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The Wisconsin Policy Forum recently reported that property tax bills mailed out to Wisconsin taxpayers this month will show the biggest tax increase from a previous year since 2009.

Assembly Speaker Robin Vos wasted no time in assigning blame. On X, Vos wrote: “When you receive your property tax bill this month, please remember it was Governor Evers who used his line item veto to create a 400 year guaranteed property tax increase.”

It’s true that Evers’ headline-grabbing partial veto of the last state budget extended the two-year tax increase the Legislature approved for school districts. The Legislature allowed schools to raise another $325 per pupil per year from local taxpayers for each year of the 2023-25 budget. By deleting some digits, Evers stretched that out until the year 2425. 

But Vos’ accusation is fundamentally misleading in a couple of ways. First, the Legislature approved the increase for the duration of the current budget cycle. The fact that Evers extended it for centuries into the future made a big splash, but it didn’t add a penny to anyone’s property taxes this year. 

Second, and more important to understand, as we begin another budget cycle and another slugfest over spending on schools, is that the Legislature’s stinginess when it comes to the state’s share of school funding is a major driver of property tax increases. 

As the Wisconsin Policy Forum points out in its report, one key reason for the recent spike in property taxes is the historic number of school district referenda passed by local communities. Local property taxpayers voted to raise their own taxes. And why is that? Because the Legislature refused to give school districts enough money in the state budget to cover their costs.

But, you might object, Vos and other Republicans made a big point of touting their last budget’s “historic” $1.2 billion increase in funding for schools. Unfortunately, that claim is as misleading as Vos’ effort to blame Evers for your property tax bill.

To understand why school districts are begging local taxpayers for money at the same time Republicans claim they gave schools a “historic increase,” take a look at how little of that $1.2 billion in “education spending” actually went to schools. 

For each budget cycle, the Legislative Fiscal Bureau produces a detailed summary of budget items by category. In the “Public Instruction” category, the Fiscal Bureau reports that “total school aid” in the 2023-25 budget came to $625 million. 

Where did the rest go? To find out, you have to look down the list of Fiscal Bureau categories to “shared revenue and tax relief.” There, under the heading “school levy tax credit” you will find the missing $590 million in so-called school funding, in the form of a rebate to property taxpayers. Schools never get to touch that money. It is an oddity of Wisconsin law that the school levy tax credit is labeled as school funding.

The school levy tax credit puts school districts in an awkward position every year. At the end of October, every district sets its levy. People believe, based on that number, that they know what their tax bill will be. But later, on Nov. 20, the Wisconsin Department of Revenue tells each municipality the amount of the school levy tax credit that will be applied to local property tax bills and the number is readjusted. The state calls this tax credit money for schools, but it’s actually just a straight-up discount for property tax payers. 

Now, had the Legislature actually put $590 million into school funding, schools would have been in a much better financial position, and we probably would not have seen a record-breaking number of districts asking property taxpayers to hike their own taxes to keep their local schools afloat. 

The backdrop to all this was a huge, historic cut to school funding in Wisconsin back in 2012, followed by a decade and a half in which schools never recovered. Wisconsin has not given schools enough funding to keep pace with inflation for the last 15 years, state schools superintendent Jill Underly pointed out when she released her $4 billion 2025-27 budget proposal.

Vos dismissed Underly’s budget proposal as completely unrealistic. But in truth, it would pretty much restore Wisconsin schools to the level of funding they enjoyed right before the brutal cuts of former Gov. Scott Walker’s administration.

One of Underly’s top budget priorities is asking the state to meet its neglected commitment to cover 90% of special education costs, instead of the current 32%, which forces schools to raid general funds and cut programs to cover this unavoidable, federally mandated expense.

Another sensible idea, endorsed by the Legislature’s bipartisan Blue Ribbon Commission on School Funding in 2017, is to end the deceptive practice of putting money into the school levy tax credit and pretending that it funds schools.

Instead of playing a shell game with school funding and pointing fingers as local taxpayers continue to shoulder more and more of the cost, Wisconsin should use a portion of the state’s massive budget surplus to adequately fund schools.

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A shrinking share of income from Wisconsin residents and business goes to education and other public services, while corrections and police costs increase. (Getty Images)

Wisconsin residents and businesses pay less than 10% of their income on state and local taxes, according to a new report published Friday, continuing a trend that has been underway for more than two decades.

The report, produced by the Wisconsin Policy Forum, credited rising incomes, a 2021 state income tax cut and state limits on local property tax increases for helping to reduce Wisconsin’s state and local tax burden.

Wisconsin residents and businesses paid 9.9% of their income to cover state and local taxes in 2022, the report finds. That’s a drop from 10.3% in 2021 and from 12.5% in the year 2000.

