Inside Wisconsin Politics

Why Wisconsin lawmakers blew up a state budget surplus deal

Shawn Johnson:
Wisconsin’s Democratic governor and Republican legislative leaders negotiate a big deal on tax cuts and school funding, and it blows up in the Wisconsin Senate. What just happened? Let’s talk about it. This is Inside Wisconsin Politics. I’m Shawn Johnson here with my colleague Zac Schultz and Rich Kremer in Eau Claire. Hey, guys.

Zac Schultz:
Hello.

Rich Kremer:
Hey, Shawn.

Shawn Johnson:
So we are going to have plenty of time here to unpack the motives of all the players in this drama that unfolded at the Capitol. But first, let’s start with kind of what led to this. For people who haven’t paid attention to every twist and turn of this big deal we’ve been calling it at the Capitol Zac, what was in this thing that was negotiated by Democratic Gov. Tony Evers and the Republican legislative leaders?

Zac Schultz:
Well, the top line picture is it’s $1.8 billion in spending, most of it one-time only, looking at the projected surplus that would be available for next year. Of that, $300 million for special education funding for public schools that’s been a Democratic priority for a long time. Three hundred and fifty million dollars in rebates or tax buy downs for property taxes that would go, money going to the schools, but that they would only use to reduce property taxes, not new spending. And then there were going to be individual rebates for tax filers $300 per person or $600 for a married couple. And then we see a match to the federal plan for no taxes on tips and overtime. And Shawn, a month ago, we asked, what’s the possibility that this could actually happen? My answer at the time was, well, this is the only time it could happen because we have three leaders that are all leaving the stage it’s legacy time. What we didn’t account for is everyone else who’s still running for reelection or election in Wisconsin sinking this deal. Three legacy leaders getting the compromise wasn’t enough. And to me, this is a political Rorschach test. How you view this particular deal kind of matches your view on politics. For some people, and for a lot of ordinary people around the state, this was the epitome of a compromise you get a little bit for one side, you get a little bit for the other side, everyone can come away maybe a little dissatisfied, maybe a little happy, and money goes back to taxpayers at a time when you’re seeing the price of gas go through the roof just to fill your tank up. And as they’re about to run for reelection, those are things that normally you’d want to see politicians pass. The other side of that test is political purity. And there are a lot of people looking at this deal saying, this isn’t as good as I would like it to be, and I think we can do better when we have more power next year.

Shawn Johnson:
So it started out the day, though, looked like your average special session day, like a bill that might pass. You have this big agreement by the leaders, by Gov. Tony Evers, the big Democrat and the big Republicans. You had speeches to start the day, including by Assembly Speaker Robin Vos.

Speaker Robin Vos:
We can show people that we listen and that we are willing to act, and most importantly, that compromise in Wisconsin is not a dead word. Compromise is defined as getting something that you want by giving up something that your partner or your opponent wants. That is really what we did here.

Shawn Johnson:
So that’s when the waiting game kind of began, Rich. We were both watching the Senate for a long time on Wednesday. What was it like as the day sort of played out?

Rich Kremer:
It was a lot of hurry up and wait. So it’s not unusual for the Senate to set a start time for their floor sessions, whether it be in a special session or a regular session, and then blow past that. That’s kind of unsurprising. But this time we kept getting these notices that, oh, it’s going to be at 3, well, it’s actually 5. 5:45. And then we just went with half-hour increments you know, 6, 6:30,7, 8, and on and on and on. I want to say it was four hours that it took for them to go from the first notice, when the plan was to meet at 3 p.m., and when they actually met. And then once they got on the floor, you heard some of the same complaints from Democrats and Republicans about this bill that you heard in the Assembly. The opponents said that they didn’t like the process of how it was thrown together. Senate Democrats were out of the picture, et cetera. And then there were concerns about costs and this being a projected budget surplus, et cetera., and how this could plunge us into a deficit in the coming budget cycle.

