Republican suggests income tax cut could offset gas tax increase (UPDATE)

By SCOTT BAUER, Associated Press

MADISON, Wis. (AP) — Republicans would be open to raising the gas tax to pay for roads if other taxes are cut by an equal amount, a GOP chairman of the Legislature’s budget committee said on Tuesday.

The signal for a compromise on road funding from Republican Rep. John Nygren comes before Democratic Gov. Tony Evers has even submitted his two-year budget proposal to the Legislature. Evers has said he’s open to raising gas taxes to pay for roads but has not put forward a specific proposal.

Transportation funding is expected to be the subject of one of the biggest budget fights this year, just as it was under former Gov. Scott Walker. Walker’s refusal to consider gas tax increases without corresponding cuts elsewhere delayed passage of the last state budget for three months. The budget ultimately approved relied on more borrowing to pay for roads, relying on neither gas-tax or registration-fee increases.

But Nygren, speaking to reporters after a WisPolitics.com luncheon, said if Evers were willing to abide by Walker’s terms to offset any gas tax increase with an equal tax reduction, they might be able to reach a deal.

“It could be an offset to meet that previous pledge that Governor Walker had made, then the Republicans, I believe, would be supportive,” Nygren said.

Evers’ spokeswoman Melissa Baldauff said it was “good to hear that Rep. Nygren is open to finding common ground with the governor, because people want to see collaboration.

Republican Senate Majority Leader Scott Fitzgerald also did not immediately respond to a request for comment.

Republicans and Evers have both proposed reducing middle-class income taxes by about $340 million. But they disagree on how to pay for it. Evers wants to cap a tax credit offered to manufacturers and farmers, a change Republicans are opposed to. Instead, Republicans want Evers to tap a budget surplus, something he has rejected.

Nygren said if taxes aren’t increased elsewhere, Evers’ $340 million income-tax reduction could provide room for Republicans to support a tax increase for roads. A 10-cent per-gallon gas tax increase would bring in about $340 million.

The current gas tax of 32.9 cents per gallon has not gone up since 2006. It is the 19th highest in the country, according to the Tax Foundation.

It’s “too early to say” whether Republicans would support increasing gas taxes and registration fees or instituting tolling to pay for roads, Nygren said. All three of those ideas have had support among some Republican lawmakers in the past.

Evers campaigned saying that “all options” were on the table to pay for roads, including raising the gas tax and then indexing it to inflation so it would automatically increase in future years without legislative approval.

Nygren’s comments came after Evers’ chief of staff, Maggie Gau, spoke at the WisPolitics.com luncheon about the budget the governor plans to deliver in late February. Gau said again that the budget will be about the issues he campaigned on, including increasing spending on public schools to cover two-thirds of their costs, something Republicans support, and expanding Medicaid, a move Republicans are opposed to.

She also said Evers’ budget may close the “dark stores” loophole that lets companies assess property taxes using the value of an empty store instead of an operational store. This typically gives stores lower assessments but costs local governments tax revenue.

Local governments have been lobbying to close the loophole, a change Evers supports. The Legislature considered a bill last session that would have prohibited assessors from comparing active stores’ property values to those of dark stores but the proposal never got a vote.