The trend might not last, however. Initial information on collections suggest little change in the state and local tax burden for 2023, which could continue in 2024 and 2025, the report states. While income growth has been strong, “taxes have also grown in at least some areas.”

On average nationwide, state and local taxes amounted to 11.1% of individual and business income in 2022, according to the report — 1.2 percentage points more than Wisconsin. The share of Wisconsin income going to those taxes “has never been so far below that of the nation,” the report states.

The report reflects only state and local taxes, not federal taxes, which the Wisconsin Policy Forum analyzes separately.

While Wisconsin taxpayers are paying a little less, the state is also spending a smaller share of its income, particularly for education, the report finds.

Direct state and local spending grew by 7% in 2022, reaching $65.06 billion. But spending fell as a share of state income, to 18.3% in 2022 from 18.6% in 2021.

“Overall K-12 spending in Wisconsin rose 4.4% in 2022, but that was less than half of the 9.8% increase nationally,” the report states. Spending on K-12 education was 5.1% of state income in 2000 — the eighth highest among states. By 2021 it had dropped to 3.9%, and by 2022, to 3.8% — ranking 31st from the top.

“This represents a major shift in the single largest area of state and local spending,” the report states.

The report sets the stage for the top priority for lawmakers and Gov. Tony Evers in the coming year — drawing up Wisconsin’s 2025-27 state budget, with likely debates over school funding and the state’s projected surplus of about $4 billion.

A trend for two decades

In the year 2000, Wisconsin ranked third among the 50 states in the share of personal income going to state and local taxes, according to the Wisconsin Policy Forum. By 2022, the state’s rank had dropped to 35, an all-time low.

Wisconsin’s ranking in taxes per capita has also fallen. In 2021, when the total annual state and local tax bill averaged $5,689 per capita, the state was in 24th place. In 2022, Wisconsin’s fell to 29th place, with an average bill of $5,966 per capita.

The single largest contributor to Wisconsin’s lower tax burden was a change in the state income tax brackets included in the 2021-23 state budget, reducing the third bracket from the bottom to 5.3% from 6.27% — reducing state tax revenue by $1 billion in 2022.

The report points out that its calculation “shows only a drop in Wisconsin’s average tax burden — some taxpayers here benefited less and others more.”

Legislative Fiscal Bureau estimates compiled when the change in the third bracket took effect “showed 98.9% of the total decrease was expected to go to tax filers with state Adjusted Gross Income of more than $40,000 and 74% of the total to filers with income of more than $100,000,” the report states.

In 2020, before the change took effect, Wisconsin ranked 13th among states for the share of personal income going to the state income tax. By 2022, with the tax cut in effect, the state’s rank fell to 30th.

Two other changes may have contributed to that shift, according to the report. One affected business owners who received Paycheck Protection Act pandemic relief loans, but then were allowed to keep the money instead of repaying it to the federal government. In 2021 Wisconsin enacted legislation waiving state income taxes on those funds.

In addition, Wisconsin revised its income tax tables for 2022, reducing the amount of tax money the state collected that would subsequently be refunded to taxpayers.

Corporate income and general sales tax revenues also grew more slowly in Wisconsin compared to nationally, the report said, also likely contributing to the state’s lower relative tax burden.

The report found that property taxes, which fund public schools and local and county government, grew 2.9% in 2022, keeping pace with the national average.

Wisconsin’s 2021-23 state budget included a freeze on per-pupil revenue caps to local school districts. That limited how much local districts could raise property taxes without getting  voters’ permission through a referendum, as well as how much state aid they could collect. As a result, the share of Wisconsin income paid to property taxes dropped to 3% in 2022 from 3.2% in 2021, “contributing a significant share of the overall decrease in the state’s tax burden,” the report states.

“The state’s higher than average property taxes — particularly on homes — remain the most salient tax for most state residents,” the report states. “That may keep some taxpayers from grasping the overall decrease in taxes that has taken place over the past two decades.”

Where costs are rising

Higher education spending has risen slightly in recent years, from 1.8% in 2021 to 1.9% in 2022, and Wisconsin’s rank has risen, too, to the 20th highest state on that measure.

Spending by state and local government on the prison system, jails and other corrections costs rose 11.3% in 2022, with Wisconsin ranking 9th among states in its corrections spending as a share of state income, according to the report.

Police spending in Wisconsin rose 5.8% in 2022 — ahead of the national average of 3.8%, and putting the state at 27th highest for police spending. Fire protection spending has fallen, however, both in the amount of money allocated and the state’s ranking for firefighter spending as a share of income.

Public social services spending, such as for Medicaid, increased 6.5% in 2022. Wisconsin ranks 21st nationally for that spending as a share of state income.

Looking ahead, the report suggests that the 2024 wave of successful referendum measures, primarily for public schools, will lead to property tax increases by the end of this year.

