Wisconsin’s budget surplus presents risks and opportunities
Turnout was “remarkable,” said his staff, when Gov. Tony Evers came to Kenosha to hear how to divvy up the state’s surplus.
But of course people showed up. That happens when you have $6.6 billion and you ask who wants a helping.
The surge of revenue outstripping even Madison’s surge of spending presents a problem for Evers: He has to burn off money — change-our-direction sums — while being a governor who hasn’t wanted to change the direction of government much at all.
The 150 people who came to talk to Evers were sorted by topic: Spend more on education? Infrastructure? Environment? There wasn’t a “give back what you overcharged” option. Evers set the mood by boasting that his administration had done some road repairs, then he declared the surplus an “unprecedented opportunity … to create the future we all want.”
For many participants, this was much like the present, just with added cash from Madison. In the education circle, the first ask was for more money for school districts on the grounds they hadn’t seen an increase in years. In reality, the state’s own figures show districts’ per-child funding has risen above inflation every year since 2013.
A sincere, prepared woman asked specifically for $300 million for Child Care Counts. That’s the set of emergency subsidies, $700 million so far, the state has distributed to child-care providers from federal pandemic aid. The program’s done in 2024. A group mostly of nonprofits wants the subsidies to continue atop the $400 million annually that state and feds already spend to subsidize Wisconsin child care.
So, a lot more of the same. Not for bad things, but you can see how an emergency spike in spending just amplifies the old trajectory.
Which, for state government, was upward. The all-in figure from Wisconsin’s annual fiscal reports was about 30% higher in 2022 than 2018. Subtract inflation and account for population, and you still have about 10% more state government, eating up about 1.3 percentage points more of all wealth produced by Wisconsinites. That’s a lot of pothole-fixing.
More of the same would be a tragically wasted opportunity. As Andrew Hanson outlined in the Badger Institute’s “Mandate for Madison,” Wisconsin’s economic trajectory is mediocre: Economic output per person, once growing apace with neighbors, now is second-worst among our Midwestern peers. Our population grows at a pace middling even for the Midwest. Projections of our working-age population show much slower growth than the country overall. Measures of our economic freedom, once growing, have flatlined.
We need to change something. Instead of blowing the surplus on padding government, we can use it to help Wisconsinites preserve their own freedom and prosperity. The “Mandate for Madison” has lots of ideas from some of the best thinkers about Wisconsin, many of them costing nothing, but consider two giant proposals.
First, Wisconsin can afford to bring justice to the funding of families’ education choices.
For decades, Wisconsin has respected parents’ responsibility for their children’s education, offering open enrollment across districts, charter schools — and the power to take state aid to a private school. Families have embraced this: Private-school choice programs now serve about 52,000 students, 43% more than five years ago.
But the moment a mother chooses a private school, her child loses value in the state’s eyes. Only $8,399 in state aid will accompany her K-8 student, $9,045 her high schooler, while district public schools average just over $15,000 per child in taxpayer funding. This radically limits the ability of independent schools to serve Wisconsin children, and it is unjust to those children’s families.
As the head of a network of nonprofit schools in Green Bay put it, “A child is a child is a child,” yet the state is saying some children are worth about 40% less. “I just know that it’s unjust.”
So is cutting off access to school choice for working- and middle-class families, as income caps do now. Reforming this to treat all children in state-supported education equally will bend our state’s trajectory toward freedom and opportunity. It will cost money, but now Wisconsin has it.
A second reform starts with the reality that a surplus means the state has overcharged taxpayers.
We’ve lowered income taxes for some in recent years, but our top rate, at 7.65%, remains higher than all but eight states, seven once Iowa falls to 3.9% in 2026. Twenty-five states have lowered their top rates in the last decade as we’ve stood still. Worse, our top rates hit about two-thirds of the income earned by the 95% of Wisconsin businesses that aren’t large corporations. The clear message to growing employers is, “Grow elsewhere.”
The way to change that is to adopt a fairer structure, charging the same rate of all taxpayers. As we showed in “Mandate for Madison,” this means a straight-up tax cut for about half of households. Improving Wisconsin’s sliding-scale standard deduction spares every other taxpayer from an increase. It’s a no-downside proposition that changes us from a tax climate that repels growing employers to one of the nation’s most attractive.
Too often, those who want to shift power from metastatic government back to citizens face the retort, “What would you cut?” Neither of these reforms requires that.
Instead, they use the state’s revenue surge to empower Wisconsinites, letting families choose the schooling they judge best, letting taxpayers escape the punishment of our overpriced tax system while staying put.
It’s a remarkable moment for creating a future we all want.
Patrick McIlheran is the Director of Policy at the Badger Institute. Permission to reprint is granted as long as the author and Badger Institute are properly cited.