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Largest tax increase ever stopped says Rhoades; others react to budget deal

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Although votes weren't expected until Tuesday, members of both parties seemed fairly satisfied with a state budget agreement announced last Friday.

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"We have achieved a workable compromise that Wisconsin families can afford," said Rep. Kitty Rhoades, R-Hudson, taking a short break from a conference committee meeting Monday afternoon.

In a press release sent out Friday evening, Gov. Jim Doyle described the budget deal worked out between him and lawmakers as "one that funds our priorities and creates opportunity for regular hardworking people."

"Today, the Legislature has done the right thing for our schools, for the safety of our neighborhoods, for the health of our kids and the health of our economy," said Doyle.

Rhoades agreed that the right thing was being done, but her reasoning was undoubtedly different than Doyle's

"We stopped the largest tax increase in the history of the country," said Rhoades.

She said the budget adopted by the Democrat-controlled Senate would have increased state spending by $4.8 billion. The budget compromise has a spending increase of roughly $400 million, said Rhoades.

According to a new Legislative Fiscal Bureau analysis, state spending will increase 3.3% a year under the budget agreement.

Although some fees are increasing, the only tax increase is on cigarettes, said Rhoades. Democrats had proposed raising that tax by $1.25 a pack. The budget agreement sets it at $1 a pack.

"Overall, this budget compromise is good for the people of the 28th Assembly District," said Rep. Ann Hraychuck, D-Balsam Lake. "It is good for our kids, families, seniors, veterans and our environment."

She added, "It provides tax relief while giving the criminal justice system a much needed boost by funding an additional assistant district attorney in both St. Croix and Polk counties. This compromise will allow our schools and local governments to move forward with their budgets."

"Obviously no one gets everything that they want when you go through the process," said Sen. Sheila Harsdorf, R-River Falls, speaking from her home Monday. But, she said, Assembly Republicans were successful in blocking most of the new taxes and reducing increases.

"Assembly Republicans have been fighting to stop these new tax increases and the spending increases that were originally proposed by the governor and added on to by the Senate. The Senate budget had a 23 percent increase in tax spending," said Harsdorf. The governor's earlier budget had a spending increase of 8 percent.

"Those kinds of increases are not taking us in the right direction," she said.

Harsdorf, a member of the Republican minority in the Senate, said "natural growth" will result in $1.2 billion in increased state revenue, but Democrats wanted far more than that.

An unfortunate part of the compromise, said Harsdorf, is "the raid on the patient compensation fund." The budget will take $200 million from the fund.

She said the money in the Injured Patients and Families Compensation Fund was paid by physicians to cover malpractice claims that exceed insurance policy limits.

"These dollars are not tax dollars," said Harsdorf, who worried that depleting the fund is not a tactic that will keep physicians in Wisconsin.

This is the third time Doyle has proposed using some of the fund money for other purposes, but his previous two attempts were blocked, said Harsdorf.

"Once you start taking it, it becomes easier to take more," she said.

Budget Highlights

  • Tobacco tax: Cigarette taxes will increase $1 per pack -- the new tax will be $1.77.
  • Property taxes: The cap on local property tax increases will stay as it has been.
  • Hospital tax: Hospitals will not be charged a 0.8% tax on revenues.
  • Gas tax: The plan announced by Doyle in February to charge oil companies a 2.5% tax on fuel sold in Wisconsin was eliminated from the budget.
  • Universities: The UW System will receive a funding increase of $159 million to help some campuses increase enrollment and expand research programs.
  • Health care: The budget agreement would allow all families to buy state-subsidized health coverage for their children at rates starting at $10 a month. It also expands coverage to over 70,000 adults.
  • Veterans: The budget includes $12 million to allow veterans to attend UW schools or state technical colleges tuition-free.

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