CHICAGO Wisconsin Gov. Scott Walker on Sunday signed into law a $100 million property tax cut that won swift passage.
Walker unveiled the proposal just a week ago and his fellow Republicans, who control the Legislature, quickly moved it through the chambers so it could be reflected in December property tax bills. The plan had bipartisan support although some critics argued that it was a political move that would have little impact on homeowners’ property tax bills and could be better spent elsewhere.
Walker defended the cut as affordable since the state closed the books on fiscal 2013 June 30 with a balance of $760 million, up from a prior estimate of $670 million. About $153 million of the surplus was directed into the state’s modest budget reserve bringing it to $278 million. Some have suggested that the state should use the extra surplus to further build reserves. The original surplus equals the cost of an income tax cut included in the state’s new two-year budget.
“Today, families, farmers, seniors, and small businesses can breathe a sigh of relief for the third year in a row thanks to our tough, but prudent, decisions and this $100 million investment,” Walker said in a statement. The cut will save homeowners about $13 on their tax bills.
The nonpartisan Legislature Fiscal bureau said in a recent report that the property tax cut and worker training legislation would drive up a projected deficit in the next two year budget by $180 million. The $68 billion two-year budget Walker signed in June cut income taxes by $650 million, allocates an additional $322 million in school aid, and limits property tax increases.
Fitch Ratings and Standard & Poor’s recently affirmed Wisconsin’s AA rating while Moody’s Investors Service affirmed the state’s Aa2 rating.
“The state’s Aa2 general obligation bond rating reflects an improved liquidity position highlighted by the availability of up to $1.9 billion in alternate-fund liquidity, as well as a fully funded pension system and limited OPEB liability, which eliminate these sources of long-term budgetary pressure, which many other states will have,” Moody’s wrote.
Offsetting its strengths is a weak financial position reflected in the negative GAAP unassigned fund balance of negative 18% in fiscal 2012 as the state balances its books on a cash basis, a past reliance on non-recurring revenue to balance budgets, and exposure to cyclical manufacturing declines.