Gov. Tony Evers and GOP announce $1.8 billion tax relief and school funding deal

Gov. Tony Evers spoke to reporters during a visit to Barneveld middle and high schools Monday, where he spoke to students and staff about their mental health initiatives and announced a deal with Republican legislative leaders on school funding and tax cuts. (Photo by Baylor Spears/Wisconsin Examiner)
Gov. Tony Evers, Assembly Speaker Robin Vos (R-Rochester) and Senate Majority Leader Devin LeMahieu (R-Oostburg) — Wisconsin’s three leaders all of whom are set to retire this year — announced a $1.8 billion deal Monday to provide additional funding to Wisconsin schools for general aid and special education and tax relief in the form of rebate checks, property tax cuts and the elimination of taxes on tips and overtime.
The deal is the culmination of months of negotiations on how to use the state’s projected surplus to provide additional funding to schools and tax relief to Wisconsinites.
Negotiations kicked off at the beginning of this year after the general fund surplus was projected to be $2.37 billion at the end of the biennium, June 30, 2027 — about $1.5 billion higher than expected. However, they fell apart as Evers and Senate and Assembly leaders argued over the form that a proposal should take and a deal was not reached before the end of the regular legislative session.
According to a Department of Administration and Department of Revenue memo released Monday, the state’s general fund tax collections are tracking between $300 million and $350 million above the January estimates.
Evers said the school funding was the biggest win in the bipartisan agreement. The deal includes $300 million for special education funding and $300 million for school general aids.
“I think money for schools, that’s obviously the most important thing for me, but again, we’re in a position to actually compromise and have Republicans and Democrats, at least in the leadership level, getting something done,” Evers said.
Evers spoke to reporters during a visit to Barneveld middle and high schools where he spoke to students and staff about their mental health initiatives on Monday morning. He was there to highlight investments that have been made in schools. He noted that Barneveld is a good school district and said the deal reached by him and lawmakers would “make them an even better” one.
About $85 million will be used to guarantee schools get 42% of their special education costs reimbursed for the 2025-26 school year and the remaining funds will be used to guarantee a 50% reimbursement rate in 2026-27.
The 2025-27 state budget promised a 42% special ed reimbursement rate in the first year of the budget and a 45% rate in the second year, but the funds set aside were not adequate to meet those rates.
The state’s special education reimbursement is currently a “sum certain” appropriation, meaning that there is a fixed pot of money available for the costs. If schools’ costs exceed the amount set aside, then the rate of reimbursement is lower. A change to a sum sufficient appropriation would ensure that the amount available is enough to cover the promised rates.
Evers said negotiations couldn’t get to a sum sufficient appropriation for special education funding, but that negotiators used figures that should get the state to the promised rates.
“Next budget people have to ensure that it is sum sufficient, but we did not get across that bridge, unfortunately,” Evers said. “Look, we know what the numbers are, so it’s going to be 50[%].”
The deal will also increase funding for pupils participating in the choice, charter, special needs scholarship and open enrollment programs by $16 million.
The investment into general school aids comes after lawmakers declined to provide any new funding in the 2025-27 state budget and property taxpayers across the state saw increases in December. The $300 million is intended to help buy down school property tax levies, although the amount will not completely cover the $325 per pupil in additional school revenue limit authority that school districts have as a result of a previous Evers budget veto.
The agreement also includes $50 million meant to serve as property tax relief aid for the Wisconsin Technical College System beginning in 2026-27.
The Wisconsin Association of School Boards said in a statement that it was encouraged by the deal’s investments in special education and general aids, but cautioned that it would not completely fix schools’ financial issues.
“While these resources are important for public schools struggling with a declining level of state investment, it will not solve the longer-term problem,” WASB said. “The state has shifted away from providing inflationary increases in spendable resources for schools for 17 years. One state surplus deal cannot reverse that trend by itself.”

The Joint Finance Committee is scheduled to take up the proposal on Tuesday, and it’s expected that the full Assembly and Senate will take up the proposal on Wednesday in a special session. Ever signed an executive order for the session Monday afternoon.
