Gov. Tony Evers' budget has a $2.4 billion net tax increase, would create a shortfall

Yahoo

20-02-2025

MADISON – If approved by lawmakers, Gov. Tony Evers' new two-year state budget proposal would leave a potential shortfall of billions of dollars over the following two years, according to projections from his administration.
The Democratic governor's fourth spending plan would cut income and sales taxes by $900 million and take steps to lower local property taxes by more than $1 billion. In separate provisions, the plan would raise state taxes by $3.3 billion for a net increase of $2.4 billion.
Meanwhile, the budget would spend more than $59 billion annually — an increase of about 20% over current levels.
The plan would balance the 2025-27 budget by drawing down the state's sizable reserves by an estimated $3.6 billion but would leave the state in a much more difficult financial position for the 2027-29 budget.
When factoring in all spending and revenues, the plan creates a deficit lawmakers would have to address if they agreed to fund it completely by making cuts to key services and programs.
The $119 billion plan comes as Evers considers whether to seek a third term as governor in 2026.
Evers' plan would draw down the state's roughly $4.3 billion surplus, said Dale Knapp, director of Forward Analytics, the nonpartisan research arm of the Wisconsin Counties Association.
The surplus wouldn't entirely be depleted in this two-year budget cycle, but it would be brought down to about $646 million at the end of the 2027 fiscal year.
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Further down the road, the state would be short about $1.6 billion by the end of the 2028 fiscal year and nearly $4 billion by the end of the 2029 fiscal year. That's assuming tax revenues stay the same.
'It does create some challenges for the next budget,' he said. 'When you're looking at an ending balance, essentially, of negative $4 billion, it tells you that they're going to be starting in a hole heading into that next budget.'
Knapp recalled the state going from budget to budget with no extra money in the 2000s. 'It's really hard to budget in those situations, so we really want to avoid that if we can,' he said.
The budget isn't just a financial document, he noted, but also a chance for Evers to make a 'statement about what his priorities are' like education, child care and tax relief.
'In the end, the Republicans and the Democrats are going to have to get together to get this budget done in some way,' Knapp said.
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In 2023, Evers pitched a $104 billion budget that, if approved in full, would also have left the state with a structural deficit. Republicans rewrote the spending plan and ended with a smaller but still substantial projected deficit.
The final state budget signed into law after a series of partial vetoes from Evers spent $2.8 billion more than revenues were expected to generate over the two years.
Britt Cudaback, spokeswoman for Evers, said the governor's plan "makes significant investments in our kids and our schools, lowers costs for working families, seniors, and veterans, and provides nearly $2 billion in tax relief to help prevent property tax increases" while leaving a smaller deficit than the state budget plan Republican lawmakers passed in 2023.
Cudaback said the budget also maintains about a projected $646 million balance in the state's general fund "so the state can respond to reckless federal cuts to programs Wisconsinites rely upon every day."
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"Gov. Evers has consistently proposed budgets that prove the state can both make the responsible, pragmatic investments we need to, like supporting public education at every level, while still providing real, sustainable, and targeted tax relief to middle-class families, and this budget is no exception," she said in a statement.
"The governor believes we must find ways to invest in our state's needs while staying within our means and finding ways to save where we can, and he's proposing a budget that balances these important obligations."
Joint Committee on Finance co-chairman Rep. Mark Born, R-Beaver Dam, called the governor's budget "reckless" and "unrealistic and unsustainable."
"Republicans will start over and create a responsible budget that returns more money to taxpayers and invests in our priorities without bankrupting our state," he said in a statement.
Molly Beck and Hope Karnopp can be reached at [e-mail] and [e-mail].
This article originally appeared on Milwaukee Journal Sentinel: Evers' proposed budget would create shortfall in the billions by 2029