Walker calls for income tax cut in two-year budget

2013-02-21T00:15:00Z 2013-03-14T21:21:32Z Walker calls for income tax cut in two-year budgetThe Associated Press The Associated Press
February 21, 2013 12:15 am  • 

MADISON — Gov. Scott Walker proposed an income tax cut targeted to the middle class as part of a state budget introduced Wednesday that would keep property taxes nearly flat, expand the private school voucher program, continue a public school spending freeze and tighten Medicaid income eligibility.

The $68 billion two-year budget Walker delivered to the Republican-controlled Legislature would increase state spending 3 percent the first year and 2.1 percent more the second. Democrats blasted Walker’s priorities, saying he should have done more to help public schools, taken a federally funded expansion of Medicaid that’s being rejected, and done more to help the middle class.

“Our focus is simple — more prosperity, better performance and true independence,” Walker said in his 40-minute speech. “Our middle class tax cut is a down payment on my goal of reducing the tax burden in our state every year I’m in office. I want to cut taxes over and over and over again until we are leading the country in economic recovery.”

Walker’s proposal will be debated by the Legislature’s budget committee over the next four months, then be voted on by both the Senate and Assembly sometime before it takes effect in July.

Much of Walker’s plan will find broad support among Republicans, but other key portions will run into trouble with members of his own party and nearly all Democrats.

“The governor’s proposals are bad for the short term and bad for the long term in Wisconsin,” said Rep. Peter Barca, Democratic minority leader in the Assembly.

One of the most problematic of Walker’s proposals is his planned expansion of the private school voucher program to any district that has at least 4,000 students and two schools receiving a D or F grade on new state report cards.

Enough Republican state senators have already voiced opposition to the plan to block it in the Senate. Walker has pledged to work with them to address their concerns.

Walker said that his goal is to “ensure that every child — regardless of where they are from or what their family income is — has access to a great education.”

Walker’s proposed $181 million increase in funding for the University of Wisconsin System drew praise from UW leaders. In the last budget, Walker cut UW funding by $315 million.

“This is the best budget we have seen in many cycles,” said UW-Madison Chancellor David Ward.

Walker’s proposal to eliminate requirements that public employees live in the city they serve, an issue that’s been debated for years in Milwaukee but is the law in dozens of communities statewide, will trigger a fierce debate.

Walker had released most of the major portions of the budget in the weeks leading up to his address before the Legislature, except for how the income tax — which equates to a 2.2 percent reduction — would be structured.

Under this plan, a family of four with an income of $80,607 would save $212 over two years.

Walker calls for cutting the taxable rates on individuals up to $161,180 and couples earning up to $214,910. The lowest rate, for individual income up to $10,750, would drop from 4.6 percent to 4.5 percent. The rate on income in the next bracket, for individuals earning up to $21,490, would decrease from 6.15 percent to 5.94 percent. And the third bracket, for individuals making up to $161,180, would decrease from 6.5 percent to 6.36 percent.

The rate cut would be permanent and not phased in over time as Walker had previously said he was considering.

The budget cuts income taxes, includes no general sales tax increases, and continues local government and school district spending limits that Walker said would hold increases on property tax bills for the median-valued home to no more than 1 percent a year.

Walker’s budget keeps spending limits for schools in place, while state aid to schools will go up about 1 percent. That money will go toward keeping local property taxes down, not more spending on schools. This has angered Democrats and public school advocates, especially since it comes on the heels of an $800 million aid cut and a 5.5 percent reduction in spending authority in the last budget.

Steve McNeal, superintendent of the Beloit School District, blasted Walker’s proposal as not doing enough to help districts like his that have already made millions in cuts.

“The low-hanging fruit is gone for us,” he said. “We’ve pulled every rabbit out of the hat.”

His proposal also calls for cutting income eligibility for poor adults in the state’s BadgerCare program from 200 percent of the federal poverty level to 100 percent. While he’s also lifting an enrollment cap for childless adults, the net effect of the changes will be a drop of about 5,400 people in the Medicaid program.

