AP News

Wis. Assembly to vote on $504 million tax cut bill

MADISON, Wis. (AP) — Republicans will vote unanimously for Wisconsin Gov. Scott Walker's $504 million property and income tax cut plan, Assembly Speaker Robin Vos said Tuesday before debate of the measure.

Democrats planned to offer their own alternative, which they don't have the votes to pass, during debate that's scheduled to run into the night. Vos, in a news conference, said the bill will pass with no changes, other than to scale back the cost of a sales tax exemption for construction companies that had been added last week by an Assembly committee.

Senate Republicans, along with Democrats, have criticized the plan for increasing a projected shortfall for the next budget that begins in mid-2015, but Vos said he was satisfied with what Walker put forward.

"I think Gov. Walker has struck the exact right tone in trying to find a balance," Vos said.

Walker last month proposed the property and income tax cut following news that the state's budget was projected to have a $912 million surplus by mid-2015, thanks largely to an improving economy resulting in higher income and sales tax collections.

Walker's plan would reduce property taxes for the owner of a typical home by $131 on the bill mailed in December. It also would reduce income taxes, by changing the lowest bracket from 4.4 percent to 4 percent, by an average of $46 per taxpayer.

But his plan also would increase by $100 million the projected shortfall that the next two-year budget beginning in July 2015 would face. However, that assumes flat revenue growth, something Walker said is unrealistic. The state would collect twice as much as is needed to eliminate the shortfall if tax collections increase at a rate equal to the 10-year average.

Still, Democratic critics have said more money needs to be saved and the tax cuts should be recast to provide greater benefit to the middle class. Mary Burke, a former Commerce Department secretary and Trek Bicycle Corp. executive who is challenging Walker, held news conferences Monday and Tuesday to tout her own alternative.

Assembly Democrats were pushing a plan similar to Burke's that would put more money into the state's rainy day fund, recast the property tax cut to increase the average savings per homeowner to $231 and nearly triple money for job training.

While that won't pass the Assembly, where Republicans hold a 60-39 majority, other more minor changes to what Walker wanted could be coming.

Last week the Assembly Committee on Jobs, the Economy and Mining adopted an amendment to extend a sales tax exemption to construction companies doing work for schools, local governments and some nonprofits. The estimated cost was $20 million a year, but Vos said that will be scaled back to $7.5 million by not allowing the exemption for state government projects.

Current law grants the tax exemption to schools and the local governments for materials they purchase, but contractors must pay the sales tax. The proposed expansion of the exemption would take effect starting in July 2015.

Walker's spokesman Tom Evenson said the governor was willing to work with the Legislature on the proposal.

"However, the governor believes the fundamental purpose of the bill, providing significant property and income tax relief, should not change," Evenson said in an email.

Republican Senate Majority Leader Scott Fitzgerald said he was concerned about expanding the scope of Walker's tax cuts.

"Among other considerations, we need to make sure there are funds available to pay for the provision and that the bill is in balance," Fitzgerald said in a statement.

Fitzgerald also renewed his criticism that the Assembly was moving ahead with voting on the bill, rather than waiting to reach a compromise that could be brought to the budget-writing Joint Finance Committee. Even after the bill passes the Assembly, Fitzgerald said it won't come up in the Senate until after the committee vote.

The Assembly was also scheduled to vote on another Walker proposal that would spend $35 million on eliminating technical college waiting lists for high-demand fields, helping high school students get trained for high-demand jobs through dual enrollment programs and supporting programs that help people with disabilities find work.

The idea found widespread support at a legislative hearing last week, although some Democrats raised concerns that the bill does not spell out exactly how much money will go toward what program. The alternative Democratic plan released Tuesday would spend $100 million on worker training programs at the state's technical colleges.

Steve Ballmer, Power Forward
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