Despite inflation and low wage growth, US jobs market somehow getting stronger in early 2026?

Today, we got more indications that maybe the US jobs market is showing signs of life this Spring?

US private employers added 122,000 jobs in May, payroll processor ADP said Wednesday.

Economists surveyed by Bloomberg had expected an increase of 120,000 roles, an increase from April’s revised level of 105,000, in a further sign of labor market stabilization. Gains were led by education and health services, though eight of the 10 supersectors ADP tracks posted positive movement.

"Hiring was more broad-based in May than we've seen in the last few years,” ADP chief economist Nela Richardson said in a statement. “The labor market continues to show sustained momentum going into the summer hiring season."…

Meanwhile, Tuesday’s job openings and labor turnover report from the federal government offered mixed signals for job-seekers. Though job openings surged in April to their highest level since May 2024, helping nudge the ratio of vacancies to unemployed workers to its best level since the beginning of last year, the openings were largely concentrated in just one sector: professional and business services.

Hiring, on the other hand, slid. And the quits rate, which is often seen as a barometer of workers’ confidence in the job market, also decreased slightly.

The ADP report has generally had good news for jobs in recent months, with private sector job growth averaging nearly 100,000 a month in that survey since January.

If there are solid job gains going on in 2026, that’s an improvement over what we had in 2025. The “gold standard” Quarterly Census of Employment and Wages (QCEW) had its latest release this week, which went through the end of 2025 and uses records from over 90% of payroll-listed employers.

The QCEW says that less than 300,000 jobs were added for all of last year, and more than half of US states lost jobs in 2025.

To be fair, the QCEW number is slightly above the monthly reports that had total job growth at only 116,000 for last year. So if anything, we would be likely to see slightly upward revisions for jobs when the preliminary benchmarks are released in a couple of months.

But notice how the Midwest wasn’t part of that job growth, and Wisconsin was part of that, with a loss of 4,157 jobs in the QCEW for 2025. That’s still quite a bit better than the loss of 19,000 (!) jobs in the monthly reports we have had for Wisconsin, so those numbers seem certain to be revised up for last year.

However, even if the US jobs market has picked up, wage growth hasn’t. ADP reports that 12-month wage growth is stuck at the lowest levels in 5 years. That is much less than workers were getting during the inflation spikes of 2022, with the premium for job leavers going down significantly.

While it is a good thing for the economy that large numbers of Americans aren’t out of work, it’s also more reason that the Federal Reserve might need to raise rates in the near future. If we aren’t in recession, but inflation keeps rising and the stock market in a speculation Bubble, tightening money is an obvious way to get back toward balance.

It sure makes me wonder why we would continue at 170 basis points below where we were 2 years ago - a time when inflation had been at lower rates than today for well over a year.

Our current level isn't cutting off these rising prices in both products and stocks. Which illustrates why times of stagflation are confounding for policymakers. When you have any growth (speculative or otherwise), prices spike up, wage growth often falls behind, and responsible banks tighten up. This inevitably slows down the economy, although the 2020s version doesn’t seem to have as much hiring or firing as we had 50 years ago (at least so far).

There’s also got to be a point where the higher costs and lack of wage growth leads to a lack of demand for other products. We haven’t seen a lot of it yet in 2026, but if Americans can’t get ahead of their bills, it may explain why consumer sentiment is so bad in a time when jobs are still getting added and unemployment appears to stay low.

We get a new monthly jobs report from the Bureau of Labor Statistics on Friday. We'll see if that also shows decent job growth, if unemployment remains in the low 4%s, and if wage growth continues to struggle. I can't think that all of these trends continue, and at least one of them breaks soon. But despite 3 months of war-induced price spikes, the US job market has yet to get hit.

