Assembly Approves Tax Cut Bill And 2 Constitutional Amendment Proposals

Wisconsin State Capitol. Photo by Mariiana Tzotcheva.

Assembly Republicans approved three measures Tuesday during their first floor session after the summer recess, including a bill that would cut taxes by nearly $3 billion, a constitutional amendment proposal that would make it harder to increase taxes and another constitutional amendment proposal that would limit the governor’s power to allocate federal funds.

Republican lawmakers passed a bill in a 64-35 party line vote that would cut taxes by about $2.9 billion. The bill is Republicans’ second try at passing a massive tax cut after Gov. Tony Evers vetoed a slightly larger tax cut they included in the budget.

AB 386 would compress Wisconsin’s current tax system from four to three brackets by lowering the state’s third income tax bracket — which includes single filers making between $27,630 and $304,170 and joint filers making between $36,840 to $405,550— from 5.3% to 4.4%.

Co-author Rep. David Steffen (R-Green Bay) said that the “impact of sky high inflation” has been nothing short of “devastating” for Wisconsinites at a press conference ahead of the floor session on Tuesday. He said the proposal would help deliver some relief to taxpayers.

The bill would also eliminate the state income tax for retirees in Wisconsin for single filers with up to $150,000 for joint filers and $100,000 for single filers.

Rep. Donna Rozar (R-Marshfield) said the tax bill would be essential to prevent retirees from leaving and help Wisconsin keep up with other states including Tennessee and Florida.

“The inflationary challenges of our retirees is real. You go buy a gallon of milk now, eggs are down a bit, which I’m happy for, but just filling up a tank of gas is putting pressure on the retirees that live in our state, and this tax-free retirement would be really helpful,” Rozar said. “It would also keep us being competitive with states that are wooing our retirees.”

Republican lawmakers insisted they listened to Evers when drafting the new proposal. Evers vetoed the last tax cut, saying that he would not approve of a tax cut for Wisconsin’s wealthiest taxpayers — Republicans tried to cut the top tax rate — and that the veto would be an opportunity for lawmakers to address other priorities like child care. Republican lawmakers have largely dismissed Evers’ calls.

“Gov. Evers has a different vision and we listened,” Vos said on Tuesday. “[Evers] said he wanted to have a target of the middle class, that’s what this bill does today. It says that a small business owner and a teacher, two teachers, two firefighters, two retirees are going to see significant relief from the cost of inflation.”

Yet the bill will likely fail to become law if it passes the Senate.

Gov. Tony Evers vowed to veto the tax cut last week, saying he wouldn’t “sign an irresponsible Republican tax cut that jeopardizes our state’s financial stability well into the future and the investments we need to be making today to address the real, pressing challenges facing our state.”

Rep. Terry Katsma (R-Oostburg) said Evers’ comments were unfortunate, and that if Evers vetoes the bill, Republicans will “have to take a look and see what else we can accomplish.”

Democrats, including Rep. Tod Ohnstad (D-Kenosha), who voted to recommend approval of the bill during committee, voted against the final bill on the floor, citing concerns about what income classes will benefit the most from the cut and how the ongoing tax cut could affect the state’s fiscal future.

“I’ve heard a lot today about the $700 that’s going back to taxpayers. Did you know that you have to earn more than $100,000 to get to that $700 mark?” Rep. Sue Conley (D-Janesville) said. “Working Wisconsinites need [and] want affordable, accessible high quality, child care, health care and public education. That’s how we should be focusing our debate on what to do with our surplus. I’m not convinced that this tax plan is sustainable.”

Rep. Daniel Riemer (D-Milwaukee) said that the Legislature should work with Evers to pass his proposed 10% middle-class tax cut, which Republicans have rejected in favor of their own plan on several occasions

“There are many fair and responsible ways to reduce the tax burden on middle-class Wisconsinites without running up huge deficits that put our investments in education, health care or other core state functions, notwithstanding Republican resistance,” Reimer said. “We could all work with [Evers] to make that vision a reality and do so in a fiscally responsible way.”

The bill will go to the Senate for consideration next.

Assembly approves two constitutional amendment proposals

While the tax cut bill is unlikely to become law due to Evers’ opposition, Republican lawmakers approved in a 63-35 party line vote a constitutional amendment proposal that could make raising taxes in Wisconsin more difficult. As a constitutional amendment, it could bypass a veto from Evers.

Assembly Joint Resolution 66 would increase the bar needed to raise taxes in Wisconsin by requiring that a supermajority — or two-thirds — of the Senate and Assembly vote in favor of proposed tax hikes.

Resolution author Rep. Amy Binsfeld (R-Sheboygan) said that the proposal was an opportunity to ask voters what they would prefer.

“[Constituents] can’t just bring extra revenue out of the sky to pay off their bills,” Binfeld said. “I think it’s only fiscally responsible that we, as a body, understand that we should let them decide if this should be a constitutional amendment or not.”

Democrat Rep. Riemer criticized the proposal for not considering how the state’s finances could change in the future.

“AJR 66, not only puts at risk our state government’s ability to do the basics like support schools, sustain health care, fix roads, it sets up a dangerous situation where one-third of this body could hold hostage future changes to state law, that may be needed to respond to changing times, new challenges in the economy that we can’t even imagine today,” Riemer said.

This is the bill’s first consideration by the Legislature. If passed by the Senate, the resolution would need to be approved a second time in the next legislative session and then ratified by voters in a statewide election to become law.

Lawmakers approved a second constitutional amendment on Tuesday in a 63-35 party line vote that would limit the Wisconsin governor’s power to accept and allocate federal money.

“This is a no-brainer,” Rep. Barbara Dittrich (R-Oconomowoc) said. “We’re simply making sure that everybody abides by the Constitution as written and the power of the purse stays with the Legislature as it should.”

Assembly Joint Resolution 6 would prohibit the Legislature from “delegating its sole power” to determine how money shall be appropriated and provide that “the governor may not allocate any federal moneys the governor accepts on behalf of the state without the approval of the legislature by joint resolution or as provided by legislative rule.”

The constitutional amendment was first proposed in 2022 in reaction to Evers deciding, largely on his own, how to spend federal money from the American Rescue Plan Act (ARPA). Much of the money was used to fund emergency grant programs like the Child Care Counts Emergency Payment Program and the Main Street Bounceback Business Grants.

Rep. Christine Sinicki (D-Milwaukee) said the governor needed that power to help people come out of the pandemic strong and that the resolution was really about Republicans not being able to use the money “for their pet projects.”

“If we had not given the governor the authority to make the investments that he did during that time, we would not have come out of COVID as strong as we did,” Sinicki said. “If we had to go back into session and make decisions that had to be made quickly in order to make sure that people in the state came through strong on the other end of a worldwide pandemic, we wouldn’t have been able to do it.”

The proposal passed the Republican-led Legislature in 2022, meaning this is its second consideration. If passed by the Senate, it would go to voters for consideration in April 2024, when the Republican presidential primary is held.

Assembly approves tax cut bill and two constitutional amendment proposals was originally published by the Wisconsin Examiner.