MADISON (WKOW) -- Gov. Tony Evers, Assembly Republicans, Senate Republicans and Senate Democrats say they've reached a bipartisan deal on the next state budget.
The announcement comes just hours before the legislative committee that writes the state budget is set to vote on funding for a slew of government agencies.
The bipartisan deal includes several items Evers had said would be critical for him to sign the budget into law, like direct payments to child care providers and a funding increase for the UW System. It also includes tax cuts, which Republicans had been championing.
"The people of Wisconsin expect their leaders to show up, work hard, and operate in good faith to get good things done," Evers said in a statement. "We've shown we've been able to get good things done for Wisconsin when people put politics aside and decide to work together to do the right thing."
Senate Majority Leader Devin LeMahieu (R-Oostburg) and one of the co-chairs of the Joint Finance Committee, Sen. Howard Marklein (R-Spring Green), celebrated the tax cuts.
"This compromise will provide meaningful tax relief for retirees and the middle class," the said in a statement. "Providing tax relief to middle-class families has been the Senate's top priority this session."
In order for the budget to pass, the votes of Senate Democrats will likely be crucial. Senate Democratic Leader Dianne Hesselbein (D-Middleton) said the deal isn't perfect but it shows progress.
"[The budget agreement] addresses the priorities Wisconsinites have clearly expressed: fund our public schools, make childcare [sic] more affordable, and invest in the UW system," she said in a statement. She attributed the deal's existence to Democrats flipping four seats in the Senate during the November election.
Child care investments
The budget agreement includes more than $330 million of investments in child care. According to the governor's office, $110 million will be set aside for direct payments to providers as part of a bridge program. Those payments are meant to replace the Child Care Counts program, which ended in June. The new program will make monthly payments to providers and monthly per-child investments.
Over the next two years, Wisconsin will spend $66 million to pay for a new program called "Get Kids Ready." It will fund child care providers teaching four-year-olds using curriculum that meets standards set by the Wisconsin Department of Public Instruction.
The deal also includes $2 million to help parents find local child care and $2 million to set up a competitive grant program to help child care providers expand their capacity.
That's just one approach lawmakers are taking to encourage providers to offer more spots. They also agreed to spend $28.6 million on a pilot program that will expand access to child care. The proposal increases the reimbursement rate for caring for toddlers and infants, and it changes child care ratios to allow one staff member to care for seven toddlers between 18 months and 30 months old at a time.
The deal also allows for "large family care centers" that can serve up to 12 children, and it lets 16-year-olds work as assistant child care teachers.
K-12 school funding
The bipartisan agreement includes nearly $1.4 billion dollars more in spendable revenue for K-12 schools across Wisconsin. That's less than the $3 billion Gov. Evers proposed in February but more than the $229 million the Republican-controlled Joint Finance Committee (JFC) approved last month.
According to the governor's office, the net categorical aid increase in the agreement is nearly 60% more than what JFC previously approved.
Wisconsin schools will see higher reimbursements for special education costs over the next two years. Advocates had been pushing for lawmakers to raise the reimbursement rate to 60%, but JFC approved an increase to 35% in the first year of the budget cycle and 37.5% in the second year.
The bipartisan agreement finds middle ground. Special education reimbursement rates will increase to 42% in the first year and 45% in the second year. The governor's office said that will be the highest rate in three decades, and the increase is larger than the increases of the past three state budgets combined. In total, the increase will lead to more than $500 million more in funding compared to the last state budget.
During its meeting on June 12, JFC approved increasing the reimbursement rate for high-cost special education to 50% in the first year of the budget cycle and 90% in the second year. The bipartisan budget agreement keeps those rate increases in place.
The deal also includes $30 million for comprehensive school-based mental health services, $15 million more than what JFC previously approved.
UW System: From potential cuts to a sizable increase in funding
In June, Assembly Speaker Robin Vos (R-Rochester) told reporters his caucus supported $87 million in cuts to the UW System. However, the agreement Vos, Evers, LeMahieu and Hesselbein have now signed onto includes a $256 million increase for system operations and more than $840 million for capital building projects. Evers' office called it the largest increase to UW System funding in more than 20 years.
The operations funding increase includes more than $100 million to support campuses systemwide after closures, layoffs and consolidations, more than $94 million to raise pay for UW system workers, $54 million to recruit and retain faculty and staff in high-demand fields and $7 million to offer virtual telehealth mental health services to nearly all students around the clock.
The capitol funding included in the deal will pay for projects on 6 campuses. At UW-Madison, that includes a new addition to Dejope Residence Hall, renovating and adding to the Chadbourne Residence Hall dining hall, renovating Science Hall and planning funding for the demolition of the Humanities Building.
The agreement directs all general education credits to be transferrable between all system campuses no later than September 2026. It also makes changes to the minimum number of credit hours certain faculty members will be required to teach.
Tax cuts
In total, the proposed biennial state budget includes $1.3 billion in tax cuts.
While the majority of that comes from changes to income tax, the deal also eliminates the sales tax on household utility bills. Gov. Evers' office said that will save people in Wisconsin more than $178 million over the next two years.
The deal does not change the income tax cuts the Joint Finance Committee previously passed. In June, the committee approved expanding the second individual income tax bracket and getting rid of retirement income taxes for many retirees in Wisconsin.
People who are 67 or older will be able to exclude up to $24,000 of retirement income payments. According to the governor's office, that will reduce taxes on around 280,000 Wisconsin filers by an average of about $1,000.
The governor's office said, overall, 1.6 million Wisconsin taxpayers will see income tax cuts under the proposal, with an average tax cut of $180. The governor's office said 82% of the tax cuts will go to people who make less than $200,000.
The bipartisan deal also creates a film tax credit and establishes a State Film Office, which advocates had been pushing for. The office will distribute up to $5 million in film production and investment tax credits each year.
Other provisions
In addition to child care, schools and taxes, the budget agreement also touches on health care and transportation.
The deal includes increasing the hospital assessment to 6%. Some of the money that generates will go toward funding the state Medicaid program. The rest of the money will be used for hospital provider payments. The governor's office said that will result in more than $1.1 billion in additional investments in Wisconsin hospitals.
The budget will invest $150 million in a program that focuses on repairing and improving rural roads in Wisconsin, and lawmakers agreed to raise wages for state workers by 3% in the first year of the budget and by 2% in the second year.
What comes next?
The budget still has to pass in the Assembly and Senate, where it could be up for a floor vote as early as Wednesday. During that process, lawmakers can add amendments to the bill. Depending on what those are, they could upset the balance lawmakers seem to have reached right now.
Once the budget passes in both chambers, it will head to Gov. Evers' desk. A spokesperson for the governor said, as part of the bipartisan deal, Evers will not use his partial veto power on any part of the budget that's included in the agreement. However, he could partially veto other sections of the budget.
The 2023-2025 state budget expired on Monday. Until a new budget is in place, funding continues at existing levels.
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