Budget deal Pt. 2- Trump/GOP cutbacks from DC, and Wisconsin's other land mines for 2027

We ended Part 1 by saying that we could pass the "blockbuster" $1.8 billion school funding and tax cut/rebate package in Wisconsin, keep it for the next budget at a cost of $1.6 billion, and still balance the 2027-29 budget if state tax revenues increased by a (very feasible) 4% in each year.

But that number also assumes no increases in costs for the same amount of services from July 1, 2027 through June 30, 2029, and we are already seeing some costs go up for state services in June 2026 . For example, Wisconsin’s Medicaid budget is already projecting a $263.6 million deficit by June 30 of next year, as the Department of Health Services says “costs are trending higher than assumed in [the 2025-27 budget] for several essential healthcare services.” Oops.

Given that the 2025-27 budget was built on a projection of 2.9% inflation for 2026 and 2.2% in 2027 but PCE inflation is running at 3.8% over the last year, so not only have base costs gone up well beyond the 2.9% projection for 2026, but what reason to think that this figure will get back toward 2% for the 2027 Fiscal Year? Higher costs (both fuel and nonfuel) are soon to be passed ahead by businesses for their products, and there absolutely will be an attempt by companies to “re-set” prices at the start of next year to make sure the profit numbers stay strong in 2027.

So the base costs are likely to be higher in 2027 than what you're seeing in the structural budget.

There are also a couple of significant items that aren’t included in that structural deficit calculation that may require more money in the bank to pay for from July 1, 2027 to June 30, 2029. One is the possibility of an explosion in amount of the state’s writeoff for costs associated with the construction of data centers. As the Legislative Fiscal Bureau noted back in March:

The announcements and planned investments from these four certified companies combine for a total investment of more than $36.9 billion, spread over the life of each project (currently planned to occur between 2024 and 2028). It is estimated that an investment this size would result in $1.5 billion in initial foregone state sales tax revenue. Additional foregone state sales tax revenue of $369 million on an annual basis is estimated once these projects are completed. Expenditures eligible for the state tax exemption would also be exempt from local sales and use taxes, resulting in forgone county, city, and premier resort area tax collections, if applicable.

Almost all of that $1.5 billion in reduced sales tax revenue has yet to happen, as many of these projects aren’t didn’t start construction or have to send the information to WEDC until this year or later.

Sure, we also see revenue positives from the boosts in construction activity when it happens, but also note the “$369 million on an annual (aka – “ongoing”) basis is estimated once these projects are completed,” which should show up in the 2027-29 revenue estimates as well as future budgets. And if there’s a cutback in data center activity in 2027-29 (sure seems likely given how these things are hated across Wisconsin), then these facilities start being a drag on state revenues.

Another concern that could lurk over the next budget is the lack of help coming from DC under Trump/GOP, and how the Big Bunch of Bollocks that they made into law (including the votes of likely GOP Guv candidate Tom Tiffany) is going to shove costs down to the state level. That was illustrated again in a large Politico article over the weekend.

The Trump administration is counting on Medicaid work requirements to save the government billions of dollars. But well before the rules formally go into effect Jan. 1, they’re costing already-strapped states millions or tens of millions to implement.

State health departments are having to funnel resources into hiring more staff, paying for overtime, and upgrading their aging technology systems so they can determine which low-income residents are working, volunteering, caregiving, or studying enough hours to keep their Medicaid coverage. They are also building new systems to determine who is sick enough to qualify for an exemption…..

States and the federal government would theoretically save money if the requirements cause millions to drop off the Medicaid rolls, as predicted. However, state officials fear any state savings will be offset or even cancelled out by expenditures to enforce the rules, as well as other impacts of the One Big Beautiful Bill Act passed last summer. “I’m looking at the operational, I’m looking at the programmatic, and I’m looking at the fiscal challenges associated with the implementation of this bill, and it’s taking a significant amount of financial resources away from a system that people depend on,” said Marvin B. Figueroa, the Virginia Secretary of Health and Human Services.

