Evers proposes 8-cent gas tax hike as budget checks off string of Dem priorities

Gov. Tony Evers on Thursday issued a blueprint for reshaping state government after eight years of GOP control, proposing a boost in the minimum wage, the repeal of drug testing for those on food stamps and a goal of all electricity produced in Wisconsin being carbon free by 2050.

The Dem’s first state budget also would increase the state’s gas tax by 8 cents a gallon. His office estimated that would cost the typical driver $3 a month and contribute to a $520 million bump to the transportation fund over the next two years.

But he also coupled that hike with a call to eliminate the minimum markup on gas, which his administration said would largely blunt the impact of the gas tax increase.

Likewise, he is seeking to cap a tax credit for manufacturers, limit exclusions for capital gains and update the state’s tax code to match federal law. Those moves, combined with efforts to improve collections of what’s already owed the state, would generate $1.6 billion in additional tax money.

At the same time, Evers proposed tax breaks for middle- and low-income Wisconsinites totaling $951.4 million. For a family of four, his office said that could amount to $500 in savings.

The guv said his budget wasn’t “the Tony Evers budget, the Democratic budget, the speaker’s budget, or the Republican budget” but what he called “the people’s budget.”

And he warned lawmakers against playing politics with the document, saying the stakes are too high.

“At times, we’ve succumbed to the trivial pursuit of political outposturing. At times, we’ve let partisanship cloud the opportunity for compromise. And at times, we’ve let power be the enemy of the good,” Evers said. “So, tonight, I want to be clear: this can’t be one of those times.”

But GOP leaders quickly denounced Evers’ plan. Senate Majority Leader Scott Fitzgerald said it was a “1,000-page press release,” while Assembly Speaker Robin Vos called it a “liberal tax and spend wishlist,” adding it would raise spending by $1,000 for every man, woman and child in the state. Both said they planned to largely ignore Evers’ proposals and start with current law as they build their own budget.

A common thread through much of Evers’ budget was a call to undo a string of initiatives his predecessor and GOP lawmakers pushed through over the past eight years. But the proposals face tough-sledding in the Republican-run Legislature, where leaders have already labeled many of the items dead on arrival.

Among the measures proposed by Evers that will most certainly be rejected by majority Republicans are repealing right-to-work and reinstating the prevailing wage for state and local projects. Evers also would cap enrollment in the state’s school choice program after Gov. Scott Walker and GOP lawmakers took the program originally intended for Milwaukee to neighboring Racine in 2011 and then statewide in 2013.

And he would repeal almost all of the changes Republicans pushed through in a December extraordinary session just before Evers and fellow Dem Josh Kaul took office as attorney general. Republicans hailed them as an effort to balance the powers of state government, while Dems denounced them as an attempt to undercut the incoming administration.

Still, the plan wouldn’t touch Act 10, Walker’s changes to collective bargaining powers for most public employees. That fight eight years ago helped propel the Republican into the national spotlight and split the state.

Evers had already rolled out a series of proposals in recent weeks — from a $150 million boost to the University of Wisconsin System that includes providing state aid to offset continuing a tuition freeze for another two years to pushing more transparency at the Republican-created Wisconsin Economic Development Corp.

But Thursday’s budget release was the first time the former state schools superintendent provided details on his transportation plan after promising during the fall campaign to keep all options on the table to address that state’s infrastructure.

The heart of the plan is a proposed boost of the state’s gas tax to 38.9 cents a gallon. Evers’ administration said the repeal of the minimum markup on gas would save Wisconsinites as much as 14 cents, offsetting the proposed 8-cent hike.

On transportation, Evers also would:

*again index the gas tax by the consumer price index starting April 1, 2020; the move would generate $42 million over the biennium. The gas tax was previously indexed to inflation, but the Legislature ended the practice in 2005.

*increase heavy truck registration fees by 27 percent, generating $36 million.

*increase the fee on original or transfer of vehicle titles, generating $36 million.

*collect the hybrid vehicle fee, pulling in $9.7 million over the biennium.

Evers also would eliminate the annual transfer from the general fund to the transportation fund. That transfer, comprised largely of the gas tax and registration fees, is now about $44 million a year. And the net impact of Evers’ proposals would result in a boost to the transportation fund of $520 million over the biennium.

He would then put $320 million more into the state highway rehabilitation program, another $22 million into the state’s 81 transit systems, and pump $6 million more into elderly and disabled transit aids.

Ever also would complete the Zoo Interchange in the Milwaukee area and enumerate the expansion of I-43 to three lanes in each direction rather than the current two in Milwaukee and Ozaukee counties.

Evers’ administration said no current projects would be canceled under his plan and transportation bonding would be $338 million over the next two years. That would be the lowest level of transportation bonding since at least 2000.

