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Assembly passes $504M tax cut bill

Associated Press

Assembly Democratic Minority Leader Peter Barca speaks out against Gov. Scott Walker's proposed $504 million property and income tax cut proposal on Tuesday, Feb. 11, 2014, in Madison, Wis. (AP Photo/Scott Bauer)

Assembly Democratic Minority Leader Peter Barca speaks out against Gov. Scott Walker’s proposed $504 million property and income tax cut proposal Tuesday in Madison. (AP Photo/Scott Bauer)

MADISON, Wis. (AP) — The Republican-controlled state Assembly passed Gov. Scott Walker’s $504 million property and income tax cut plan on Tuesday, rejecting a Democratic alternative that spends more on job training and reducing property taxes.

The 67-37 vote sends the bill to the Senate, where Republicans in control there have said they want to make changes to how much money is put into the state’s savings account while not significantly altering the tax cuts. The identical plan must pass both chambers before being sent to Walker for his signature.

Walker’s proposal passed by the Assembly 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.

Senate Republicans, along with Democrats, have criticized the plan for increasing the projected shortfall, but Assembly Speaker Robin 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 in a news conference prior to debate starting.

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 pushed 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.

“When are we really going to focus on the middle class?” said Rep. Cory Mason, D-Racine. “When are we going to get people back to work?”

The Assembly, where Republicans hold a 60-39 majority, rejected the Democratic alternative on a party line vote. On the vote to pass the bill, two Democrats joined with all 60 Republicans in support. They were Rep. Stephen Smith, of Shell Lake, and Rep. Amy Sue Vruwink, of Milladore.

Republicans did support one change to the bill that would 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 that was 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 said Tuesday he’s willing to accept changes to his proposal without significantly changing the income and property tax cuts. Walker also said he’s open to moving money into the state’s rainy day fund but as far as “piling on” other tax cuts, “the simpler it is, the better.”

“I’m still going to be pushing to put as much money into property and income tax relief as possible,” the governor told reporters.

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

The bill will first go to that committee before the Senate votes on it, Fitzgerald said.

The Assembly also passed on a bipartisan 77-22 vote 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.

Democratic critics said the bill didn’t spend enough to address the problems and they also raised concerns that it 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.

The Assembly passed Walker’s tax cut less than three weeks after he unveiled it 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.

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