Wisconsin Gov. Evers Signs GOP-Written State Budget With $2 Billion Tax Cut
Updated 1:34 p.m. CDT
Gov. Tony Evers signed the Republican-written state budget Thursday, enacting a two-year spending plan that includes a $2 billion income tax cut while making 50 largely minor partial vetoes, saying “unfinished business” still needs to be addressed.
The budget will also cut property taxes for the owner of an average home by $100 next year, ends a University of Wisconsin tuition freeze in place for eight years, increases salaries for state employees and basically holds K-12 funding flat.
Evers, a Democrat who is running for reelection next year, cast the tax cut as a bipartisan effort even though the plan was added to the budget by Republican lawmakers. Evers' original budget would have raised taxes, primarily on manufacturers and the wealthy, by more than $1 billion.
“I could have vetoed that," Evers said of the GOP tax cut proposal. "I made a promise to the taxpayers, to the state, we would reduce middle class taxes by 10% and we did 15%. It is a bipartisan effort.”
Senate Majority Leader Devin LeMahieu, R-Oostburg, released a statement saying Evers doesn’t deserve credit for the budget.
"He got boxed into a corner and rather than fight for his unpopular budget and risk a political knockout, he and his team threw in the towel and signed our responsible budget," LeMahieu said.
Evers said signing the budget with the partial vetoes “will improve this document and leave resources available to ensure that the unfinished business can be addressed."
The average person earning $61,000 a year will see an income tax cut of $488 this tax year and $975 over the next two years, state Revenue Secretary Peter Barca said at the bill signing ceremony at Cumberland Elementary School in Whitefish Bay.
Evers opted to go along with the GOP-written budget with some relatively minor changes through his vetoes rather than killing the entire plan, a move that would have jeopardized $2.3 billion in federal coronavirus relief funding for K-12 schools. That money only comes to the state if funding for schools increases enough to meet federal requirements, which the budget as signed would do.
Evers also said he planned to veto a bipartisan bill to eliminate a property tax paid by businesses. Evers was keeping money in the budget to pay for it, saying he hoped the Legislature would pass a better bill to eliminate that tax.
Two years ago, Evers issued 78 partial vetoes and four of them were challenged in court. The Wisconsin Supreme Court struck down three of them, but its ruling did not directly address a governor’s veto authority going forward.
Evers said that court ruling “absolutely” limited his ability to make more sweeping vetoes this year.
“The Supreme Court made it much more difficult to partial veto the budget,” he said. "Those decisions play a huge role in this.”
The budget was approved by the GOP-controlled Legislature last week, with all Republicans and seven Democrats in support. It increases K-12 funding by $128 million, less than a tenth of what Evers wanted. Evers, Democrats and some schools had argued that’s not enough, particularly given that the federal COVID-19 money can only be spent on virus-related expenses and is not distributed equally to all schools.
Evers, a former state superintendent of schools, had wanted to tap the state’s projected $4.4 billion surplus to spend more on schools. But he said he was signing the budget because he didn't want to jeopardize the federal money.
“This budget isn’t good enough for our kids," Evers said, surrounded by elementary school children. "Republicans could have and should have done more.”
Republicans also directed about $650 million to schools but did it in a way that the money must be used to reduce property taxes, rather than go toward new spending by the schools. That move meets the federal requirement to increase funding. It means the owner of a median-valued home will see their taxes drop $100 next year and increase $30 the next.
To make up for the relatively flat education support, Evers is directing an additional $100 million in federal stimulus funding to schools. That funding would be allocated on a per-pupil basis, giving schools an estimated $120 per student to spend as they see fit, according to Evers' staff.
Kim Kaukl, director of the Wisconsin Rural Schools Alliance, said districts are grateful for that provision.
"The only thing that concerns me is it’s federal money, so it’s one-time money," Kaukl said. "So it kind of fills the gap, but we’ve got to keep looking forward. And I know [Evers is] doing the best he can with what he’s got to work with there."
Republicans stripped hundreds of Evers’ proposals from the $87.5 billion spending plan, which takes effect immediately and runs through the middle of 2023. The budget Evers signed does not expand Medicaid, legalize marijuana, reinstate collective bargaining rights for public workers, raise taxes on the wealthy, increase the minimum wage cap enrollment in private voucher schools or enact gun control measures as Evers had proposed.
The budget ends an eight-year tuition freeze on University of Wisconsin System undergraduate resident tuition. But even with the new freedom to raise tuition, the UW Board of Regents on Thursday was voting to not raise tuition in the next academic year.
The budget cuts income taxes by $2 billion over two years, mostly by lowering one tax bracket from 6.27% to 5.3%. It would apply to individuals making between $23,930 to $263,480 and married couples filing taxes jointly who earn between $31,910 and $351,310. According to the nonpartisan Legislative Fiscal Bureau, a taxpayer making between $40,000 and $50,000 would see a $115 reduction in tax year 2022.
There are no gas tax or vehicle registration fee increases. The budget would authorize the start of the oft-delayed Interstate 94 expansion project in Milwaukee County, as Evers wanted. State employees will receive a 2% raise in both 2022 and 2023.