Budget Brief

State of Wisconsin 2023-25 Governor’s Budget

March 2023


Video Summary

Despite a historic public health crisis that stretched all levels of government in recent years and created severe economic upheaval, the state of Wisconsin now finds itself with the largest budget surplus on record. The economic recovery from COVID-19, coupled with massive federal relief aids and tight state and local spending constraints, have produced an unprecedented opportunity in this budget. From tax cuts to aid to local governments, state leaders can make changes in this tax and spending plan that their recent predecessors could have barely even dreamed of enacting.

Gov. Tony Evers has proposed using this opportunity to make substantial income tax cuts for low and middle-income earners as well as the largest spending increases on record, boosting aid to schools and local governments, expanding health care coverage and broadband services, upgrading American Family Field (home of the Milwaukee Brewers), raising the pay of state workers, and launching a paid family medical leave program for private and public employees. To pay for these initiatives, he would take federal dollars available for Medicaid expansion, increase taxes on upper-income earners, and draw down state reserves by the largest amount on record, though the governor’s bill would still add to the state’s record rainy day fund balance.

The proposal would represent a fundamental shift in the state’s relationship with schools and local governments, providing large increases in aid after many years of relatively slow growth, loosening state limits on local property taxes, and providing Milwaukee and other populous cities with the possibility of sales tax authority for the first time. Some of these changes have at least a measure of support from Republicans in the Legislature. However, many of the governor’s other proposals, such as the expansion of Medicaid, appear to lack sufficient backing from lawmakers to advance.

In our overview of the governor’s proposed budget, we describe its broad sweep and major initiatives. However, we direct most of our focus on the provisions that appear to have the most chance of passage and on the fundamentals of the budget – from the appropriate size of state reserves to the coming disenrollment of thousands of Medicaid recipients – with which lawmakers will have to grapple regardless of their views on the governor’s bill. Though we are unable to look in depth at every aspect of the budget in this report, we plan to analyze additional items in the weeks and months to come, including competing income tax proposals and funding levels for higher education.

The decisions made over the next several months may well be some of the most momentous in the modern history of our state. Our goal, as always, is to help readers to better understand these issues and make up their own minds about them. In doing so, we hope to promote an informed discussion about our state’s priorities at this critical juncture. Continue reading…