Brian Dake

One of the biggest questions headed into this year’s state budget debate was how Republican lawmakers and Gov. Tony Evers would handle Wisconsin’s record surplus. Now that the dust has mostly settled, there’s plenty of money left over.

Wisconsin began the two-year budget cycle with a projected surplus of roughly $7 billion in its general fund. Following the budget vetoes last week by Evers, the current projected surplus for the next budget is about $4 billion.

“There’s still a massive amount of money that the state has in reserve,” said Jason Stein, research director at the Wisconsin Policy Forum.

Neither side planned it that way, exactly.

The budget Evers presented to lawmakers in February would have spent more of the surplus on education, broadband, child care, paid family leave and a range of other government programs. That budget would have ended with gross balance of about $634 million.

The budget Republicans passed in June would have spent more of the surplus on a $3.5 Billion income tax cut. That budget would have left a similar balance of about $588 million.

In the end, Republicans gave Evers less than half of what he wanted for public schools and zeroed out other programs altogether. And Evers used his partial veto to reject a GOP income tax cut for the state’s top two brackets.

The end result leaves lawmakers and the governor with some of the same choices they faced when the budget debate began earlier this year. The trick is, they still have to agree.

In his veto message to lawmakers, Evers suggested that by eliminating the bulk of the GOP tax cut, he had preserved enough funding for a budget do-over.

That is never going to happen,” said Assembly Speaker Robin Vos, R-Rochester, during an appearance last week on WISN-AM. “We’re not going to all of a sudden decide to spend the money.”

Vos indicated that Republicans would try to override Evers’ vetoes, a move he acknowledged was unlikely to succeed in the Assembly where the GOP is just short of a two-thirds supermajority. He also told conservative talk radio host Jay Weber that Republicans would send Evers standalone bills to cut taxes even if they’re destined for more vetoes.

“I think that’s exactly what we’re going to do,” Vos said.

Assembly Speaker Robin Vos says Republicans are preparing to sue over Gov. Tony Evers’ partial veto that increases public school funding for 402 years, saying he sees “very little option left but to go to the courts.”

“When you say he has the broad authority, that is clearly in question,” Vos said on WISN’s “UpFront. “We do not know that. He has taken the broad authority, but it doesn’t mean that it’s right.”

Vos said Republicans will also consider introducing a proposed constitutional amendment to further limit the partial veto powers of Wisconsin’s governor.

“I never thought it was necessary, frankly,” Vos said, referring to a constitutional amendment that would require passage from two consecutive sessions of the Legislature before going to voters. “This is something that is unprecedented. Gov. Evers has taken this to a new level. Talking about how the Legislature is undemocratic, well, having one person using a creative veto that is clearly in question — we won’t know until the court says whether it’s constitutional — but it’s clearly questionable.”

Evers’ education veto was one of 51 partial vetoes he issued. He increased the amount public school districts can raise by $325 per student each year through 2425 by striking a dash and “20” from the original 2024-25 language.

In doing so, Vos accused Evers of lying to Republican leaders during private negotiations surrounding the shared revenue agreement and education funding, a claim Evers called “breathtaking” Friday in response to Vos’ “UpFront” interview, telling WISC-TV, “I never lied.”

HHS, the Treasury Department and the Department of Labor issued proposed rules on Friday that clamp down on short-term limited duration health plans. If finalized, short-term health plans would last for three months and can only be renewed for one more month.

The Trump-era rule enabled these types of plans to last up to a year and be renewed for up to three years.

Short-term plans do not have to meet the same requirements as a health insurance plan sold on the Obamacare insurance exchanges. These requirements can include coverage of pre-existing conditions and certain essential health benefits such as prescription drugs.

Consumers currently enrolled in short-term plans will be grandfathered in under the old rules, according to a senior administration official granted anonymity to discuss the details of the Biden plan.

The rule does not limit the sale of short-term plans during Obamacare’s open enrollment.

Gov. Tony Evers has signed a Republican-drafted state budget that includes income tax cuts for most residents and a major increase in funding for K-12 education, more state aid to local governments and workforce housing.

During a packed budget signing ceremony, Evers applauded investments for K-12 schools, transportation, broadband, workforce housing and PFAS contamination.  Schools will get an additional $325 per student in each of the next two fiscal years under the budget approved by Republicans. In a surprise move, Evers used his line-item veto to continue the annual increase for over the next 400 years.

Last week, the Republican-controlled Senate and Assembly approved their own budget, which aimed to cut income taxes by $3.5 billion across all brackets, including the state’s wealthiest residents.  Governor Evers vetoed the proposed cuts for the state’s top two income tax brackets while preserving the cuts to the bottom.

“Using my broad veto authority, I’m doing what I can to ensure that tax relief goes to working families who need help affording rising costs, not the wealthiest taxpayers in Wisconsin,” Evers said.

In a tweet Wednesday, State Assembly Speaker Robin Vos, R-Rochester, said he was disappointed by Evers’ vetoes, specifically as they relate to tax cuts, K-12 funding and DEI.

