Following the enactment of the 2023-25 state budget (Act 19), the Legislative Fiscal Bureau (LFB) has released several memos on the budget, including the effects of partial vetoes issued by Gov. Evers.

General Fund Projections Through 2027

According to this memo, the state is projected to have a balance of just over $4 billion at the end of the 2024-25 fiscal year. The budget as passed by the Republican-led Joint Committee on Finance had a projected ending balance of $588 million. Most of this difference is due to Gov. Evers’ partial veto of individual income tax reductions and related tax withholding table updates (totaling $3.3 billion in revenue).

Specifically, Gov. Evers vetoed reductions in the individual income tax rates for the third and fourth (top two) tax brackets. The state’s third tax bracket covers incomes from $34,030 to $374,600 for married couplies filing jointly, including a large majority of Wisconsin families. The veto left in place reductions for the lower two tax brackets, which cover annual income under $34,030 for married couples filing jointly.

Republican legislative leaders were highly critical of the governor’s income tax veto, while Gov. Evers called on legislators to “complete their work on this budget” using the “ample state resources” retained by his vetoes.

County and Municipal Aid

This memo explains the effects of the budget and shared revenue legislation (Act 12) on county and municipal aid. Under the new shared revenue formula, most municipalities will receive a minimum increase of 20 percent of their existing aid payment, while counties and the cities of Madison and Milwaukee will receive a minimum increase of 10 percent. In the 2024-25 fiscal year, counties and municipalities will receive a total of just over $1 billion in both regular and supplemental aid.

According to the shared revenue memo, “For payments in 2025 (2025-26), and each year thereafter, annual supplemental county and municipal aid payments and the existing county and municipal aid payments will increase by the percentage change in state sales and use tax revenues in the prior state fiscal year over the preceding state fiscal year.”

Education Funding and School District Levy Limits

This memo details the effects of the budget and related legislation (Act 11) on funding for K-12 schools over the 2023-25 fiscal biennium. This includes per pupil revenue limit adjustments of $325 in each fiscal year, a $1,000 increase in the low revenue adjustment, and increases in special education aid and school-based mental health services funding.

Another memo discusses the potential effects of Gov. Evers’ partial veto of annual increases in the per pupil revenue limit adjustment. By removing several numbers and words from the text of the budget bill, the partial veto extended the annual increase of $325 per pupil until 2425. The budget bill originally provided increases only in 2023-24 and 2024-25.

The memo explains that it is impossible to reliably estimate the levy limit impacts of the per pupil adjustment beyond the 2023-25 biennium. The amount by which school districts are able to increase property taxes, the levy limit, is impacted by many factors that are difficult to project into the future. In particular, the memo notes that any changes in future state school aids and school levy tax credits, number of enrolled pupils, and property values will affect future school district levy limits.

UPDATE: Additional LFB memos have been released since this article was first published.

Local Transportation Aids

This memo explains state aids to towns and other municipalities for road construction and maintenance. This includes the general transportation aid (GTA), local roads improvement, and agricultural roads improvement programs. The memo includes a table listing the 1,204 towns, 76 villages, and one city that received GTA payments in 2023 and their estimated payments in 2024 and 2025.

The budget provided a two percent annual increase to the calendar year GTA distribution for municipalities and counties, but Gov. Evers vetoed a two percent annual increase in the mileage aid rate payment for municipalities. This effectively means that most towns will not receive additional GTA aid, and the funding that would have gone to towns will instead be retained for the share-of-cost side of the GTA formula.

Property Tax Estimates

This memo estimates property tax levels under the actual 2023-25 budget, the governor’s recommendations, and prior law. It also describes changes from Acts 11 and 12 (the education funding and shared revenue bills) and how those changes impact estimated property tax levies and tax bills. These policy changes include new supplemental county and municipal aid (shared revenue), per pupil revenue limit adjustments, and increased funding for the school levy tax credit. According to LFB, these various changes “would result in tax bills for a median-valued home estimated at $3,304 in 2023(24) and $3,454 in 2024(25).” This estimate is very close to the estimated tax bills under both prior law and Gov. Evers’ initial budget proposal.

Tax and Fee Modifications

This memo lists the state tax and fee modifications included in the budget and estimates their impact on revenue. Notable tax changes include individual income tax rate reductions for the lower two brackets (a $174.6 million revenue reduction over the biennium). Notable fee changes include a $40 increase in the nonresident deer hunting license fee and a $5 increase in several other nonresident hunting and fishing licenses (nearly $5 million in additional revenue over the biennium).