Finance

Wisconsin Governor Unveils Tax Cut Package in State of the State

by | January 23, 2014

Read text and highlights of every governor's State of the State speech.

By Mary Spicuzza and Matthew DeFour

Gov. Scott Walker used his election-year State of the State address Wednesday to rally support for his plans to use the majority of Wisconsin's $912 million in unexpected revenue for tax cuts.

"What do you do with a surplus?" he said. "Give it back to the people who earned it. It's your money."

He said he would call a special session of the Legislature to consider his income and property tax cut package -- part of a broader fiscal plan called "A Blueprint for Prosperity" -- which would save average Wisconsin families about $150 this year.

Assembly Speaker Robin Vos, R-Rochester, said there is support among Assembly Republicans for Walker's proposal and it will likely be the first bill his chamber takes up when it convenes Feb. 11. The package, however, faces some opposition from Republicans in the Senate.

"I don't have 17 votes for anything right now," said Senate Majority Leader Scott Fitzgerald, R-Juneau.

Much of the tax cut plan was detailed by Walker to reporters Tuesday, but the speech was the first time Walker disclosed it directly to voters.

It was Walker's fourth State of the State, and he delivered it less than 10 months before standing for re-election and as he considers a 2016 presidential bid.

Also Wednesday, the administration launched prosperity.wi.gov so people could use a "tax savings calculator" to check their own tax savings under the plan. The Legislative Fiscal Bureau has yet to analyze Walker's proposal.

Democrats said Walker avoided talking about the state's dismal record of job growth and criticized his proposal for adding more than $100 million to an existing $708 million structural deficit -- the amount expenditures are expected to exceed revenues by mid-2017. "He's going to be kicking a bigger can down a longer road," said Assembly Minority Leader Peter Barca, D-Kenosha. "That's a self-inflicted wound we shouldn't have to absorb."

Walker also proposed adding more than $100 million to the state's rainy day fund and increasing by $35 million a job training program known as Wisconsin Fast Forward.

The $35 million, which comes from economic development-related surplus funds, would be spent on several programs, including eliminating waiting lists at technical colleges in such high-demand fields as manufacturing, agriculture and information technology; helping high school students get training in high-demand jobs through dual-enrollment programs with high schools and technical colleges; and supporting programs helping people with disabilities to enter the workforce.

In his nearly hourlong speech, Walker touted improvements in the state's finances and credited his fiscally conservative policies, including his controversial 2011 measure to all but end collective bargaining for public workers. The move -- along with the ensuing massive protests -- put Walker in the national spotlight and fueled speculation about a presidential run.

"The state of our state is strong and improving every day. The economy is dramatically better, and our finances are in great shape," Walker said. "Thankfully, the days of double-digit tax increases, billion-dollar deficits, and major job loss are gone." Walker's critics, including his likely Democratic opponent, Madison School Board member and former state Commerce secretary Mary Burke, have pointed to the state ranking 37th in the nation in private-sector job creation, according to the most recent federal data.

Burke said Wednesday she would use the surplus to reduce the state's debt levels, which are budgeted to increase $1.2 billion since Walker took office, target property tax cuts to residential property owners rather than businesses and put more money toward worker training programs.

"I don't know too many Wisconsin families who would rush out to spend money they may not even have on new things, particularly when they've already racked up a bunch of debt and have other bills coming due," Burke said.

Walker said his "Blueprint for Prosperity" would trim property taxes by about $406 million and provide about $98.1 million in income tax relief. He also plans to adjust withholding tables so that Wisconsin workers will have more money in their pockets starting April 1 -- $521 for the average taxpayer -- though it would mean less of a tax refund in 2015.

The governor also encouraged employers to hire people with disabilities, promoted workforce development, and touted his approach to providing health care for the poor.

"We're not making it harder to get government assistance," Walker said. "We're making it easier to get a job."

He introduced numerous guests, including disabled workers, people who have found jobs since he took office, students, and workers who helped fix the Leo Frigo Bridge in Green Bay.

Earlier Wednesday, Fitzgerald and Sen. Alberta Darling, R-River Hills, said that Senate Republicans support the general idea of tax cuts.

"There's definitely a willingness to return the money to the taxpayers," Fitzgerald said.

Fitzgerald acknowledged that one side effect of Walker's tax cut plan -- increasing the structural deficit by about $100 million -- is "definitely a concern" for some of his members.

Several Republicans in the Senate, including a group of moderate members, have been advocating first putting money toward ensuring the state's long-term financial health and making sure the next state budget cycle doesn't begin with a shortfall.

Sen. Luther Olsen, R-Ripon, said if the state relies on economic growth to cover the structural deficit, it won't have money in the next budget to address looming problems, such as a shortfall in transportation funding, growing Medicaid costs and local governments that have had to live with less state funding in recent years.

"The Senate is very interested in the structural deficit getting smaller, not bigger," Olsen said.

Senate President Mike Ellis, R-Neenah, said whatever the Legislature does should include a plan to eliminate the structural deficit in time for the next budget cycle. To do that, he suggested not cutting income taxes by $98.1 million annually as Walker proposed.

Walker's tax cut proposal will likely face less criticism from Assembly Republicans.

Rep. Dale Kooyenga, R-Brookfield, said he's not worried about the governor's proposal adding about $100 million to the state's projected $706 million structural deficit. He said continued economic growth will bring state finances into balance.

"I will you promise that at this point next year the structural deficit will be gone," Kooyenga said.

The state is projecting a surplus of $976.6 million by mid-2015. That includes $912 million more in revenue than was anticipated when Walker signed the 2013-15 budget last summer.

Walker plans would cut taxes by $504 million and the overall package would cost the state $826.7 million and eat up the lion's share of $912 million.

(c)2014 The Wisconsin State Journal (Madison, Wis.)

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