State Rep. Dale Kooyenga, who is leading the Assembly GOP’s transportation package, is melding his charge with an ambitious plan to overhaul Wisconsin’s tax code, according to multiple sources.
Among other things, the sources said the Joint Finance Committee member has floated the idea of cutting the state’s excise tax, now 30.9 cents a gallon, while applying the state’s 5 percent sales tax to gasoline. He also has suggested paring back the minimum markup on gasoline.
Kooyenga, R-Brookfield, was put in charge of the Assembly GOP’s effort to find $300 million in tax cuts to pave the way for a boost in transportation funding and shore up its long-term finances. Still, the sources stressed Kooyenga’s overall plan has moved well beyond that effort. They also caution that final details are still a moving target as he pulls the plan together for the full caucus to review.
Kooyenga declined comment on the details of his plan, though he acknowledged he’s working on what he called “the most substantial tax and transportation reform Wisconsin has seen in the last two to three decades.”
Several of the sources also said the package would put the state on the path toward a flat tax, a goal of conservatives, while touching on a host of tax policies. That, they said, means some groups will love a majority of what he proposes, but equally despise some pieces Kooyenga wants to include.
Kooyenga conceded as much in saying he has sought out a host of groups for their feedback on his ideas.
“Listen, it’s not a buffet. This is eat your broccoli, too,” Kooyenga said.
Several of the sources said one of the questions going forward is whether Kooyenga’s plan will survive scrutiny from various groups, his fellow Republicans and Gov. Scott Walker, who opposes a gas tax or registration fee increase.
“He used the leverage he had in transportation to do some big tax reform stuff,” one GOP source with knowledge of the outline said of Kooyenga’s plans.
Key elements of the emerging plan, according to sources:
*A proposal floated last session that would allow a local half-cent sales tax to pay for local road projects. Under the proposal, the sales tax would have to be approved by referendum and then would last five years. It could be re-authorized by voters for another five years, potentially giving locals 10 years to levy the tax.
*The additional money the plan would free up for transportation would not pay for new projects in this biennium. Instead, it would be used to reduce the $500 million in bonding Walker proposed to support transportation in the 2017-19 biennium. Though it would not help pay for new projects in 2017-19, the move would be intended to free up money in future budgets, easing the funding crunch, the sources said.
*The move toward a flat tax would occur over a number of budgets. That approach, some said, likely will get some pushback from some who see a flat tax as lowering taxes for the wealthy.
Senate Republicans have been working on their own transportation package, but the expectation among budget watchers is it will focus largely on freeing up money in the general fund that could then be moved over to transportation.
Freeing up general fund money could take any number of forms, they said. Past suggestions have included moving transit aid from the transportation fund to the general fund. That aid, $110.7 million annually, helps cover local bus systems and other shared-ride operations.
There’s also been chatter about wiping out the guv’s move to eliminate the forestry tax, the state’s portion of homeowners’ property tax bills. Walker proposed $180.4 million to wipe out the tax and backfill it with state dollars.
Critics of that approach, however, say that using GPR to fund roads creates an ongoing issue in the general fund and pulls resources away from schools, Medicaid and other program paid for with those tax dollars.
Walker, though, has expressed an openness to looking at GPR for transportation and other moves, particularly after his administration freed up another $100 million for transportation; that occurred through a combination of $38 million more in revenues than what was previously expected, along with DOT saving money on projects thanks to more competitive bids and lower fuel costs.
“I’ve said repeatedly in my meetings with the (Assembly) speaker and the Senate majority leader that I think we can free up some more money, looking at general purpose revenue in the state budget and some other areas we think we can save on,” Walker told reporters Monday.