The Art of the Deal by Tony Evers

Tuesday morning Gov. Tony Evers announced that he had hammered out a deal with Republican leaders on the next state budget, and he’s essentially getting everything he wants.

“Republican lawmakers had long indicated this budget would not invest in childcare providers, would provide no new increases for our K-12 schools, and would cut nearly $90 million from our UW System,” Evers explained in a statement Tuesday morning.

In the end, Republicans caved. They agreed to provide $330 million in subsidies for the day care industry, the largest funding increase for special education in state history, and the largest funding increase for the UW in 20 years. That’s just for starters.

So-Called “Tax Cuts”

In exchange, Evers said he would not veto a $1.3 billion income tax cut that the Joint Committee on Finance (JFC) approved last month. The typical family in Wisconsin, which makes $80,000 a year, will see a $137 decrease in state income taxes. JFC had decided on that amount, because the initial risk of Evers vetoing it was low – with or without a pre-negotiated budget deal.

Evers also announced that families would no longer be charged state sales tax on their electric bills. Combined with the income tax cut, this brings total taxpayers’ savings up to $1.4 billion, or $180 a year per family.

Childcare Subsidies

Back in January, Evers declared 2025 to be the “Year of the Kid,” which made childcare his top priority for this budget. He wanted to provide $440 million in subsidies to the childcare industry. Republicans initially were going to consider providing $64 million, but Evers convinced them to go up to $300 million instead.

Evers claims that it will “help lower the cost of childcare for working families,” but it won’t. According to DCF, Wisconsin has provided $736 million over the past two years to subsidize the childcare industry. A UW study found that over that time, only 2% of childcare providers reduced their prices, while 63% of providers actually increased their prices. 

The quality of childcare facilities in Wisconsin continues to be dismal, despite those subsidies. According to DCF, 60% of facilities fail to meet minimum quality standards, and only 16% of facilities provide what would be considered quality care. 

The subsidies also don’t do much to help labor problems in the industry. Two-thirds of providers reported that they still could not offer competitive wages even with the large subsidies. 

Without heavy government intervention, apparently, the childcare industry is economically unviable. Fortunately for Gov. Evers, Republicans are willing to help prop it up.

More K-12 Funding AND Higher Property Taxes

Republicans agreed to increase K-12 funding by $1.4 billion, an 8% increase from current funding levels. Unfortunately, it’s done in a way that will allow school districts to also increase property taxes by $750 million over the next two years.

Gov. Evers’ 400-year-veto in the last state budget authorized school districts to increase their revenue limits by $325 per pupil per year for the next 400 years. Schools can collect that additional revenue through one of two ways: more general education aid from the state or higher property taxes from local residents. JFC voted last month to keep general education aid levels flat. The $1.4 billion in new funding is mostly through categorical aids, which are exempt from the revenue limit formula. That means schools will actually enjoy $2.1 billion in new funding over the next two years, while taxpayers feel the pain.

Evers was especially pleased that Republicans agreed to go back and change JFC's previous decision on special education reimbursement rates. Evers wanted 60% and JFC approved 37.5%. Under the deal, JFC will go back and increase it to 45%.

UW Gets to Stay Woke

Two weeks ago, Republicans threatened to cut UW’s funding by $87 million because the system continues to promote DEI policies. The university wanted $855 million in new state funding, not because it needs those funds for specific strategic objectives, but because that’s what other states give their university systems. In the end, UW will get all it asked for and then some.

Republicans agreed to provide $256 million in operations funding. Most of it will go to higher salaries and to propping up failing campuses with unsustainable enrollment. Another $840 million will go to capital building projects across the system.

Higher Healthcare Costs

Funding Medicaid (also called BadgerCare) is a bit of a shell game. Hospitals provide care to participants in the program, and then they are reimbursed for a portion of that care by a combination of state and federal funds. The state funds come from a special tax on hospitals called hospital assessment fees. Those fees, obviously, are ultimately passed on to non-Medicaid patients. In order to provide higher reimbursement rates to hospitals, and draw in more federal matching funds, Evers wanted to increase those fees by $3.3 billion over the next two years. Before the budget deal, JFC was entertaining the option of increasing the fees by $1.4 billion. Evers did not announce the details about this portion of the deal in his statement.

More Road Spending

JFC still needs to approve its plan for transportation finance. This hasn’t gotten much attention this budget cycle, but the committee is considering a wide range of revenue raisers. The options include: increasing title fees by $60 or $120, creating a highway use fee equal to 1% MRP, increasing registration fees by 10% or 20%, and increasing the gas tax by $0.04.

Evers didn’t disclose the details of the deal in his announcement Tuesday morning, but he did say that they agreed to increase transportation revenue by $200 million over the biennium

Higher Camping Fees

JFC didn’t need Evers to convince it to increase camping fees, because that was already determined prior to the budget deal.

Last week, JFC increased DNR program fees by $6.1 million. Most of that will come from higher non-resident camping and admission fees. It also increased electricity fees for all campers by $5 to $10.

Ironically, JFC also agreed to increase taxpayer support of the Department of Tourism by $36.7 million (GPR). So, Tourism will try to attract out of state visitors while the DNR is discouraging them. Government at its finest.

Finishing up the Budget

On Tuesday, when the budget deal was announced, JFC only had 40% of its work on the budget complete. It planned on a marathon session that day to finish up the rest. The Assembly and the Senate announced they would hold floor votes on Wednesday, July 3^rd.

Ultimately, liberals are getting everything they wanted out of this budget, though not all of everything. (Sen. Larson, for example, says special education funding is still too low.) Conservatives, on the other hand, don’t seem to be getting anything in this budget. Nothing in this budget could be considered conservative. The $180 per family tax cut amounts to nothing more than a distraction in the hopes conservatives won’t notice that Gov. Evers ran circles around the legislature’s Republican leadership.