Walker estimates that about 224,600 currently uninsured people will access federally subsidized private insurance coverage through the marketplace known as an exchange, which is scheduled to begin operating in 2014. He called for those changes instead of accepting money from the federal government under President Obama’s health care overhaul law to pay for expanding Medicaid eligibility to cover 175,000 additional people.

Walker’s Medicaid proposal and other parts of his budget are shaped by his desire to run for president in 2016, said Scot Ross, director of the liberal advocacy group One Wisconsin Now.

“Wisconsin’s middle class needs a balanced approach that targets tax relief to them and invests in long-term growth strategies and services they need like public education and health care,” Ross said.

Walker also is rejecting the recommendations of a task force created in his last budget that studied ways to plug a projected $2 billion funding gap over the next decade for road maintenance, repair and other transportation projects.

That group, headed by Walker’s own secretary of the state Transportation Department, recommended a gas tax increase, fee hikes and other changes to provide long-term growth and stability to pay for roads projects. None of their recommendations are in Walker’s budget.

Instead, Walker said he would look into selling the state’s power plants and other assets to pay off bonds for transportation projects such as the Zoo Interchange near Milwaukee. Prisons, state parks and other land that has protections in the law from being sold would not be considered for sale.

Walker’s budget would end with a $43 million positive balance, but unfunded commitments would total $188 million. Using more comprehensive private-sector accounting measures, the so-called structural deficit after two years would be $2.6 billion.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(18) Comments

  1. Balancr
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    Balancr - February 21, 2013 9:20 pm
    I see Laxtea and Deezus are still going down with the ship with Walker- right to the end.

    Boy - Scott Walker. Punches you in the face for 300 plus million, then offers you a hand (or a pinky. Or $2.00 a weak)? Keep your handshake.

    Sad, sad days for Republicans. "Same politics that have been ensuring republican dislike since 2010."
  2. LoveLivesHere
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    LoveLivesHere - February 21, 2013 7:13 pm
    I genuinely hope all the people who have claimed they would voluntarily give money to various causes and charities that are to take care of the services the big bad government now dictates, will take the additional tax cut and choose to donate their $106 to those organizations.
  3. JS
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    JS - February 21, 2013 6:36 pm
    Interesting, in the post below you complain how walker is spending too much and creating a deficit but in this post you complain he is not spending enough? Fascinating...
  4. GrandpaS
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    GrandpaS - February 21, 2013 5:11 pm
    The one good thing in this budget is increasing the number of employees of the Dept. of Health. That probably needed to be done. More of the bad news is cutting 5,400 adults off from Badgercare/Medicaid until 2014, when the Affordable Care Acts exchange kicks in. (An exchange that Walker refused to let Wisconinites set up, by the way.) We just have to hope that none of those 5,400 adults gets sick this year, I guess. In essence, the governor is sacrificing health care for thousands of poorer Wisconsonites and then justifying that by saying it's okay, because the difference will be picked up by that awful, terrible, socialistic ObamaCare. At what point did the Republican/Tea Party lose any and all of their connection to logic? I want my Collin Powell/HWB Bush Republican party back. When Powell endorses Obama in 2008 and again in 2012, you know something has to be horribly, horribly wrong.
  5. GrandpaS
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    GrandpaS - February 21, 2013 4:50 pm
    Last budget, Walker and the Wisconsin GOP slashed $315 million from the UW System budget, then he adds $181 million for them in this budget. That's still a reduction of $134 million over 4 years. BUT.....I've got a $5 bill that says Walker and Fox will be blowing their horns about how Walker cut taxes AND increased financial support for Wisconsin's college system. They will, of course, leave the last budget's cuts out of the story and neglect to mention that those wonderful tax cuts amount to $2 a week. I can smell that bragging coming, which is easy, cuz it pretty much stinks.
  6. Cassandra
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    Cassandra - February 21, 2013 4:13 pm
    "Walker’s budget would end with a $43 million positive balance, but unfunded commitments would total $188 million. Using more comprehensive private-sector accounting measures, the so-called structural deficit after two years would be $2.6 billion."
    Another tax-and-spend republican.
  7. Cassandra
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    Cassandra - February 21, 2013 4:12 pm
    You miss my point entirely. It is the REPUBLICANS who have been kvetching since the flood about increasing spending. At the same time they gripe about taxes being too high and also that we cannot have deficit spending. Seems like your pal's budget is a recipe for deficits. But, as usual, they want something for nothing--they'll just slash more services for the needy and neglect critical infrastructure to pay for their tax cuts so wealthy people can sock their money away in the Cayman Islands.
  8. GrandpaS
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    GrandpaS - February 21, 2013 3:18 pm
    Laxative tea: At the federal level, Obama gets blocked constantly by Republicans screaming that he can't expect any legislation to pass unless it's paid for. But when Walker does it, then I guess it's okay. Is this a double standard on your part, or ignorance of not knowing what's going on in government at different levels?
  9. GrandpaS
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    GrandpaS - February 21, 2013 3:16 pm
    Vicky: Hey, don't laugh. $212 over two years (104 weeks) comes out to $2.04 per week. That's almost $9.00 per month. BMW, here you come!!!! Life is good.

