Gov. Tony Evers vetoed a proposed GOP tax cut Wednesday, saying he wanted more money invested in education.
The $248 million tax cut would have come from a $620 million surplus the state is expected to have by the middle of next year. But Evers wanted to spend $250 million on schools, and another $130 million to reduce property taxes.
The Republican plan would have netted an average of about $106 to qualifying taxpayers by modifying the standard deduction; the plan also reduced personal property taxes paid by businesses by nearly $45 million, primarily by extending the property tax exemption of machinery, tools, and patterns used for non-manufacturing equipment to include all such personal property not presently exempted beginning with 2020 assessments.
It would also have paid off about $100 million of debt.
Additionally, under the Republican bill, if no deposit was made to the budget stabilization fund because its balance was in excess of the five percent of general fund expenditures limitation, 50 percent of the revenue surplus would be used to reduce the state's general obligation and variable rate debt supported by general purpose revenues.
The other 50 percent would be deposited in the general fund.
According to an analysis by Junjie Guo and Noah Williams of the Center for Research on the Wisconsin Economy at UW-Madison, low-to-middle-income taxpayers would have benefitted the most. The expansion would reduce the effective marginal tax rates (MTR) and provide work incentive for some low-to-middle-income taxpayers, too, the analysis stated.
Just last week, Evers had sent a letter to Republican leaders in the Senate and Assembly - Senate majority leader Scott Fitzgerald (R-Juneau) and Assembly speaker Robin Vos (R-Rochester) - asking them to reconsider the tax cut package.
"I am disappointed that this bill does not include support for our public schools or an effort to provide property tax relief for families in Wisconsin, and I intend to take action on Senate Bill 821 next week," Evers wrote. "I've said time and again, what's best for our kids is what's best for our state. My call for a special session on education and property tax relief should not force us to choose between investing in our kids and providing property tax relief to families in Wisconsin."
This week, in his veto message, the governor called the GOP plan unsustainable.
"I am vetoing the bill because I object to its unbalanced and unsustainable approach to state fiscal policy," Evers wrote. "Specifically, this bill would reduce the estimated budget stabilization fund balance by $123.8 million in fiscal year 2020-21, according to the Legislative Fiscal Bureau. Moreover, this bill fails to acknowledge or address the continued, inordinate burden that has been placed on our public schools, local governments, and Wisconsin families."
Since 2011, Evers wrote, nearly one million Wisconsinites have voted to raise their own taxes to support local schools.
"In 2018 alone, voters approved more than $2 billion in debt and revenue increases for local schools," he wrote. "This is not sustainable."
Evers said that, in his recent special session call, he proposed a balanced package of proposals to deploy some of the state's projected revenue surplus to both renew the state's historic, bipartisan promise of two-thirds funding for K-12 education in Wisconsin and provide meaningful property tax relief across the state.
"This package also included critical investments for students with disabilities, student mental health services, programming for American Indian students, rural schools, and summer school programs," he wrote.
"Unfortunately, Republican leadership in the Legislature chose to dismiss these ideas without any discussion or public input, even though many of these proposals have previously received bipartisan support and were recommended by the 2017 Blue Ribbon Commission on School Funding."
Specifically, the governor wanted to use $250 million in projected revenue surplus to recommit to two-thirds state funding for K-12 education, including investments in school-based mental health services, special education aid, and tribal language revitalization, and $10 million in sparsity aid for rural schools.
More than half of the governor's education plan - $130 million - would have gone to reducing property taxes through equalization aid.
In addition, Evers said the budget he signed last year made a down payment on doing what's best for kids and what's best for the state.
"Our projected revenue surplus presents the opportunity to continue our progress by investing in two-thirds funding - reversing years of underinvestment in our kids and K-12 schools - while also providing meaningful property tax relief for Wisconsin families," he wrote. "We do not have to choose between funding for our kids and our schools and providing property tax relief - we can and should do both."
Evers said the state has been asleep on the job for the past 10 years when it comes to fully funding schools.
"Folks across our state are seeing an increase in their property taxes," he said. "It's time for Republicans to put politics aside, and let's work together to find a compromise that works for everyone."
Republicans countered that they have already invested record funds for Wisconsin's K-12 schools and that budget surpluses represented overtaxing that should be returned to taxpayers.
"Wisconsin is reaping incredible returns on our responsible fiscal management and wise economic investments over the past decade," Rep. Chuck Wichgers (R-Muskego) said. "The legislation returns over $247 million in surplus tax revenue back to the people. Now is not the time to change course."
Evers would rather increase future spending obligations, Wichgers said, setting the state up for ever-increasing budgets with no end in sight.
"The Assembly plan is financially prudent and rewards our citizens for their hard work by giving them their money back," he said.
Other Republicans said the tax cuts would help boost the economy.
"When you look at other states like South Carolina or Utah, they've implemented common-sense tax policies that unleash their economy and put the people first," Rep. John Macco (R-Ledgeview) said. "This tax cut package gets us closer to that."
Richard Moore is the author of the forthcoming "Storyfinding: From the Journey to the Story" and can be reached at richardmoorebooks.com.
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