WI Gov. Tony Evers proposes tax cuts for middle class, 20% of sales tax revenue to help fund local communities

Democratic Gov. Tony Evers announced Tuesday he wants to work with Republicans to divert as much as 20% of the state's sales tax revenue to help fund local communities, including police and emergency services, while he also promised to cut taxes for the middle class and fight a GOP effort to impose a flat income tax rate.

Evers, in his fifth State of the State speech and the first of his second term, pledged to compromise with Republicans who control the Wisconsin Legislature in order to increase funding for schools and local governments. All of the spending proposals Evers announced, which totaled more than $1 billion, will be in competition for a state budget surplus that is projected to be near $7 billion.

Republicans discounted much of what Evers proposed as being too expensive.

"All of Governor Evers’ ideas will probably be tossed aside like we always do, and we’ll start over," Republican Assembly Speaker Robin Vos said. "If he has creative ideas he should probably reach out and talk to us about it."

The Legislature will spend the next five months dissecting Evers' proposals before passing their own version of the state budget. Evers releases his full spending plan in three weeks, but he highlighted priority areas in his State of the State speech delivered at a joint meeting of the Senate and Assembly.

"Let's find common ground," Evers said in announcing his willingness to get behind diverting sales tax revenue for counties, cities, towns and villages. It marked the first time Evers had publicly gotten behind the idea that Republican legislative leaders have been talking about publicly for weeks.

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Evers said changing how local governments are funded by tying so-called shared revenue to sales tax revenue will ensure payments increase after decades of little growth or cuts. Evers said his plan would direct more than $500 million per year to local governments.

Evers previously called for a 4% increase in shared revenue funding for each of the next two years, a total of about $91 million. Evers appeared to be supportive of a plan Republican legislative leaders have discussed that would use 1 percentage point, or 20%, of the state's 5% sales tax for shared revenue.

"The bottom line for me has always been making sure our communities have the resources they need to meet basic and unique needs alike," Evers said. "But there are a lot of different ways we can find compromise to achieve that goal, and together we will."

Evers has met with Vos and Senate Majority Leader Devin LeMahieu privately since his reelection win in November, a noticeable thawing of their icy relationship from his first term when they rarely spoke. Both sides have shown some signs of being willing to compromise on some issues, like local government funding.

They've been farther apart on others, like abortion and tax cuts.

LeMahieu said Evers' shared revenue plan was similar to his own.

"It's good to see that he may be supportive of a plan that we put in front of him," LeMahieu said.

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Evers, in his speech, reiterated his support for targeting tax cuts to the middle class. Republicans are backing a flat tax plan that would reduce rates for the state's wealthiest filers and move to a flat 3.25% rate in four years. Evers called that plan "reckless."

Evers also declared 2023 the "Year of Mental Health" and proposed spending about $500 million to expand access to mental and behavioral health services across the state, including efforts to reduce suicides and other mental health-related issues.

"Almost the entire speech was about spending increases for one government program or another," Vos said. He added that anything that expands the size of government is likely dead on arrival in the Legislature.

Evers also called for spending $100 million to combat pollution from so-called forever chemicals known as PFAS. He said the money will be used to increase PFAS testing, sampling, and monitoring statewide. The pollutants are man-made chemicals that don’t easily break down in nature and have been tied to a wide range of illnesses.

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Evers also announced an array of grant programs and other initiatives targeting small businesses; workforce development, with a focus on healthcare workers; child care tax credits; and clean energy.

Vos accused Evers of "just throwing money" at problems.

"We can’t just do everything the governor wanted, which is going to break the bank," Vos said.