Gov. Evers signs Wisconsin budget with $2B tax cut

Gov. Tony Evers signed the Republican-written state budget Thursday, enacting a two-year spending plan that includes a $2 billion income tax cut while making 50 largely minor partial vetoes, saying "unfinished business" still needs to be addressed.

The budget will also cut property taxes for the owner of an average home by $100 next year, ends a University of Wisconsin tuition freeze in place for eight years, increases salaries for state employees and basically holds K-12 funding flat.

Evers also announced that schools will be receiving $100 million more in federal funds to use as they wish.

Both Evers, who signed the budget, and the Republicans who wrote and passed it took credit for the tax cut made possible by a revenue surplus.

Evers, a Democrat who is running for reelection next year, cast it as a bipartisan effort even though the tax cut was added to the budget by Republican lawmakers. Evers' original budget would have raised taxes, primarily on manufacturers and the wealthy, by more than $1 billion.

"I could have vetoed that," Evers said of the GOP tax cut proposal. "I made a promise to the taxpayers, to the state, we would reduce middle class taxes by 10% and we did 15%. It is a bipartisan effort."

Republican Assembly Majority Leader Jim Steineke said, "The taxpayers of Wisconsin should be celebrating the fact that today Gov. Evers has done an about-face on his plan to raise taxes by more than a billion dollars and instead signed a Republican spending plan that delivers significant tax relief."

Evers said signing the budget with the partial vetoes "will improve this document and leave resources available to ensure that the unfinished business can be addressed."

The average person earning $61,000 a year will see an income tax cut of $488 this tax year and $975 over the next two years, state Revenue Secretary Peter Barca said at the bill signing ceremony at a suburban Milwaukee elementary school.

Evers opted to go along with the GOP-written budget with some relatively minor changes through his vetoes rather than killing the entire plan, a move that would have jeopardized $2.3 billion in federal coronavirus relief funding for K-12 schools. That money only comes to the state if funding for schools increases enough to meet federal requirements, which the budget as signed would do.

Evers also said he planned to veto a bipartisan bill to eliminate a property tax paid by businesses. Evers was keeping money in the budget to pay for it, saying he hoped the Legislature would pass a better bill to eliminate that tax.

Two years ago, Evers issued 78 partial vetoes and four of them were challenged in court. The Wisconsin Supreme Court struck down three of them, but its ruling did not directly address a governor’s veto authority going forward.

Evers said that court ruling "absolutely" limited his ability to make more sweeping vetoes this year.

The budget was approved by the GOP-controlled Legislature last week, with all Republicans and seven Democrats in support. It increases K-12 funding by $128 million, less than a tenth of what Evers wanted.

Evers, a former state superintendent of schools, had wanted to tap the state’s projected $4.4 billion surplus to spend more on schools. But he said he was signing the budget because he didn't want to jeopardize the federal money.

"This budget isn’t good enough for our kids," Evers said, surrounded by elementary school children. "Republicans could have and should have done more."

Republicans also directed about $650 million to schools but did it in a way that the money must be used to reduce property taxes, rather than go toward new spending by the schools. That move meets the federal requirement to increase funding.

Republicans stripped hundreds of Evers’ proposals from the $87.5 billion spending plan, which takes effect immediately and runs through the middle of 2023. The budget Evers signed does not expand Medicaid, legalize marijuana, reinstate collective bargaining rights for public workers, raise taxes on the wealthy, increase the minimum wage cap enrollment in private voucher schools or enact gun control measures as Evers had proposed.

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The budget ends an eight-year tuition freeze on University of Wisconsin System undergraduate resident tuition. But even with the new freedom to raise tuition, the UW Board of Regents on Thursday was voting to not raise tuition in the next academic year.

The budget cuts income taxes by $2 billion over two years, mostly by lowering one tax bracket from 6.27% to 5.3%. It would apply to individuals making between $23,930 to $263,480 and married couples filing taxes jointly who earn between $31,910 and $351,310.

There are no gas tax or vehicle registration fee increases. The budget would authorize the start of the oft-delayed Interstate 94 expansion project in Milwaukee County. State employees will receive a 2% raise in both 2022 and 2023.

Reaction to signing of biennial budget

State Rep. Gordon Hintz (D-Oshkosh)

"Gov. Evers introduced a budget which would have invested in Wisconsin’s public schools, brought in millions in federal funding while increasing access to affordable health care, spurred economic development, and provided needed resources for local governments. Unfortunately, legislative Republicans prioritized partisan politics at the expense of the best interests of our state throughout the budget process. Their actions over the past two-and-a-half years leave no doubt they would have been willing to walk away from any vetoed budget, risking Wisconsin’s economic security and stability for many months to come.