Wisconsin was among the states that have shelled out more funds for these extra costs, giving $72 million over the next 2 years for personnel and technology upgrades to “increase oversight” on programs such as FoodShare and Medicaid (on top of the $263 million Medicaid deficit, by the way). It looks like these costs and positions are assumed as part of the LFB’s structural budget for 2027-29, but this seems far from the last of these items that’ll be cut from the Feds and Wisconsin will have to deal with and likely pay for.

There are also the extra funds Wisconsin has been able to take advantage of under the 2022 Infrastructure Investment and Jobs Act, including $94.3 million of recently granted investments to remove lead from drinking water that Congressman Bryan Steil is taking credit for despite voting against the bill. The 2026 Fiscal Year is the last year for those boosts in investments, and do you think this dysfunctional GOP Congress or the Trump Administration is going to pass something else to keep those funds flowing? Especially with the US Highway Trust Fund expected to run out of money in 2 years? HAH!

That’ll add to the funding strains for a Wisconsin Transportation Fund that already is in need of more money. In the current state budget, there was a one-time transfer of $580 million sent from the General Fund in the 2026 Fiscal Year to pay for items in the Transportation Fund, in addition to ongoing transfers of just over $110 million from items such as a small portion of all sales taxes and specific sales taxes on electric vehicles, along with left-over funds from the state’s Petroleum Inspection Fee.

And without that one-time transfer of $580 million, the Wisconsin Transportation Fund is expected to spend $300 million more than it takes in for Fiscal Year 2027.

Since the Transportation Fund is projected to only have $28.5 million left over in it as the next budget begins, that means another $600 million is needed to make up the difference ($300 million each year). Plus whatever might be cut by Sean Duffy and company from US DOT for whatever stupid reason they make up.

Oh, and have I mentioned that a lot of highway construction cost is related to the costs of petroleum and other oil-related products? Those road projects sure won’t be cheaper when we’re debating the next budget this time next year.

And I haven't even figured in the effects of a recession caused by cutbacks in the face of these higher prices and/or reduced demand. If there is one, or of this inflated stock market ever falls back toward reality, then you likely don’t have that 4% increase in revenues that would at least give a chance of the next budget balancing.

So there are plenty of legitimate reasons why Legislative Democrats and others could voice concerns about using up our budget surplus in 2026 when things are likely to be much tougher in 2027. That doesn’t mean there isn’t merit to giving education-related property tax relief now, when so many Wisconsinites are struggling, and I still remain ambivalent on what's the best option. I get the WisDems wanting more money to be left for 2027, given the strong chances of them running all of state government at that time, but I also get taking care of some of the real strains for taxpayers and K-12 school districts today while we can.

But while you can question whether concerns over future costs should outweigh the need for relief today, you can't say the numbers are made up, because the 2027-29 budget in Wisconsin could be even tighter than the "structural deficit" calculations let on, after the Trump/GOP crew got back in power in 2025.

A few key budget things to understand in Wisconsin's scuttled schools/taxes deal pt.1

Two weeks after the rejection of the tax cut and school funding deal in Wisconsin, it's clear that a lot of people don't exactly know all of the numbers involved, or the difference between budgets of NOW and LATER.

For example, all of the following can be true.

1. If no more bills are passed and if state tax revenues remained in the positive trend we saw through April 2026, we'd likely have more than $3 billion in the bank as the biennium ends on June 30, 2027.

2. We could give back $1.8 billion of this in the form of income tax rebates, property tax relief for schools, some targeted tax cuts, and increases in funding for special education services, and still have a bit more than $1 billion left in the bank on June 30, 2027.

3. Passing that $1.8 billion package also means we are looking at a significant budget hole starting on July 1, 2027, where expenses would outnumber revenues by far more than the $1 billion+ in the bank at the start of the 2027-29 biennium.

And a big part of this is the issue of one-time vs ongoing, which is always something that should be central to taxing and spending policy analysis, but usually isn't looked at too much by the media. But what is affordable in one year may not be affordable in future years. Or these ongoing, continuing measures might be just fine and doable, depending on how the bigger picture looks.

