Nearly $800 million in funding for Wisconsin hospitals is in question due to potential rule changes under consideration by the Trump administration. (Photo by Thomas Barwick/Getty Images)

Nearly $800 million in funding for Wisconsin hospitals is in question due to potential rule changes under consideration by the Trump administration. 

Wisconsin lawmakers and Gov. Tony Evers rushed to finish the state budget in July, ahead of federal legislation making it to President Donald Trump’s desk, to ensure the state draw down additional federal funds. Whether the state will be able to benefit from that funding is now uncertain. 

The 2025-27 state budget included a provision to increase its Medicaid hospital assessment from 1.8% to 6% as a way to supplement the state’s Medicaid resources with matching contributions from the federal government. The change was meant to increase payments to hospitals and to offset the state’s funding for the Medical Assistance program. It was estimated to result in over $1 billion in additional revenue for Wisconsin hospitals. 

A Legislative Fiscal Bureau analysis this week found that “preliminary federal guidance from the Centers for Medicare and Medicaid Services (CMS) has created some uncertainty about the allowability of changes to Wisconsin’s hospital assessment.”

The analysis said that if the increase is disallowed then it would lead to a general purpose revenue shortfall of $396 million annually — or $792 million in the 2025-27 biennium.

“CMS indicated that this matter will be addressed through formal rule making procedures, and thus will be subject to provisions of notice and public comment. Pending additional information from the federal government, the allowability of the Act 15 changes is not currently known,” the LFB analysis stated. 

A group of eight Democratic state lawmakers, including state Rep. Steve Doyle and Sen. Brad Pfaff, both from Onalaska, sent a letter to U.S. Rep. Derrick Van Orden urging him to take action to help ensure Wisconsin receives the funds. Following the state budget, Van Orden claimed credit for helping secure the extra funds for the state.

“Our hospitals, and especially our rural hospitals were counting on that funding to keep their
doors open… At a time when our medical institutions are facing unprecedented financial challenges, we must do everything we can to ensure their ability to continue to operate. Our state budget was counting on it, and our constituents’ lives literally depend on it. We implore you to do everything in your power to reverse these catastrophic decisions,” the lawmakers wrote.

The LFB projection is about $1.53 billion above the projected balance when the 2025-27 biennial budget was enacted last year. Wisconsin State Capitol. (Examiner file photo)

According to a Legislative Fiscal Bureau (LFB) analysis released on Thursday, Wisconsin’s general fund balance at the end of the biennium, June 30, 2027, is projected to be $2.37 billion. The projection is about $1.53 billion above the projected balance when the 2025-27 biennial budget was enacted last year.

According to the LFB, the majority of the growth, $1.367 billion, is due to an increase in estimated tax collections. Other contributions to the growth include $104 million in departmental revenues, an increase of $49.9 million in sum sufficient appropriations and an increase of $107.8 million in the amounts that are estimated to lapse to the general fund.

Both Republicans and Democrats sought to take credit for the news.

Rep. Mark Born (R-Beaver Dam) and Sen. Howard Marklein (R- Spring Green) said in a statement that Republicans’ “long-standing commitment to responsible budgeting and fiscal discipline is working.” 

The lawmakers warned that the state should continue to exercise caution. 

“These increased revenue estimates are driven in part by strong stock market performance and resulting tax collections,” the lawmakers said. “We must be careful when committing to ongoing spending using one-time money. Our disciplined approach has delivered results and put Wisconsin in a strong fiscal position.”

Senate Minority Leader Dianne Hesselbein (D-Middleton) said that the numbers are “a tribute to Wisconsin Democrats, who have prioritized investments in the people of Wisconsin that have improved our state’s economy, provided middle class tax relief and helped make Wisconsin a state where businesses want to invest and families want to live.”

Gov. Tony Evers told reporters that the revenues were larger than expected on Monday and he wanted to use the funds for priorities including over $1 billion in property tax relief. Republican lawmakers have said that they want Evers’ 400-year veto, which gave school districts the ability to enact annual revenue limit increases, repealed in order to deal with rising tax cuts.