Shawn Johnson:
Tonight, we're joined by Jason Stein, president of the Wisconsin Policy Forum. Jason, thanks for being here.

Jason Stein:
My pleasure, thanks for having me.

Zac Schultz:
So, if the band has stopped playing for a half second, but if we could talk over them, any surprises from what the governor laid out in his speech?

Jason Stein:
I think what strikes me is just the breadth and depth of the proposals. I mean these are very significant in terms of the level of spending, the extent of the both tax cuts that he's proposing, as well as some tax increases. You know, it's a significant document. Many of these things won't pass, but they would have a significant impact if they did.

Shawn Johnson:
Jason, talk us through kind of the size of the budget that we're talking about here, because we've heard for the second budget in a row that we have this massive surplus, about four and a half billion dollars, roughly. Sounds like a lot of money. What would happen if all this became law?

Jason Stein:
Well, the one thing that's important to know is that over the current two-year budget, we would decrease the surplus by about 3 billion, or the general fund balance by about $3 billion, including about $350 million in this year. And so when you look at what the governor is doing with K-12 education, higher education, child care, other proposals on the tax side like income tax cuts, sales tax cuts, property tax credits, and aid to local governments, you're really looking at something that would be billions of dollars of draw down of that general fund surplus. And so you really, and that's consistent with what he talks about in leaving $500 million left.

Zac Schultz:
So at the end of the speech, we heard the governor use the phrase, reasonable and pragmatic, in describing his budget, but we sat and watched the Republican response. There was no applause, even for things that they had supported in the past. Do you think there will be anyone on that side of the aisle that will describe it as reasonable or pragmatic?

Jason Stein:
I mean, I think probably right now, to reporters, they are saying pretty negative things about the budget. I mean, there may be some areas where they can compromise. For example, the governor talked about increasing the school levy credit, which essentially is state money that buys down local property taxes by about $350 million. That's something that Republicans have approved increases in that credit in the past. They might reach a meeting of the minds on that. Obviously, the tax cut for tips, for cash tips, that's something the president has talked about at the federal level, possible you could have a meeting of the minds, even if economists wouldn't particularly like it. And then finally, he's the postpartum coverage for mothers that he talked about. That's something that most states, red or blue, have done it around the country, and there is bipartisan legislation to do that. So even though he's proposed it in the past and it hasn't happened, this time might be the charm on that one.

Shawn Johnson:
And Jason, we don't know what the governor's going to do in 2026, if he's going to run for another term. But that prospect is out there. Republicans who run the legislature know that. How could that affect budget negotiations over the next several months?

Jason Stein:
I mean, obviously, there's going to be a tension for Republican legislators that they're not going to want to deliver a win to a governor who might run for reelection. At the same time, he's probably not going to make that decision until the fall or early 2026. And so they're not going to know that, they're just going to have to make a decision. I think there is some things that are going to put pressure on both sides to reach a deal, including the fact that in the previous budget, the governor's veto left this increase in school revenue limits in place. If we don't get a state budget passed with new state aid to school districts, that would put upward pressure on property taxes, which is something that neither party really wants to see happen.

Shawn Johnson:
Alright, Jason Stein, the president of the Wisconsin Policy Forum. Jason, thanks for joining us.

Jason Stein:
Hey, my pleasure.