    It would have been better to just leave these tax "cuts" out of the budget and use it for public schools and the UW system. $2.04 a week doesn't do any good for anybody, especially a family making $80,000 per year, but that money may have been helpful for our schools. And by that I mean PUBLIC schools, not private schools. With all due respect to private schools, the state's first responsibility and priority should be to make our public schools the best they can be.
  10. Vicky
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    Vicky - February 21, 2013 1:59 pm
    I wonder what I'm going to do with that whopping $106 tax relief next year. I think I'll buy a new car. Maybe an extended vacation to Hawaii.
  11. burnout
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    burnout - February 21, 2013 12:38 pm
    @Cassandra ,

    You do not understand the relationships of raising taxes and decreasing revenue.

    Laffer curve: http://en.wikipedia.org/wiki/Laffer_curve
  12. Hockeydad
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    Hockeydad - February 21, 2013 11:14 am
    States have other sources of income other than taxes. Those other sources must be improving.
  13. Cassandra
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    Cassandra - February 21, 2013 10:01 am
    Walker wants to reduce "the tax burden in our state every year I’m in office," and yet he is proposing an INCREASE in spending? Typically republican, he is spending more and taking in less. A policy doomed to failure. Mr. Walker, you can't get something for nothing.
  14. lookout
    Report Abuse
    lookout - February 21, 2013 9:46 am
    The republican's live in a world of blind leading the blind. If any of them ever did the research they'd figure out that the way they govern doesn't work. It only works in the short term. And to all you boy and girls who keep saying they all of themwant our hard earned money. That's not what people on the other side of then fence want. Re[publicans always say less government is better but their the ones who keep expanding it. They also are the ones whom don't get out of the way of companies. They continuely keep stick their nose in it. Then they give all our money away to companies. If a company can't make it on their own they should be in business anyway. When republicans give our tax money to a company they call it a investment. But when someone gives a couple dollars to help a family out it's call welfare. I consider both welfare. But no republicans are blind to the fact that giving money away no matter where it goes is welfare.
  15. Nugget
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    Nugget - February 21, 2013 8:57 am
    Typical, Republican morons continuing their failed policies.
  16. nels
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    nels - February 21, 2013 8:02 am
    ok cut revenue with an income tax decrease and increase spending both years, maybe walker was cheating in math class as the figures don't add up , that is why there would be a 2.6 BILLION deficit in 2 years, they will borrow it and add it to the over 83 billion wis already owes. he will proudly point to another "budget surplus" ignoring the fact the money was borrowed, just like Greece
  17. deezus
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    deezus - February 21, 2013 7:54 am
    Yep, they feel entitled to have all of our hard earned wasted on government programs.
  18. LAXTEA
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    LAXTEA - February 21, 2013 6:06 am
    I watched the coverage of this last night on PBS and was sad for the little puke from WPR that kept saying "how is he going to pay for the tax cut". WTF?

    Acting like someone has to "pay for" a plan to NOT steal quite as much property from hardworking citizens is sickening.
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