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Walker's State of the State to focus on tax cuts

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Associated Press
January 22, 2014

MADISON, Wis. — Gov. Scott Walker will make the case in his State of the State speech on Wednesday that the days of “major job loss” in Wisconsin are over and extra money collected thanks to an improving economy should be returned to the people as property and income tax cuts. 

Walker released excerpts of his speech hours before he was scheduled to deliver it Wednesday night before a joint meeting of the Senate and Assembly. Walker on Tuesday provided details of his tax cut plan, which would return $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 plans to say in the speech, based on the excerpts provided by his office. “The economy is dramatically better and our finances are in great shape. Still, there is more work to be done.”

The speech, Walker's fourth State of the State as governor, comes as he's running for re-election this year and trying to position himself as a possible 2016 Republican presidential candidate. 

Walker's speech comes just a week after updated projections showed the state would collect $912 million more than previously anticipated. 

His 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, depending on how a person files. Walker wants to cut the lowest income tax rate from 4.4 percent to 4 percent. 

Walker also plans 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 in a speech excerpt. “We replaced them with massive tax cuts, growing budget surpluses, and significant job growth. Wisconsin is going back to work.”

Democratic critics are 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. 

And, 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. 

Still, Fitzgerald said Republican senators were concerned about the growth in the shortfall, but were also supportive of cutting taxes. 

“There's definitely a willingness to return the money to taxpayers,” Fitzgerald said. 

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 on that stuff.”

Walker, on Tuesday, defended the growing shortfall saying that will be erased in a strong economy. The surplus, which tops out at more than $1 billion for this budget cycle, should be returned to taxpayers, he said. 

“What do you do with a surplus?” he said in an excerpt. “Give it back to the people who earned it. It's your money.”

Republican Assembly Speaker Robin Vos on Tuesday voiced support for Walker's tax cut plan and indicated that it's likely to pass largely the same as he proposed it. 

Democrats argued that Walker instead should use the surplus to restore cuts to public education, reduce $2 billion in additional bond spending made last year and lower the projected budget shortfall.



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