Last night, Governor Evers addressed a joint session of the state legislature where he outlined his priorities for the 2023-2025 Wisconsin State Budget. He had previously teased several of his initiatives over the last few weeks leading up to the speech. Unsurprisingly, with a $7 billion surplus to work with, his budget has considerably more spending than previous budgets.
Overall, his $103.8 billion budget comprises an increase of 17.9% in the first year, and essentially flat in the second year. In the General Purpose Revenue account – which is comprised of revenue from your standard income and sales taxes – the $48.1 billion in spending is an increase of 23.2% in the first year and a small 1.2% dip in the second year.
Republican leaders in the legislature responded to his budget by hinting at some areas of agreement but announced they would essentially scrap the whole proposal and start from scratch. The legislature has the power of the purse and the Governor’s budget is only a starting point. Once the legislature passes the budget, Evers can sign it in its entirety, veto it in its entirety or – most likely – line-item veto specific sections.
Tax Reform
Governor Evers is proposing a variety of tax reforms, some of which will benefit and others that will hinder businesses in Wisconsin. Some of the highlights include:
- Repealing the personal property tax.
- Increasing the refundable share of the research & development tax credit from 15% to 50%.
- Limiting the Manufacturing and Agriculture credit to only apply to the first $300,000 in production activities income for each firm.
- Limit the current 30% long-term capital gains exclusion to individuals with incomes below $400,000 and joint filers below $533,000.
Infrastructure
- Increase general transportation aids for local governments by 4% per year.
- Adding $50 million to the Local Road Improvement Program.
- Increasing mass transit aids by 4% per year.
- Allowing local governments to establish Regional Transit Authorities.
- $750 million for the Broadband Expansion Grant Program.
Local Government
- Proposing to send 20% of the sales tax to local governments, which is estimated to equal $576.2 million in 2024-25.
- Public safety aid will be 43% of the new appropriation, with the remaining amount to be used as the municipalities see fit.
Workforce, Housing and Families
- Creating a paid family and medical leave program;
- Under this proposal, workers will be eligible for 12 weeks of leave beginning in 2025, and will be funded through payroll contributions shared equally between the employer and employee.
- Investing over $300 million into the Child Care Counts programs to continue funding child care centers across the state.
- $22 million invested in the “Partner Up!” Program to support partnerships between businesses who purchase child care slots for their employees.
- Creating an Affordable Workforce Housing Grant program with $150 million to provide funding to local municipalities to encourage the development and maintenance of additional affordable housing.
- $100 million to create a Municipal Home Rehabilitation Program for awarding grants to municipalities to renovate and restore blighted residential properties.
- $200 million to continue the Workforce Innovation Grant Program.
- $50 million to continue the Main Street Bounceback Grant Program.
Many of these programs and policies will make it through to the final budget, but many others will be amended or removed altogether. For the next four months or so, the legislature will debate among themselves and take public input on how they should craft their proposal. The current fiscal year ends June 30, but the legislature and governor have rarely met that deadline to pass a new budget. However, unlike the federal government, the state government does not shut down. It just keeps operating under the old budget until a new one replaces it.
Stay tuned for more information as the process unfolds.
