Republican suggests income tax cut could offset gas tax hike
MADISON — Republicans would be open to raising the gas tax to pay for roads if other taxes are cut by an equal amount, a GOP co-chair of the Legislature’s budget committee said Tuesday.
The signal for a potential compromise on road funding from Republican Rep. John Nygren comes before Democratic Gov. Tony Evers has even submitted his two-year budget proposal to the Legislature. Evers has said he’s open to raising gas taxes to pay for roads but has not put forward a specific proposal.
Transportation funding is expected to be one of the biggest budget fights, just as it was under former Gov. Scott Walker. His refusal to consider gas tax increases without corresponding cuts elsewhere delayed passage of the last state budget for three months. The budget ultimately approved relied on more borrowing to pay for roads, with no gas or fee increases.
But Nygren, speaking to reporters after a WisPolitics.com luncheon, said if Evers were willing to abide by Walker’s terms to offset any gas tax increase with an equal tax cut, they might be able to reach a deal.
“It could be an offset to meet that previous pledge that Governor Walker had made, then the Republicans, I believe, would be supportive,” Nygren said.
Evers’ spokeswoman Melissa Baldauff said it was “good to hear that Rep. Nygren is open to finding common ground with the governor, because people want to see collaboration.”
Republican Senate Majority Leader Scott Fitzgerald also did not immediately respond.
Republicans and Evers have both proposed cutting middle class income taxes by about $340 million. But they disagree on how to pay for it. Evers wants to cap a manufacturing and agriculture tax credit program, a move Republicans oppose. Instead, Republicans want Evers to tap a budget surplus, something he has rejected.
Nygren said if taxes aren’t increased elsewhere, Evers’ $340 million income tax cut could provide room for Republicans to support a tax increase for roads. A 10-cent per-gallon gas tax increase would bring in about $340 million.
The current gas tax of 32.9 cents per gallon has not gone up since 2006. It is the 19th highest in the country, according to the Tax Foundation.
It’s “too early to say” whether Republicans would support a gas tax increase, registration fee hike or instituting tolling to pay for roads, Nygren said. All three of those ideas have had support among some Republican lawmakers in the past.
Evers campaigned saying that “all options” were on the table to pay for roads, including raising the gas tax and then indexing it to inflation so it would automatically increase in future years without legislative approval.
Nygren’s comments came after Evers’ chief of staff Maggie Gau spoke at the WisPolitics.com luncheon about the governor’s upcoming budget that he’s to deliver in late February. Gau reiterated that the budget will focus on the issues he campaign on, including increasing funding for public schools to cover two-thirds of their costs, something Republicans support, and expanding Medicaid, a move Republicans oppose.
She also said Evers’ budget may close the “dark stores” loophole that lets companies assess property taxes using the value of an empty store instead of an operational store. This typically gives stores lower assessments, which means businesses save money but costs local governments tax revenue.
Local governments have been lobbying to close the loophole, a move Evers supports. The Legislature considered a bill last session that would have prohibited assessors from comparing active stores’ property values to dark stores but the measure never got a vote.