Freezing property taxes, spending increases and tax relief: Is Gov. Evers' budget sustainable?
MADISON, Wis. (CBS 58) -- Efforts to freeze property taxes, massive spending increases paired with a mix of tax reductions and hikes are all key aspects of Gov. Tony Evers' state budget proposal.
But is the governor's 2025-2027 spending plan sustainable?
Evers' proposal spends $119 billion over the biennium, a 20% increase from the last state budget.
That includes a combination of cutting income and sale taxes by $900 million and lowering property taxes by more than $1 billion. Evers' budget also raises taxes by over $3 billion, leaving the state with $646 million in the general fund by 2027.
While Evers uses most of the state's projected $4.3 billion surplus on his priorities, overall, his efforts to provide tax relief are outweighed by tax increases.
Bottom line: If Evers' budget is approved without changes, it would leave the state with a structural deficit that lawmakers would have to address.
"If you look at the overall budget document, it would be difficult to sustain," said Jason Stein, president of the Wisconsin Policy Forum, a nonpartisan research organization.
"In the next budget, the state would have a structural deficit to deal with. That shows you there are some challenges there."
Two years ago, Evers' 2023-2025 budget proposal would have also left the state in a financial pinch, if accepted by lawmakers. Republicans, however, wrote their own spending plan and avoided a projected deficit.
It's what the GOP-controlled Legislature plans to do again this year, but key aspects of Evers' plan could stay alive or be tweaked as they have in years past.
In 2023, Evers pitched sending more money to local governments, known as shared revenue, and renovating the Brewers stadium. Both proposals eventually became law after numerous negotiations.
Issuing tax relief and holding down property taxes are both areas Democrats and Republicans want to prioritize this budget.
Evers proposed giving local governments a payout, a 3% increase in state aid, in exchange for freezing property taxes. The measure would cost the state more than $330 million.
The League of Wisconsin Municipalities supports the concept but fears it won't be sustainable in the long run because communities rely heavily on property taxes to keep services afloat.
"Honestly, that is our main concern with this," said Jerry Deschane, executive director of the League of Municipalities. "I think it's dangerous to become too dependent on huge state aid programs."
Evers' idea comes as several municipalities keep turning to referendums despite the sweeping 2023 shared revenue law that gave communities more money to fund critical services.
In 2022, 44 municipalities and counties held referendums to increase their property tax levy, according to data by the Wisconsin Policy Forum.
Evers' $119 billion state budget also includes other incentives to freeze property taxes and cut taxes elsewhere, including eliminating taxes on cash tips, over-the-counter medications, diapers and other household products.
It amounts to nearly $2 billion in tax relief, which largely benefits middle-income earners.
Evers' budget also raises taxes on the wealthiest individuals by creating a new individual tax bracket of 9.8% that would apply to single and joint filers earning more than $1 million. Estimates show the new tax would generate nearly $1.3 billion over the biennium.
Republicans immediately rejected Evers' tax proposal and are expected to unveil their own plan in the coming weeks. Assembly Speaker Robin Vos, R-Rochester, said their goal "is to lower taxes for everybody and raise taxes on no one."
Rep. Mark Born, a co-chair of the powerful Joint Committee on Finance, added Evers' budget is "reckless."
"Reckless spending, tax increases and a liberal wishlist," Born said. "But we're a bit surprised it's actually that on steroids."
Over the next several weeks, Republicans will host listening session across the state before beginning to craft the next spending plan this spring.