Jason Stein on the Politics of Wisconsin's 2025 Budget Cycle

Frederica Freyberg:
Wisconsin comes into the budget season with a $4.3 billion surplus. But as expected, the Republican-majority Legislature calls the Evers’ plan dead on arrival. Republican budget writers say they will start from scratch. We’re joined by Jason Stein of the Wisconsin Policy Forum for his take. And thanks for being here, Jason.

Jason Stein:
My pleasure, thank you.

Frederica Freyberg:
So it sure seems like a lot of work and a lot of number crunching on the part of the governor and his administration to end up with a budget that’s DOA but is it more like a potential reelection vision statement on the governor’s part?

Jason Stein:
Potentially, yes. I mean, it’s certainly a vision statement, right? And you do feel a little bit for the analysts and budget writers who work, you know, painstakingly to put all this stuff together. And then it’s right into the trash heap in some sense. But there may be some areas where they can work together. I mean, the governor had an increase in tax credits for buying down local property taxes. He had a tips — taking off income taxes for tips. So there are some areas where Republicans have worked in those same vein in the past. So there may be some areas where they can have a meeting of the minds. But clearly on many things in this budget, there will not be.

Frederica Freyberg:
In fact, I was going to just ask of all of the spending in it, could the only agreement really come with tax cuts?

Jason Stein:
Well, that’s where the real rub is going to be or the back and forth with the governor. I mean, the governor’s proposal would decrease some taxes, but raise a number of others, and on net, would increase taxes by more than $2 billion. Now, obviously, given that the state has a $4 billion surplus, that’s a nonstarter for Republicans. They will be looking at large income tax cuts, which last time the governor vetoed. I think the thing that will probably keep both sides working with one another is with no budget passing, there would be upward pressure on property taxes around the state, particularly school property taxes, because of provisions that are in current law. So I think both sides are going to really feel some pressure to get a deal, because they don’t really want to see that happen.

Frederica Freyberg:
With K-12 test scores, really, sadly sagging, I trust pouring more than $3 billion into that part of the education budget and freezing school choice slots is not the majority’s idea of an answer.

Jason Stein:
I mean, clearly they’re very far apart from one another on the issue of both income taxes and education. You know, the one being the Republican priority, the other being the governor’s priority. I think, again, where you have some impetus to get that increase is in the governor in his veto last year, put “for 400 years,” he stuck in with his partial veto. This steady increase in the limits, the state limits that govern how much school districts can spend. And so they’re going to get like a two and a half or 3% bump in that spending limit, revenue limit every year. And so if there’s no budget, there’s no state aid to kind of take up the slack there and keep property taxes from going up. And I think that’s something that Republicans have in the back of their heads and will be a reason for them not to walk away from the negotiating table.

Frederica Freyberg:
Where else might the sides potentially come together? What about Evers’ prison plan that would eventually close Green Bay Correctional? Do Republicans take parts of that and kind of call it their own and rework it?

Jason Stein:
Great question. I mean, I think there’s something fundamentally there that must be dealt with. I mean, we have two prisons that go back to the 19th century: Waupun and Green Bay Correctional. The governor wants to close Green Bay Correctional. He has a very creative way to do that. I mean, it’s kind of like a flea flicker play in football where you’re passing the ball from one player to another and they’re throwing down field. It’s a touchdown if you get that and you connect on that play. But it also has a lot of ways it can break down. I suspect the Republicans will probably not take that plan in its entirety, but some elements of it, they may do.

Frederica Freyberg:
Also, Evers proposes what’s described as an historic investment in the university: $856 million over two years. Given what’s happening around the state with closures and layoffs and that kind of thing at the colleges, does that resonate?

Jason Stein:
It’s a great question. I mean, the issue of higher education has become very politicized, much more than it was, let’s say, two decades ago. And so, you see, actually, at the federal level, some dispute, right, over whether to decrease the amount of research grant funding that goes out to universities like UW-Madison or the Medical College of Wisconsin, or even UW-Milwaukee. Whether or not there may be some increase on the possibility, because in many cases, the UW campuses that would be hurt the most would be in more Republican areas, or at least in purple areas of the state. So that one, I think, is TBD.

Frederica Freyberg:
It seemed of note to me that Evers was using his budget to try to guard against impacts from President Trump’s actions out of Washington, saving out what was it, nearly $500 million of kind of in case money?

Jason Stein:
Right, I mean, the governor’s leaving enough reserves to cover about 10% of state spending. I mean, that’s historically a pretty good number. At the same time, it would not be enough in the event of a really severe recession. So I think there will be some back and forth with the legislature. Again, the governor would pull down roughly $3.5 billion of the surplus. But, you know, Republicans did the same thing two years ago with their income tax proposal. And the governor just partially vetoed it. So I think part of the question is, do the two sides working at cross-purposes get us to a sustainable budget, which is what has happened in recent cycles, or an unsustainable budget, which is more what happened in the 2000 when you and I were starting at the state Capitol.

Frederica Freyberg:
Jason Stein, thanks very much. Thanks for joining us and your expertise.

Jason Stein:
Thank you.