Vos said in a statement that legislators would be sending the surplus “back to help families with the pressure of increasing costs, reward hard work, and to continue investing in schools to help stabilize rising property taxes.”
LeMahieu said Repiblicans’ top priority was to send the surplus back to “hardworking taxpayers across the state.”
“This deal will provide immediate relief with $600 in surplus refund payments and provide permanent property and income tax relief for Wisconsin families,” LeMahieu said.
The deal will also provide $300 tax refunds for individuals and $600 refunds for married joint filers. Tax relief in this form was originally a Senate Republican proposal, though they had proposed rebates of $1,000 for married joint filers and $500 for individuals.
The deal also includes the elimination of taxes on tips and overtime — two proposals that Evers initially vetoed. The proposal will align state with federal law, though the state proposals differ as they are permanent changes rather than having a sunset date in 2028.
Evers expressed confidence that there are enough votes to get the deal through both houses and to his desk.
“I need a majority of each house, and whether that’s all Democrats, all Republicans or a mix, I don’t care,” Evers said. “I think it would be hard for anyone to say I’m not in favor of this…[when] as a result, my local school district gets screwed. I think that’s going to be a hard position for people to take.”
It’s already clear that not every member is on board as Democratic and Republican Senate lawmakers express concerns and opposition to the deal in statements.
Senate Minority Leader Dianne Hesselbein (D-Middleton) said in a statement that from her perspective there is no deal. She said her caucus needs to see the full details of the “expensive proposal” before they say more.
“Three men who will not be in elected office next year have come up with this proposal which Senate Dems will be reviewing,” Hesselbein said. “Any proposal must pass both houses of the legislature and no one knows if Republicans have the votes to pass it.”
Assembly Minority Leader Greta Neubauer (D-Racine) has not responded to a request for comment.
Sen. Steve Nass (R-Whitewater), who is also retiring this year, said in a statement that he “can’t support another bad deal cut by leaders that will never face the voters again.”
With an open race for governor and control of the state Legislature up in the air, some expressed concerns about leaders deciding to spend down the surplus when they won’t be around to deal with the consequences next year.
Democratic candidates for governor, Sen. Kelda Roys (D-Madison) and former Department of Administration Secretary Joel Brennan criticized the way lawmakers negotiated the deal and the contents of the deal.
“Budgets are difficult to negotiate and demand tough decisions, and that’s why I believe they must be done in public with input from Wisconsinites. It’s very disappointing that this one wasn’t, and we should expect all candidates for governor to commit to an open process,” Brennan said. “I’m all for putting money back in people’s pockets, giving our schools a much-needed boost, and providing some property tax relief, but this deal misses the mark in many other ways. It does nothing to address the cost-of-living crisis that is still crushing Wisconsin families on things like child care, health care, and gas and utility prices.”
Roys said the leaders had come to a “backroom” deal.
“This latest deal is the height of fiscal irresponsibility,” Roys said. “It spends a projected ‘surplus’ before it’s in the bank, even though that projection was estimated before Trump’s attack on Iran that disrupted our economy and caused gas prices to skyrocket. It gives a little one time money to public schools while permanently cementing unfairness in our tax structure. Worst of all, it blows nearly a billion dollars on an election year gimmick to send out rebates, squandering the ability of a new Democratic majority to make the long-overdue investments in our kids that they deserve.”
The critique on the transparency in the negotiation process comes after Lt. Gov. Sara Rodriguez, who is also campaigning for the nomination, was recorded saying she would craft the state’s next budget “behind a curtain.”
Evers told reporters that the negotiations with lawmakers was typical process.
“Well, sometimes you do things behind the curtain,” Evers said. “Leadership both from my staff and others on the other side met on a regular basis, and we kept others informed about that. Now, if… [Roys is] angry because we didn’t involve every legislator prior to, that doesn’t happen with a regular budget, too. So if she’s going to be governor, she needs to get used to it.”
He continued: “If she’s not going to support it, my question would be, ‘How do you run for governor of the state of Wisconsin and say to your schools, well, you know, this money of 42% and 50% for special education, I’m against that?’ That’s a tough one to run against.”
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