"I commend Gov. Evers for acting in the best interests of the people by using his partial veto authority to address some of Republicans’ misplaced priorities and providing certainty for our state. Gov. Evers’ actions today demonstrate that he won’t punish our state in order to engage in tired political fights, and show once again that the people of Wisconsin are always his top priority.

"I also applaud Gov. Evers for announcing the investment of $100 million new federal dollars in Wisconsin schools. The future of our kids is paramount, and this investment will provide critically important resources in light of Republicans’ education cuts. At the same time, we know that much more school funding is needed to avoid cuts and layoffs in the next two years. Through today’s partial vetoes, Gov. Evers has put the legislature in a position to restore more of the school funding that Republicans cut from his original budget. I call on legislative Republicans to act immediately to fund our schools and invest in our kids’ future."

Wisconsin Insurance Commissioner Mark Afable

"We have said all along that Governor Evers prioritized access to high quality, affordable health care during the budget development and deliberation process. This budget includes important investments that deliver on that commitment. Among them is fully funding the bipartisan Wisconsin Healthcare Stability Plan (WIHSP).

"This budget may not have everything we fought for, but it’s an important step forward that builds on our agency’s success in expanding health care access."

Democratic Party of Wisconsin Executive Director Nellie Sires

"Thanks to Governor Evers’ leadership, we have a historic opportunity to deliver for families, small businesses, and communities across the state. When our economy and working families need help the most, Governor Evers is delivering on his promise and providing historic tax relief to more than 1.6 million Wisconsinites. That’s in addition to the more than $2 billion in tax relief the governor has already secured – including a $450 million tax cut earlier this year to help small businesses and lower-income families bounce back.

"The governor is also making sure Wisconsin students and teachers have the support they need. Because of his leadership, the budget directs $685 million in additional funds to education, and for the first time in two decades, we will finally hit our two-thirds funding commitment to public schools. The governor is committed to ensuring Wisconsin students, teachers, and parents have well-funded public schools, regardless of their zip code.

"The bipartisan support for this budget shows Governor Evers’ commitment to finding solutions to the challenges facing our state. Now, we have the opportunity to do even more to move Wisconsin forward. We’re confident that Governor Evers’ steady leadership and bold solutions will make sure Wisconsin bounces back stronger than ever before."

University of Wisconsin System President Tommy Thompson and Regent President Edmund Manydeeds III

"The University of Wisconsin is the state’s greatest asset next to its people. We thank Gov. Evers and the legislature for their leadership in providing significant investments in the university’s mission, especially critical improvements in our infrastructure and support for our employees."

Republican Party of Wisconsin Chairman Andrew Hitt

"Tony Evers tried to raise taxes by $1 billion in his proposed budget, so it is laughable that he is now taking credit for Republicans’ tax cut. We applaud Wisconsin Republicans for putting forward a historic budget with transformative tax cuts that will put more money in the pockets of Wisconsin families despite Tony Evers’ tax increase in his proposed budget."

Senate Majority Leader Devin LeMahieu (R-Oostburg)

"Today is a great win for the people of our state. We now have a responsible state budget that cuts taxes, spends wisely, and keeps our state on solid financial footing. The Legislature built a budget that truly represents Wisconsin values.

"Governor Tony Evers deserves NO credit for signing our budget. This was not a bipartisan process of colleagues sharing ideas. He got boxed into a corner and rather than fight for his unpopular budget and risk a political knockout, he and his team threw in the towel and signed our responsible budget.

"He is not a fighter. He is not a leader. He did not sign our conservative budget out of bipartisan motives. He is merely sensible enough to recognize a better budget when he sees one.

"Governor Evers proposed raising taxes by more than $1 billion to fund his tax-and-spend budget. Instead, the Legislature listened to Wisconsinites and passed the most conservative spending plan in a generation including tax cut of more than $3 billion.

"The Legislature targeted funding increases to health care providers, special education, local roads, and mental health services - investing in areas of need while cutting taxes and holding state spending to historic lows. Today, despite minor, politically-motivated partial vetoes, our Wisconsin Budget will become law.

"The Legislature delivered a Wisconsin Budget that benefits everyone and sets our state on a solid foundation for the future."

State Rep. Mark Born (R-Beaver Dam) and State Sen. Howard Marklein (R-Spring Green)

"Once again, Republicans in the legislature have led the way and sent Governor Evers a common-sense budget that invests in priorities and puts more money back into the hands of families. It is laughable that the Governor is now taking credit for cutting taxes. Just six months ago, the Governor wanted $1 billion in tax INCREASES. Even though the Governor used his veto pen to make some significant changes, he ultimately had no choice but to sign the Republican legislature’s budget which leads Wisconsin into the next biennium."

