Wisconsin’s Democratic governor reaches budget deal with Republicans to cut taxes, fund university

After months of negotiation, Democratic Gov. Tony Evers and Republicans who control the Wisconsin Legislature announced Tuesday, July 1, 2025, that they have reached a bipartisan budget deal to boost education funding, pass more than $1-billion in tax cuts, and support the state’s struggling child care industry.

The deal, which comes after the Legislature missed its June 30 deadline to pass a new two-year budget, notably does not include a plan to close the troubled Green Bay Correctional Institution.

Legislative leaders say the agreement comes with enough Democratic votes to pass a budget through the state Senate, where Republicans can only afford to lose one detractor from their slim 18-15 majority.

The biggest win for Republicans is Evers’ agreement to sign their $1.3-billion tax cut plan into law. Those cuts would exempt retired Wisconsin residents from paying taxes on their first $24,000 of retirement income and expand the state’s second tax bracket, lowering income taxes for roughly 1.6-million residents.

“This budget delivers on our two biggest priorities: tax relief for Wisconsin and reforms to make government more accountable,” Assembly Speaker Robin Vos said.

Evers, a former state superintendent, has prioritized investments in child care and education during budget talks.

“I’ve always believed that what’s best for our kids is what’s best for our state, and today, after three months of negotiations, I’m proud to be announcing a bipartisan budget agreement that delivers on that promise,” Evers said.

Under the deal, Republicans agreed to funding $110- million in direct payments to child care providers as federal pandemic relief aid supporting the Child Care Counts program expires. GOP leaders have previously objected to directly subsidizing child care centers.

In return, Evers agreed to pass GOP-authored policies that loosen child care regulations as part of the budget. The agreement also sets aside $66-million to support child care providers who run K-4 programs to prepare children for kindergarten.

Republicans also agreed to increase state funding for special education to cover 42 percent of the costs to school districts in the first year of the budget and 45 percent in the second. That’s roughly $275-million more than the plan GOP lawmakers voted for last month for special education, but falls short of the 60 percent reimbursement rate Evers proposed in his budget.

Last year, the state’s primary special education aid covered 32.4 percent of special education costs, according to the Legislative Fiscal Bureau. School districts are required to cover the rest, leading many to turn to referendums to cover funding gaps.

The deal also includes both Republican and Democratic priorities for the Universities of Wisconsin. Republicans have pushed for more control over the university system and sought to cut back on so-called administrative bloat. Evers, meanwhile, has advocated for increased investments in higher education, proposing more than $850-million in new funding for the UW system in his budget draft.

Under the plan, UW’s budget would increase by more than $256 million over the next two years. Faculty would also be expected to increase their teaching loads, and it would become easier to transfer credits between UW schools. Finally, the deal orders an audit of the UW system to evaluate whether its current operations are sustainable.

The agreement only encompasses a portion of the state budget. The governor’s office said Evers has agreed not to use his partial veto power to strike down any of the items he negotiated with Republicans. In addition to education, child care, and tax cuts, the deal includes various proposals within the budgets for other state agencies, such as the Departments of Transportation and Health Services.

The glaring lack of a bipartisan plan to address deteriorating conditions at Green Bay Correctional Institution doesn’t preclude legislative Republicans from including their own plan in the budget, but it increases the odds of Evers vetoing their proposal.

The governor’s office and co-chairs of the Legislature’s budget-writing committee didn’t say in a press briefing on Monday, June 30, 2025 why a plan for GBCI wasn’t included in their negotiations. The contents of that briefing were held for release until Tuesday.

Evers in February proposed a nearly $500-million plan to close GBCI by 2029 by expanding early release programs to reduce the state’s prison population and renovating existing prisons. Republicans have favored building a new prison altogether, which could cost upwards of $1-billion.

The Legislature’s Joint Finance Committee is set to finalize the budget on Tuesday July 1. From there, both chambers of the Legislature are expected to vote on the budget in special sessions on Wednesday, July 2, 2025.

Evers can then use his partial veto power to amend the plan before signing it into law. The governor’s office said in a press release that the deal between Evers and Republicans is “contingent upon the governor approving the final committee motion and statutory language drafted by Republican lawmakers.”