Walker makes case for property, income tax cuts
MADISON — Gov. Scott Walker made the case in his State of the State speech Wednesday that extra money coming in because of the improving national economy should be returned as property and income tax cuts, though some Republicans say his proposal goes too far.
Walker, in a speech that also doubled as an argument for re-election in November, asked lawmakers to approve $504 million in property and income tax cuts over the next 17 months.
"The state of our state is strong and improving every day," Walker said during a joint meeting of the Legislature in a packed Assembly chamber. "The economy is dramatically better and our finances are in great shape. Still, there is more work to be done."
The hourlong speech, Walker's fourth State of the State address, comes as he's aiming for another term in office and positioning himself as a possible 2016 Republican presidential candidate. Democrat Mary Burke, a former Trek Bicycle Corp. executive, is challenging him in the governor's race.
Walker's tax cut proposal — which would save a typical homeowner about $150 a year — was made possible by updated projections released last week that showed Wisconsin would collect $912 million more than previously anticipated.
"What do you do with a surplus?" he said in the speech. "Give it back to the people who earned it. It's your money."
But elements of the tax cut plan, dubbed by Walker a "Blueprint for Prosperity," are running into opposition from some Republican state senators who say it increases the projected budget shortfall too much. Republicans control the Senate 18-15 and have a 60-39 majority in the Assembly.
Heading into the 2015 two-year budget, the state already faces a $725 million projected shortfall. That would grow by about $100 million under Walker's proposed tax cut, but those estimates don't take into account future revenue growth.
Tax collections would only have to grow 1.5 percent to wipe out that shortfall, Republican Senate Majority Leader Scott Fitzgerald said Wednesday. Net tax collections are projected to increase by 2.2 percent by July and another 4.3 percent by mid-2015.
Republican Sen. Luther Olsen, of Ripon, said Walker's tax cut plan will have to be scaled back so the projected shortfall doesn't grow.
"We have to reduce it," Olsen said. "We ran (for office) on that stuff."
Republican Senate President Mike Ellis said his preference would be to reduce the size of Walker's proposed income tax cut to help lower the projected deficit if it appeared revenue growth wouldn't be strong enough to eliminate the shortfall.
"Every conservative has been against inordinate deficits," Ellis said.
Still, Fitzgerald said that while Republican senators were concerned about the shortfall growing, they were also supportive of cutting taxes.
"There's definitely a willingness to return the money to taxpayers," Fitzgerald said.
Walker said he'll call Thursday for a special session regarding the tax cut proposals, as well as a new initiative to help people with disabilities find work and a $35 million worker training initiative.
Republican Assembly Speaker Robin Vos indicated Tuesday that Walker's tax cut plan is likely to pass the Assembly largely the same as proposed and downplayed concerns over the shortfall. Cutting taxes is his highest priority, Vos said.
Walker's proposed tax cuts would equal $101 in property tax savings for the owner of a median-valued $151,000 home and between $44 and $58 in income tax savings. Walker wants to cut the lowest income tax rate from 4.4 percent to 4 percent.
Walker also said he ordered the state Department of Revenue earlier Wednesday to update income tax withholding tables, which will result in a typical family of four keeping about $58 more a month starting in April.
"The days of double-digit tax increases, billion-dollar deficits, and major job loss are gone," Walker said. "We replaced them with massive tax cuts, growing budget surpluses, and significant job growth. Wisconsin is going back to work."
Democratic critics were quick to point out that Wisconsin ranks 37th in private sector job growth over the 12-month period that ended in June. And Walker is not on pace to meet his 2010 campaign pledge to create 250,000 private sector jobs by the end of this year.
"Gov. Walker should be laying the foundation for long-term fiscal health by investing in worker training programs, infrastructure, and education to ensure that every Wisconsinite has access to a long-term family-supporting job with decent benefits," said Phil Neuenfeldt, president of the Wisconsin State AFL-CIO.
Democratic Assembly Minority Leader Peter Barca said Walker said a more balanced approach was needed to help the middle class and put more people back to work.
Burke, Walker's Democratic opponent for re-election, said he painted an overly rosy picture of the state's economy.
"I know there's a lot more to do to give every middle-class family a fair shot," Burke said.