“These increases should also help to counteract at least somewhat the drop in K-12 spending levels as local school leaders try to rebuild their budgets after the two recent years of frozen revenue limits,” the report states.

But it also forecasts conflicts ahead between lawmakers who have continued to press for reducing Wisconsin taxes and the Evers administration as well as local taxpayers who approved school referendum questions and want to see increased financial support for public schools in the 2025-27 budget.

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Up to 90,000 Wisconsin residents could get better health insurance if Wisconsin agrees to expand Medicaid under the Affordable Care Act, and rural residents would be the most likely to benefit, according to a new report published Thursday.

Expansion would give the state just over $1 billion from the federal government for each two-year state budget cycle, along with a one-time boost of $1.29 billion, concludes the report, published by the Wisconsin Policy Forum.

The forum’s practice is not to make recommendations based on its analysis, but instead to present alternatives and their probable outcomes.

The report finds that the number of people moving from the rolls of the uninsured would be more modest than in many states — about 23,000, according to one projection.

More striking, however, is that the state could save more than $200 million a year just on coverage it already provides, according to the report.

The federal Affordable Care Act (ACA), enacted in 2010 and implemented in 2014, established a government marketplace for individual health insurance plans and set standards for those plans. It also included provisions to expand health care coverage under Medicaid, a joint federal-state program.

States that accept the expansion agree to cover people with incomes up to 138% of the federal poverty guideline. In return the federal government pays 90% of the cost for the additional Medicaid recipients. The standard federal matching rate in Wisconsin is 60.7%.

Former Gov. Scott Walker, a Republican, declined to take the expansion and its requirements when the ACA took effect. Gov. Tony Evers, a Democrat first elected in 2018, has repeatedly sought to expand Medicaid. Just before he took office, however, the Legislature passed and Walker signed a law requiring lawmakers’ approval for the governor to accept expansion. Republican lawmakers have since rejected Evers’ attempts to do so.

Of 10 states that have still not accepted Medicaid expansion, Wisconsin “is on a completely different footing,” said Jason Stein, president of the Wisconsin Policy Forum and the report’s author.

BadgerCare Plus, the Wisconsin Medicaid program for primary and acute health care for individuals and families, covers uninsured children and pregnant women with household incomes up to 300% of the federal poverty guideline. It covers parents and childless adults with incomes up to 100% of the guideline.

By accepting full Medicaid expansion, Wisconsin would raise the parents’ and adults’ income limits to 138% of the guideline while paying less overall.

“In 2024, the state of Wisconsin is paying 39.3% of the costs of covering the roughly 190,000 childless adults currently in BadgerCare Plus rather than the 10% rate available through a full ACA expansion,” the Wisconsin Policy Forum report states.

The other non-expansion states don’t cover childless adults unless they have a disability, and their median income limit for parents to get coverage is 31% of the poverty guideline, according to the report.

The state Department of Health Services (DHS) has calculated that with expansion, about 90,900 state residents would become eligible for Medicaid.

Fewer than a third of that number — about 23,000 people, the Urban Institute and the Robert Wood Johnson Foundation have projected — would be previously uninsured, however, according to the report.

More of them would move from other coverage, such as insurance purchased through the ACA’s health insurance marketplace. While federal subsidies in place through 2025 have lowered the price for low-income consumers buying coverage through the marketplace, the report says Medicaid coverage would offer them lower out-of-pocket expenses and somewhat more robust coverage.

The report also finds that accepting Medicaid expansion could have a larger impact in rural areas, where both the share of uninsured people and the share of people whose incomes fall in the range that Medicaid expansion targets are higher.

About 5% of Wisconsin’s population, or 290,000 people, have incomes between 100% and 138% of the poverty guideline — up to $20,783 for an individual and $35,632 for a family of three in 2024. A third of them are in the state’s three most urban counties: Brown, Dane and Milwaukee.

But in more than 25 rural or mostly rural counties, 6% or more of the residents are in that income range. In Monroe, Rusk and Forest counties, it’s more than 8%.

“In other words, when one considers the share of the population who might benefit from expansion, it becomes clear that the residents of rural counties would be impacted the most,” the report states.

Yet the group of people who are uninsured and the group with incomes of 100% to 138% of the federal poverty guideline don’t overlap much.

As many as 90.3% of state residents in that same income range already have “some form of health insurance coverage,” the report finds.

Those include employer-based insurance, Medicare, and people who have purchased insurance themselves. Just over half are already covered by Medicaid or another public program, according to the report.

“So though Medicaid expansion would decrease the uninsured population in Wisconsin, its impact on coverage levels would be more modest than some might assume,” the report states.

“The biggest surprise to me clearly was the penetration of Medicaid into this target population already in our state,” said Stein. “That was eye-opening to me.”

The higher rural share of both uninsured people and people whose incomes fit the Medicaid-expansion target have implications for the future of rural health care, he added.