“Vetoing tax cuts on the top two brackets provides hardly any tax relief for truly middle-class families,” Vos said. “His decision also creates another economic disadvantage for Wisconsin, leaving our top bracket higher than most of our neighboring states, including Illinois.”

An estimated $1.8 billion plan to replace a major bridge connecting Superior and Duluth will receive a $400 million boost under Wisconsin’s next two-year state budget.

This December will mark 62 years since the bridge first opened, and it needs to be replaced due to its deteriorating condition. It has been under load restrictions due to age, rust and corrosion on its primary trusses. The bridge also poses a safety risk because its crash rates are 7 to 10 times higher than the statewide averages in Wisconsin and Minnesota respectively.

The Wisconsin and Minnesota Departments of Transportation are still weighing two options for the project. One alignment would reconstruct the bridge along its existing route, and the other would run slightly westward across the St. Louis River that separates Duluth and Superior. Transportation officials will gather public input on a preferred alternative sometime this fall.

Transportation officials now hope to begin construction in 2027, but it could begin in 2026 if funding becomes available. Wisconsin and Minnesota sought $889.5 million in federal funding under the bipartisan infrastructure law to help pay for the project, but it wasn’t funded in the first round of grants. However, the states are continuing to seek financial support through the Bridge Investment Program, according to Wisconsin Transportation Secretary Craig Thompson.

Thompson said the bridge carries billions of dollars worth of goods from 42 states and nine Canadian provinces that support more than 8,200 jobs in the region.

In a 6-3 vote, the court’s conservative majority ruled the president and his U.S. Department of Education Secretary did not have authority under the law to cancel $430 billion in student loan debt without the approval of Congress.

In August 2022, Biden issued an executive order canceling up to $20,000 in federal loan debt for borrowers who received need-based Pell Grants during their collegiate careers if they make less than $125,000 per year. For students who did not qualify for the Pell program, up to $10,000 in debt would be forgiven for those falling under the same income cap.

The administration argued the federal HEROES Act, passed after the Sept. 11, 2001 terror attacks in New York gives the education department authority to cancel the debt during a national emergency, like the one declared for the COVID-19 pandemic.

The Supreme Court’s majority was not convinced.

“We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up,” wrote Chief Justice John Roberts.

In her dissent, Justice Elena Kagan said Congress authorized the forgiveness plan, the education secretary put it into action and the president would have been accountable “for its success or failure.”

“But this Court today decides that some 40 million Americans will not receive the benefits the plan provides, because (so says the Court that assistance is too ‘significant,’)” Kagan wrote.

Federal student loan payments will resume in October, following a three-year pause initiated by former President Donald Trump and continued by Biden.

Republicans in the Wisconsin Assembly on Thursday passed their version of the next two-year state budget, which includes a massive income tax cut covering all taxpayers. It now heads to the desk of Democratic Governor Tony Evers, who can sign it, veto it, or use his powerful partial veto pen to change the plan.

Republicans framed the proposal as a “historic” investment in their priorities, and said the tax cut fulfilled a promise to voters about returning money to them.  Assembly Speaker Robin Vos, R-Rochester, said the tax cut would attract business to the state and make Wisconsin competitive among its neighbors.

“The goal is to try to keep successful people in Wisconsin, no matter what their income is,” Vos said shortly before debate began. “And one of the things that’s always frustrated me is when people choose to retire, they take their success and they move to another state.”

Democrats argued that the tax cut squanders the state’s estimated $7 billion surplus, which they said could have been spent on priorities like child care, transportation and youth mental health services.

The budget now headed to Evers would spend about $99 billion over the next two years when counting all funding, both state and federal. Evers’ budget would have spent about $105 billion by that same measure.

The GOP budget would still increase all spending by nearly 12 percent, including a 10 percent increase in the state’s general fund.

The plan includes raises for state and university workers, and a higher starting pay for corrections officers at a time when Wisconsin’s jails are on a path to overcrowding. Assistant district attorneys and public defenders would also see higher pay, which supporters say will help attract and retain staff, and deal with a backlog in the state’s court system.

The GOP budget would also create a $125 million fund to mitigate PFAS pollution and spend roughly $2.4 billion on Wisconsin’s capital budget for building projects.

It also included $1 billion between state and local funding for public education, which was negotiated between Evers and Republicans weeks ago as part of a sweeping deal on local government funding.

Yesterday, the nonpartisan Congressional Budget Office (CBO) released its Long-Term Budget Outlook, which offers a look at the nation’s fiscal health through 2053. The report highlights the structural misalignment in the country’s budget and the resulting unsustainable fiscal trajectory. Here are six key takeaways from CBO’s latest projections.