Shawn Johnson:
Yeah. So that night, we had a very unusual scene kind of play out. The Assembly met after waiting all day to see what the Senate was going to do. They passed this bill in short order. The Senate is meeting at the same time, and it’s clear that things are not going well there. You hear a speech from Senate Democratic Minority Leader Diane Hesselbein, who made it clear she was not happy with this bill.

State Sen. Diane Hesselbein:
This is a completely reckless proposal stitched together in a backroom deal by three people who will not be running around and won’t be here when the consequences of a multibillion dollar deficit comes home to roost. It’s simply something I can’t support.

Shawn Johnson:
This bill actually fails on a vote of 15 to 18. I know people probably think, big deal, things pass, things fail bills don’t actually get to the point of failure hardly ever in the state Legislature. If it doesn’t have the votes, it does not come to the floor, especially something as big and dramatic as this. And for the governor to negotiate this, and his Senate Democrats stand unified against it to help kill it with a few Republicans, is something we do not see every day. Zac, what do you think was motivating Senate Democrats here?

Zac Schultz:
There’s two factors. I think, first is they were insulted they were left out of the loop

Shawn Johnson:
That is huge, actually.

Zac Schultz:
Every single time over the past few years that they’ve needed to pass a big budget bill, especially, with Republicans having a smaller majority in the state Senate, they’ve had two members that have voted against every bill that’s Senators Nass and Kapenga. They’ve consistently said, we can’t support this extra spending, we’re voting no. That means in practice, Republicans don’t have a working majority when it comes to passing that kind of legislation. They need Democratic votes. Gov. Evers knows that. Senate Majority Leader LeMahieu knows that. Everyone knows they need at least a couple Democratic votes, and probably more. So the fact that they were not consulted, did not have any input on this bill, and made it clear from the very first time it was announced that they were unhappy with it that showed. And I think that showed up in that long pause in the Assembly. The Assembly had the votes. It was, they were going to wait and see if they had the votes in the Senate. And the second part of why Senate Democrats were not in line with this comes next fall, and that’s with the reelection. They are not quite certain, but very confident that they’re going to flip the majority in that chamber, and that when they come to power in the next session, they will not only have a say, they will be the deciding factors in how any bills are passed and how budgets are passed, and so they can direct where that money goes. If they think they get lucky, and there’s a Democratic governor and a Democratic Assembly, then they’re going to say all this money will be available for us to spend in ways that we prefer instead of having to compromise, which is what has sunk every possibility of all these budget surplus deals since Tony Evers has been governor. The fact that the next election might bring a better outlook for each of the sides and so they’ve decided not to compromise.

Shawn Johnson:

I think this was a clear-cut case where circumstances matter completely. If Tony Evers were running for election in November and he said, this is my big bill Democrats, this is what I want to run on

Zac Schultz:

It passes.

Shawn Johnson:

I mean, they would, they would have voted yes. Now Republicans probably wouldn’t have brought it up in that case

Zac Schultz:

They wouldn’t have given them the win

Shawn Johnson:

It’s a theoretical exercise. But Senate Democrats, I’m confident, would have been with him. He is not on the ballot, though, this November as Diane Hesselbein noted. Senate Democrats are poised to they think take that majority. She has essentially been a co-majority leader on some of the big bills that have come through the Senate this year, from the budget to gambling, and so to freeze them out of talks like this, which is the way they viewed it, certainly, and end up with a bill that was pretty Republican in nature was about a billion and a half in tax cuts was not something that they enjoyed.

Zac Schultz:
Well, and don’t forget, there is another factor when it comes to everyone looking at the next budget in the next year. And that is, there’s a lot of people who think we may be looking into a recession

Shawn Johnson:

Yeah.