State Sen. Chris Larson (D-Milwaukee)

"Governor Evers understands the value of investing in our children. While the Republican budget continued the dangerous scheme of allowing an education funding gap and barely qualifying for federal funds, Governor Evers was able to meet the promise of two-thirds funding by using federal funds to increase per-pupil aid by $100 million. Given the education funding shell game of the GOP budget, there was little room left for the governor to fix their chaos while meeting the needs of our kids.

"When will Republicans stop forcing the false choices between tax cuts and adequate public education funding? In a year of plenty, they chose to underfund our kids, while giving an outsized tax cut to the wealthy. Seventy-four percent of this regressive tax cut goes toward the wealthy few, while the average person saves little. How many of them should we expect to be grateful enough to use their ill-gotten gains to fund a new school air ventilation system? Or boost the special education reimbursement rate?

"Budget after budget, when Republicans control the process they have failed our children and put our future in jeopardy. They have done this by intentionally denying our kids adequate and equitable funding for their education. It is time for those in GOP leadership to hear the call of the people. Over the past biennium, our communities passed 138 referendums, costing taxpayers $3,220,966,510. Wisconsin deserves better than forcing local communities to keep going back to referendums to make up the gaps in what is needed for our children.

"As the economic future of Wisconsin remains strong, we should have invested in our teachers, reduced classroom sizes, and ensured that our public schools system returned to being a point of national pride. As a member of the Senate Committee on Education, I will continue to fight for progressive policies to bring our children, and those that devote their lives to them, the resources they need to thrive.

"This Republican budget started out as an ugly and empty piñata, and while Governor Evers’ veto pen couldn’t fill it with good policies or smart investments, he at least broke it apart into a few useful pieces."

State Sen. Dale Kooyenga (R-Brookfield)

"Over the past several months, Republicans have crafted a reasonable, sustainable budget that we knew could earn broad support. We were successful. This budget had the second lowest number of partial vetoes in two decades, the most votes in the legislature since 2001, and was the first to pass with bipartisan support in the legislature since 2007.

"On behalf of all Wisconsin taxpayers, I am happy that Gov. Evers and sensible Democrats agreed this is a solid budget and that tax relief is a value we should all share. Under this budget, middle-class income earners, homeowners and Main Street businesses will benefit from further reducing the tax burden. This tax cut and this budget as a whole will truly make our communities and state stronger long into the future.

"I am disappointed that the Governor did not adopt the changes to the withholding tables. Although this may appear to be an inside-baseball accounting issue, it represents accounting practices that may increase the GAAP deficit and delay Wisconsin taxpayers from realizing the reduction in taxes."

Wisconsin Manufacturers & Commerce (WMC) President & CEO Kurt Bauer

"While much of the budget includes common sense priorities and fiscally responsible spending, none of this would be possible without the prudent decisions made by the State Legislature over the past couple months to drastically modify what Gov. Evers initially proposed. Following the worst economic downturn in a century, we thank lawmakers for providing the substantial tax relief our state needs to bounce back.

"Unfortunately, Gov. Evers plans to veto a significant part of that tax relief, the repeal of Wisconsin’s outdated and costly personal property tax. As many Main Street businesses are struggling to recover from the pandemic and subsequent government restrictions, vetoing a $200 million tax cut will make it harder for small businesses to fully recover. We urge the governor to reverse course on this issue."

State Senator Dan Feyen (R-Fond du Lac)

"I am thrilled Governor Evers has signed our Republican-authored state budget into law. This will help Wisconsinites keep more of their hard earned money through historic tax cuts, while still funding our priorities like education, transportation, healthcare, and broadband.

"Wisconsin is primed to take off from the economic upheaval of the past year due to smart fiscal planning and responsible investments. This budget is another step forward for Wisconsin as we continue to make the right decisions for our state."

State Sen. Chris Kapenga (R-Delafield)

"After spending the last several months disparaging Republican policies at every chance he got, Governor Evers has now nearly wholesale embraced the Republican written budget.

"In particular, Governor Evers proposed raising taxes by $1 billion in his original budget wish list. He now gets to reverse course and take credit for the Republican budget which will cut taxes by over $3 billion.

"Governor Evers says he supports tax cuts, but he always waits for the Republicans to do it for him.

"But even as he takes credit for these tax cuts, he can’t resist keeping higher taxes on small businesses by announcing his veto of the elimination of personal property tax. This continues his clear attack on those who employ people. By vetoing the tax cut and our bill to end the federal UI benefits, he’s making it difficult for businesses to fill open positions and causing businesses to lose desperately needed revenue to keep the doors open.

"Governor, do you really help small businesses ‘Bounceback’ by kicking them while they’re
down?"

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