By Tom Still
MADISON, Wis. – If you were betting a few weeks ago on when the Wisconsin Legislature and Gov. Tony Evers would pass a state government budget for the cycle that started July 1, you might have put your money on late summer – or even this coming fall.
Instead, a combination of events – two of which were external to details of the biennial budget itself – produced a rapid and non-traditional finale. As a result, there may be more winners than losers statewide over the course of the $111-billion budget.
The first external factor was a gnawing sense, especially among Republicans, that new district maps could upset the balance of power following the 2026 elections. It has been 14 years since Democrats have held a majority in either the Assembly or Senate for more than a few months, but redistricting could change that, especially in the Senate. Leaders of the GOP felt this budget was the right time to leave a mark, which they did in the form of $1.4 billion in tax cuts.
The second outside factor was President Trump’s “One Big Beautiful Bill,” which would have dramatically reduced access to federal Medicaid dollars – especially in rural Wisconsin – unless the state acted quickly to raise its hospital provider tax from 1.8% to 6% to secure federal matching dollars. Passage of the budget in the wee hours of July 3 was necessary to beat the clock; Evers signed it practically before the ink was dry with half his typical number of line-item vetoes.
The result is a budget that reclaimed about three-quarters of the state’s expected $4.3 billion balance as of June 30, raised spending for the Universities of Wisconsin, public education and a mix of child-care programs, all while providing tax cuts for about 1.6 million people. Some details:
- UW President Jay Rothman had sought $855 million in spending increases over the two years that will end June 30, 2027; the Legislature responded by suggesting a cut of $87 million over current levels. The new budget raises spending across UW’s 13 comprehensive universities and branch campuses by $256 million, which could mitigate possible tuition increases over time. Republicans point to the announced closing of UW-Madison’s Division of Diversity, Equity and Education Achievement as a victory.
- Spending on K-12 public education will increase by about $1.4 billion, much of it focused on special education.
- Child-care spending across a mix of programs will climb by $330 million to generally stabilize the industry, lower costs for families and increase access. It’s not the $480 million advocates wanted, but it’s a sizable increase.
- The state’s second-highest personal income tax bracket was significantly expanded, thus reducing taxes for many middle-class tax filers. Under previous law, that bracket taxed 4.4% of income for married couples earning between $19,090 and $38,190 a year and single filers earning between $14,320 and $28,640. The new bracket will be capped at $67,300 per year for married couples and $50,480 for single filers, a major expansion of income parameters. For filers newly eligible for the expanded bracket, their tax rate will drop from 5.3%.
- The first $24,000 of retirement income, or up to $48,000 for married joint filers, will be shielded from state taxes. There are conditions tied to age and residency.
- The budget eliminates the state sales tax on household energy bills, a change that is predicted to save taxpayers more than $178 million over two years. The state seasonally exempted household energy bills from taxes; this move eliminates the 5% tax year-round.
- Wisconsin Manufacturers & Commerce, the state’s largest business group, applauded the removal of suggested tax increases while supporting laws that enhance the state’s competitiveness. Specifically, the budget includes a fee schedule for the state’s workers’ compensation program, which could control high workers’ compensation medical costs and thus benefit employers.
In short, Evers and Democrats got much of what they asked and legislative Republicans scored some victories, as well. With a little outside prodding, what emerged from the Capitol is a budget that should serve Wisconsin well. Bipartisanship may be fading in some levels of government, but Madison just witnessed an unexpected surge.
Still is president of the Wisconsin Technology Council. He can be reached at tstill@wisconsintechnologycouncil.com.