A top Republican said GOP leaders are planning to include a $400 million middle-class tax cut in the final version of their budget package.
Senate Majority Leader Scott Fitzgerald, R-Juneau, told the State Journal in a brief interview Monday that Republican leaders are keeping a tax cut in mind as they wrap up work on the state’s two-year budget, which will be sent to Democratic Gov. Tony Evers this summer.
“We’re conscious of the idea that at the end of the day, we want to hit that tax cut number,” Fitzgerald said, referring to the roughly $400 million figure.
Spending levels set by the Republican-controlled budget committee in the coming days could change the size of the tax cut.
Fitzgerald didn’t say how Republicans would fund the measure, and a Fitzgerald spokesman declined to provide further details. A plan could be introduced as early as Tuesday.
The Juneau Republican said their tax cut plan would be similar to the one the Legislature passed in January. That proposal would have cut $170 in taxes, on average, for nearly 2 million qualifying, mostly middle-income tax filers. To fund it, Republicans had planned to use one-time surplus funds, prompting Evers to veto it, saying it was fiscally irresponsible.
The plan would have reduced state tax collections by about $490 million in the second and final year of the next state budget cycle. That figure accounts for a total ongoing tax reduction of $338 million, with an additional one-time cost of $152 million to account for the timing of the change.
“We look forward to working with the Senate to enact a middle-class tax cut, and hopefully this time Governor Evers won’t veto this bipartisan goal,” Assembly Speaker Robin Vos, R-Rochester, said in a statement.
Fitzgerald said any tax cut they pass won’t match the one Evers proposed in his state budget plan — a 10% middle income tax cut for single filers with gross incomes below $80,000 and married joint filers with gross incomes below $125,000, with the cut being phased out for higher incomes. The average recipient of the credit would receive $217 in tax relief annually.
Evers’ plan would reduce revenue by roughly $422 million in 2020 and $412 million in 2021. To make up for some of the cost, Evers proposed increasing taxes on manufacturers by about $518 million.
Evers spokeswoman Melissa Baldauff in a blistering statement said the Republican proposal offers less tax relief for the middle class than Evers’ plan.
“The governor’s sustainable plan puts the needs of farmers and working families first, while Republicans are fighting to protect millionaires,” she said.
Fitzgerald’s comments came just a day before GOP leaders on the budget committee planned to take up general taxes, veterans affairs, juvenile corrections and the state’s building program, among other items. The committee’s final votes are expected Tuesday and Thursday, if necessary.
Deliberations are still ongoing regarding the state’s capital budget for large building projects. Evers requested $2.5 billion for the biennium, about $2 billion of which would come from state-funded borrowing. About $1.1 billion would go toward UW System building projects, roughly $900 million of which would come from borrowing.
Fitzgerald said funding for the UW System’s building projects is the largest capital budget item still in flux.
“We’ve got to determine what our tolerance is,” he said.
UW System leaders last Tuesday called on lawmakers to stop “kicking the can down the road” and support their unprecedented financial request to renovate and repair aging campus buildings.
So far, Republicans have approved a $500 million spending increase for the state’s public schools, a $58 million increase for the UW System and a $484 million bump to help pay for the state’s roads, among other things.
They’ve rejected the governor’s plan to expand Medicaid, which he said would have saved the state $324 million in 2019-21 and brought in $1.6 billion in additional federal money. They’ve also thrown out many other provisions Evers proposed, such as the legalization of medical marijuana, an overhaul of how the state draws political maps and a gas tax increase.