MADISON, Wis. (AP) — Wisconsin Democratic Gov. Tony Evers and Republicans who control the state Legislature have reached a deal on a new two-year budget.

The deal announced Tuesday cuts income taxes by $1.3 billion, increases funding for the Universities of Wisconsin despite a threatened cut, and raises taxes to pay for transportation projects.

The deal in the battleground state emerged the day after the deadline for enacting a new budget. However, there is no government shutdown in Wisconsin when the budget is late.

The Legislature is scheduled to pass the budget deal this week.