The co-chairs of the Joint Finance Committee urged caution even as the Legislative Fiscal Bureau projected a $2.5 billion surplus at the end of 2025-27, nearly $1.5 billion more than what the agency had expected when the budget was signed.
Rep. Mark Born, R-Beaver Dam, and Sen. Howard Marklein, R-Spring Green, noted yesterday some of the boost was driven by a strong stock market and resulting tax collections.
“We must be careful when committing to ongoing spending using one-time money,” the GOP lawmakers said.
Their call came on the heels of Dem Gov. Tony Evers pushing lawmakers to use an expected boost in state revenues to provide $1.3 billion in property tax relief. During an availability with reporters earlier this week, Evers said the state was on pace to see up to an additional $1 billion in revenue beyond what was expected just six months ago.
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Many homeowners saw a spike in their property tax bills, largely due to schools. Evers in the 2023-25 budget issued a 400-year veto allowing a $325 per year increase in what districts can spend per student between general state aid and property taxes. The budget didn’t put any additional money into the formula — which Evers called one of his great regrets over the document — and that allowed districts to raise their property tax levies to cover the full increase.
Evers posted on social media yesterday the revised estimates were, “Great news for my 2026 legislative agenda! Let’s work together to get good things done for Wisconsin.”
The bulk of the additional $1.5 billion that LFB is now projecting is due to nearly $1.4 billion in higher-than-expected tax collections, particularly in income and corporate.
LFB chalked that up to several factors. That includes growth in the national gross domestic product for 2025 coming in higher than what had been projected due to lower-than-expected inflation. The nation also saw a lower effective tariff rate than previous estimates.
LFB offered a couple of caveats in its projection.
One, the Department of Health Services recently projected the Medical Assistance program will finish the biennium with a shortfall of $213.2 million in general purpose revenue. LFB noted that’s about 2.2% of the GPR budget for the program.
Meanwhile, preliminary guidance from the Trump administration has created some uncertainty over the increase Wisconsin made to its hospital assessment in the 2025-27 budget. The move was designed to draw more matching dollars from the federal government that would then be sent back to hospitals in payments that would exceed their higher assessments.
The Centers for Medicare and Medicaid is currently writing federal rules addressing such moves. If Wisconsin’s change is disallowed, it would mean $792 million less in GPR for the biennium.
Because of the uncertainty over both issues, they weren’t included in the LFB’s projection of a $2.5 billion gross balance at the end of 2025-27.
Senate Minority Leader Dianne Hesselbein, D-Middleton, called for the additional revenue to go toward helping lower costs for Wisconsinites.
“Wisconsin Senate Democrats are focused on what we owe the people of Wisconsin: a thoughtful review of the options and decisions about investments that reflect the priorities of the people of Wisconsin, meet critical needs, and are sustainable over time,” she said.