Within a week of the school funding/tax cut deal's demise, the Legislative Fiscal Bureau released its breakdown of the bill's costs for now and in future years. Note that while the biggest cost would have been in the Fiscal Year that starts on July 1, it would still have more than $1.6 billion in commitments in the next state budget.

This is because while the $870 million income tax rebate and the $20 million in Disaster Assistance Grants are one-time expenses, all of the other items are ongoing, which means those tax cuts and spending will continue into the next budget until something is changed by a later law.

Likewise, Fiscal Year 2026 is slated to spend a significant amount of General Purpose tax dollars above revenues, even if the $300 million in extra revenue that the Evers Administration estimated last month for FY 26 were to come through (and revenue numbers through the end of April would agree that we are ahead of estimates). But if those added revenues were to hold up for the next Fiscal Year at the same 1.5% increase rate that LFB estimated earlier this year, we'd have a 2027 Fiscal Year that would nearly be in balance.

But that's assuming the $3.4 billion bill doesn't get passed. If it does, then the next fiscal year is projected to have a similar one-year deficit to this current one, even if the extra $300 million in revenues come in for both fiscal years.

And that's where we have the "$2.9 billion structural deficit" argument come in, as the LFB put together the $0.5 billion left in the bank to start the next budget if this bill were to pass, then looked at the 2027-29 budget commitments under the base budgets of 2027, and added in the extra spending/tax cuts that would be ongoing. That means expenses exceed revenues by $3.4 billion for the next budget, and $2.9 billion that has to be made up somehow.

However, one argument being made by the Howard Markleins of the world is that revenue growth is not part of those 2027-29 estimates. So let's throw in a 4% growth assumption (which has been attainable in recent years), and see what we get with this bill.

If a 4% increase in revenues does fill in the gap that appears in the “structural deficit”, then we should be able to get by, right?

Ahh, but there are a lot more obstacles to balancing things in a 2027-29 budget that seems likely to be the most difficult one in the 2020s. And we'll get into those in part 2.

Income, spending and profits explain why Americans see a two-sided economy

Thursday featured the release of the always-important income and spending report, and it’s what you likely imagined it to be. Year-over-year inflation still rising, and consumer spending barely growing beyond the price increases.

Inflation-adjusted consumer spending increased just 0.1% last month, while the personal consumption expenditures price index rose 3.8% from a year earlier, the most since 2023, a report from the Bureau of Economic Analysis showed Thursday. The so-called core PCE index, which excludes food and energy items, was up 3.3% from a year earlier.

The numbers suggest consumers are facing increasing pressures as uneven hiring trends and the rising cost of living erodes incomes and savings. The surge in prices for fuel and other materials sparked by the Middle East conflict is reverberating through the economy and has driven consumer sentiment to record lows.

While consumer spending did exceed inflation last month, income growth didn’t keep up with rising prices. That meant Americans continued to reduce their savings rates in April.

Personal income, a metric which is not adjusted for inflation, was flat in April, while wages and salaries advanced 0.2%. Inflation-adjusted disposable income fell 0.5%, marking the third straight monthly decline. The saving rate dropped to 2.6%, the lowest since 2022.

Retailers including Walmart Inc. have warned that high fuel costs are squeezing their bottom lines and may soon begin to show up in prices of products on their shelves. Higher tax refunds have helped support consumer spending in recent months, though they’ve been partly offset by prices at the pump rising to the highest levels in nearly four years.

UW-Madison professor Menzie Chinn has a telling graph at Econbrowser, where you can see how inflation-adjusted consumption has kept rising in the last year, while real incomes stayed around the same level for the rest of 2025, and are now declining in 2026.

And on a per-capita basis, inflation-adjusted disposable incomes in America have now fallen below where they were at in November 2024 – when Donald Trump was returned to power in large part because enough low-info American voters thought he would improve people’s economic situation.

