Gov. Tony Evers today proposed a budget that would boost state spending by $3.2 billion with half of that going to K-12 education as he laid down a marker on his priorities ahead of a possible reelection bid in 2022.
The two-year spending plan, which is sure to face stiff resistance from the GOP-run Legislature, includes restoring collective bargaining powers for many state employees after Republicans stripped them under former Gov. Scott Walker a decade ago.
It also would require background checks on all firearms sales and creation of a red-flag law, both proposals that Republicans have already rejected. GOP lawmakers also have signaled they would reject two other big items Evers released ahead of the formal budget introduction: legalizing recreational marijuana and expanding Medicaid. Both of those items were projected to bring hundreds of millions in new revenue to the state.
In addition, the Evers budget plan proposes new or expanded tax cuts to benefit seniors, the poor, veterans and first-time homebuyers. Meanwhile, he proposed tax increases on large manufacturers and the wealthy.
Evers has battled GOP lawmakers for much of his two years in office, and their relationship has frayed even more during the COVID-19 crisis over various steps the guv has taken to address the pandemic.
Still, Evers challenged the Legislature to “summon the will to get this done” and help the state bounce back from the crisis.
“There’s no time for false promises of hope and prosperity with empty words that you know full well won’t match your actions,” Evers said in a virtual address received by GOP lawmakers assembled in the Assembly chamber and some Dems. “You can disagree with me if you want, but don’t punish the people we serve so you can settle a score no one but you is keeping.”
Republicans weren’t briefed on the budget ahead of Evers’ speech, but slammed what they’d heard and gleaned from media reports. Assembly Speaker Robin Vos, R-Rochester, said one of the only things from Evers’ speech that he agreed with was the guv’s call to work together. But he knocked the guv for what he said are “poison pills” in the document such as restoring collective bargaining powers for some public employees and legalizing marijuana. Vos said the guv knows those proposals have “zero chance” of passing the GOP-controlled Legislature.
Vos also suggested the document was a clear indication that Evers will seek reelection in 2022 and he’s not serious about governing.
“He’s serious about politics,” Vos said. “This to me looks like it is nothing more than a liberal Democrat from Madison’s wish list to his potential donors and to his potential voters as he seeks reelection.”
The budget also would address one of Evers’ biggest vulnerabilities if he seeks reelection. After his administration was pummeled by Republicans for delays in delivering unemployment checks to laid-off Wisconsin workers during the pandemic, Evers proposed $79.5 million to overhaul the computer system used to process claims. Evers in last month’s State of the State address already called on lawmakers to take up legislation in a special session that would begin the overhaul, but Republicans have argued the guv already has the power to begin that work.
The budget also calls for $15 million to address the increase in workload for administering the program.
And the document asks for increasing the maximum weekly benefit rate until it reaches 75 percent of lost wages by 2024, eliminating the one-week waiting period to receive benefits, and repealing both work search and drug testing requirements for those in the program.
The Evers spending plan would spend $41.5 billion in general purpose revenue over the biennium, which would amount to spending increases of 7.3 percent in the first year of the budget and another 2 percent in the second year.
When adding in federal funds, program revenue and other money, the budget would spend $91 billion in 2021-23, increases of 9.3 percent in the first year and 0.4 percent in the second.
Senate Majority Leader Devin LeMahieu, R-Oostburg, said Republicans “fixed” Evers’ first budget proposal two years ago, stripping out a series of tax increases, spending and divisive policies. LeMahieu said Evers introduced something similar and perhaps even worse than the first time around, saying the state didn’t need such significant spending increases with the economy emerging from a pandemic.
“I don’t think the governor has learned his lesson at all,” LeMahieu said.
The proposed spending comes on the heels of the Legislative Fiscal Bureau projecting the state will finish the current fiscal year June 30 with nearly $1.9 billion in the general fund. The nonpartisan budget arm of the Legislature projects state revenues will then grow 1 percent in the first year of the upcoming budget and another 4.6 percent in the second.
The guv’s proposal also would leave the state in relatively good shape heading into the 2023-25 budget. It would produce a structural deficit of $660 million for the next biennium, according to the administration. Structural deficits are a measure that compares spending commitments in the next budget to revenue expectations for the current one. Over the last two decades, the structural deficit has been as high as $2.9 billion. The state went into the 2013-15 biennium with a structural surplus of $146 million, the only time that’s happened over the last 20 years.
Here’s a look at highlights from specific parts of the budget:
K-12 funding
Evers, a former state schools superintendent, is again making education the heart of his proposal.
State Superintendent Carolyn Stanford Taylor requested a $1.6 billion increase for K-12 education over the next two years, and Evers’ budget proposal would match that figure. The infusion of cash would restore the state’s share of K-12 education costs to two-thirds after it repealed that requirement in the 2003-05 budget. In the current school year, the state is picking up 65.2 percent of costs, according to the Legislative Fiscal Bureau.
