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Evers, GOP leaders split over tax revenue windfall

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State Capitol Money ANCHOR

MADISON (WKOW) -- Republican leaders in the state legislature and Democratic Gov. Tony Evers have very different ideas for how to use an unexpected $4.4 billion jump in projected tax revenue.

The nonpartisan Legislative Fiscal Bureau released a memo Tuesday outlining how, due especially to an "unprecedented" increase in tax revenue collected in April and May, it was updating its three-year forecast to include an additional $4.4 billion estimated to land in the state's coffers.

Evers said in an interview Tuesday he wanted lawmakers crafting the upcoming two-year budget to use the money in areas he believes have been underfunded so far in the budget process, particularly education.

Republican leaders said they want to use the money for sweeping tax cuts. Assembly Speaker Robin Vos (R-Rochester) said he wanted at least 90 percent of the unexpected tax revenue to go directly toward tax cuts.

"The bottom line is before we talk about tax cuts, we have to have legislature kind of figure out this budget," Evers said. "They are under resourcing all sorts of people, especially our K-12 schools and our University of Wisconsin System.:

Evers referred to a letter the Department of Education sent to legislative leaders last month that warned of "maintenance of effort" rules that stipulate states need to maintain their level of education spending in recent years in order to qualify for the maximum available amount of federal relief.

Vos said lawmakers could add spending over time as needed to make sure the state was in compliance with those rules without committing to a large spending increase right away.

"There are a lot of ways we could come back and invest in our schools and do it in a way that's standalone legislation or other options inside the budget," Vos said. "As opposed to just saying it's gotta be on the first day with no oversight."

While both parties agree the tax revenue revelation is very good news for the state, it brought the budget-writing process to a halt Tuesday. The Joint Finance Committee had been scheduled for a 1 p.m. meeting where it would take up the transportation budget.

Instead, the meeting was delayed time and again and as of Tuesday evening, it had still yet to begin. Lawmakers huddled behind closed doors, discussing how the tax windfall should alter the remainder of their work on the budget, which GOP leaders have said they expect to have pass the full legislature before the soft June 30 deadline.

Fueling the feud

The extra money figures to exacerbate an ongoing debate between Evers and Republican leaders about whether a number of his proposals should be funded as part of the state budget or paid for with federal relief dollars he controls.

The state is set to receive $2.5 billion over the next two years via the American Rescue Plan with cities and counties getting relief funds of their own.

"My focus is really on saying that the surplus that's coming in needs to go back to taxpayers," Vos said. "The federal dollars we borrowed from our kids, let's hope [Evers] spends it smartly but only time will tell."

Evers said the education warning already demonstrated it was reckless of Republicans to view the federal relief dollars as a substitute for increased state spending, especially in light of the tax collections development.

"To kind of Mickey Mouse around with that, and throw in the federal money as a way to do that, that's -- first of all, it's illegal," Evers said. "Second of all, we can do a lot better than that."