A 'flat' income tax, floated by Sen. Devin LeMahieu, above, and other Republican lawmakers, faces a likely veto by Gov. Tony Evers.
Now that Democratic Gov. Tony Evers and Republicans who control the Legislature have hit the lottery — with a record $7.1 billion budget surplus by mid-year — get ready for six months of Capitol infighting over how much of that surplus to spend, and on what programs.
The first weeks of rhetoric — inaugural speeches by all those elected officials and the governor’s State of the State address and GOP reactions to it — have already framed the subjects of those fights.
Here’s a summary, for those of you scoring at home.
Evers’ big asks:
$500 million more for school and local mental health programs to cope with post-pandemic psychological scars. Giving local governments 20 percent of the state’s 5 percent sales tax, which the governor says would net them $500 million more than they get now. $2 billion more in state aid for public schools. $370 million for child-care subsidies. An income tax cut for only low- and middle-income taxpayers.
Republicans’ priorities:
The biggest income tax cut possible for all taxpayers. An “inflation” increase in state aid for public schools that total less than Evers’ $2 billion. Statewide school choice, which would remove all limits on parents who want state vouchers to send their children to private schools. A smaller increase in state government spending than the $1.3-billion boost Evers proposed. And a few Republicans want to eliminate the personal income tax, citing the record surplus.
Evers’ veto threats:
A “flat” income tax plan floated by Republicans, which would make all taxpayers — rich and poor — pay 3.25 percent of taxable incomes. Any Republican changes that would complicate the push to restore abortion options the U.S. Supreme Court took away last year. That ruling restored an 1849 state law, which Evers and Democratic Atty. Gen. Josh Kaul are fighting in court, prohibiting abortions except when necessary to save the woman’s life.
Missing from Evers’ State of the State speech:
Legalizing medical and recreational marijuana, although the fine-print details of his $500 million mental health plan includes spending revenues from a new “marijuana excise tax.” Expanding health-care coverage through the state-controlled Medicaid program — a change Republicans killed in 2019 and ‘21 but which would net more federal funds. Reform of the criminal justice system.
Victories both sides can claim:
State government is in the “best fiscal shape ever,” with a $7.1 billion surplus and $1.7 billion in the “rainy day” fund on July 1. An income tax cut approved two years ago, when Evers accepted the bigger cut developed by Republicans. Funding of state highways and bridges. Improvements in broadband access in rural areas. A low unemployment rate statewide.
Compromises that must be reached:
Size and structure of the next income tax cut. How much to spend on new mental health resources. Response to the growing water pollution threat of PFAs, as communities statewide — in the districts of Republicans and Democrats — detect dangerous levels of cancer-causing chemicals. Next steps in responding to critical workforce challenges, as professionals retire and move away. The best response to pandemic-caused lost learning by students statewide. Better pay for local criminal prosecutors who are increasingly resigning for better-paying jobs, reducing the backlog of local court cases, and hiring more public defenders.
What to watch for:
Will Evers and Republican legislators be able to negotiate good-faith compromises? What changes in how schools and local governments operate — especially in Milwaukee County — will Republicans demand, in exchange for more state aid? Will state limits on what school districts and local governments can levy in property taxes continue, if they get significantly more state aid? If local governments share in revenues from the 5 percent state sales tax, will they still be able to levy a 0.5 percent local-option sales tax?
Now that we’ve listed the big issues that will dominate the Capitol for six months, let’s consider some of the rhetoric.
“Wisconsinites want a government that works, and works better,” Evers said in the first State of the State speech of his second term. “We have roads and bridges to fix, schools to fund, kids to support, communities to keep safe, water to keep clean, and a future…we must work to protect.”
But a key Republican, Assembly Majority Leader Tyler August, had this response to the governor’s wish list: “That is a lot of money.”
Steven Walters started covering the Capitol in 1988. Contact him at stevenscotwalters@gmail.com.
