GOP finishes budget edits, inserts $321 million tax cut

MADISON — The Legislature's Republican-controlled finance committee finished revising Democratic Gov. Tony Evers' state budget Thursday, wrapping up its work by pasting a $321 million income tax cut plan into the document.

Evers had included an $833.6 million income tax cut in the budget, funded mostly by all-but eliminating a tax credit program for manufacturers. Committee Republicans erased it in favor of their own proposal, frustrating Democrats on the panel.

Republican Rep. John Nygren, the committee's co-chair, responded that the GOP is making cuts without raising taxes on manufacturers. They would cover the reductions through expected increases in state revenue.

The Republican plan calls for reducing the second-lowest income tax bracket, resulting in a $321.5 million cut. Taxpayers would see an average cut of $75 in tax year 2019 and $77 in tax year 2020. Filers who make between $125,000 and $300,000 would see a $95 reduction, the biggest cut for any filers.

Republicans had floated plans for a $400 million middle-class tax cut earlier this week but never offered any details. The income tax cut in the budget is about $80 million short of that initial concept.

But the GOP plan also shifts about $60 million from the state's general fund to increase property tax credits offered through the state lottery. The committee also approved a separate bill that would require online vendors like Amazon to collect and remit sales taxes from third-party sellers in perpetuity. The new revenue would go to cover additional reductions in the two lowest income tax brackets.

All told, Republicans said Thursday's actions will provide more than $500 million in total tax relief and an average per person income tax reduction of $136 by 2020. The online vendor bill still must pass the full Legislature and Evers must sign it into law before it can take effect, however.

In other final budget actions Thursday, committee Republicans scratched an Evers proposal to place a new tax on electronic cigarettes and vaping products equal to 71 percent of the product's list price. They instead imposed a sales tax of 5 cents per milliliter of liquid used in the product. The tax is expected to generate about $5.5 million over the biennium, about $23.7 million less than under Evers' plan, according to the nonpartisan Legislative Fiscal Bureau.

Republicans also dumped an Evers proposal to prohibit businesses from using Wisconsin Economic Development Corporation tax credits, grants and loans to reduce net employment in Wisconsin or move jobs out of the state.

WEDC is in charge of job creation for Wisconsin and this year approved more than $3.1 billion a year in tax credits, grants, loans and bonds. Its handling of those awards, especially its tracking of companies in default, has been under scrutiny for years.

A state audit last month revealed that Madison-based medical diagnostics firm Exact Sciences Corporation received about $61,000 in tax credits for jobs created outside of Wisconsin. The audit also found that national retail chain Walgreens received $462,000 in tax credits even though it lost 17 jobs.

The budget goes next to the full Senate and Assembly. Both houses must pass an identical version of the spending plan before it can go back to Evers' desk. The governor can sign the document into law as-is, veto the entire thing or use his partial veto powers to rewrite the document.

Assembly Speaker Robin Vos said he anticipates a vote on the budget in his house on June 25. Senate Majority Leader Scott Fitzgerald said he expects a vote in his chamber later that week. Evers spokeswoman Melissa Baldauff didn't immediately respond to an email seeking comment.

Other key provisions in the finance committee's version of the budget include:

—A $500 million spending boost for K-12 public schools. Evers wanted to give them $1.4 billion.

—$5 million to buy land and begin the bidding process for a new prison to replace the aging Green Bay Correctional Institution.

—$58 million in new money for the University of Wisconsin System. Lawmakers would have to approve how the system spends $45 million of that. Evers had proposed $150 million. The system would get about $1 billion for building projects. Evers wanted to give the system $1.1 billion.

—An additional $484 million for road work, generated through a mixture of cash from the state's general fund, borrowing and higher fees for car titles and registration. Evers wanted to spend an additional $624 million on roads and raise the state's gas tax by 8 cents a gallon to generate more long-term revenue for transportation needs. Republicans scrapped that idea.

—Republicans erased Evers' proposal to expand Medicaid for an estimated 82,000 additional people. The move would have saved the state $324 million and leveraged $1.6 billion in additional federal aid. Republicans said they didn't want to expand welfare.