They’re going to know that their kids’ schools are not doing as well as they should. They’re going to know when their daycare provider closes down… They’re going to know when their employees aren’t able to come back to work after having a kid because there’s no paid family leave. There’s no child care,” Roys said. “Everything has been sacrificed on the altar of tax cuts for the wealthiest Wisconsinites, who won’t even notice what you’ve done.”

According to the Legislative Fiscal Bureau, 73% of tax filers in Wisconsin make less than $100,000, however, only 19.7% of the proposed tax cut would go towards those earners. 

Wisconsin’s 11 tax filers who make over $75 million would receive an average cut of about $1.8 million. Earners making between $1 and $1.5 million would receive an average of $11,504.

Defending the label Republicans applied to their plan, Rep. Mark Born (R-Beaver Dam), co-chair of the committee, said, “Just because we can do more than one thing, doesn’t mean that this is not a middle class tax cut.” 

“There’s no meaningful benefit, unless you’re wealthy. That’s what we heard from the minority party moments ago. The average filer saves $537, but ‘that’s no meaningful benefit’,” Born said. “That money could offset the inflationary pressures that we’re all feeling, could be an extra car payment, could be a staycation or a little getaway for the family.” 

The median household income in Wisconsin is $67,080, according to the U.S. Census Bureau. Earners making between $60,000 and $70,000 would save an average of $249 under Republicans’ income tax cut. 

Katsma said the plan is necessary to help keep Wisconsin competitive with its neighboring states, including those with flat taxes like Illinois. “We have to pay attention to our states around us,” Katsma said. “And I hope that our governor is appreciative of this.” 

Republican lawmakers said prior to the meeting that the cuts were negotiated without Evers, and he has since criticized the plan.

“Tax relief should be targeted to the middle class to give families a little breathing room — not to give big breaks to millionaires and billionaires who don’t need the extra help to afford rising costs,” Evers said in a tweet Thursday night. “That’s just common sense.” 

Evers’ spokesperson Britt Cudaback tweeted following the Republicans’ announcement, criticizing the plans and bringing attention back to Evers’ proposed 10% tax cut for middle class earners. 

“[Evers] believes that when we deliver tax relief, it should be real, responsible and targeted to the middle class,” Cudaback said. “The GOP is doubling down on tax breaks for wealthy millionaires and billionaires instead of prioritizing relief for working families.” 

Democrats on the committee that the plan could also place future budgets into a precarious position. 

“This is blowing a giant hole in our budget in perpetuity. We are squandering this incredible opportunity to help put our state on a path to growing and thriving, an opportunity for everyone,” Roys said. “And not only are you squandering it today, you’re making it impossible for us to ever have it tomorrow.” 

Born said Democrats just want to spend taxpayers’ money.

“Republicans trust the people of Wisconsin,” Born said. “Government is not the answer to everything. We don’t need to keep every nickel that we took from you and we don’t need to find ways to take more.”

UW system gets $32 million cut

JFC Republicans voted to cut $32 million and 188 full-time positions from the UW system budget with the stated purpose of eliminating diversity, equity and inclusion efforts throughout the system. 

Evers has called the cut “irrational” in light of the state’s $7 billion budget surplus and threatened to veto the budget if lawmakers went through with it.

“Instead of forcing these students to view the world through a lens of race, gender or economic class just to obtain one of these degrees, the UW system ought to be teaching them different things such as critical thinking and problem solving work and collaboration,” Rep. Alex Dallman (R-Green Lake) said during a press conference ahead of the meeting.

“We will be redirecting taxpayer dollars throughout the UW system that are now being spent to divide people based on race and a single ideology, and instead we’re going to focus these dollars towards enhancing Wisconsin’s future workforce,” Dallman continued.

The request that the money for these initiatives be cut from the university system originated from Assembly Speaker Robin Vos (R-Rochester), who said diversity programs are “divisive and offer little public good.”

Sen. LaTonya Johnson (D-Milwaukee), the only Black lawmaker on the JFC, said during a press conference ahead of the meeting that the move was a “way for [Republicans] to whitewash the fact that there are problems that exist.” 

Johnson said the blame for the cut should be shared among all Republicans who voted in favor and not just on Vos. 

“There’s no way that one person should be responsible for the decision made and the representation for an entire party because the choice to punish an entire university system because of their willingness to educate a student body in acceptance, that just shows you who they are,” Johnson said. 

