Evers seeks a gas tax hike in Wisconsin
Wisconsin Gov. Tony Evers laid out an $83.4 billion two-year budget plan that relies on new revenue from a gasoline tax hike and other transportation fees along with tax credit rollbacks to fund new transportation and education spending and a middle-class tax cut.
The plan from the new Democratic governor would steer the state in a different policy and tax direction from Republican predecessor Scott Walker, who lost to Evers in November.
“This isn’t the Tony Evers budget, the Democratic budget, the speaker’s budget, or the Republican budget — this is the people’s budget,” Evers said in his address.
The Republicans who maintained control of the legislature in November are unlikely to go along. They vowed to write their own budget based on projected natural revenue growth.
“The problem with Tony Evers’ budget is it just spends too much, it spends way more than Wisconsin can afford,” said Assembly Speaker Robin Vos.
The budget would spend $40.7 billion, up 5.4%, in the first year and $42.7 billion, up 4.9%, in the second year. In addition to new tax revenues, the budget is built on Legislative Fiscal Bureau estimates that general tax revenues will increase 3.3% or $529.7 million in the current fiscal year, by 4.2% or $693 million in the first year of the new budget, and 2.3% or $393 million in the second year.
The plan would raise by eight cents the state’s existing 32.9 cent-per-gallon gasoline tax and some other transportation related registration fees. The governor contends actual gas prices would go down through the repeal of state’s minimum markup law.
“This won't be a one-time fix. We're going to raise more than $600 million in new revenues to fix our roads, bridges, and highways and make sure that our transportation fund is sustainable for our future,” Evers said.
On other tax measures, middle class residents would see a 10% income tax cut and a new child tax care credit tied to the federal credit would be established. To generate revenue, a capital gains tax exclusion would be limited to those with incomes below $100,000, or $150,000 for joint filers, to generate about $500 million, and a rollback on a manufacturers’ tax credit would generate another $500 million while changes to conform to recent federal changes would generate more than $360 million.
Participation in federal Medicaid expansion would free up $320 million in funds. Evers would send another $100 million to hospitals to supplement potential cuts in reimbursements.
Public school aid would rise by 10% or $1.4 billion and the University of Wisconsin system would see a $150 million increase. The budget would raise aid to county and municipal governments by 2%.
The operating budget would include new authority for $306.5 million of general obligation borrowing and $142.3 million of transportation revenue bonds, said state capital finance director David Erdman. Additional bonding capacity will be submitted in the capital budget that will be proposed later this month. Once approved by the State Building Commission later this month it becomes part of the budget.
The gasoline tax is not pledged to transportation revenue bonds, but if other proposed increases in the heavy truck registration and related fees are approved those would benefit the credit. The state plans to sell $150 million of mostly new money transportation revenue bonds in a competitive sale the week of March 11 under existing authority, Erdman said.
The budget also expands the state’s existing revenue bond authority to include the power to issue drinking water bonds similar to the state’s wastewater bonding. “It provides an additional resource to finance important projects,” Erdman said.
The state is rated Aa1 by Moody’s Investors Service, AA by S&P Global Ratings, and AA-plus by Fitch Ratings and Kroll Bond Rating Agency.
The proposed general fund budget would maintain the state’s structural balance on a cash basis until the subsequent biennium when the state could end with a $920 million imbalance, though that estimate doesn’t account for growth in taxes or expenses. The state has long recorded deficits based on generally accepted accounting principles but has been chipping away at them.
Evers seeks to roll back some measures that reduced the powers of the governor passed during the lame-duck session that preceded his swearing-in, and to repeal “right-to-work” rules on prevailing wages that were part of Walker’s larger and controversial Act 10 law that also curtailed public employee union powers.
He also wants to raise the minimum wage, eliminate various work and drug testing rules for public aid recipients, legalize medical cannabis, and freeze future school voucher funding.