Voucher schools would expand statewide, income taxes would be cut by more than $500 million and Wisconsin would reject a federal Medicaid expansion even though it would save the state money under a broad agreement being worked out between Gov. Scott Walker and Republican legislative leaders.
Walker, Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald are still negotiating details and talking with other Republican lawmakers to reach a compromise that can be voted on Tuesday. That’s when the Legislature’s Joint Finance Committee is slated to complete its work on Walker’s budget.
“We’re actually pretty close,” Fitzgerald said in an interview.
Walker, in a separate interview, agreed: “I think we’re getting there.”
While only three areas remain before the budget goes to the Senate and Assembly for approval, they are the most contentious parts of Walker’s two-year spending plan. Walker and Republicans are trying to weave together a deal that will appease moderates and tea party conservatives within their caucuses so the budget can pass over universal opposition from minority Democrats.
Republicans hold a narrow 18-15 majority in the Senate and a larger 60-39 advantage in the Assembly.
Even as a deal nears, some cracks have appeared in the normally united GOP caucus.
Last week, 11 Assembly Republicans sent a letter calling for more conservative changes to the budget to get their vote. If they all bail, Republicans wouldn’t have enough votes in the Assembly to pass the plan.
And in the Senate, moderates are pushing for more school spending, a watering down of Walker’s voucher plan and elimination of debt. Meanwhile, conservatives want to strengthen the voucher plan and go farther with tax cuts.
“We’re trying to maximize the tax cut and get that as high as we can but at the same time be mindful of the structural deficit,” Fitzgerald said, referring to the projected shortfall that could result from deep tax cuts and ongoing spending commitments.
Fitzgerald said the income tax cut will end up above $500 million. Walker proposed $343 million, while Republican Rep. Dale Kooyenga called for around $750 million. Walker said he expected the cut to approach $750 million.
Vos said he felt $500 million was the minimum: “I want big and bold.”
Walker’s proposal lowered rates for the lowest three income brackets, which affects those earning up to $217,630. Kooyenga called for lowering rates for all five brackets, leading to a much greater benefit for the wealthy.
It also flattens the tax brackets, moving from five to three, resulting in a person earning $14,510 a year paying the same 5.94 percent rate as someone making $319,000.
People earning more than $224,000 a year would see an average cut of about $1,200 under the plan, while those making under $60,000 would only get $34, according to an analysis by the liberal Institute of Taxation and Economic Policy.
The tax cuts for high earners are a concern for some Senate Republicans, Fitzgerald said. But Vos said he had no problem with them.
“I think everybody who pays income taxes deserves a tax cut,” he said.
Work also continued on a deal to expand private school vouchers, but Walker, Fitzgerald and Vos all said they were close.
The proposed deal would expand vouchers statewide, but limit enrollment in any one district to no more than 1 percent of the students and 1,000 statewide starting in 2014. Vouchers are currently available only in Milwaukee and Racine. Walker’s original plan would have allowed them initially in only nine new cities but enrollment would be unlimited after two years.
The preliminary deal has set off a torrent of criticism both from public school advocates, who say expanding vouchers statewide is the wrong way to go, and conservatives who object to the enrollment caps.
The proposed deal would also allow public school spending to increase $150 per student in each of the next two years. Walker had no increase in his budget.
Medicaid is the third big undecided item.
Walker proposed rejecting a federally funded expansion of Medicaid under the health care overhaul law. He chose instead to tighten income eligibility for adults, thereby forcing more people near the poverty line into private insurance offered under a new marketplace.
Walker’s plan would leave only those at 100 percent of the federal poverty level or poorer covered for Medicaid. Democrats and numerous health care advocates, including the Wisconsin Hospital Association and many others, want to make the cutoff 138 percent of poverty, which would net Wisconsin $119 million in federal money and cover 84,700 more adults.
Walker’s plan would actually cost the state $52 million to implement primarily because Wisconsin would not take advantage of additional federal money available if it expanded coverage to those at the
138 percent of poverty level.
“If he’s interested in governing, he’ll go for it,” said Democratic Rep. Jon Richards of Milwaukee, one of the most vocal proponents of taking the federal money to pay for the expansion. “If he’s interested in grandstanding, he won’t.”
Walker, Fitzgerald and Vos all said they expected the Legislature ultimately to stick closely with Walker’s plan.
“I don’t foresee any major changes to that,” Walker said. “We’re fine.”