Also notice that real per-capita incomes had gone up nearly 9% in the 31 months from that trough in June 2022 to Trump’s election in Nov 2024. And unlike 2022, there aren’t 2 years of stimmy payments in the bank to pay the higher bills in our inflationary times of 2026.

Another report that I was awaiting on Thursday morning was the updated figures for GDP growth for the first 3 months of 2026.

Separate BEA figures showed the economy expanded in the first quarter at a 1.6% annualized pace, slower than previously estimated after downward revisions to inventory investment and consumer spending. The initial estimate last month showed 2% growth.

A new item in the revised GDP report was the first look at what corporate profits were over the first 3 months of the year. And that showed a small increase of just over $40 billion (annualized) for Q1, but up more than $1.85 trillion since the end of 2020.

Along with the small boost in profits, I also see that post-tax corporate profit margins for Q1 2026 were at their highest levels since the end of 2023, maintaining their elevated post-COVID levels.

Let’s see where these profit and margin numbers go with the higher prices and higher costs that have and likely will see for all of the 2nd quarter of 2026.

Speaking of uses of excess profits, let's see what Jeff Bezos is pouring money into these days.

BREAKING: Blue Origin's New Glenn blows up at Launch Complex-36 while attempting to static fire.

[image or embed]

— AZ Intel (@azintel.bsky.social) May 28, 2026 at 8:12 PM

JOB CREATORS, BABY!

Put these obscenely high profits together with the dwindling savings amount and how non-executive Americans are seeing their wage growth falling further below the inflation rate with every month, and you wonder why consumer sentiment is at record lows? Because I don’t.

Stock market up, Americans still driving and spending. So why do consumers hate this economy?

Sign o' the Times from the end of this week.

The gulf between US stocks and Americans’ spirits keeps widening.

The Dow on Friday hit a record high — the same day consumer sentiment hit an all-time low. Beyond pressures from the Iran war, which stock markets have largely shrugged off, AI is a factor in the divergence.

Traders are all-in on AI, but Americans are fretting over its impact on jobs. “The stock market on the moon and households in increasing gloom are reflecting on the same thing,” an economist said: Reduced labor costs may be good for stocks but mean fewer jobs.

The stock market's reaction is noticeably different from the peak inflation times of 2022, when stocks were heading down and growth in jobs and (nominal) wages was much stronger than today.

The odd part about the rock-bottom consumer sentiment is that it isn't translating into an overall recession. New unemployment claims remain at or near multi-decade lows, and even with gas being at similar price levels to the same time in 2022, gas usage stayed elevated through April in 2026, showing little change in habits.

Inflation-adjusted retail sales for the non-car based economy may have dropped in March from February's highs, but they stayed relatively stable in April, even with gas prices going even higher.

But UW-Madison professor Menzie Chinn may have landed on a reason why everyday Americans think the economy sucks so much despite the not-so-bad macro data and the bomming stock market. Professor Chinn found a recent New York Fed survey that indicates that if you're not in the investor class (aka - the bottom 3/4 of Americans by wealth and income), then it probably does feel like a recession, with spending by those groups falling by much more than with richer Americans.

This coming Thursday, we are scheduled to get data that not only reveals April's income and spending for the US economy, but also a revised look at 1st quarter GDP. That GDP report will also include the first look at corporate profits for Q1 2026, which includes the initial rise in gasoline prices.

I suspect we will see a combination of real declines in income combined with contunued increases in profit. It'll be even more evidence of a two-tiered economy that may be giving big gains to a few with the money to gamble with and self-invest, but done at the expense of the typical American who is living paycheck to paycheck, and now has to spend more to get the same things.

Endangered GOPs ask for Dem Guv Evers to revive deal, careers

After the "blockbuster" deal between Gov Evers and GOP Legislative leaders collapsed last week in the Wisconsin State Senate, I noticed that 6 GOP members of the Wisconsin Assembly sent a letter to Governor Evers asking for work to continue on a deal.

