Evers' Budget Includes Over $7 Billion in Higher Taxes, Fees, and Local Taxing Authority

Gov. Evers’ latest budget proposal would increase taxes by billions of dollars and still put Wisconsin on the path to financial ruin.

The total price tag of his 2025-27 executive budget is $120 billion (all funds), it includes a net tax increase of $2.4 billion, and ends the biennium with a $1.6 billion structural deficit. Evers projects that under his plan, the state’s general fund would be $4.1 billion in the hole by June 2029.

During his budget address, Evers bragged that his proposal would cut taxes by $2 billion spread out over two years. It’s really just $894 million in direct tax relief from the state.

However, over that same time frame, he plans to collect an additional $4.6 billion in taxes. That doesn’t include the $894 million in tax cuts that need to be offset somewhere else in the budget, which means Evers actually plans to increase taxes by $5.4 billion over two years. A lot of that would come through natural growth in the economy, but most of it comes through $3.3 billion in “revenue enhancements.”

Higher Taxes

The biggest revenue enhancement would be the creation of a new tax bracket of 9.8% on incomes above $1 million. As of 2022, there were 9,318 taxpayers in Wisconsin who made over $1 million a year. Their collective gross adjusted income was $20 billion. The portion of that subject to the new rate would be $10.7 billion, and 9.8% of that would be $1 billion. However, Evers only plans to collect $719.3 million the first year and $578.4 million the second year, for a total of $1.3 billion over the biennium. Perhaps, even he realizes this new tax policy would result in high income earners fleeing to lower tax states.

Next, he plans to increase taxes on manufacturers by $792 million over the biennium. Evers expects to collect another $490 million over the biennium simply by updating the internal revenue code. He doesn’t give specifics on how that would work, but it’s coming out of someone’s pocket. The final big ticket tax increase will be on capital gains, which will bring in another $420 million.

Excise tax hikes make up most of the rest. Evers wants to legal and tax marijuana to raise another $70 million over the biennium. He wants increase e-cigarette taxes by $41 million. Little cigars would generate another $5 million.

He also wants to lower the tax exemption for parents who send their kids to private, rather than public schools. That’s recorded on his ledger as a $13 million increase.

Higher Fees

Fees, technically, are not taxes. Politicians are keenly aware of that detail when bragging about cutting taxes. Oftentimes, they offset those cuts by simply raising fees. Gov. Evers’ budget increases fees by billions of dollars. Those increases would have a real impact on Wisconsin residents.

For example, under Evers’ plan, hospital assessment fees would go up $3.3 billion. That money would be given right back to hospitals in the form of higher Medicaid reimbursement rates. Seriously, his proposal states, “the Governor recommends increasing the hospital assessment and Medicaid hospital access payments to provide increased Medicaid reimbursement to hospitals.”

Other fee increases would impact Wisconsin more directly. Evers wants to increase hunting and fishing licenses by $75 million. He doesn’t specify how much individual licenses would need to go up to reach that goal. However, he does specify that he wants to increase car title fees by $120 and driver’s license renewal fees by $8.50. Together that would bring in an additional $190.5 million over the biennium.

Higher Local Taxing Authority

There’s another way to increase taxes without it showing up in the state budget as either taxes or fees. You can empower local governments to increase local taxes. All local taxing authority comes from the state government, which sets strict limits and restrictions on them. Right now, municipalities can basically only raise revenue locally through property taxes and user fees. Counties also the authority to levy a 0.5% sales tax.

Evers wants counties to be able to levy an additional 0.5% sales tax contingent on a referendum vote, which could bring the total county sales tax rate up to 1.0%. Milwaukee County would be excluded from this because it gets already special treatment under state law. Last year, county sales tax collections (excluding Milwaukee) were $522 million. If the sales tax rate was doubled, then Wisconsin consumers could potentially pay an additional $522 million a year in sales taxes if Evers’ proposal was successful. It doesn’t stop there.

Evers also wants municipalities with populations above 30,000 to be able to levy a 0.5% sales tax contingent on a referendum vote. The City of Milwaukee would not be eligible for this deal, because, like Milwaukee County, it already gets special treatment under state law. There are 26 other cities in Wisconsin that have a population over 30,000. The Department of Revenue doesn’t report sales tax collections by city. And so, MacIver estimated the impact of this policy using the sales tax revenues from the specific counties where those cities are located. The resulting potential tax increase is about $250 million a year.

Evers would also hit property taxpayers by increasing the levy limit for school districts. Last budget, Evers used his line-item veto to create the 402-year annual levy limit increase of $325 per pupil every year. This time he wants to tie that 402-year annual increase to inflation. That would mean the per pupil increase would be $334 next year and $345 the year after that. The total impact of this would be $267.2 million in FY26 and $276 million in FY27. However, that wouldn’t impact taxpayers this budget, because Evers plans to increase general aid by enough to offset the high levy authority.

Conclusions

MacIver’s initial analysis puts the total cost impact of Gov. Evers’ budget at $7.6 billion. That includes $3.3 billion in revenue raisers, $3.3 billion in hospital fees, $75 million in hunting and fishing license fees, $190.5 million through the DMV, $522 million through new county sales taxes, and $250 million through the new city sales taxes.

Over the next few weeks, the Legislative Fiscal Bureau (LFB) will be conducting their own analysis of the impact of Evers’ budget. Their final calculations will be more thorough and is likely to be much higher than MacIver’s estimates, which are only intended to provide an initial picture for our readers.