Committee approves $76 billion Wisconsin budget
MADISON — Wisconsin's $76 billion state budget, which sends more money to K-12 schools but does not come up with a long-term funding solution for dilapidated roads, cleared a legislative committee more than two months late Wednesday night, setting the stage for swift passage in the Republican-controlled Legislature.
The Joint Finance Committee made a host of significant changes in the final push to get the budget over its biggest hurdle. The process of dissecting Gov. Scott Walker's two-year spending plan, introduced in February and due to be passed by the end of June, was the most torturous for any plan the Republican has introduced. His three previous budgets were all signed into law before or within days of the deadline.
But even with their largest legislative majorities in decades, Republicans found it difficult to reach agreement on several key areas — most significantly how to plug a $1 billion roads shortfall. Unable to reach a long-term funding solution, Republicans opted instead to borrow about $400 million, impose a new fee on electric and hybrid vehicles and delay construction projects to get by for another two years.
"The missed opportunities in this budget are really frustrating," said Democratic Sen. Jon Erpenbach of Middleton.
But Republican Rep. John Nygren, co-chair of the committee, said the plan moved the state forward by prioritizing education funding and targeted tax cuts.
"The citizens of Wisconsin are going to say this is a pretty darn good budget," he said.
The budget passed on a 12-4 party line vote, with all Republicans in support and Democrats against.
The budget would increase funding for public schools and higher education, and freeze tuition at the University of Wisconsin for two years, positives that Walker and legislative Republicans are certain to tout on the campaign trail next year. It also holds the line on property tax increases and imposes new work and drug testing requirements on public aid recipients, but lawmakers rejected income and sales tax cuts Walker wanted.
The budget now heads to the Assembly, which is expected to vote on it next week, followed by the Senate. They are expected to make few changes to what the committee approved Wednesday. Walker also has broad veto powers to shape the proposal that was due July 1.
In some of its final votes Wednesday, the budget committee voted to reject Walker's call to increase the earned income tax credit, which benefits the working poor, by $20 million. At the same time, the committee voted to eliminate in 2019 the state's alternative minimum tax, which is typically paid by people who earn between $200,000 and $500,000 a year. It also affects about 50 millionaires. Eliminating the tax saves taxpayers about $7 million per year.
Republican Rep. Dale Kooyenga defended the moves, saying they were "common sense" changes to help simplify the tax code that would affect very few taxpayers. Wisconsin is one of only six states that impose the alternative minimum tax, which only applies to about 1,800 taxpayers including 135 with less than $5,000 in income.
Other late changes to the budget on Wednesday included:
— Reducing a tax on property paid by businesses other than manufacturers by more than $74 million a year, a move championed by the state's business community.
— Rejecting Walker's call to reduce personal income taxes on average of $44 per filer, as well as his proposal to institute a sales tax holiday for some back to school purchases.
— Making it easier for students with disabilities to receive a taxpayer-funded voucher to attend private school. The move is estimated to cost public schools $3.1 million a year and double enrollment in the special needs voucher program, adding 250 students.
Supporters of the program say the vouchers help provide more options for disabled students and their families. But opponents, including Democrats and disability rights advocates, say the program diverts money to private voucher schools and students there won't receive the same legal protections they are guaranteed in public schools.
There were just over 200 students in the program during the last school year, which cost their home public school districts $2.4 million. Students in the program this year, its second, have not yet been counted.
Under changes before the committee, various program requirements would be softened to result in an estimated 250 additional students qualifying at a cost of $3.1 million more per year to public schools. But Democrats worried that because there's no cap on what students could receive, based on their needs, the true cost is not known.
"We think it's an investment that's worth it," Nygren said. "If you're the parent of that child, there's no price you can put on getting the education that they deserve."
HIGHLIGHTS OF $76 BILLION WISCONSIN BUDGET PROPOSAL
Highlights of the two-year state budget passed Wednesday by the Legislature's Joint Finance Committee:
BY THE NUMBERS: The budget will leave about a $196 million cushion, improved from around $82 million as Gov. Scott Walker introduced it. The budget covers spending through the end of June 2019.
