Fall 2023 Floor Period: Taxes, Child Care, and Redistricting Emerge as Key Issues

Between the Republican-led Wisconsin Legislature and Gov. Tony Evers (D), both sides were dissatisfied with aspects of the 2023-25 state budget and are seeking legislation to address those issues. After a quiet summer following passage of the budget, legislators resumed regular committee and floor activities in early September. The Assembly and Senate are each expected to hold several floor days in October and November and again over the first few months of 2024 before adjourning the 2023-24 session. See this article for detailed coverage of the floor votes taken by the legislature in September.

The legislature passed the final version of the state budget in late June, mostly along party lines, and Gov. Evers signed it into law on July 5. The governor issued 51 partial vetoes of the budget bill, most notably eliminating an individual income tax cut for the state’s upper two tax brackets (the state’s second-highest bracket includes a majority of individuals and couples that file income tax in Wisconsin). Largely because of this veto, the state is projected to have a $4 billion surplus at the end of the 2024-25 fiscal year.

Gov. Evers called a special session of the Legislature for September 20 “to complete their work on the 2023-25 biennial budget and pass a meaningful, comprehensive plan to address the state’s longstanding, generational workforce challenges.” The governor’s press release lists $1 billion in proposals including about $340 million to continue the Child Care Counts program, $243 million to create a paid family and medical leave program, and $250 million for the UW System and a new engineering building at UW-Madison.

The legislature’s top two Republicans quickly dismissed the proposal when it was first announced. Assembly Speaker Vos called the policies “nothing more than a rehash of Tony Evers’ tax and spend budget.” Senate Majority Leader LeMahieu said his caucus wants to address workforce challenges “without growing government entitlement programs.” Both leaders indicated that they are more interested in reducing income taxes to attract and retain employees and employers, with Speaker Vos saying that Republicans’ top priority in September “will be to give Gov. Evers another chance to fix his mistake by signing a middle-class tax cut.”

To that end, Republicans introduced and are quickly moving forward with AB 386, which passed the Assembly on September 12. The Republican tax plan would reduce the income tax rate from 5.3% to 4.4% for individuals earning between $27,630 and $304,000 and married joint filers earning between $36,840 and $405,000. The proposal would also exempt from taxation up to $150,000 in retirement income (e.g., from pensions and 401k plans) for married couples who are both at least 67 (or up to $100,000 in retirement income for individuals).

Gov. Evers has pledged to veto the bill, saying it would put Wisconsin “on a path to bankruptcy” by reducing future tax collections and possibly requiring repayment of certain federal funds the state received during the COVID-19 pandemic. He has spoken positively about the part of the bill that reduces taxes on retirement income.

Republican legislators have also introduced a package of five child care-related bills, which passed the Assembly on September 14. The bills would increase the current child:teacher ratios in group settings, decrease age limits for child care teachers, create a new category of large family-based day care providers, allow parents and guardians who do not have an employer-sponsored flexible spending account to open state-issued child care savings accounts, and create a new renovation loan program administered by the Wisconsin Economic Development Corporation.

Gov. Evers’ office has stated that the child care legislation “simply will not cut it,” “could reduce the quality of care for our kids,” and “fails to keep child care center doors open tomorrow.” Republicans, meanwhile, have expressed skepticism about using state funding to continue the Child Care Counts program, with Speaker Vos calling it “preposterous to say that we are going to take taxpayer dollars from everybody to subsidize one specific industry, like child care. We are not going to increase wages for child care workers by having everyone else pay more.” At a public hearing, representatives of the child care industry raised concerns with the Republican bill package and expressed support for continued funding to support child care providers.

On September 20, instead of ending the special session by immediately gaveling in and out, Senate and Assembly leaders gaveled in and then adjourned the session, meaning that legislators can take up the issue again at a later date. Legislative leaders convened a “skeletal session” the following day, introduced Gov. Evers’ proposal as a bill, and referred it to the Senate Committee on Economic Development and Technical Colleges. Sen. LeMahieu stated that “the governor’s special session bill will be referred to committee and follow the normal legislative process.”

Behind these issues, the specter of redistricting looms large for Wisconsin officials and political operatives. As we reported here, Wisconsin Supreme Court is currently reviewing petitions to reconsider the constitutionality of the state’s legislative maps, which were adopted following the 2020 U.S. Census. This is a significant political issue that is being closely followed by all sides, especially Republican legislators, who have held strong majorities since the early days of former Gov. Scott Walker’s administration. Other issues including abortion, election law, union rights, and more are expected to come before the Wisconsin Supreme Court within the next few years.

As we reported here, the Assembly recently passed a bill to establish a new procedure for redistricting and create a redistricting advisory commission. Under the bill, the Legislative Reference Bureau would prepare redistricting plans based on certain standards. The bill is modeled on a process used in Iowa and is similar to proposals introduced by Democratic legislators in recent sessions.

For recent coverage of this issue, see the following news articles: