Wisconsin Gov. Tony Evers speaks during the annual State of the State address Tuesday, Jan. 24, 2023, in Madison, Wis. (Amena Saleh / Wisconsin Watch)
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Wisconsin’s projected state budget surplus is forecast to reach $7.1 billion by July, up more than half a billion dollars from the previous estimate just two months ago, the nonpartisan Legislative Fiscal Bureau reported Wednesday.

It is the largest budget surplus in Wisconsin history.

Democratic Gov. Tony Evers and the Republican-controlled Legislature are fighting over what to do with the money.

Republicans support moving to a flat income tax, a proposal that would result in the state collecting about $5 billion less a year in taxes. Evers wants a more modest $600 million tax cut targeting the middle class. He’s also called for spending more than $2 billion on K-12 schools.

Evers on Tuesday, in his State of the State speech, unveiled nearly $1.5 billion in new spending proposals targeting mental health services, water pollution, affordable child care and workforce development. Republican Assembly Speaker Robin Vos declared most of them to be dead on arrival.

“We will continue to fund our core priorities and obligations while protecting Wisconsin’s checkbook,” Sen. Howard Marklein, co-chair of the Legislature’s budget-writing Joint Finance Committee, said in a statement reacting to the higher forecast.

He and committee co-chair Rep. Mark Born, also a Republican, reacted with caution to the unprecedented positive economic news.

They highlighted that the new report estimates tax collections to the state through June 2025 will be about $94 million lower than previously expected, and that the surplus was boosted by an infusion of federal pandemic relief money.

The Fiscal Bureau reported nearly 90% of the increase over November projections came from money that was set aside for specific purposes but went unspent, including $200 million for a failed attempt to kill Wisconsin’s personal property tax and $270 million in Medicaid funding that was replaced by federal funds.

Tax collections for the current fiscal year were also about $61 million higher than projected.

Evers will deliver his full two-year state budget plan in three weeks. The Legislature will then spend the next four months rewriting it before passing their own two-year spending plan for Evers to consider.

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Scott Bauer

Scott Bauer / Associated PressCorrespondent at Associated Press

Scott Bauer is the head of the AP bureau in Madison, covering state government and politics.

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Harm Venhuizen / Associated PressReport for America Corps Member

Harm Venhuizen is a state government reporter with The Associated Press in Madison, Wisconsin, primarily covering elections and voting rights. Prior to this, Venhuizen interned at Military Times. He holds a bachelor’s degree in political science and philosophy from Calvin University in Grand Rapids, Michigan, where he served as editor-in-chief of Chimes, the student paper. During his time at Chimes, he earned recognition for his investigative coverage of controversial personnel decisions, sexual assault and university employment policies against same-sex marriage. Venhuizen grew up on a small farm in rural Wisconsin, and spent a summer working as a wildfire firefighter with the U.S. Forest Service.