K-12 SCHOOLS: State spending on K-12 schools would increase by $639 million over the next two years, low-spending districts would get a boost and wealthier families could qualify for taxpayer-funded private school vouchers. Per-student aid would increase by $200 this year and $204 next year for all schools, at a cost of about $505 million. Democrats argued that the latest proposal wouldn't do enough to help public schools while spending millions more for private schools in the choice program. Enrollment in a voucher program for students with disabilities would double in 2018, growing by an estimated 250 students, under a variety of changes making it easier to participate.
HIGHER EDUCATION: Tuition across the University of Wisconsin system would be frozen this year and next while increasing funding by $36 million. That comes after UW funding was cut by $250 million in the last budget. The committee rejected Walker's call to cut tuition by 5 percent in the second year of the budget. It also denied Walker's request to freeze tuition at the technical colleges. UW would have to monitor teaching workloads and develop policies rewarding those who teach more than average. All UW campuses would be barred from requiring that only faculty members or those granted tenure be considered when hiring chancellors or president of the system.
INCOME TAXES: The committee rejected Walker's proposal to cut income taxes by $100 million in each of the next two years, which would result in an average reduction of $44 per filer. Lawmakers instead cut taxes paid by businesses on certain property by about $74 million a year.
PROPERTY TAXES: The budget eliminates the state portion of the property tax, which is about $90 million a year. The move would save the owner of a median-valued home about $50 over the next two years.
SALES TAXES: Walker's proposed "back-to-school" sales tax holidays for two days in August 2017 and August 2018 for specified school supplies was rejected.
ROADS: The budget would not raise gas taxes, but registration fees for hybrid and electric vehicles would be at least doubled under the budget. The deal would borrow about $400 million over the next two years, which is less than the $500 million Walker called for but would also result in delays for some major work, including around the Milwaukee area. Democrats decried the plan as irresponsible since there is no long-term solution for transportation funding. Republicans have said they are also disappointed, but feel like the plan is a step in the right direction.
PAY INCREASES: State employees would receive 2 percent pay raises in July 2018 and January 2019.
MEDICAID WORK REQUIREMENT: Able-bodied childless adults in the state's main Medicaid program, BadgerCare, and parents on food stamps would be required to be working or receiving job training for 80 hours per month. That is the same requirement already in place for childless adults who receive food stamps.
DRUG TESTS: All able-bodied, childless adults applying for BadgerCare health benefits would be screened for illegal drugs, including marijuana, which is not legal in Wisconsin even for medical purposes. Drug test requirements for food stamp recipients would be expanded to parents of children ages 6 to 18. A requirement that childless adults receiving food stamps be screened for drugs was passed in the prior state budget, but it has yet to take effect pending federal approval.
PREVAILING WAGE: All prevailing wage requirements would be eliminated under the budget. The law sets minimum salaries for construction workers on public projects. The Legislature in 2015 eliminated the prevailing wage for local government projects, but the budget would do away with it for state projects, as well.
HISTORIC TAX CREDIT: Walker tried for a second time to cap tax credits for rehabilitating historic property to no more than $10 million a year, but the budget committee rejected it.
LOW INCOME TAX CUTS: Republicans rejected Walker's proposal to increase a tax credit more than $20 million for the working poor. Walker had proposed increasing the earned income tax credit for about 130,000 that he had cut in 2011, but the committee did not go along.
HIGH INCOME TAX CUTS: The budget eliminates the state's alternative minimum tax, which is typically paid by people who earn between $200,000 and $500,000 a year but also benefits millionaires. It would end in the 2019 tax year, a $7 million tax cut.
STATE PARKS: The Department of Natural Resources could raise daily state park admission and camping fees according to a park's popularity.
DNR MAGAZINE: Publication of a popular Wisconsin Natural Resources magazine, which Walker wanted to end altogether, will be scaled back from six to four issues per year. There was strong pushback from fans the publication and from Democrats and environmentalists who said Walker's true motivation was to silence scientific articles about subjects such as climate change.
SELF INSURANCE: The committee rejected Walker's proposal switching to a self-insurance system where the state would pay for benefits directly for about 250,000 state workers and family members instead of purchasing insurance from 17 HMOs.
WHAT'S NEXT? The budget heads to the Assembly, which could vote on it in a week. The Senate could pass it as soon as late next week. Republicans have their largest majorities in the Senate since 1971 and in the Assembly since 1957, so they're not expected to need any Democratic votes to pass it. Walker can reshape the budget with his broad veto powers, but he's expected to largely leave it alone given his close work with Republicans on what's included.