Evers said the state should’ve recommitted to two-thirds funding of public school in the 2019-21 budget, saying it was “sidelined by politics despite having broad public support.” He said GOP lawmakers have supported the step in the past, but couldn’t get it done in the last budget or a special session he called.
“Well, here’s the bottom line: if members of the Legislature are going to make promises on this, then they sure ought to keep them,” Evers said. “Let’s stop talking about it and just get it done.”
The proposed K-12 increase includes:
*a boost of $612.8 million GPR in general school aids over the biennium, which Evers says would be the largest increase since the 2005-07 biennium;
*increasing special education funding by $709.6 million to reimburse districts for 45 percent of their costs in the first year of the budget and 50 percent in the second. The current reimbursement rate is 29 percent.
*increasing the revenue limit for about 140 low-spending districts to $10,250 per student in the first year of the budget and $10,500 in the second year, up from $10,000 now. Revenue limits were first put in place for schools in the early 1990s and used the 1992-93 school year as a starting point. Districts were then generally allowed an annual increase in per-pupil spending. That meant districts that were spending significantly less per student have lagged behind others in the increases on what they can spend between state aid and property taxes, while districts that were spending more in the early 1990s have a significantly higher cap on per-pupil spending. Currently, more than three dozen districts have a cap of more than $14,000 per student.
*$46.5 million for school aids to support mental health;
*$60.8 million to boost school aids for economically disadvantaged students. The increase would boost per-pupil payments by $75 each year to $750.
*repealing the Opportunity Schools Partnership Program, which was created to allow the takeover of some of Milwaukee’s lowest-performing schools. It has yet to be used.
Higher ed
The guv’s budget calls for a $192 million boost to the UW System.
Of that, $40 million would go to increase the university’s general operations budget while $50.4 million would go to make up for lost revenue by continuing the freeze on in-state, undergraduate tuition through the 2022-23 school year. The freeze has been in place since 2013.
The university had sought a $97.5 million increase for general operations, though it didn’t request any additional aid to backfill a tuition freeze.
Other provisions include:
*increasing funding for need-based financial aid by $18.6 million for the UW System; $6.9 million for the Tech College System; $8.6 million for private, nonprofit colleges; and $144,600 for tribal colleges.
*providing $39 million over the biennium for a program to pay tuition and fees for students whose household income is $60,000 or less. UW-Madison has already implemented a similar program, and the new effort would be geared toward other campuses in the system.
*giving the UW System Board of Regents the authority for lines of credit for short-term funding on athletic and education expenses. UW had asked for the authority to borrow between $500 million and $1 billion to offset pandemic-related losses, and the guv’s provision doesn’t include a cap.
*providing $36 million over the biennium in additional state aid for the Wisconsin Technical College System.
Evers touted that his budget would spend more on the UW System than the Department of Corrections. Each would make up more than $1.3 billion in GPR over the biennium with $8.1 million more spent on UW.
Labor
The proposal to restore collective bargaining powers for some state employees is just one provision Evers is proposing that would undo changes in state labor laws that Republicans implemented over the past decade.
Under Walker, Republicans pushed through Act 10 in 2011 stripping most public employees of the power to collectively bargain. The package of changes also included a requirement that unions receive support from 51 percent of members, not just those voting, to obtain recertification. The budget would eliminate that requirement.
The collective bargaining provision would apply to front-line workers whose regular duties include interacting with the public or large populations or maintaining public works. The Evers administration said the Wisconsin Employment Relations Commission would be tasked with defining which bargaining units would be impacted.
Employers would also be required to meet at least quarterly on policies affecting wages, hours and working conditions.
Evers didn’t propose any changes to collective bargaining powers in his first budget.
The budget also would overturn the GOP ban on project labor agreements, which allow government contracts to be awarded exclusively to unionized firms. It also would restore the prevailing wage, a requirement that projects funded by state and local governments pay the hourly wage and benefits paid to the majority of workers in the project’s area.
The budget also would raise the state’s minimum wage, now $7.25 an hour, to $8.60 after the effective date of the budget. It would then go to $9.40 on Jan. 1, 2023, and $10.15 on Jan. 2, 2024, before being indexed for inflation.
The budget also calls for the creation of a task force to study going to a $15-an-hour minimum wage. Congressional Dems are now debating whether to include a federal minimum wage of $15 an hour in the pending $1.9 trillion COVID-19 bill.
Taxes
The net impact of Evers’ tax proposals would be a $1 billion increase over the biennium, according to his office.