We appreciate the progress made through those discussions, particularly efforts focused on returning surplus funds to taxpayers, providing property tax relief, supporting schools, and helping hardworking Wisconsinites manage rising costs. These are the kinds of issues where collaboration matters most. While we may not agree on every issue, we remain committed to working toward responsible outcomes and ensuring politics does not stand in the way of doing what is best for the people of Wisconsin.

Which is why, despite last week’s setback, we encourage you to call the Legislature back into Special Session to continue work on the common-sense reforms that received broad bipartisan support through months of negotiation. The failure of this legislation to advance does not change the reality that Wisconsin families are still facing rising costs and growing pressure on household budgets. We cannot allow political gamesmanship or ideological extremes on either side of the aisle to prevent meaningful progress on issues where common ground clearly exists. Our responsibility to do what is best for Wisconsin did not end with one vote, and our work is far from over.

It is no coincidence that the senders are the 6 GOP Assembly members remaining that will face the voters in districts where Kamala Harris got her highest percentage of votes in GOP-held Assembly districts.

Based on what I’ve been seeing in the Generic Ballot polls, the results from April’s Supreme Court election in Wisconsin, and the size of typical Dem overperformance nationwide, I’m going to assume a baseline case of Dems +8 for November in this state.

So if you look at this map from Marquette University professor John Johnson of the 2024 presidential election in Wisconsin by Assembly district, then move all of these results 9 points toward the Dems (GOP +1 to Dems +8), and let’s see which seats would be likely to flip.

Alternatively, we could go look at our last midterm electorate from 2022, where Governor Evers won by 3.5%, and push those numbers 5 points towards Democrats, that also could be a good base to go off of.

Same story, if not more so with a more-engaged midterm electorate (which trends Dem these days).

Now let’s look at the State Senate map from the 2022 Governor's race.

And lookie there! It’s Howard Marklein’s 17th District that’s very blue, among others! No wonder why he's getting the PAC run by Robbin' Vos' wife to run ads claiming how this guy gets along so well with Guv Evers!

I think the fact that this is shaping up to be a Dem year also explains why many Dems in the Legislature didn't want the "blockbuster deal" to go through. Yes, I think it is worthy to discuss having more fiscal cushion for the next 3 years - we've seen inflation go well past projections for this year, and it does seem like we are heading toward some kind of cutback in consumer spending and a pileup of job losses. And it becomes hard to do significant change to our failing K-12 financing system or transportation investment abilities if there isn't any money around to do so.

But there's also something to be said about sending a reminder to Governor Evers that sometimes you need to act politically to help your party, instead of talking them down when they don't follow along with a plan you and the GOP came up with. Winnebago County Executive and former Assembly Dem Leader Gordon Hintz made that clear in a response to Evers' complaints about Legis Dems earlier this week.

In other words, Dems chose you in the 2018 primary, Tony. Dems stood up for you and upheld all of your vetoes when the Legislature was gerrymandered in favor of tbe GOP throughout your governorship. Now why don't you do US a favor and not bail out these vulnerable Republicans before an election many of them are set to lose, and allow us Dems a better chance to win a trifecta and have the resources to clean up the mess they have left behind.

Yes, I know there’s a long time between now and November. We don’t know who will be the Dem candidate at the top running for Governor, etc. But you sure can see why Dems would be favored to win big, and why a lot of Republicans would want to be seen as independent and conciliatory toward Dems instead of telling people about all of the GOP BS they have supported over the years, and how they blocked most attempts at progress in this state by Governor Evers and other Dems throughout the last decade.

And so when Governor Evers tries to work out a deal that I believe would have helped Wisconsinites and schools in getting through the next year, the Dems in the Legislature that are likely to be in office (and power?) beyond January 2027 said "NOT SO FAST, MY FRIEND! We aren't letting the GOPs in the Legislature off that easy!"