“As the the problem of rural health care becomes more acute over time, as health care becomes more difficult to deliver, as the rural population at least in some parts of the state has fallen, and as the demographics of those areas change and people get older and more in need of health care, the question of rural health care becomes very important to us at the Forum, and I think should be important to policymakers and voters as well,” Stein said.

One possible outcome from expansion, the report says, would be to use funds from expanding Medicaid to increase Medicaid reimbursement rates that hospitals and other health care providers have complained are inadequate to cover the cost of care. But that would require specific action by the Legislature and the governor.

“There is an issue with Medicaid reimbursement rates that is important for policymakers to consider,” said Stein. “There is a potential for drawing more resources into the state with Medicaid expansion that could be used to address that first issue. But there’s no guarantee of that.”

 

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A new report finds that even with Wisconsin's record employment growth, the boom hasn't benefited all parts of the state. A mural depicting workers is painted on windows of the Madison-Kipp Corp. The artwork was created by Goodman Community Center students and Madison-Kipp employees with Dane Arts Mural Arts. (Erik Gunn | Wisconsin Examiner)

Four years after a brief but stark crash in the early months of the COVID-19 pandemic, Wisconsin employment has made a strong comeback — but the recovery has been uneven across the state,  according to a new report from the Wisconsin Policy Forum.

Employment in the state now stands at more than 2.92 million jobs — 1.2% higher than its peak in 2019 before the COVID-19 pandemic, according to the report, which was released Friday.

In more than half of Wisconsin’s 72 counties, however, employment in 2023 remains lower than it was in 2019.  

“There are quite a few very positive indicators here when you look at the overall picture,” said Joseph Peterangelo, Wisconsin Policy Forum research director and author of the report. Those positives are accentuated in contrast to the sharp employment drop-off in the pandemic’s early months.

In the long recovery unemployment has remained low, at or below 3%, and wages have kept up with inflation, according to federal data.

“But when you get into the details, it’s a very mixed picture,” Peterangelo said.

In more than half of Wisconsin’s 72 counties, jobs in 2023 haven’t yet caught up with 2019.

“The improvement also has been inconsistent across the economy, with most sectors having fully rebounded by 2023 but several remaining down by thousands of jobs,” the report states.

Employment grew fastest from 2019 to 2023 in a varied group of rural and urban counties. Counties near the metro areas of Chicago and Minnesota’s Twin Cities were among those with the strongest employment growth, according to the report.

Employment has fallen short of 2019 levels in a variety of counties as well — from the state’s most urban, Milwaukee County, to many of its most rural areas.

Milwaukee County, also the state’s most populous, saw the largest decline in the number of jobs in 2023 compared to 2019 — a drop of 19,140, or 4%. The county’s working-age population (ages 15-64) was also down 3.9% in 2023 from 2019, data that Peterangelo provided showed.

But not all counties where employment was lower in 2023 than in 2019 lost working-age residents. Some counties saw employment rise despite a shrinking population, while in others employment fell even as the working-age population increased.

“It could be there’s different stories going on in different communities,” said Peterangelo.

Kenosha County’s working-age population for example, was 2.4% less in 2023 than 2019, according to the report. But it “is among the Wisconsin counties that added jobs the fastest” — with 5,700 more jobs, an 8.5% increase.

According to the Wisconsin Department of Workforce Development, a higher percentage of workers commute either into Kenosha County or from the county to jobs elsewhere “than many other counties in Wisconsin,” the report states.

Dane County had the largest employment gain in the 2019-2023 period, more than 8,800 jobs.

The largest growth in Wisconsin jobs over the 2019-2023 period was in construction, according to the report — an increase of 12,000. Professional, scientific and technical service jobs rose by almost as much in that time, and transportation and warehousing jobs by more than 11,000.

Statewide there were almost 9,000 fewer jobs in manufacturing in 2023 than in 2019, according to the report. But within the overall manufacturing sector, there were dramatic differences.

The paper industry, for instance, has steadily lost jobs over the five-year period, Peterangelo said. Meanwhile, fabricated metal manufacturing jobs fell from more than 77,000 to 71,000 early in the pandemic, but have since rebounded to more than 75,000 — a marked improvement but still short of its earlier peak.

While the net loss of manufacturing jobs may prompt concern, the report states, “the state’s strong overall employment and wage growth figures perhaps suggest that our economy is diversifying, which could be a strength if it means greater resilience during future economic downturns.”

Demographic challenges remain for Wisconsin, however. From 2010 to 2023, the Wisconsin population in prime working years (25 to 54) fell by 133,000 or 5.8%, the report states. Nationally that age group grew by 2.8% in the same period.

The state’s “aging population, low birth rate, and weak net migration figures have resulted in a shrinking working-age population, which could affect the state’s ability to attract and retain employers,” the report states.

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