Joint Finance Committee Finishes Its Work on the 2021-23 State Budget

The Wisconsin Legislature’s Joint Finance Committee (JFC) has completed its work assembling a state budget for the 2021-2023 fiscal biennium, which begins on July 1. In May and June, JFC held a series of executive sessions to consider various budget motions related to state agencies and programs. In the series of articles linked below, we review the motions considered by the committee during each session, including notable items that the committee adopted:

In his original executive budget proposal, Governor Tony Evers (D) included a two-year operating budget of more than $90 billion and a long list of changes to various state laws and programs. Immediately following the governor’s budget address in February, Republican legislative leaders indicated they would make significant changes to the proposal.

At its May 6 executive session, JFC took steps to more or less start over from the governor’s proposal. Then, the committee held a series of meetings to consider and approve budget motions for all state agencies and programs. With its adoption of Motion 999 on June 17, JFC completed its work assembling a state budget. In that motion, the committee adopted substitute amendments incorporating its changes to the governor’s proposal and recommended passage of the budget bill as amended.

The budget bill will now go to the full Legislature for consideration. Based on indications from the offices of the majority leader in each house, the Assembly will vote on the budget first, around June 28, with the Senate taking up the bill around June 30.

Key stories from the budget process

Full budget veto possible. Gov. Evers has publicly indicated that he may veto the budget in its entirety. In particular, the governor and his administration have criticized legislative leaders for refusing to accept federal money to expand Medicaid and for not providing enough funding for K-12 education. On May 27, the committee provided an increase in state funding for K-12 education compared to the last budget, but at only 10 percent of the governor’s original proposal. That level of funding may not have been enough to meet a federal maintenance of effort requirement for Wisconsin to receive billions in federal relief funds provided by the American Rescue Plan Act (ARPA). At its final session on June 17, JFC approved additional education funding that should allow the state to receive its full appropriation under the ARPA.

Unprecedented state revenue estimates. In its final session, JFC approved several significant tax cuts, including a full repeal of the personal property tax and a cut to the individual income tax rate for the state’s third and largest tax bracket. Although legislative leaders had previously indicated a desire to include some kind of tax relief in the budget, they were bolstered by a memo released on June 8 by the Legislative Fiscal Bureau (LFB), a nonpartisan government agency. The memo projected that by June 30, 2023, state tax collections would be $4.4 billion more than previously estimated. According to LFB, the revised estimates are “based upon the strength of collections and the vastly improved economic forecasts for the remainder of this year and the next two years.”

Repeal of the personal property tax. The Senate is quickly moving forward with a bill to repeal the personal property tax (Assembly Bill 191/Senate Bill 189). The Senate Committee on Economic and Workforce Development scheduled the bill for a hearing and session on June 22. Under the bill as introduced, the tax would be repealed as of January 1, 2021. As part of its tax relief plans, JFC voted on June 17 to set aside $202.4 million to reimburse local taxing jurisdictions for lost revenue in the event that the tax is repealed in a separate bill.