Evers announces 'tentative' budget deal with GOP leaders; signs point to Dem votes needed in Senate
MADISON, Wis. (CBS 58) -- Gov. Tony Evers and top officials in the Legislature have reached a compromise deal on several key sticking points in the next two-year state budget, according to a statement the governor's office released Tuesday morning.
The proposed state budget is now before the full Senate and Assembly after the budget-writing Joint Finance Committee (JFC) passed the final portions of the spending plan in an omnibus motion Tuesday afternoon.
The JFC vote passed 13-3, with State Sen. LaTonya Johnson (D-Milwaukee) joining 12 Republicans in supporting the final motion. The vote came hours after Evers' office announced said the Democratic governor settled on a "tentative bipartisan budget agreement" with Assembly Speaker Robin Vos (R-Rochester), Senate Majority Leader Devin LeMahieu (R-Oostburg) and Senate Minority Leader Dianne Hesselbein (D-Middleton).
Hesselbein's involvement in the talks signals a belief Democratic votes will be necessary in the state Senate, where Republicans have an 18-15 advantage, but have seen multiple GOP senators openly oppose the budget framework that has taken shape in recent weeks.
Wisconsin has a $4 billion surplus, and the battle over how to shape the next state budget has essentially boiled down to a progressive push to boost social programs and school funding against a conservative push to send that money back out in the form of tax cuts.
Lawmakers from both parties voiced dissatisfaction with the agreement Tuesday, but legislative leaders said they were confident there'd be enough 'yes' votes in both parties to clear the Senate and get a budget bill on Evers' desk before July 4.
Details of the agreement released by the Evers administration cover several of the key areas that have held up budget negotiations: K-12 funding, support for the UW System, continued aid for child care programs and tax cuts.
“The people of Wisconsin expect their leaders to show up, work hard, and operate in good faith to get good things done," Evers said in a statement. "We’ve shown we’ve been able to get good things done for Wisconsin when people put politics aside and decide to work together to do the right thing."
Tax cuts included
A key win for Republicans is Evers' pledge to sign off on $1.3 billion in tax cuts previously passed by the JFC, which had been rewriting nearly all of the budget Evers originally proposed in February.
The GOP plan puts more people in the second-lowest of four tax brackets, which pays a 4.4% income tax. Currently, married couples pay that rate on up to $38,000; income beyond that amount is taxed at 5.3%.
Republicans voted to instead tax income up to $67,000 at 4.4%. For married couples making that much and more, it would amount to about $600 in annual savings. Single and separate filers would save about half that amount.
Other tax cut provisions included in the deal are an exemption on retirement income and the elimination of the sales tax on residential utility bills, which would save households $178 million over the next two years.
The agreement also includes a new film tax credit, which would come with the creation of a new film office within the Department of Tourism.
"This compromise will provide meaningful tax relief for retirees and the middle class," LeMahieu and Sen. Howard Marklein (R-Spring Green), a co-chair of Joint Finance, said in a statement.
Following Tuesday's JFC vote, Marklein touted the cuts and added the discussions were the nature of operating under divided government, saying the deal includes some measures very important to him and others he'd never want to see in a state budget.
"We just gave our citizens a five-percent cut on their electric bills. They sure, hopefully, will appreciate that," Marklein said. "This is a great example, I guess, of a compromise document."
School funding revised
One of the most closely watched issues in this budget has been reimbursement for what school districts spend on their students' special education needs. In the previous budget, which ended Monday, the state covered about 33% of a district's special education spending.
The bipartisan agreement calls for the state to increase the reimbursement level to 42% in the budget's first year and 45% in the second.
The funding increase is still about $625 million short of the $1.13 billion increase Evers proposed in his budget, which would've raised the reimbursement level to 60%. However, it's a $275 million increase from the amount lawmakers passed earlier this month, when the Joint Finance Committee voted along party lines to increase the reimbursement level to 37.5% by 2027.
The plan also doubles the amount of state funding dedicated to student mental health programs from the $15 million adopted by Joint Finance to $30 million.
Still, some Democrats believe the increases don't go far enough. State Sen. Kelda Roys (D-Madison) signaled she'll oppose the budget because of the school funding.
There is not an increase in general state aid for schools; instead it relies on the 400-year partial veto Evers issued in 2023 allowing school districts to raise property taxes by $325 per student every year.
Roys and other critics said if the state increased school aids, districts could then avoid annual property tax hikes, even if they had the ability to implement them.
"This is an overwhelmingly Republican budget that fails to meet the needs of our kids," Roys said. "And it's great that the efforts of Senator Hesselbein and the governor have made it less harmful. I think that is part of our job, but ultimately have to ask ourselves what can we do to meet the needs to Wisconsin kids?"
A child care compromise
The agreement provides $330 million in child care investments, according to the Evers administration. That includes $110 million that will go out in direct payments to child care providers, a big win for Democrats since GOP leaders, specifically Vos, have previously said they wholly opposed the idea of subsidizing child care businesses.
