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Republicans in the Wisconsin Legislature completed their work on the state's 2021-23 budget on Wednesday, sending a spending plan to Democratic Gov. Tony Evers that differs dramatically from the one he proposed earlier this year.
The $87.5 billion plan spends $3.7 billion less than the one Evers introduced in February, but increases spending from current levels by 5.4%. It includes more than $3 billion in tax cuts, ends an eight-year freeze on University of Wisconsin System tuition and boosts funding for expanded broadband access.
The budget passed the Senate on a 23-9 vote, with Democratic Sens. Janet Bewley, of Mason, Brad Pfaff, of Onalaska, and Jeff Smith, of Brunswick, joining Republicans to support it. Four Democrats joined Republicans in voting for the budget in the Assembly on Tuesday.
Republicans tout the plan as a fiscally responsible document that returns unexpected extra revenue to taxpayers, while Democrats say it's full of "missed opportunities" eliminated from Evers' original proposal.
"The GOP has, at every turn, made the wrong choice for Wisconsin families. They removed every single significant provision in Gov. Evers’ budget, starving our state of needed investments — in public education, health care, economic development, climate mitigation, local services," said Sen. Kelda Roys, D-Madison.
Evers' budget would have expanded BadgerCare under the Affordable Care Act, bringing in an additional $1 billion in one-time federal incentive funds. Wisconsin is one of a dozen states that have not adopted the federal Medicaid expansion, after years of Democratic efforts to do so failed at the hands of the Republican legislative majority.
Other proposals in the governor's budget rejected by Republicans included legalizing marijuana, increasing the minimum wage, repealing collective bargaining limits implemented under Act 10, requiring background checks for all gun purchases, implementing nonpartisan redistricting and raising taxes by $1 billion (mostly through increasing capital gains taxes and reducing tax breaks for manufacturers).
Taking advantage of an unexpected revenue windfall, the budget as written by Republicans includes about $2.7 billion in income tax relief by bringing the state's third income tax bracket — which applies to individuals making between $23,930 and $263,480 per year — down from 6.27% to 5.3%. Estimates from the nonpartisan Legislative Fiscal Bureau show that 74% of the total tax decrease would apply to people earning more than $100,000 per year (about 18% would apply to people making more than $300,000).
The budget also reduces property taxes by about $647 million, and sets aside funding to offset a repeal of the state's personal property tax, which applies to business equipment.
The personal property tax repeal, which would cost the state about $245 million per year, was passed in separate legislation which also awaits a response from Evers. Several Democrats have said they support eliminating the tax, but opposed the current effort because they said it was rushed through. It's not clear whether Evers will sign the legislation.
Senate President Chris Kapenga, R-Delafield, highlighted the income tax cut as a "significant step" toward implementing a flat tax in Wisconsin.
"No budget is ever perfect, but when we can get government out of the way and allow our citizens and businesses to invest and innovate with their own dollars, it’s a good day for the people of Wisconsin," Kapenga said.
Senate Majority Leader Devin LeMahieu, R-Oostburg, praised the budget for providing "transformational tax relief." He described it as "the most conservative budget in a generation."
"This is real money for the average family. This isn’t just stuff we go campaign on," LeMahieu said. "This is real money that’s being left in people’s wallets that they can go spend at their local store, that can help them pay for their kids’ college, that can lower their debt."
Joint Finance Committee co-chair Sen. Howard Marklein, R-Spring Green, touted the budget's support for hospitals, nursing homes and other health care providers.
The budget provides $252 million to increase Medicaid reimbursement rates for skilled nursing facilities and intermediate care facilities for people with intellectual disabilities, $104 million in funding for direct care workers and $78 million for personal care agencies.
"I think we're sensitive to the health care needs of the public and we didn't have to expand Medicaid to accomplish that," Marklein said.
Sen. Jon Erpenbach, D-Middleton, described the budget as a "swing and a miss," arguing that lawmakers "absolutely wasted" the billions of unexpected dollars the state had available — particularly when it comes to spending money to expand broadband.
The budget increased funding for efforts to expand broadband access by $125 million — $75 million less than proposed by Evers — funded by borrowing.
A 2020 report by the research arm of the Wisconsin Counties Association found that Wisconsin's level of broadband accessibility is lower than the national average and 35 other states. The state Public Service Commission estimates that about 800,000 people in Wisconsin — or 14% of its population — don't have the infrastructure needed for an internet connection fast or reliable enough to meet the federal definition of broadband.
"We have the money — I don’t care where it came from — and we wasted it. Absolutely wasted it. What we could have done for broadband — staggering," Erpenbach said. "You still could have done the tax cuts. But you didn’t do that. You said, we’re going to bond a paltry sum of money compared to the larger pot of money that we had."
Democrats also lamented that a proposal in Evers' budget to extend postpartum Medicaid coverage from one month to one year was modified to instead extend coverage to three months, and that several items aimed at reducing racial disparities in health outcomes — including Medicaid funding for doulas and grant funding for community organizations aimed at improving the health of Black women and babies — were stripped from the spending plan.
"The biggest tax break that you could ever give your constituents is to make sure that they don’t have to pay more for these issues (that contribute to racial disparities), that could be addressed with just small incremental amounts before they get to the point of being the worst in the nation," said Sen. LaTonya Johnson, D-Milwaukee. "People are leaving Wisconsin for a reason — especially individuals of color. And it is because when we have chosen to create Wisconsin's vision, they were left out."
The budget would also:
- Increase UW System funding by $8.25 million (compared to $192 million proposed by Evers).
- Give K-12 schools an additional $128 million (compared to $1.6 billion proposed by Evers).
- Meet federal funding requirements to allow schools to receive $2.6 billion in COVID-19 relief money.
- Increase the reimbursement rate for special education costs from 28.2% to 30% (compared to an eventual increase to 50% proposed by Evers).
- Reauthorize the state's land stewardship program for another four years (down from 10 requested by Evers).
- Allow for the expansion of I-94 in Milwaukee County.
- Fund a study on possible changes to the state's unemployment insurance system.
- Increase funding for programs to help veterans and people with disabilities find jobs.
The budget now awaits action from Evers, who must act on it within six days, not including Sunday. The governor can accept or reject it in its entirety, or he can make some changes with his partial veto power. However, if Evers vetoes the budget and lawmakers don't come back to the table to pass another one, Wisconsin would no longer qualify for $2.2 billion in federal K-12 aid, according to a memo prepared by the nonpartisan Legislative Fiscal Bureau first reported on by WisPolitics.
