Gov. Tony Evers and legislative leaders reach bipartisan deal on budget after months of negotiations

The deal comes after months of negotiations (and multiple breakdowns in communication) among Gov. Tony Evers and Senate and Assembly leaders. Gov. Tony Evers delivers his 2025 state budget address. (Photo by Baylor Spears/Wisconsin Examiner)
Gov. Tony Evers and Republican and Democratic legislative leaders have reached a tentative agreement on the 2025-27 state budget, agreeing to invest hundreds of millions in the University of Wisconsin system, to create new grant and payment programs for child care facilities, further boost investment in special education and cut $1.3 billion in taxes.
The deal comes after months of negotiations (and multiple breakdowns in communication) among Evers and Senate and Assembly leaders. Each leader highlighted pieces of the deal in statements.
Evers focused on the investments in education and child care, saying it is “a pro-kid budget that’s a win for Wisconsin’s kids, families, and our future.”
“What was at stake is no secret — Republican lawmakers had long indicated this budget would not invest in child care providers, would provide no new increases for our K-12 schools, and would cut nearly $90 million from our UW System. But I never stopped believing we could work together to reach consensus and pass a bipartisan budget, and I’m proud of the months of work that went into getting to where we are today,” he said.
Evers thanked Senate Majority Leader Devin LeMahieu (R-Oostburg), Assembly Speaker Robin Vos (R-Rochester) and Senate Minority Leader Dianne Hesselbein (D-Middleton) for coming to the table to get a deal done.
“The people of Wisconsin expect their leaders to show up, work hard, and operate in good faith to get good things done,” Evers said. “We’ve shown we’ve been able to get good things done for Wisconsin when people put politics aside and decide to work together to do the right thing. I look forward to signing a bipartisan budget that makes these critical investments in our kids, families, and communities across our state,” Evers said.
Evers has also agreed not to utilize his partial veto power — previous uses of which have been both limited and sustained by the state Supreme Court in recent weeks — on parts of the budget included in the deal.
Vos said in a statement that he appreciated Evers’ willingness to work with lawmakers to find a bipartisan agreement.
“This budget delivers on our two biggest priorities: tax relief for Wisconsin and reforms to make government more accountable,” Vos said. “This deal brings those investments and reforms together and creates a Wisconsin that works for everyone.”
JFC co-chair Rep. Mark Born (R-Beaver Dam) said legislators worked hard to find compromise while staying “committed to our core principals.”
“We are proud to have worked diligently to craft this budget, listened to the priorities of our constituents and look forward to sending the bill to [Evers] later this week,” Born said.
LeMahieu and budget committee co-chair Sen. Howard Marklein (R-Spring Green) said in a statement that tax relief for middle-income Wisconsinites has been their top priority during the entire process.
“This compromise will provide meaningful tax relief for retirees and the middle class, stabilize the child care system without making pandemic-era subsidies permanent and strengthen our schools by reimbursing special education at a higher rate,” the Senate leaders said.
Hesselbein said she has “been at the table fighting hard on behalf of Senate Democrats to help hammer out a bipartisan budget agreement.” Her involvement in negotiations comes amid slim margins in the Senate.
“Remember where we were a week ago: Republicans proposing $87 million in cuts to the UW, a mere 5% increase for special education and no direct payments to child care providers. Elections matter: the fact that Democrats gained four Senate seats and are close to taking the majority means that Senate Democrats were able to make this budget agreement better for the people of Wisconsin,” Hesselbein said.
Last session, the state Senate passed the budget bill with only Republican votes even after a couple of Republicans voted against the proposal. This session the Republican Senate caucus would only be able to lose one vote if it were going to pass the bill with only GOP support, yet, even prior to a deal announcement, a handful of Republican members had publicly expressed concerns about the spending in the bill. Among them was Sen. Steve Nass who, in a statement last week, laid out requirements for a budget that he could support, Sen. Rob Hutton who, in a Friday opinion piece, and Sen. Chris Kapenga who, in a post on Monday, drew their own lines in the sand.
It is unclear how many Senate Democrats will vote for the budget when it comes to the floor this week. Sen. LaTonya Johnson (D-Milwaukee) earlier told WISN UpFront that the caucus was sticking together and members were “not willing to be picked off one by one.”