Altogether, Evers wants to spend $83.4 billion over the next two years in all funds, which would amount to increases of 5.4 percent in the first year of the budget and 4.9 percent in the second. Evers’ office said general purpose revenue expenditures would go up $2.7 billion, slightly above the additional $2.4 billion the Legislative Fiscal Bureau projects will be available through the end of the budget.

By comparison, Walker’s last budget called for spending hikes from all funds of 1 percent and 3.2 percent.

Other highlights of Evers’ plan include:

TAXES

Fresh off vetoing the GOP’s version of a middle-class tax cut, Evers included his own plan in the budget. Dubbing it the Family and Individual Reinvestment — or FAIR — credit, it would provide a cut in the individual income taxes paid by individuals with adjusted gross incomes below $80,000 and married-joint filers below $125,000. Those filers would see a credit equal to 10 percent of their remaining tax liability or $100, whichever is greater.

The credit would then be phased out for individuals making between $80,000 and $100,000 and married couples between $125,000 and $150,000.

It would amount to a tax cut of $837.5 million over the biennium and provide an average credit of $217 for individuals and more than $500 for the median family of four, according to Evers’ office.

He also would boost the Earned Income Tax Credit, which targets low- and moderate-income earners with children, producing $53.1 million in savings for those who qualify. And he would enhance the Homestead Credit for low-income Wisconsinites, increasing the maximum eligible household income to $30,000 and indexing the credit. That would produce $38.9 million in savings for taxpayers.

Evers also is calling for a new nonrefundable child and dependent care credit, which amounts to nearly $10 million annually after it would kick in during fiscal year 2020-21.

Saying he wants a “fairer” tax code, Evers also is proposing a series of tax hikes.

One would cap a tax credit for manufacturers at the first $300,000 of income, generating $516.6 million over the biennium. Another would limit a tax break on long-term capital gains. Now at 30 percent, the guv would cut that limit that to individuals with an adjusted gross income of $100,000 or less and married-joint filers at $150,000. Evers said it would preserve the credit for 81 percent who now claim it, though it also would cost those no longer eligible $505.1 million.

The budget also would conform the state’s tax code with the federal changes approved as part of the federal GOP tax cut in 2017. Those changes would generate $362.4 million.

Evers also proposed a series of smaller tax hikes, from ending a break for private school tuition ($24.3 million), to repealing a change in how broadcast stations are taxed ($29.5 million), and raising taxes on brown cigarettes and little cigars ($6.8 million).

Evers also would relax property tax caps on municipalities that were put into place by Republicans. Now, municipalities are limited to increasing their property tax levies by new construction. Instead, Evers wants to ensure each municipality could raise their property taxes levies by 2 percent or new construction, whichever is higher.

The guv also would increase county and municipal aids by 2 percent in 2020.

According to the guv’s office, the net impact of his budget would result in property taxes for a mythical median-valued home going up 1.7 percent in each year of the biennium, or about $50 annually.

That home, projected to be worth $173,646 in 2019-20, would have a property tax bill of $2,919, compared to $2,869 in the current year. In the following year, that would go up to $2,969.

Evers’ office said more than half of the anticipated increase would be due to already approved school district referendums and the option for local school districts to raise property taxes to pull in more money after losing students to the state’s school choice programs.

MINIMUM WAGE

Evers’ plan seeks to gradually increase the minimum wage of $7.25 per hour over a four-year period before indexing it to the Consumer Price Index.

The guv has said he’d aim to up the wage floor to $15 an hour, but it wouldn’t happen over the course of the upcoming biennium.

Instead, the budget sets a series of incremental steps towarding upping the minimum wage. First, it would be increased to $8.25 starting Jan. 1, 2020, before rising to $9 beginning Jan. 1, 2021. It would then increase by 75 cents each of the following two years, meaning the minimum wage would be set at $10.50 beginning Jan. 1, 2023. After that, it’d be indexed to the CPI.

The budget would also create a task force to study other options to progress toward a goal of a $15-per-hour minimum wage. The panel would include five guv appointees and appointments from the four legislative leaders.

LAME DUCK

Evers’ budget also looks to repeal most of the provisions included in the lame-duck laws that cleared the Legislature and Walker’s desk in December.

That includes repealing language requiring the AG to get approval from the Joint Finance Committee to settle cases and rolling back the Legislature’s ability to hire private attorneys for their members if needed, rather than relying on representation from the Department of Justice.

The plan would again let DOJ retain any settlement funds it receives, rather than turning them over to the general fund. DOJ would still have to report to the Legislature’s Joint Finance Committee how the funds are spent.

And Evers’ proposal would nix requirements for guidance documents. The laws compel each agency by the start of the new fiscal year to rescind guidance documents outlining how it interprets existing state statute unless it first sends them through a new process that includes a public comment period.

