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Gov. Walker proposes tax cuts

Gov. Scott Walker's biennial budget proposal, introduced last week, drew hearty praise from local Republican lawmakers and ire from this area's lone Democratic legislator.

The proposal -- which includes a small income tax cut for the middle class, continuation of a public school spending freeze and tightening of Medicaid income eligibility -- was introduced Feb. 20.

It now goes to the Legislature's Joint Committee on Finance, which will hold public hearings, go through the budget issue by issue, take votes, make changes and forward the amended bill to the full Legislature with the intent of adopting a final version by the end of June.

"Following the challenging budget and tough decisions we made last session, I am pleased that the current budget outlook provides us with opportunities to invest in our priorities as we work to maintain a sound financial position," said Sen. Sheila Harsdorf, R-River Falls. "The governor's budget address puts an emphasis on building on our successes by reducing the tax burden on middle-class families and focusing on economic development, education and transportation."

Sen. Kathleen Vinehout, D-Alma, sees things differently.

She said an analysis by the Wisconsin Budget Project shows that more than half of the tax cut would go to the upper 20 percent of Wisconsinites.

"But there is no evidence a tax cut would spur job growth," said Vinehout. "State government should instead pay all its bills before sending money back to the taxpayers. In the last budget, $560 million in debt payments were not made."

She said it appears the proposed budget would increase the structural deficit to $349 million by the end of 2017.

"Prudent fiscal management should precede cuts in revenue," said Vinehout.

Rep. Dean Knudson, R-Hudson, who along with Harsdorf serves on Joint Finance, said the governor has been working on this budget for months and now it's the Legislature's turn.

"Governor Walker has submitted his proposal for a pro-growth budget that builds on the reforms we enacted last session," said Knudson. He promised a budget that "protects taxpayers, fosters economic growth and enhances opportunities for all citizens."

Tax cuts

Harsdorf said the governor intends to provide tax relief to the middle income brackets.

"As families face challenging times, this puts more money in people's hands," she said.

"It's a modest amount -- everybody recognizes that," said Harsdorf. "But it all helps."

Walker is calling for tax-rate cuts on individuals making up to $161,180 and couples earning up to $214,910. While the rates for the bottom three income brackets would be different, the highest would be about two-tenths of a percent. One analysis indicates a family of four with an income of $80,600 would save $212 over two years.

Education funding

The governor is also proposing continuation of a public school spending freeze and increasing state aid to schools by one percent in an attempt to keep local property taxes down -- a move that angers Democrats and public school advocates.

"Costs for schools are rising," said Vinehout. "Unprecedented cuts last budget made balancing school budgets difficult. Without increases to compensate for rising costs, schools will have no choice but to cut teachers and programs."

The state had made great progress in balancing its budget and it's encouraging that lawmakers won't have to deal with the same deficits they have seen in so many of the last state budgets, said Harsdorf.

But, she said, Wisconsin doesn't want to lose the ground it has achieved and governments still need to carefully use the dollars they have.

"The governor provides additional state funds for school districts, technical colleges and the UW System," said Harsdorf. She said his funding initiatives include grants for skills training, a flexible degree option and expansion of school choice.

Medicaid and BadgerCare

Walker proposes cutting income eligibility for adults in BadgerCare, a medical insurance program, from 200 percent of the federal poverty level to 100 percent. He's also changing Medicaid eligibility requirements for childless adults, resulting in a drop of over 5,000 people statewide from that benefit.

"The governor could save state money and cover people who make up to $15,000 a year by simply agreeing to the federal health reform law," said Vinehout. "Covering 35,000 more people than he proposed will bring in over $4 billion in federal funds over the next six and a half years."

She added, "The governor worries the federal government will not pay its share of Medicaid costs after the year 2020, but in the nearly 50-year history of Medicaid that has never happened."

"I'm not going to tell you I'm aware of any of the details," said Harsdorf, referring to the governor's stands on BadgerCare and Medicaid.

But, she said, the state has to look at assuring that programs for the most vulnerable are sustainable.

General goals

The overall goal of the Legislature and the budget is to improve the economy, said Harsdorf. "We want to continue on the path of growing the economy by putting people back to work."

That, she said, means not only that taxpayers have more money to spend but that they will pay more taxes, which means more money for the state.

"State revenues are improving and the state budget reflects the slow but steady climb out of the recession," said Vinehout. "More spending should equate to more support for the basic services of state government: education, health, local government, courts and corrections and technical colleges.

"But a meager increase in state funding for local schools is allotted in this budget, a very small increase for tech colleges, local officials were denied their requests for increases in courts costs and nearly 90,000 people will lose BadgerCare."