There would also be $123 million for the Wisconsin Shares subsidy program, which helps low-income family pay for child care.
"For those struggling child care centers, that's gonna make a difference as to whether they keep their doors open or not," Johnson said.
There would also be provisions aimed at opening more slots for infants and toddlers. A $28.6 million pilot program would pay providers $200 per month for every infant under 18 months and $100 per month for every toddler between 18 months and 30 months.
The deal also includes Republican proposals to reduce strain on providers through deregulation. One change would lower the minimum age to 16 for assistant child care teachers. Another would allow household-based family care centers to watch up to 12 kids.
The plan also would spend $66 million on a new "Get Kids Ready" program, which would specifically help day cares offer programming aimed at four-year-olds with the goal of better preparing them for school.
UW System boost
Some of the Republican holdouts in the state Senate had specifically mentioned a desire to see cuts to University of Wisconsin System. Evers had responded by saying he'd veto the entire budget if it cut funding for higher education.
The bipartisan budget agreement calls for an increase of $256 million in state support for the UW System, according to the governor's office. That funding includes more than $100 million to help "stabilize" universities that have recently struggled with campus closures and layoffs.
JFC Co-chair Rep. Mark Born (R-Beaver Dam) said the $256 million figure was "spin" from the Evers administration. He said that figure included pay raises all state workers will get under the agreement, which includes a 3% raise in the budget's first year and a 2% raise in the second.
Born acknowledged other Republicans' opposition to any funding increase for the UW System after Vos told reporters last month he supported cutting UW funding by nearly $90 million.
In exchange for the funding, Republican won the concessions of mandatory workload standard for faculty, setting minimums for how much time they must spend teaching classes.
Born said that, along with a cap on the number of positions allowed throughout the system, were must-haves for Republicans.
"The UW is really is seeing about a $50 million increase," Born said. "So it's still an increase, and you're right; that is more than our caucus wanted because we are tired of some of the things going on there with the bloat, but that's why the reforms are important with that."
The budget also includes more than $840 million for buildings projects across the system, including $189 million for the Health Sciences and Northwest Quadrant complex at UW-Milwaukee.
Under the plan, there would also be a $27 million poll for merit pay, which would be controlled by the Legislature's Joint Committee on Employment Relations.
Hospitals get a hand...but will also pay more
Under the agreement, hospitals will pay significantly more in fees that help boost the state's Medicaid fund.
Currently, hospitals pay 1.8% of their net patient revenue to the state Department of Health Services. The bipartisan framework increases those payments to 6% of hospitals' revenue with 30% of those collected dollars going into the Medical Assistance Trust Fund, which covers the state's Medicaid spending.
The rest of that money, totaling more than $1.1 billion, would go back to hospitals.
"Provisions included in versions of federal reconciliation legislation could prohibit or limit this type of policy change in the future," the Evers release said in a reference to the current federal budget bill, which Republicans refer to as the "One, Big, Beautiful Bill."
A win for Milwaukee County
Johnson said one of her biggest reasons for backing the budget was a provision giving $30 million to Milwaukee County.
It's meant to help the county make up for being Wisconsin's only county on its own when it comes to patrolling its highways.
Johnson said it's long been unfair Milwaukee County doesn't get help from the Wisconsin State Patrol on highways while still having to pay a portion of its traffic citations to the state.
"Milwaukee County gets pimped more than any other county in this state," she said during the JFC meeting. "And you can quote me on that because it's true."
Johnson said the additional aid for the county was welcomed. It could be especially significant if other Milwaukee votes are needed in the Senate Wednesday.
"It was huge," she said after the JFC meeting. "It was huge because so many times in this building, Milwaukee and Milwaukee County are overlooked."
What's Next?
Legislative leaders have scheduled sessions for Wednesday in both the Assembly and Senate with the goal of passing a budget bill that day.
While the current budget ended Monday, spending can continue at current levels until a new two-year budget is enacted. In order for that to happen, it's become clear Republicans in the Senate need some Democrats to join them.
"Elections matter," Hesselbein said in a statement. "The fact that Democrats gained four Senate seats and are close to taking the majority means that Senate Democrats were able to make this budget agreement better for the people of Wisconsin."
At least four Republican senators, Rob Hutton, Chris Kapenga, Andre Jacque, Steve Nass, have expressed varying degrees of reservations. If all four vote no, at least three Democratic senators would need to support the bill in order for it to pass.
Born said he was extremely confident when asked on a scale from one to 10 how certain he was the Legislature will pass a budget bill during Wednesday's sessions.
"I would say a 10," Born said. "We're gonna pass this budget this week."
The governor's office said under the deal, Evers won't use his partial veto powers to strike any of the area covered in the agreement. However, he would still be willing to issue partial vetoes in other parts of the budget, which could include corrections, natural resources and the elections commission, among other state agencies.