GOP's $250 million income tax cut appears to be headed to an Evers veto

MADISON - All Republicans and two Democrats in the state Legislature approved a $250 million income tax cut on Thursday, lining up a likely veto by Democratic Gov. Tony Evers.  

The Republican plan would cut income taxes, scale back the personal property tax imposed on businesses and buy down state debt. It would cost the state about $400 million through June 2021. 

Evers has a separate, $252 million plan to put more money toward schools and reduce property taxes. Republicans have rejected that idea, and Evers expressed his misgivings about the GOP proposal on Twitter.

"I know there are Republicans concerned about the high price tag of their own unsustainable tax bill that shortchanges our rainy day fund," Evers wrote in his Twitter post. "My plan invests in our kids and property tax relief. There’s still time to do the right thing."

Senate Majority Leader Scott Fitzgerald of Juneau said he had hoped Evers would sign the tax cut after the two of them talked Tuesday. But Evers and his aides since then have cast doubts on that possibility. 

Assembly Speaker Robin Vos of Rochester said Thursday he's still optimistic Evers will sign the legislation, despite signals the Democratic governor won't.

"Here we are with a clear conscience — more money than we planned and the ability to use it for a smart financial purpose," Vos said before the measure passed the Assembly 65-34. "Gov. Evers should do what he did last time, which is ignore the far left of his chamber and do the right thing."

Last year, Evers vetoed one GOP plan to cut income taxes but approved a subsequent one that lowered the state’s two lowest income tax brackets. That proposal reduced income taxes by $136 per person on average this year. 

If Evers vetoes the bill passed by both houses Thursday, Republicans can try to negotiate tax cuts and school spending after the November election, Fitzgerald said.   

"I don’t see anything happening until the next state budget" if Evers vetoes the tax cut, Fitzgerald told reporters.   

Senate Democrats blocked a vote on the GOP tax cut on Wednesday, and Republican leaders forced a vote on it before 8 a.m. Thursday. 

Under Senate Bill 821, more than 2 million tax filers would see their income taxes cut by $106 on average. That part of their plan would cost $248 million in the next fiscal year.

Their proposal would also reduce the personal property taxes paid by businesses by $45 million a year. It would also pay down $100 million in state debt and direct more money in the future toward reducing debt.  

Republicans put forward their plan after they got revenue projections that said the state is expected to have an extra $620 million in its main account by the summer of 2021, even after putting hundreds of millions of dollars in the state’s rainy-day fund.

The tax cut is aimed toward the middle class but would vary by income level. Those making $25,000 to $30,000 a year would see an average cut of $88, while those making $70,000 to $80,000 a year would see an average cut of $146, according to the Legislative Fiscal Bureau. 

Individuals who make more than about $120,000 and married couples who make more than about $145,000 would not receive a tax cut.  

In a brief debate Thursday, Democratic senators decried the Republican plan and the opposition to Evers' agenda by Vos.

"Whatever the governor proposes, Robin Vos disposes," said Democratic Sen. Tim Carpenter of Milwaukee.

Voting with Republicans to pass the plan in the Assembly were Democratic Reps. Steve Doyle of Onalaska and Nick Milroy of South Range — both represent areas that include a mix of Democratic and conservative voters. 

But most Democrats in the Assembly blasted Republicans for ignoring Evers' call to spend much of the unexpected revenue on schools and property tax relief by adding money to the state's formula to fund schools. 

"Our schools are our priority and it should not be just a talking point," Rep. Lisa Subeck, D-Madison, said. "And that's why what we're doing here today is wrong."

Vos said if Evers vetoes the bill, he will likely seek to override the action at some point this year.

Property tax cut for farmers

Also Thursday, the Assembly plans to take up legislation that would give farmers a property tax cut of up to $7,500 per year starting this year. 

Under Assembly Bill 873, farmers could claim a credit for up to 66% of property taxes paid on agriculture buildings starting this year. To qualify, the farm would have to have at least $35,000 in annual income. 

The measure is expected to lower taxes for farmers by about $27 million a year, according to the state Department of Revenue. The tax credit would expire after three years. 

Another piece of legislation the Assembly plans to pass Thursday would change how the state taxes health care for those who are self-employed.

The measure, Assembly Bill 875, would reduce income taxes by $9.5 million a year, with about $2.5 million of that going to farmers and the remaining $7 million going to the owners of other types of businesses. 

Senate leaders have not said if they will take up the tax cuts for health care and farm buildings in March, when they meet for the last time.

Contact Patrick Marley at patrick.marley@jrn.com. Follow him on Twitter at @patrickdmarley.