1. The national debt will nearly double in size by 2053. Debt held by the public equaled 97 percent of gross domestic product (GDP) at the end of fiscal year 2022. Under current law, CBO projects that ratio will continue to climb — reaching 181 percent of GDP in 2053.
2. The mismatch between revenues and spending will continue to grow. CBO projects that outlays will climb from 24.2 percent of GDP in 2023 to 29.1 percent in 2053. CBO also projects that revenues will rise slightly over the next 30 years relative to the size of the economy, but at a slower pace, reaching 19.1 percent of GDP in 2053.
3. Social Security and Medicare will drive the growth in programmatic spending. The aging population and rising healthcare costs will cause spending on Social Security and federal healthcare programs, primarily comprised of Medicare, to continue climbing over the next 30 years. Federal spending on Medicare will increase from 3.1 percent of GDP in 2023 to 5.5 percent by 2053, while outlays for Social Security will climb from 5.1 percent of GDP to 6.2 percent over that period.
4. Federal revenues won’t keep pace with rising spending. CBO projects that total federal receipts will rise by less than 1 percentage point of GDP over the next 30 years — from 18.4 percent in 2023 to 19.1 percent in 2053. Receipts from individual income taxes, which account for over half of federal revenues — are projected to moderate in the coming years, falling from 9.6 percent of GDP in 2023 to 8.8 percent in 2025, before rising again after 2025 because of the scheduled expiration of some provisions of the 2017 Tax Cuts and Jobs Act.
5. Interest rates, on average, are projected to gradually rise over the next 30 years. In their effort to fight inflation, the Federal Reserve raised the federal funds rate 10 times since March 2022. As a result, the average interest rate on federal debt held by the public rose — that rate was 2.1 percent in 2022 and is projected to reach 2.7 percent in 2023. Furthermore, CBO projects that the average interest rate on such debt will grow slowly over the next several years as existing debt matures, some of which may be refinanced at a higher rate. By the end of the projection period, the average interest rate on federal debt may reach 4.0 percent.
6. The accumulation of federal debt and rising interest rates will cause borrowing costs to rise. In CBO’s projections, interest costs would rise from 1.9 percent of GDP in 2022 to 3.2 percent in 2030, which would be the highest since 1940, the first year for which such data were reported. Interest costs would continue climbing over the following decades, reaching 6.7 percent of GDP by 2053. At that point, interest costs on the federal debt would account for 35 percent of federal revenues.

The nation is on an unsustainable fiscal path, driven by the mismatch between the government’s commitments and its revenues. Furthermore, the accumulation of federal debt and relatively high interest rates will push the government’s borrowing costs increasingly higher — crowding out investments in other priorities. Policymakers should work together to establish a positive fiscal future for the United States.

Fraudsters scooped up more than $200 billion in COVID-19 relief funds meant to help struggling small businesses during the pandemic, a government watchdog says.

The inspector general of the Small Business Administration (SBA) released a report Tuesday that gives the largest estimate yet of how much of the $1.2 trillion disbursed by the SBA was stolen by fraudulent claims. At least 17% of all COVID-19 Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) funds were given away to potentially fraudulent actors, according to Inspector General Hannibal “Mike” Ware.

In 2020, Congress approved $953 billion for the PPP program, designed to keep workers employed during the pandemic. But the program was an easy target for thieves who took advantage of the loose controls on emergency spending to enrich themselves while employers could not afford to keep their workers on payroll.

So far, the Justice Department has opened more than 140 cases of fraud totaling millions of dollars, including a Minnesota man who claimed to have 28 employees when he had none, a Maryland pastor who bought luxury cars, and a Florida family who bought a $3 million home.

Of the 22.1 million loans and grants disbursed, 21%, or 4.5 million, were handed to potential fraudsters, according to Ware’s report.

Multiple federal agencies are working to recover the stolen money, and there are 570 ongoing investigations in addition to congressional hearings. So far, nearly $30 billion in COVID-19 EIDL and PPP funds have been seized or returned to the SBA, the inspector general said.

Moving forward, the inspector general is working to obtain additional datasets from lenders and third-party processors to find potential fraud and bring criminals to justice.

Wisconsin will receive $1.1 billion to spend on broadband expansion as part of the federal Infrastructure Investment and Jobs Act..

The state-by-state breakdown of the funding was announced Monday. Nationwide, the infrastructure law will spend a total of $42.5 billion on high speed internet grants.

Speaking to reporters Monday afternoon, Mitch Landrieu, a senior advisor to the president and the White House infrastructure coordinator, called the investment a “big deal,” one that rivaled the electrification of rural America in the 1930s. “High speed internet is not a luxury,” Landrieu said. “It’s a necessity if anybody wants to fully participate in society.”

The federal government spent the last 18 months mapping broadband access state by state, with the goal of using these funds to achieve universal broadband access by 2030. Landrieu said that in Wisconsin, 253,000 homes and small businesses either had no high speed internet or lacked access to “minimally acceptable” speeds.

Landrieu said the bulk of the funding would go toward laying fiber, or high-speed fiber optic cable in the ground. “Essentially, 80 percent of that is digging dirt,” Landrieu said. “A lot of it is manufacturing the cable and then just the hard work of laying out where it needs to be based on the mapping that has been done. And then we expect the work to be complete 100 percent by 2030 across America.”

Landrieu said the next step in the process would be for the Evers administration to present a plan to the federal government on how to use the funding. Construction, Landrieu said, could begin early next year.