Big revenue boost allows for property tax relief in Wis. Now how do you do it?

Governor Evers recently had interviews with state media to mark the start of his last year in office. And those discussions included some surprising budget news, and a plan to deal with it.

Gov. Tony Evers said state revenues for 2025-27 are on track to come in as much as $1 billion higher than previously projected — and he wants lawmakers to use the additional funds to drive down property taxes.

The Dem governor, in his last year of office, called on lawmakers to approve the $1.3 billion in property tax relief he included in the 2025-27 budget that Republicans rejected. Still, he told reporters he was open to any approach that would help homeowners…..

Evers’ budget called for a series of steps to lower property taxes, from putting more state money into public education to supplemental aid for local governments.

The new call, which wouldn’t impact homeowners until they receive their bills in December, was one of several pushes Evers made for lawmakers to spend money the state either has in reserves or is expected to take in. The 2025-27 budget he signed was projected to have a gross balance of $770 million at the end of the biennium.

His ideas range from putting more money into special education reimbursement to approving various sales tax breaks Evers proposed in the budget, such as exempting adult diapers and breast pumps.

Turns out that Evers' prediction was selling things short, as on Thursday the Legislative Fiscal Bureau released their updated revenue estimates for the rest of the 2025-27 biennium.

Based upon our analysis, we project the closing, net general fund balance at the end of this biennium (June 30, 2027) to be $2,373.5 million. This is $1,529.0 million above the net balance that was projected at the time of enactment of the 2025-27 biennial budget, as modified to: (1) incorporate the 2024-25 ending balance (2025-26 opening balance) as shown in the Annual Fiscal Report; (2) include the fiscal effect of all legislation enacted to date in the current legislative session (2025 Acts 1 to 82); and (3) include the estimated fiscal effects of the following general fund tax law changes that were automatically adopted by, or altered estimated tax collections for, the state after enactment of the federal P.L. 119-21, the One Big Beautiful Bill Act (OBBBA): (a) the credit percentage for the child and dependent care expense credit; (b) Section 179 expensing provisions; (c) the federal limit for itemized deductions of state and local taxes; (d) reporting requirements for de minimus payments by third-party settlement organizations; (e) health savings accounts; (f) the qualified small business stock exclusion; (g) eligible expenses made from college savings accounts; (h) eligible rollovers to ABLE accounts from college savings accounts; and (i) the repeal of the deduction for energy efficient buildings.

The $1,529.0 million is the net result of: (1) an increase of $1,367.1 million in estimated tax collections; (2) an increase of $104.0 million in departmental revenues (non-tax receipts deposited in the general fund); (3) an increase of $49.9 million in sum sufficient appropriations; and (4) an increase of $107.8 million in the amounts that are estimated to lapse (revert) to the general fund.

And that's with the LFB adding in the $115 million that by law has to be set aside. Add that in, and it's nearly $2.5 billion that's projected in the bank, which is more than 3 times vs what was a relatively small cushion that was built into the budget when it became law back in July.

So why did LFB say things were looking so good? Income taxes are one major reason.

Total collections for 2025-26 are estimated at $10,330 million, which is $455.7 million (4.6%) higher than the previous estimates. One factor that is expected to help revenues over the rest of 2025- 26 is the projected high level of capital gains realizations for tax year 2025. [Realizations for tax year 2026 are also expected to be significant, though not as high as tax years 2024 or 2025]. Additionally, the year-to-date withholding growth for 2025-26 (5.7%) is higher than had been anticipated.

Total individual income tax revenues for 2026-27 are projected to increase by 3.2% year-over- year, to a total of $10,665 million. Relative to the previous estimates, these figures are higher by $311.9 million (3.0%). Major contributing factors to this increase include an improved forecast for wages and salaries, which impacts withholding collections, and a higher forecast for capital gains.

In addition, the LFB says that corporate taxes are projected to be $583 million above what was budgeted, as corporate profits continue to hit new records and are projected to keep growing over the next 18 months.But one warning I'd give is that the $700 million in income tax cuts that were part of the budget are going to show us as larger state tax refunds in the next 3 months. That's a significant unknown which could change those total revenues when Fiscal Year 2026 closes on June 30, for better or worse.

But part of the reason Evers isn't willing to wait for tax season to verify the larger revenues before he asks the Legislature to use that money for property tax relief is that the GOP-led State Legislature will go on their 10 month paid vacation in the next 6-8 weeks or so, before tax season ends. Not surprisingly, the GOP-led State Legislature has different ideas on how to limit or cut property taxes, starting with Assembly Speaker Robbin’ Vos.

Republicans are pushing SB 389/AB 391, which would end that per pupil increase after the 2026-27 school year, and it cleared an Assembly committee last week. “So hopefully he would work with us to say, assuming we do property tax relief, we can’t just keep putting more water into a bucket full of holes. We need to fill the holes and then make sure that the bucket has the ability to deliver the relief,” Vos said.

What “bucket” is Robbin’ talking about? Is he saying he wants to leak out funding to schools by cutting property taxes? If so, I guess that hacky metaphor makes sense, but I’m not thinking the average Wisconsin voter is down with cutting even more resources to public schools in their community.

The Senate has already passed this bill during the current session, and the GOP Leader in that house threw in his own talking points on the situation.

“Now that everyday people are feeling the impact of his 400-year mistake, Governor Evers is desperately trying to pass the buck,” said Senate Majority Leader Devin LeMahieu, R-Oostburg. “If the governor really cared about lowering property taxes, he would sign our proposal to eliminate the automatic 400-year property tax increase he unilaterally created.”

Congrats, Devin LeMahieu! You are the new contestant on the game show “GOP, LYING or STUPID??”

For the God-knows-how-many-ith time, the only reason we have a property tax increase for schools is because the GOP refused to put state aid into the schools. The $325-per-student increase in revenue limit is for a combined total of state general aids and property taxes. And the GOP chose to pass a budget that ended up cutting state general aids for nearly 3/4 of the state’s districts for this school year. Hence…higher property taxes.

Not surprisingly, the failure of the WisGOP Legislature to have the state pay its share resulted in the largest increase in K-12 property taxes in Wisconsin in decades, as the Wisconsin Policy Forum reminded us in December.

The easiest solution to all of this isn’t something either Evers or Vos/LeMahieu have brought up. Why not just back $400 to each tax filer in Wisconsin as a property tax/rent rebate, which they will get by June of this year. Last month, I estimated a doubling of the Property Tax and Renter's Credit from $300 to $600 would cost around $255 million, so a $400 rebate would be maybe $340 million? That seems to play it cautiously enough so that if the $1.4 billion in extra revenue becomes more like $700 million, we wouldn't risk a situation where the new Governor would have to fix a potential deficit as he/she comes into office.

The Wisconsin DOR should have the names of all of those who filed state taxes and took the Property Tax/Renter’s Credit, so the check would go out to everyone who claims it for this year. And it would be something that can be felt by Wisconsinites long before property tax bills come out in December (and before the 2026 elections, if that matters….and it sure should if you’re a WisGOP that’s already in big danger of losing your ill-gotten majorities).

No matter how you do it, there is NO excuse for there not to be some kind of way to use the higher projections of revenues to give property tax relief in Wisconsin. And Evers and the Legislature are not able to get to a deal, then I'd sure encourage Dems running in all state-level elections to run on using a sizable surplus as a reason to cut property taxes AND adequately fund our community schools. Because today's strong revenue numbers show that it can and should be done.