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Wisconsin Republicans insert $3.3 billion tax cut in budget

June 18, 2021 GMT

MADISON, Wis. (AP) — Wisconsin Republicans wrapped up revisions on the 2021-23 state budget Thursday night by leaning on unprecedented revenue projections to build a roughly $3.3 billion tax cut into the spending plan.

Lawmakers learned last week the state is projected to collect $4.4 billion in tax revenue over the last three years more than expected, sending Republicans scurrying into meetings to hammer out a tax cut plan. They emerged on Thursday afternoon with a plan that calls for slicing income taxes by $2.7 billion and local property taxes for schools and technical colleges.

The GOP would accomplish the income tax cut largely by reducing the tax rate for people making $23,930 to $263,480 from 6.27% to 5.3%. According to the nonpartisan Legislative Fiscal Bureau, a taxpayer making between $40,000 and $50,000 would see a $115 reduction in tax year 2022.

“Certainly an excellent step in the right direction for the state of Wisconsin,” said Rep. Mark Born, co-chairman of the finance committee. “Certainly the type of thing that we are, I guess, excited to do with the budget surpluses we’ve built. We are taking more from the citizens of Wisconsin than we need.”

Democrats on the committee complained that three-quarters of the income tax cuts would go to people making $100,000 or more. They said Republicans could easily cut taxes for people in the lowest income brackets but passed.

“This proposal just doesn’t cut it,” Rep. Greta Neubauer said.

The committee approved the income tax cuts on an 11-4 vote. All four Democrats on the committee voted against it.

The committee also approved provisions designed to ensure that Wisconsin schools will receive $2.6 billion in federal coronavirus relief money. Republicans on the committee earlier this year gave state schools an additional $128 million in the budget, less than 10% of the $1.6 billion Democratic Gov. Tony Evers proposed. The state needed to spend almost $400 million than what the GOP allocated to secure the federal aid.

The provisions adopted Thursday would cut local property taxes levied by schools and technical colleges by $647 million and replace that revenue with state aid. Schools would come out even but the moves would technically satisfy the federal requirement to spend more state dollars on schools, the fiscal bureau’s director, Bob Lang, told the committee.

The panel adopted those changes on another 11-4 vote, with all the Democrats voting against the provisions.

GOP leaders announced at a news conference that the total tax cuts will translate to $1,200 in savings for a typical family through income tax and property tax relief.

Republicans said at the news conference that they planned to eliminate the personal property tax, which businesses pay on items such as furniture and machinery, leaving the impression they would include those provisions in the budget. They set aside $202 million to backfill the lost revenue for local jurisdictions but didn’t eliminate the tax, saying said they would do that through separate legislation.

In other moves Thursday, the committee:

—Approved spending about $1.8 million to give guards working at understaffed prisons an extra $5 an hour.

—Approved spending $87.4 million to give state workers a 2% raise in each year of the budget.

—Granted Democratic Attorney General Josh Kaul permission to withdraw Wisconsin from a multistate lawsuit challenging Trump administration obstacles to abortion. Twenty Democratic-led states sued the Trump administration in 2019 after it created a rule banning taxpayer-funded family planning clinics from referring patients to abortion providers and prohibiting federally funded family planning clinics from being housed in the same facility as abortion providers. The states decided to drop the lawsuit after the Biden administration said it would undo the rule by the end of 2021.

The budget now goes to the full Senate and Assembly, with the first floor votes expected during the last week of June.

Approval in both houses will send the budget to Democratic Gov. Tony Evers, who can use his powerful line-item veto to rewrite the document to his liking.

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Follow Todd Richmond on Twitter at https://twitter.com/trichmond1