Budget committee OKs tax cut plan (UPDATE)

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By TODD RICHMOND
Associated Press

MADISON, Wis. (AP) — Wisconsin Republicans broke an internal logjam on Gov. Scott Walker’s $504 million tax cut plan Wednesday, pushing a deal through the Legislature’s finance committee designed to win a key vote from a hesitant GOP senator.

Walker wants to use the state’s projected $977 million surplus for property and income tax cuts. He proposed a bill earlier this month that would send $406 million to technical colleges to reduce their property tax hit and cut income taxes by $98.6 million by slicing the lowest bracket from 4.4 percent to 4 percent. The moves would save the owner of a median-value home $131 on this December’s property tax bill and the average worker $46 a year in income taxes.

Assembly Republicans passed the package earlier this month, eager to finish it before the legislative session ends in April and they hit the campaign trail. But the legislation bogged down in the Senate after Sen. Robert Cowles, R-Green Bay, balked out of concerns the plan would increase a projected shortfall in the next state budget to $807 million. Cowles’ vote is crucial. Republicans hold an 18-15 edge in the Senate, but Dale Schultz, R-Richland Center, is a moderate. If he votes with Democrats against the plan the Republicans would need Cowles to pass the package by a single vote.

Republicans came up with a compromise late Tuesday to get Cowles on board. They put $118 million in the state’s general fund rather than its rainy day account, requiring state agencies to return $38 million to the general fund during the fiscal year that begins July 1, 2015 and dropping a provision setting out $7.5 million in sales tax exemptions for construction companies. The revisions would shave $156 million off the budget shortfall.

The Joint Finance Committee took up the changes during a hearing Wednesday. Democrats on the panel criticized the plan, questioning why state agencies should have to scrimp in the face of a huge surplus. They also said the tax cuts unfairly benefit the rich.

“We’re frustrated with a missed opportunity that could happen today,” Rep. Cory Mason, D-Racine, said.

Republicans shook their heads.

“You are so sour about giving people their money back. You’re just so unhappy things are going well,” said Sen. Alberta Darling, R-River Hills, one of the committee’s two co-chairs. “I just can’t believe you don’t want to give the money back. I don’t know why you can’t cheer for Wisconsin.”

Ultimately the committee approved the changes 12-4 along party lines. The Senate plans to take up the bill on March 4. Cowles said after the vote he supports the package.

“I’m happy the structural deficit is moving down,” Cowles said.

The Assembly would have to approve the bill again since both houses must send identical language to the governor for his signature.

Walker also has introduced another bill that would use about $35 million of the surplus to fund new Department of Workforce Development job training grants, including grants to eliminate technical college waiting lists for high-demand fields, help high school students get training for high demand jobs and help the disabled find work.

The Assembly passed that bill earlier this month as well, but the finance committee still took it up Wednesday. Democrats have introduced an alternative plan to spend $100 million on worker training at technical colleges and Mason criticized Walker’s plan as another layer of bureaucracy that will slow payouts. Republicans still passed the measure on another 12-4 vote, clearing the way for a vote in the full Senate.