On Thursday July 8th, 2021, Governor Tony Evers signed the 2021-2023 state budget into law. The Wisconsin REALTORS Association advocated for many of the provisions included in the budget that benefit the real estate and commercial real estate industries. The governor used his partial-veto authority to change 50 provisions adopted by the Republican-controlled legislature. In total, the state budget spends approximately $87.3 billion over the biennium.
Prior to the governor’s action on the state budget, Republican lawmakers made significant changes to the original budget introduced by Governor Evers in mid-February. The legislature removed numerous tax increases and the proposed repeal of significant regulatory reforms enacted by Republicans over the last ten years.
The Assembly passed the budget with bipartisan support 64-34, with all Republicans and four Democrats voting in favor of the budget. In the Senate, the bill passed 23-9 with all Republicans and three Democrats voting in favor of the budget.
Despite the changes made by both Governor Evers and the legislature to each other’s budgets, the final budget includes a number of bipartisan priorities such as a middle class tax cut, water quality initiatives, health care improvements, and increased education and transportation funding.
Key Provisions Included in The State Budget: Below are some of the most significant provisions included in the final state budget that impact the real estate industry:
- Broadband – Provides $125 million (plus an additional $100 million from federal stimulus money) for broadband expansion to increase internet access in unserved and underserved areas of the state.
- Property taxes – Reduces property taxes by $650 million, lowering the property tax burden for the average homeowner by $100.
- Income taxes – Reduces income taxes by approximately $2 billion. Reduces the income tax rate from 6.27% to 5.3% for individuals with incomes between $24,000 and $263,000 (married filers with incomes between $32,000 and $351,000), providing approximately $172/year in savings for the those making between $50,000 and $60,000 annually.
- DSPS Technology Upgrades — Provides $5 million for the modernization of customer interface platforms, including real estate licensing renewals and changes.
- Transportation – Provides approximately $253 million in additional funding for state and local transportation projects without increasing the gas tax or vehicle registration fees. The plan also includes $30 million in local road funding and $223.5 million in bonding over the biennium, which is the lowest amount in decades.
- I-94 E/W project – Enumerates the expansion of I-94 E/W between the Marquette and Zoo interchanges from 6 lanes to 8 lanes.
- State building projects – Allocates $1.5 billion in funding for state building projects, including $629 million for the UW System.
- Rainy day fund – Increases Wisconsin’s “rainy day” fund to approximately $1.5 billion (previously $423 million).
Key Provisions Removed From The Budget: The following provisions were removed by the legislature from either the original state budget introduced by Governor Evers:
- Capital gains tax – Proposed to limit the current 30 percent long-term capital gains exclusion to those taxpayers with adjusted gross incomes below $100,000 for individuals and $150,000 for married-joint filers.
- Sales taxes – Proposed to allow counties to impose an additional 0.5 percent sales tax, in addition to the 0.5 percent allowed under current law. County sales taxes must be approved by referendum. Currently, 68 of Wisconsin’s 72 counties have enacted the 0.5 percent tax. Also, proposed to allow municipalities with more than 30,000 residents to impose, by referendum, a 0.5 percent sales tax.
- Prevailing wage – Proposed to restore the state’s prevailing wage law, which sets minimum pay requirements for construction workers on public works projects.
- Levy limits — Allows county and municipal governments and technical colleges to increase levies by the greater of the percentage change in equalized value due to new construction less improvements removed or 2 percent beginning with levies set in 2021. Eliminates requirement for municipalities to reduce levy limits by revenues generated through certain fees.
- Workforce Housing TIF Districts – Proposed to modify TIF law by lifting the current limitation on what share of a mixed-use district’s area can be used for newly-platted residential developments from 35 percent to 60 percent if the additional 25 percent is comprised of workforce housing.
- Dark store – Proposed to incorporate provisions from the “dark store” bill, which was introduced as separate legislation earlier this session. Under the proposal, property would be assessed at its “highest and best use” and would remove vacant properties, or “dark stores,” as comparable sales for the purposes of property tax assessment, thus allowing assessors to value occupied property more solely because of its occupancy.
- Manufacturing and agriculture tax credit—Proposed to limit the manufacturing portion of the credit to only apply to the first $300,000 in qualified production activities income for each firm qualifying for the credit.
- State Housing Tax Credit Program – Proposed to increase funding (from $42M to $100M) for WHEDA’s State Housing Tax credit program to address affordable housing needs.