Prior to the election, GOP candidates were touting major tax reform plans in the new legislative session. The election results ended the full extent of their plans, but tax cuts appear to still be on the horizon.
Speaking at a meeting of the Wisconsin Policy Forum, Speaker Robin Vos announced that he expects to use a large portion of the projected $6.8 billion surplus for tax cuts. In the last budget, Evers and legislative Republicans agreed on $3.4 billion in reductions and Vos says he expects that to be the floor for discussions this time. Governor Evers announced he will propose a 10% middle class tax cut when he releases his budget in February.
Republicans still maintain full control of the budget writing process with majorities in both the assembly and senate, but Evers will still need to ultimately sign the budget into law. Vos said while they will continue to focus on the middle class, the top income tax bracket deserves to be lowered as well. Wisconsin’s top bracket of 7.65% is the second highest in our region behind Minnesota at 8.53%. Illinois and Michigan both have a flat tax around 4.5% while Iowa just passed legislation to do the same by 2026.
In addition to tax cuts, Speaker Vos also recognized the strain local government budgets are under with record inflation and state mandated revenue limits. Vos said he was open to changes to shared revenue to help maintain staffing in priority areas such as law enforcement and sanitation, including potentially segregating a portion of the state sales tax to go to local governments, but did not elaborate. He said he was working with the League of Municipalities, Towns Association, and Counties Association on possible fixes.
Governor Evers will introduce his budget in February, after which the legislature will begin their process of passing their version. The fiscal year ends June 30, 2023, though unlike the federal government, Wisconsin continues to operate under the old budget until a new one is passed so there is no government shutdown. In the last 30 years, the state has rarely passed a budget into law prior to the June 30 deadline.