The biggest chunk of that would come from matching state tax laws to the provisions of a tax bill former President Trump signed in December 2017. The combined impact of the numerous changes would be an increase of $540.1 million.
Two years ago, Republicans rejected Evers’ attempt to place new limits on the manufacturing and ag credit. But he has brought back the proposal. Like last time, it would restrict the credit for manufacturers to $300,000 per tax year. The change would raise an additional $487.4 million over the biennium.
Evers also wants to change the capital gains exclusion. The proposal would maintain the current deduction for 30 percent of net gains from stocks, precious metals and real estate held for more than one year for single filers with an income below $400,000 and married joint filers making less than $533,000. The exclusion would be eliminated for filers making more than those limits. The proposal would raise taxes $350.5 million over the biennium.
The guv also wants to change a tax break on tuition parents pay to send their child to private primary or secondary schools. It would be limited to single filers with incomes below $100,000 and married couples with incomes of less than $150,000. There is currently no income limit on the tax deduction, and the change would generate $12.9 million over the biennium.
Meanwhile, Evers is also proposing a series of tax breaks.
That includes a supplement to the federal Work Opportunity Tax Credit, which encourages hiring people who have faced significant barriers to employment such as veterans and ex-cons.
The state credit would equal to 50 percent of what a taxpayer claims for the federal credit with a reduction in tax income of $51.9 million over the biennium.
Evers also wants to allow those who are self-employed to deduct their health insurance premiums, a savings to taxpayers of $9.5 million annually, and to increase the maximum income threshold for the homestead credit. Now, filers had to have a household income of less than $24,680 in 2020. The proposal would up that for low-income seniors and those with a disability to $30,000 in 2021 and then index it beginning in 2023. The enhanced credit, which is meant to soften the impact of property taxes and rent on those with low income, would provide $68.9 million in savings over the biennium. Evers proposed something similar in his last budget.
The guv also would expand a property tax credit for veterans and surviving spouses and expand a law that excludes from their adjusted gross income money that National Guard and Reserve troops earn while on active duty. The proposal would add income earned for state active duty or support missions to the exclusion, a savings of $430,000 a year.
Evers would enhance the earned income tax credit, which benefits low- and moderate-income filers, by $148.3 million. A bill the state Legislature took up Tuesday included a more modest boost to the credit of $30 million.
The guv also wants to add a nonrefundable tax credit for child care expenses. The move would repeal a less generous state tax provision, resulting in a reduction of $9.8 million in state revenues.
The guv also would increase the available credits for affordable housing to $100 million from the current $42 million available.
The document also includes provisions that would impact local property taxes, including one that would allow municipalities and counties to increase their levies by at least 2 percent a year. Now, they’re only allowed to increase for net new construction.
According to the Evers administration, the mythical median-valued home estimated to be worth $197,200 in 2020-21 would see an increase of $23 on December’s property tax bill of $3,317. That would then go up $80 from $3,340 to $3,420 on the December 2022 bills. The increases would amount to 0.69 and 2.39 percent.
Health care
The centerpiece of Evers’ health care proposal is a second attempt to persuade GOP lawmakers to accept federal money to expand Medicaid through the Affordable Care Act. The Legislature two years ago rejected the move as Republicans decried it as an expansion of welfare. This time, the Evers administration estimates it would save $634 million in GPR while drawing an additional $1.3 billion in federal money over the biennium.
Evers’ budget includes two new initiatives.
One would put $1.8 million into studying the development of a state-administered public option, which would create a government-run health insurance agency that would provide coverage options alongside private companies. If implemented, Wisconsin would join only Colorado and Washington in offering the option.
Another provision would direct the Office of the Commissioner of Insurance to develop a plan that would offer premium subsidies by 2024 for some Wisconsinites enrolled in the Affordable Care Act’s marketplace. To qualify, individuals would have to make between 138 percent and 250 percent of the poverty level, and be enrolled in a silver tier plan.
The federal poverty level is currently $26,500 for a family of four, and silver plans include cost-sharing reductions to lower the costs for those in the marketplace.
The budget also includes a series of proposals such as raising the age to 21 to purchase tobacco and vapor products. In December 2019, Trump signed legislation to raise to 21 from 18 the federal age to purchase tobacco products. But Wisconsin hasn’t been able to enforce it because there’s no similar provision in state law, which now bars sales to those under the age of 18.
Assembly Minority Leader Gordon Hintz, D-Oshkosh, said the guv’s proposal shows “what is possible if we truly prioritize Wisconsin people and Wisconsin communities.
“Governor Evers articulated a progressive plan to invest in Wisconsin’s public schools, increase access to affordable health care, spur economic development in every part of our state, and ensure our local government partners have the resources to respond to important needs close to home,” he said.
Explore more budget information at the DOA’s 2021-23 Executive Budget page.