It would also eliminate language requiring the Department of Administration to get legislative approval to make changes to Capitol security, as well as get rid of provisions changing the administrative rule process.

Evers’ budget also targets changes the lame-duck laws made to ID cards for voting.

For example, temporary voting credentials would be valid for 180 days instead of the 60 days GOP lawmakers pushed for — a change federal Judge James Peterson in January approved as well in a broader lawsuit targeting the lame-duck laws’ early voting changes.

The guv’s plan would also allow expired college IDs to be used within five years of the expiration date, though Republicans sought to allow only current IDs to be accepted. Peterson’s ruling last month also allowed the state to accept students’ expired college IDs for voting.

VOTING

The budget includes several provisions that change the voting process in the state, including the addition of an automatic voter registration system.

Evers is proposing coordination between the Elections Commission and the Department of Transportation to create an “opt-out” voter registration system that would automatically sign Wisconsinites up to vote.

DRUG TESTING AND WELFARE

Able-bodied adult FoodShare recipients wouldn’t be subject to drug screening and testing requirements under Evers’ plan.

The budget also targets at least one of the welfare overhaul laws Walker signed into law last session.

That is the 2018 law requiring able-bodied adults to work or participate in a workforce development course to maintain eligibility for the FoodShare program. Evers would repeal the work requirement for those able-bodied adults with dependents ages 6 to 18.

The budget would also repeal the state’s plan to institute work requirements for certain Medicaid recipients, which the feds signed off on last fall.

Specifically, the proposal would throw out a measure to require able-bodied childless adults between 19 and 49 in the program to work or participate in a worker training program or “other community engagement” for at least 80 hours a month to receive benefits.

It would also roll back other provisions, including:

*An $8 copayment for childless adult recipients who visit the emergency room in a non-emergency situation;

*A requirement that recipients submit a health care assessment that includes questions about drug use;

*And a monthly premium for BadgerCare Plus recipients of $8 per household for those childless adults whose household incomes are between 50 percent and 100 percent of the federal poverty level.

PRISON

Evers’ budget aims to address both surging prison populations and the dwindling and overworked ranks of prison guards.

The budget aims to lower the number of inmates in the correctional system by making efforts to prevent offenders from ending up behind bars in the first place. That includes: allocating $1 million dollars each fiscal year towards treatment and diversion programs for substance abuse offenders; setting aside $1 million per year toward community policing initiatives to head of crime before it happens; reclassifying 17-year-olds as minors for most offenses; and decriminalizing possession of up to 25 grams of marijuana.

The budget also increases funding for district attorneys as well as several Department of Justice positions and ups the reimbursement rate for private attorneys in an effort to expedite the trial process.

Additionally, the budget proposes to fund expanded barracks to address overcrowding at some facilities. Jackson Correctional Institution would have an additional housing complex built on site, while Taycheedah Correctional Institution would have two. The barracks hold roughly 144 inmate each.

Evers is also proposing to boost correctional officer pay to $18 per hour from $16.30 per hour over the two-year period. Those employees would also qualify for the proposed 2 percent raise for government workers.

While that falls short of the $22-per-hour mark which Corrections Secretary Kevin Carr said last week would align with neighboring states, the Evers administration hopes the bump will drive recruitment and retention efforts.

HEALTH CARE

Evers’ budget includes his long expected plan to accept federal money to expand Medicaid through the Affordable Care Act after Walker and GOP lawmakers six years ago rejected the move.

It also would keep Walker’s “Wisconsin Healthcare Stability Plan” intact, while fully funding it.

The $200 million plan subsidizes coverage on the federal exchange under the Affordable Care Act in order to contain premium increases.

The feds in July signed off on the waiver required to set up the program. At the time, Walker said the state will cover $34 million of the plan with the federal government covering the remaining $166 million through savings.

A spokeswoman for the Office of the Commissioner of Insurance said the budget includes the full $72 million the state needs in order to obtain federal funding for the plan over the biennium.

While the guv included a series of Dem proposals, Evers also sought to play up provisions that have been championed by Republicans.

That includes provisions to increase the private bar reimbursement rate to $70 an hour and adding more than 25 new assistant district attorneys. GOP lawmakers earlier this month called for a similar increase for private attorneys who take on cases as public defenders. But it also included seeking more than 60 assistant DAs.

Evers also said he will accept every recommendation from the Wisconsin Interagency Council on Homelessness, which was chaired by former GOP Lt. Gov. Rebecca Kleefisch. He added he will also expand broadband grants.

Evers urged lawmakers to focus on the pressing issues facing Wisconsinites.

“Their plight must be our purpose, their crises our cause and their desires our demands,” Evers said.

Read Evers’ prepared remarks.

 

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