Other Democrats on the committee said the proposed cut would hurt communities of color across the state and hurt the state’s economic development. Rep. Evan Goyke (D-Milwaukee) said DEI efforts work to increase inclusivity.

“You guys cut every position within the University of Wisconsin system that has anything to do with the words diversity, equity and inclusion,” Goyke said. “You are sending such a painful message to communities of color, people of color.” 

Goyke said investments in the University of Wisconsin system are necessary because the state is losing young people to other places including Minneapolis and Chicago. He said the university system is one of the biggest attractors to the state.

“What happens when we give [young people] that opportunity and they come here and they get their degree? More likely than not, they stay here,” Goyke said. “Decisions tonight to not properly invest in the University of Wisconsin system and… to cut funding, at a time of record surplus, will only heighten our demographic challenge. If you want to grow Wisconsin, invest in the University of Wisconsin system.” 

The money — $15.9 million annually — will be put in the supplemental fund, and the UW system could recover the funds. However, the system would need to develop a plan that would need to be approved by the Republican-led finance committee. 

“You’re going to cut 188 positions and you didn’t even have the guts to leave the 142 vacant ones open. You cut those too, so these people can’t even transition to a different job. These are real human beings in River Falls, and in Stevens Point, in Kenosha,”  Rep. Tip McGuire (D-Kenosha) said. “You’re holding funding hostage in Joint Finance so you can make a political point. It must feel wonderful to be so willing to destroy other people’s lives for a talking point.”

Jay Rothman, president of the University of Wisconsin system, called the decision a “missed opportunity” and a “significant setback to Wisconsin’s efforts to win the war for talent” in a statement. He also pointed out that Wisconsin’s public universities rank 42nd nationally in public funding. 

“Investments at even half the rate of inflation would have afforded us a real opportunity to develop the talent that tomorrow’s workforce desperately needs,” Rothman said. “Instead, continued erosion of state investment will diminish student access and affordability at our public universities.” 

UW-Madison Chancellor Jennifer Mnookin, while acknowledging the economic effects that the cut could have, also spoke about the benefits of DEI efforts on the UW-Madison campus. 

“These programs play a critical role on campus and help students from a wide variety of backgrounds succeed in college, including veterans, students with disabilities, first-generation students, and underrepresented minority students. They also support the wellbeing of faculty and staff,” Mnookin said in a statement.

A UW faculty union leader, however, charged on Twitter Thursday that Republican complaints about DEI were a smoke screen.

“This is not an effort to curb DEI. This is an effort to distract from the fact that the legislature is giving the state university system no new funding—not even an inflationary increase—when we have the largest surplus in state history,” tweeted Nick Fleisher, a UW-Milwaukee linguistics professor and president of the American Association of University Professors Wisconsin Conference.

Committee approves state employee pay hike 

The committee voted 12-4 along party lines to approve over $700 million to increase pay for state employees, including $344 million to increase pay for state corrections officers. 

The approved plan would raise corrections officers’ starting pay to $33 per hour. The plan also includes a provision to provide supervisor parity as well as the continuation of a $5 high-vacancy add-on, a $3 add-on for staff at maximum security facilities and a $1 add-on for staff at medium security facilities. 

“I think a lot of times people forget about [corrections officers] and the role that they play and they don’t get the respect and acknowledgement that they deserve,” Born said. “If nothing else, along with the fact that I think these things will help other challenges there, but if nothing else, I hope that the folks that work there recognize that this $344 million investment in this budget. We recognize… the value of the service that’s provided, the essential part of our public safety system that’s provided by our state correctional officers.” 

The plan mirrored the one proposed by Evers. 

Over $155 million during the biennium will go towards providing general wage adjustments of 4% in 2023 and 2% in 2024 for state and UW system employees. Evers had proposed a slightly larger increase for employees of 5% in the first year and 3% in the second year. 

Rothman, while criticizing the cuts to the system, said he appreciated the pay increases. Mnookin also acknowledged that the raises would be positive for university employees.  

“This plan helps to recognize the toll that inflation has taken on the pocketbooks of UW–Madison employees who work hard to ensure our students receive one of the best educational experiences in the nation, conduct life-changing research, and provide important outreach services to people and businesses around the state of Wisconsin,” Mnookin said.