The Joint Finance Committee is scheduled to meet at 9 a.m. Tuesday to vote on the rest of the budget before sending it to the full Assembly and Senate.
Child care funding
Child care providers, who have dealt with staffing shortages, high costs and declining state support, will receive a $300 million investment under the deal.
Evers had proposed spending an additional $480 million to continue funding Child Care Counts, a program that was funded using federal pandemic relief. With that funding running out, Evers had said the state should pick up the costs to continue supporting child care providers, while Republican lawmakers said they were opposed to providing checks to facilities.
Under the deal, the Child Care Counts program will be phased out, but the state will invest $110 million to support direct monthly payments and monthly per-child investments to child care facilities for a bridge program. That will continue helping providers to remain in business, cut child care wait lists and lower costs for families. The money will come out of the state’s federal interest earnings.
The state will also invest $66 million in general purpose revenue for a “Get Kids Ready” initiative, which will be targeted at supporting child care providers serving 4-year-olds. This will be the first child care program in state history to be funded solely by general purpose revenue.
Another agreed-upon budget item creates a $28.6 million pilot program to help support child care capacity for infants and toddlers.
Under the program, providers are to receive $200 per month for every infant under 18 months and $100 per month for every toddler between 18 and 30 months.
Other child care investments include a $123 million increase in the Wisconsin Shares program, $2 million over the biennium for the creation of a competitive grant program aimed at supporting child care facilities seeking to expand their capacity and $2 million in Wisconsin’s Child Care Resource and Referral Agencies to help parents find child care and provide training to providers.
The deal also makes changes inspired by solutions that Republican lawmakers have advocated for including creating “large family care centers” that will be allowed to serve up to 12 children and standardizing the minimum age for an assistant teacher in a child care facility at 16.
No cuts for University of Wisconsin system
The University of Wisconsin system will get an investment of more than $256 million in the state budget under the deal — a significant compromise as Evers and the system had requested an $855 million investment, while Republican leaders in recent weeks were considering an $87 million cut to the system. Evers had threatened to veto the budget if it came to his desk with a cut.
The funding includes $100 million to support UW system campuses statewide. Some of the funding would be distributed to campuses according to a formula. Of this, $15.25 million each year would be distributed to campuses with declining enrollment over the last two years and $11.25 million each year through a formula dependent on the number of credit hours undergraduates complete.
There will also be $7 million across the biennium to provide 24/7 virtual telehealth mental health services across UW system campuses, $54 million to support retainment and recruitment of faculty and staff, $94 million to increase wages by 3% in the first year and 2% in the second year for UW system employees and $1 million for UW-Green Bay’s Rising Phoenix Early College High School Program.
The UW system will also be required to maintain the number of positions funded with general purpose revenue and program revenue at January 2024 levels.
The system will also get over $840 million for capital projects. Other parts of the capital budget, including the Green Bay Correctional Institution, were addressed in the deal.
- $194 million for UW-La Crosse to complete the construction of the Prairie Springs Science Center and to demolish Crowley Hall
- $189 million for UW-Milwaukee to renovate the Health Sciences and Northwest Quadrant complex
- $137 million for UW-Oshkosh to demolish a library facility, renovate and add a brand-new replacement addition
- $10 million for UW-Madison to renovate and build a new addition to Dejope Residence Hall
- $98 million for UW-Stevens Point to renovate and build a new addition to Sentry Hall
- $800,000 for UW-Milwaukee to plan for renovations at Sandburg Hall East Tower
- Nearly $32 million for UW-Stout to renovate and build a new addition at its recreation complex
- Nearly $19 million for UW-Madison to renovate the Chadbourne Residence Dining Hall, $5 million to plan for relocation and demolition of the UW-Madison Humanities Building and $160 million for renovation of UW-Madison’s Science Hall
K-12 special education funding up to 45%
The deal also makes changes to the budget that Republican lawmakers on the budget committee passed in mid-June, boosting the special education reimbursement rate to 45% by the second year of the budget.
The state’s special education rate was one of the crucial issues discussed by education advocates with many saying a significant investment would help alleviate some of the financial stress schools have faced and ease districts’ reliance on property taxes.