Zac Schultz:

So, most of this surplus is a projection of what the economy is going to bring in for tax revenues. If there’s an economic downturn in the next six months, that money disappears all by itself without having been sent out. So you send it out even though most of this is one-time spending it may not be there next year. Now, they say even in the worst of circumstances, at least the state will have a little bit of money to start the next year with. So that is a legitimate concern considering where gas prices and grocery prices are right now, and with no end to a war in Iran that the economy could shift and go down and these tax revenues may not materialize. Rich, Senate Democrats don’t have this power if Republicans just stick together and all their members vote for the bill negotiated by their leader, Devin LeMahieu, and Assembly Speaker Robin Vos. In fact, in the Assembly, all the Republicans did stick together, and they voted for that bill. So what’s gone on in the Senate, with a few Republicans there who decided, yeah, we’re just not going to do this?

Rich Kremer:
Well, what was surprising is that two of the three Republicans that voted against this proposal, they’re not running for reelection. So maybe that made them feel freer to speak their mind. But as Zac mentioned, you’ve also got Sen. Steve Nass as one of them, and he’s pretty well known for voting against especially spending, large spending packages. So it seems like Devin LeMahieu didn’t have the sort of control over his caucus that Robin Vos did in the Assembly. That’s been pretty obvious, given the past bills where you needed Democratic support to get them over the finish line. But what’s also been really interesting is seeing Republicans attacking Republicans after the fact. So in particular, Sen. Van Wanggaard, who is retiring, he went on social media afterwards, after the bill failed, and said it was a good deal for Wisconsin. But, you know, every Dem and Nass and Kapenga and Rob Hutton wanted to spend more and keep more of your money. So you’ve got a Republican saying that Steve Nass wants to keep your tax dollars from you, which is pretty interesting in the grand scheme of things. But you also had Democrats kind of saying good riddance, Tony Evers. I mean, it’s just really fascinating to see this breakdown. It’s just unlike anything I’ve ever seen. And I wanted to ask both of you Shawn, how many times in your careers have you seen a bill pass, this kind of bill with this kind of buildup, where you would expect the votes have to be there before it gets to the floor to avoid embarrassment? How many times have you seen it clear one chamber and then die in the Senate?

Shawn Johnson:
It is pretty rare. I thought of a couple. One, the vote on state employee contracts ahead of when Scott Walker took office

Zac Schultz:

Another one that featured lame ducks.

Shawn Johnson:

It did. I mean, weird stuff happens at the end here when everybody’s position has changed. Circumstances matter. But you had the Assembly Democrats pass new contracts for state employees. The thought was that that would protect them when Scott Walker took office, and Senate Democrats, led by Russ Decker and Sen. Jeff Plale at the time, voted no, and they failed. So it has happened. Another one on ethanol mandate, way back in like 2006, I think. But it is pretty sparse, the way this stuff happens.

Zac Schultz:
But it does point out exactly what we’re talking about. Once a politician is no longer running for reelection, they become a lame duck. They lose a lot of control. What’s most impressive about all of this is Robin Vos holding his entire caucus together. Even though he’s going to be exiting stage right, he still has enough to keep his chamber together. Sen. LeMahieu really never had firm control over Republicans in the Senate. That’s always been called herding cats over there, so that’s not terribly surprising. Kapenga and Nass have made it quite clear. But all of these people leaving office really gives people a lot of freedom to think about their own interests next year, completely aside from what you would expect in the typical bill process.

Shawn Johnson:
Yeah. Steve Nass, I mean, has been a thorn in the side to leadership for his entire career, basically

Zac Schultz:

Yeah, unapologetically.

Shawn Johnson:

Or at least the part that I have observed anyway. And can you imagine him on his last vote ever in the Legislature saying, you know, I’ll take one for the team for Robin Vos? I mean, I think it’s pretty predictable that he was going to be a no vote. But let’s kind of unpack where Assembly Republicans were on this and why they decided, we’re going to take this vote, because I think by the time both chambers got to voting at night, I bet you Assembly Republicans knew darn well that this thing was going to fail in the state Senate, and they wanted to take this vote anyway. Why?

