It approved the expansion and tax changes, after debating through the night and more than 10 hours of closed door meetings.
The tax cut is more than double what Walker proposed.
The voucher expansion will allow public school students to attend private and religious schools using a taxpayer funded voucher.
The voucher expansion deal, approved on a partisan 12-4 vote, caps enrollment in voucher schools to 500 students next year and 1,000 for every year after that. Those limits would not apply to Milwaukee and Racine.
Gov. Scott Walker's original proposal expanded vouchers to only nine cities, but there was no enrollment cap after the second year.
Democrats are calling the move vouchers on steroids. They oppose voucher schools, saying they are unaccountable and divert money from public education.
The Joint Finance Committee reconvened around 1:00 Wednesday morning.
MADISON (WKOW) -- The Joint Finance Committee was delayed for more than six hours at press time Tuesday.
Committee members are expected to vote on at least two big issues: school vouchers and income tax cuts.
Expanding the school voucher program would allow parents to use public funding for their children to attend private or parochial schools. Under the plan, only 1 percent of students per district would be allowed to use the vouchers. The program already exists in Milwaukee and Racine counties.
Tuesday afternoon, after the vote was delayed a second time, WKOW talked to budget committee member Jon Richards (D-Milwaukee), who seemed worried funding would be pulled from public schools to be put into private schools.
"We will continue to fight for public schools and getting the funding that they need. Right now we're pessimistic that we'll be successful but we're going to continue the fight and I hope that they'll listen to reason," Richards said.
"They" meaning republicans, who say vouchers allow parents to have a choice when it comes to which school their children attend and let students leave schools that received poor marks on state report cards.
Republicans also want more income tax cuts – almost $750 million.
Rep. Dale Kooyenga (R-Brookfield) has proposed $400 million in tax cuts in addition to the $348 million cut Gov. Scott Walker originally wanted for the 2013-15 biennial budget plan.
Committee members say they expect to resolve the entire budget Tuesday.
"I expect that we're going to do the entire budget tonight -- all of the outstanding issues," Richards said. "There are a couple of other curve balls that might come into the picture later on. For example, I've heard some people say that there might be bail bonds, especially in Dane County where there's a particular pilot project."
Once the Joint Finance Committee meets and finishes work, the budget will go to the Senate and Assembly.