MADISON, Wis. - Wisconsin's state budget is projected to see "unprecedented" revenue growth of $4.4 billion above previous estimates by the middle of 2023, news delivered Tuesday that led Democratic Gov. Tony Evers to call for more spending on education while Republicans urged caution and promised tax cuts.
Republican legislative leaders said the massive influx of cash, which couldn't have been imagined a year ago early in the pandemic, provides a once-in-a-generation chance to reform the state's tax code. Republicans previously said they wanted to include a tax cut in the budget but haven't revealed details.
"If we recklessly spend this new money and grow taxpayer obligations in an unsustainable way, we risk future fiscal stability, a stability Republicans have spent a decade cultivating," said Republican budget committee co-chair Sen. Howard Marklein.
Evers called on Republicans to use the surplus to spend more on K-12 education and other areas. The budget as it stands currently spends less than 10% of what Evers proposed, a level that puts $1.5 billion in federal coronavirus relief funding for schools in jeopardy.
"There’s no excuse for choosing not to fully invest in our kids and our schools, broadband, venture capital and support for Main Street businesses, among other critical priorities, that will ensure we’re bouncing back and better than we were before this pandemic hit," Evers said in a statement.
Gov. Tony Evers
Evers also announced that he was rescinding $300 million in budget cuts across state government ordered earlier in the pandemic, including $50 million to the University of Wisconsin System and the state's technical colleges.
"The requirements are not the amount that you appropriate on day one, but the amount that you spend over the two-year budget," Assembly Speaker Robin Vos, a Republican said. "Just because it's not in the budget doesn't mean we don't come back and schools will say, yes, we need money."
Wisconsin State Capitol, Madison
Republican Senate Majority Leader Devin LeMahieu said taxpayers gave the state the massive surplus, so they deserve to have some of it back.
"We will take this moment to consider ways to significantly reduce the tax burden on workers and main street businesses and pay off state debt to save taxpayers long into the future," LeMahieu said.
Vos said he wants at least 90% of the extra money to go to tax cuts.
"There are going to be two choices: Either spend the money on increasing the size of government, or give it back to the families who paid it. And my goal would be to figure out the largest possible tax cut that we could," said Vos. "All tax cuts are good. I am open to negotiation. My focus has always been on property and income. Those are the ones that most families pay and the ones that hurt the most."
"We’re underfunding our schools, and education is extremely important, especially coming off a pandemic. We know that there is a lot of ground we need to cover, in terms of catch-up, in terms of educating our children, we know that all school districts are not created equal," State Sen. LaTonya Johnson, a Milwaukee Democrat, said. "So saying we going to give taxpayers a huge property tax rebate, when we’re underfunding their schools, serves no purpose."
Republican budget committee member Sen. Dale Kooyenga called for eliminating entire income tax brackets and categories.
"The scale of this surplus means now is the time to build upon bipartisan proposals to reduce the tax burden for the middle class," he said.
(Xinhua/Liu Jie via Getty Images)
The rosier budget projection delivered Tuesday is based on the strength of current tax collections and "vastly improved economic forecasts for the remainder of this year and the next two years," Legislative Fiscal Bureau Director Bob Lang wrote to the co-chairs of the Legislature's budget committee.
"The increase in general fund tax collections in 2021, particularly in the months of April and May, is unprecedented," Lang wrote.
The estimate does not even include the $2.5 billion in federal coronavirus relief money coming to the state for infrastructure and other uses.
Many other states are seeing similar budget windfalls as the pandemic fades and the economy ramps up.
Wisconsin's budget committee was expected to complete its work next week and send the two-year spending plan to the Republican-controlled Legislature for votes likely by the end of this month. The budget would then head to Evers, who has broad veto powers. It wasn't immediately clear whether news of the massive surplus would delay completion of the budget, which begins July 1 and runs through June 30, 2023.