It may not be great governing, but it might be good politics. And it might lead to a better payoff for both Dems and everyday Wisconsinites next year, to recover what has been lost over the last 15 years in this state, and restore some long-needed balance and fairness in our taxing and economic system, as well as the services and investments that WisGOPs have chosen to defund.

Fallout continues from failed "blockbuster" tax and K-12 deal, and why it went down

One week ago, we had a major announcement of a “blockbuster” deal between Governor Evers and top two Republicans in the soon-to-be completely ungerrymandered State Legislature. It was estimated to give income tax rebates to an estimated 2.1 million Wisconsin households, give $302.5 million in property tax relief for K-12 school costs, increase special education aids, and remove state taxes on pay beyond base wages that come from overtime and tips.

Then, by Wednesday, the whole deal had blown up, with all 15 Senate Democrats and 3 Senate Republicans defeating the bill 18-15. Which leaves a lot of fallout for today, and the coming 5 ½ months before a midterm election that will decide who replaces Governor Evers, and who controls each House of the State Legislature.

There is a good breakdown from Molly Beck and Jessie Opoien in Monday’s Milwaukee Journal-Sentinel on what went wrong with the budget deal, and where things go from here. Let’s start with Governor Evers’ fellow Democrats, who had almost 90% of their legislative caucus vote against the deal.

Democratic state Sen. Mark Spreitzer of Beloit said he wants the state to guarantee covering a higher percentage of schools' special education costs than the failed bill would have and doesn't oppose using state funds to pay for special education services and to drive down property taxes like the bill did.

"My biggest issue with this bill is the nearly $2 billion total price tag when we simply can’t afford it," he told the Journal Sentinel.

"Approximately half of the spending would go to a tax rebate that leaves out 1.36 million Wisconsin adults, including seniors and working families, while giving rebates to millionaires and billionaires," Spreitzer said, referring to the bill's proposed rebate checks for income tax filers.

What Sen. Spreitzer is referencing is that the rebate was set up to only be paid up to $300 for single filers and $600 for married couples if someone owed state income taxes for Tax Year 2024. And the LFB's analysis of the bill showed that a sizable amount of low-income Wisconsinites wouldn't get anything at all - especially seniors that might have Social Security as their only source of income, as Social Security is exempt from Wisconsin taxes.

On the Assembly side, Dem Leader Greta Neubauer said she didn’t think the bill did enough to solve the real problems in K-12 school financing.

“We want to pass a budget next cycle that really invests in our schools in a sustainable way and addresses the long-term cycle of referendums and lowers property taxes. It would have been great to get something done now, but we could have been in a position of cutting schools next year if we passed that bill yesterday,” she said.

Neubauer, D-Racine, said the majority of her caucus and Evers “did not see eye to eye about responsible use” of the surplus dollars.

Their primary concern, she said, was that it spent too much and could leave the state unable to adequately respond to future economic challenges.

I went off of the Legislative Fiscal Bureau's rundown of the deal, and then constructed numbers based on the budget update in that paper, and crossed it with the LFB's "structural budget" and related adjustments for the next budget. And I can see where LFB Director Bob Lang gave an estimate of $2.9 billion being neededin the next budget, as the base imbalance would have been over $1.55 billion in both years if the original Evers-Vos-LeMaheiu deal had become law.

But there are a few other variables to throw into when evaluating this bill and the overall fiscal situation. The first is that the Wisconsin Department of Revenue formally released the April tax revenue figures for the State, which includes the end of filing season for Tax Year 2025. And it shows why the Evers Administration believed there would be more funds available than what we’d seen in prior estimates for the rest of the 2025-27.

Even if you add the $200 million to the FY 2025 totals (as Note 1 mentions), that's still a nearly 4% increase in overall revenues in Fiscal Year 2026, well above the 1.4% increase that the Legislative Fiscal Bureau estimated in January. If that 4% increase holds over May and June, it would be well above the $300 million to $350 million in additional revenue that the Evers Administration estimated last week, and might be closer to $500 million.