Zac Schultz:
Because they’re all up for reelection this fall. Everyone that’s not retiring has an absolute desire to go back to their constituents and say, I was willing to put $300 in your pocket, I was willing to give more to the schools, I was willing to lower your property taxes, it’s not my fault this failed. That does bring us around to some of the interesting calculations that we’re looking at, especially on the Democratic side. So one of the people I was watching is Jeff Smith, who’s a Democratic senator. He’s the assistant majority leader, so he’s pretty high ranking in his caucus. He’s going to move up if they control the chamber. He voted no on this. His staffers tell me he was no the entire time, mainly for the structural deficit concerns. But within his district, one of the Assembly Democrats, Jodi Emerson, voted yes. You go south from there into La Crosse Brad Pfaff in the Senate voted no. Within his district, Jill Billings and Steve Doyle two Assembly Democrats in competitive districts both voted yes in the Assembly. They understand what it’s like to go back to the voters and have to say, oh no, I voted against this because we’ll spend it better next year, when people are feeling the pinch right now. There’s a lot of political calculations that go into some of these moves, and looking unified as a team does help. We also saw another state Senate race Howard Marklein voted yes. He’s in a competitive district. Jenna Jacobson, the Assembly Dem who’s running against him, also voted yes. It would put her in a terrible position easy marketing for Marklein if she voted no on this deal. So some of this has to be political maneuvering.

Shawn Johnson:
And, you know, I think you could look at this bill and say potentially it’s a little gimmicky, right? You’re going to spend almost $900 million just on these $300 checks, and it’s going to be gone. And you have lawmakers on the record from both parties for bills like this in the past saying, oh, that’s a gimmick, we can’t do that. But do you want to be, which side of that gimmick do you want to be on when you’re doing doors in November and people are struggling with costs? It’s a popular kind of bill, giving people money and saying that you worked together with the other side.

Zac Schultz:

So Shawn, let’s look at the outside players in this, because Tom Tiffany was a big factor in this. I’ve seen some Republicans online saying he would have been better off being quiet given how it played out. Instead, he did come out against this bill, and he was on the record talking to at least one state senator who did vote for it, but weighing in on his concerns about this bill. What do you make of that?

Shawn Johnson:
Yeah, from a practical perspective, I get it. From a political perspective, I do not. I don’t understand what he was doing. What I mean is, from a practical perspective, if Tom Tiffany thinks he’s going to be governor, then I bet he wants to either have that money in there so that he doesn’t take office with the deficit, or if the economy does OK, maybe he wants to come in as governor and throw a special session for a “Tom Tiffany tax cut,” not a “Tony Evers tax cut” you know, get things started off right. From a political perspective, I don’t know why you come out against this. I just don’t. It’s like a theoretical exercise, because you’re not in there voting, but why come out against a big tax cut? And why attack Tony Evers? Like, he’s not on the ballot. All these Democrats who are also against this bill might be running against you in November. So how do you differentiate yourself here by agreeing with them? I’m not sure. Now, Rich, one question I had for you, that we kind of traded notes on throughout the night was, will voters actually remember this? Will anybody be rewarded or punished?

Rich Kremer:
You know, that’s a huge question. All of what you’re saying makes sense to me, someone who’s been really following this, but, you know, I also remember being at a Supreme Court election night event and a fellow at the hotel not knowing there was an election that day. So there’s a part of me, I’m always skeptical that this sort of thing will stick in voters’ minds. It’s different, I guess, if you’re getting your door knocked consistently and people are reminding you of that, or if you see a lot of commercials. But, you know, in the grand scheme of things, a $300, $600 check that’s a big deal but all the political infighting and everything like that, I just, I’m not sure if people will carry that all the way to November.

Shawn Johnson:
There’s a lot going on out there right now in national and world politics, that’s for sure. That’s all the time we have for today. Thanks for joining us. This has been Inside Wisconsin Politics. Our colleague Anya van Wagtendonk will be back next week. Be sure to follow us on wpr.org, pbswisconsin.org, YouTube or wherever you get your podcasts.