Gov. Tony Evers and GOP leaders announced a “blockbuster bipartisan deal” that would use $1.8 billion of the state’s nearly $2.5 billion surplus to funnel additional funding for property tax relief, education, and exempt state income taxes on tips and overtime.
The deal, announced Monday morning, comes after nearly three months of negotiations between the Democratic governor and Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Devin LeMahieu, R-Oostburg. All three are set to retire following the end of their terms early next year. The deal builds on the bipartisan 2025-27 Biennial Budget that was passed last July.
“It’s a historic day for Wisconsin’s kids and our schools, and I’m jazzed we were able to get this done,” Evers said in a statement on X. “I want to thank Speaker Vos and Majority Leader LeMahieu for their leadership and willingness to work across the aisle over the last several months. This is a blockbuster deal for Wisconsin, and I’m grateful for the bipartisan partnership that got us to today.”
Wisconsin taxpayers would directly feel the $870 million put towards a one-time direct rebate payment for individual and married joint income tax filers, according to the Legislative Fiscal Bureau. Individual filers would receive $300, and married joint filers would receive $600. LFB estimates over 3 million Wisconsinites would be eligible for the payment.
After two recent attempts from Evers and Republicans to pass legislation nixing state income taxes on tips and overtime, the deal would accomplish that. LFB estimates that the absence of overtime taxes would save taxpayers $179.9 million in 2026-27 and $148.1 million in 2027-28. Exclusion of taxes on tips would reduce collections by $52.9 million in 2026-27 and $48.9 million in 2027-28.
Per pupil aid for general schools, the money school districts receive from the state based on enrollment numbers, would see a $302.5 million increase for the 2026-27 school year, amounting to $387 per student, according to the LFB.
$16.3 million in funding would be allocated to students in choice, charter, special needs scholarship and open enrollment programs. LFB says the per pupil payments would increase by $108 in 2025-26 and an additional $186 in 2026-27.
Special education and school-age parent programs, which the state reimburses, would see an increase of $315 million in the 2025-26 and 2026-27 fiscal years, according to the bill. Based on current projections, the bill would increase the reimbursement rate for eligible costs to 42.7% in 2025-26 and 50.0% in 2026-27; however, the reimbursement rate could be altered depending on costs.
The deal allocates $50 million to the Wisconsin Technical College System to provide property tax relief by reducing taxes collected by the colleges.
Despite the deal being crafted in a bipartisan fashion, the criticisms are also bipartisan. Multiple legislators and gubernatorial candidates voiced their displeasure with the deal. One legislator, who is also a Democratic candidate for governor, called the deal a “backroom deal.”
“Today, Tony Evers and Wisconsin Republicans have emerged from behind a curtain with a proposal to spend the state’s projected surplus before it actually materializes and almost guarantee Wisconsin is facing a fiscal deficit in January 2027,” said state Sen. Kelda Roys, D-Madison, in a press release.
Republican state Sen. Steve Nass, R-Whitewater, who will also be retiring at the end of his term, criticized the deal, calling it a “closed-door deal.” He said that Republican gubernatorial candidate Tom Tiffany “will be a better fighter for taxpayers than the current Republican legislative leadership.”
“As of now, I can’t support another bad deal cut by leaders that will never face the voters again,” Nass said in a statement.
Nass criticized the bill for “using projected state revenues that might be collected by the end of the biennium on June 30, 2027,” saying the bill banks on funds that have not been collected yet. The criticism comes on the same day as a memo published by the Wisconsin Departments of Administration and Revenue found that 2025-26 state tax collections are tracking between $300 million and $350 million above the LFB’s initial January estimates.
Nass’s disapproval cuts an already slim 18-15 Republican majority in the Senate even closer. With the presumed ‘no’ from Nass, Senate Republicans cannot afford to lose another Republican’s support unless one or more Senate Democrats help the deal get across the finish line. But a statement from Senate Democratic Leader Dianne Hesselbein, D-Middleton, indicates Democrats may not be willing to help Evers and Republicans pass the deal.
“From my perspective, there is no deal,” Hesselbein said. “Three men who will not be in elected office next year have come up with this proposal, which Senate Democrats will be reviewing. Any proposal must pass both houses of the Legislature, and no one knows if Republicans have the votes to pass it.”
The Legislature has not been in session for two months; however, Evers signed Executive Order #292 calling a special session for legislators to approve the deal. The Republican-controlled Joint Finance Committee will vote on the deal Tuesday, and both the Assembly and Senate will vote on the deal Wednesday.