But the state may also be seeing some expenses rise above what was budgeted for. The Wisconsin Department of Health Services has estimated that $263.5 million will be needed to cover a deficit in the state’s Medicaid program.

That deficit also seems likely to get larger in the coming months, as costs of care continue to go up and fewer Wisconsinites can access health insurance through the Obamacare exchanges, due to the Big Bunch of Bollocks that Trump/GOP pushed into law.

Let’s also point out that there is a structural deficit in the state’s Transportation Fund, which currently spends hundreds of millions of dollars more than it takes in for base revenues, and required $580 million of additional money from the General Fund to make ends meet for the 2025-27 biennium.

With road construction likely to cost more in two years and gas taxes being based on consumption instead of price, this Transportation Fund imbalance in Wisconsin is likely to grow. And they can't expect more infrastructure funds to be coming from DC with deficits continuing to climb and the Trump Administration showing no inclination to increase infrastructure spending beyond the boosted levels we have enjoyed in recent years (in fact, it's likely that Federal aids decline for the next budget).

Why Dems in the Legislature disapproved of the deal is very different to what GOP Guv candidate Tom Tiffany didn’t like about it. Tiffany apparently does want to give any additional money to schools, and would blow an even larger budget hole on more (unspecified) income tax cuts.

“Governor Evers chose to protect his 400-year property tax hike instead of the people of Wisconsin, and now we’re learning he didn’t even want to directly return any surplus money to taxpayers," Tiffany said in a statement to the Journal Sentinel. "As governor, I will repeal the 400-year property tax hike, return the full surplus to you, and deliver lasting property tax relief."

Tiffany was referring to a post on X from Evers spokeswoman Britt Cudaback, who said the governor agreed to include a tax rebate provision at the request of Senate Republicans in exchange for their support.

This is clown show stuff from Toxic Tommy.

1. HEY TIFFANY, Robin Vos, Devin LeMahieu and about 95% of the GOP caucus in the Legislature just showed that Evers did not do a “400-year property tax hike”. Because the deal that those people voted for WOULD HAVE REDUCED PROPERTY TAXES FOR K-12 AND KEPT THAT VETO IN PLACE.

The first part of that statement also makes Tom Tiffany today’s contestant on the longtime game show of “GOP, LYING OR STUPID?”

2. HEY TIFFANY, you got a way to “deliver lasting property tax relief” when your permanent income tax cuts would reduce the amount of money available from the state that could help local communities cut property taxes? The only mathematical way you’re doing that is by forcing massive service cuts on top of what Wisconsinites have already had to deal with over these 15+ years of GOP-imposed austerity.

Or, will you continue with the old WisGOP game of passing the buck to more referendums, while claiming you weren’t the ones that chose to raise property taxes, it was the voters? Good luck selling that as your strategy for the future when most Wisconsinites are already sick and tired of it.

I think the fact that we're still unpacking the numbers of the Evers-Vos-LeMahieu deal and Wisconsin's potential to afford it may be part of the reason it went down in the State Senate. It's clear that Governor Evers didn't talk to Dems in the Legislature about this before it became a bill, and some of the opposition could have been as simple as that turf war. But it does seem like the attempt to bum rush this through in 3 days was a bad way to do it, because there were some flaws that legislators brought up in the bill's debate.

On the other hand, while I understand that this wouldn't solve the real long-term issues of how we finance this state's K-12 schools, and the state's fiscal health would become more endangered if the $1.8 billion deal were to become law, that doesn't mean that waiting until next January is necessarily the solution in what are increasingly tough and frustrating times for a lot of Wisconsinites. And it's a big gamble by both Legislative Dems and Tom Tiffany to oppose this in the hopes that their respective sides win in November, and get to use a larger amount of money in the next state budget to impose bigger changes.