Some advocates had called for a 90% investment, while Evers proposed a 60% rate. Republican lawmakers had initially approved raising the rate to 35% in the first year of the budget and 37.5% in the second year.
Under the deal, the total investment in the special education reimbursement will be over $500 million. The rate will rise to 42% in the first half of the biennium and 45% in the second. It will remain at a sum certain rate, meaning the amount of money allocated is finite and will not increase based on expanding demand.
The budget deal will also invest $30 million for comprehensive school-based mental health services.
Department of Health Services changes
The deal would also increase the hospital assessment rate to help maintain the state’s Medicaid costs. The Wisconsin Hospital Assessment is a levy from certain hospitals that the Wisconsin Department of Health Services (DHS) uses to fund hospital access payments, hospital supplemental payments and reinvestment in the Wisconsin Medicaid program.
Wisconsin hospitals currently pay an assessment rate of about 1.8% of their net patient revenue to the DHS. That would rise to 6% under the deal with 30% of the funds being retained in the Medical Assistance Trust Fund, which supports Wisconsin’s Medicaid program. The rest of the funds will be used to invest in hospital provider payments and is estimated to provide over $1.1 billion in additional investments in Wisconsin hospitals.
The changes use federal funding to increase hospital reimbursement while decreasing the amount of general program revenue for the Medicaid program.
Evers’ office noted that federal reconciliation legislation proposals have included provisions that would prohibit or limit the policy change in the future, meaning that this budget could be the last for Wisconsin to make these types of changes.
The state will also fund the current Medicaid program under the deal.
The budget will also increase investments in free and charitable clinics by $1.5 million.
The deal does not include Medicaid expansion, which Evers continued to advocate for in the budget but Republican leaders have fervently opposed. It also doesn’t include the smaller postpartum Medicaid extension, which would allow postpartum mothers to receive Medicaid coverage for up to a year after giving birth.
Wisconsin is one of 10 states not to take the Medicaid expansion and one of two not to take the postpartum expansion.
Roads improvement program gets additional investment
A couple of projects created in the last budget to help with road improvement will get additional funding under the deal
The state will allocate $150 million in the Agricultural Roads Improvement Program, which was created in 2023 to support local agricultural road improvement projects statewide. Of the additional funding, $30 million will go towards improving and repairing deteriorating bridges across the state.
According to Evers’ office, the program has so far funded 92 projects across the state.
The deal would also generate nearly $200 million in additional revenue to improve the sustainability of the transportation fund, allocate $14 million for municipal service payments, invest $50 million to continue the Local Projects Program (also created in the 2023 budget), which supports local communities with construction projects that serve statewide public purpose, allocate $15 million for repairs and modifications to the Echo Lake Dam, invest $5 million for the Browns Lake dredging project and invest $30 million for the De Pere railroad bridge.
$1.3 billion in tax cuts
Evers has also agreed to support the tax cuts that lawmakers approved in committee in mid-June.
Under those changes, more people will qualify for the state’s second tax bracket with a rate of 4.4%. For single filers, the qualifying maximum income will increase from $29,370 to $50,480. For joint filers, the maximum will increase from $39,150 to $67,300 and for married separate filers, the maximum will increase from $19,580 to $33,650.
It’s estimated that this will reduce the state’s revenues by $323 million in 2025-26 and $320 million in 2026-27.
The cut will affect 1.6 million Wisconsin taxpayers and provide an average cut of $180. Under Wisconsin’s tax system, people pay the first-bracket tax rate on the portion of their income that falls into that bracket, the second-bracket rate on their income up to the maximum of the second bracket and so on. Thus even high-income earners will get a tax break through adjustments to the lower bracket rates.
The proposal also included an income tax exclusion for retirees. It is estimated to reduce Wisconsin’s revenues by $395 million in 2025-26 and $300 million in 2026-27. This will allow Wisconsinites 67 and older to exclude up to $24,000 for single-filers and $48,000 for married-joint filers of retirement income payments. Those filers will see an average cut of about $1,000 per filer.
The deal will also include the elimination of the sales tax on household utility bills, which is estimated to cost the state about $178 million over the biennium and create a film tax credit similar to one that Republican lawmakers have been advocating for.
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