CHICAGO — The Wisconsin Legislature's powerful Joint Finance Committee approved a $500 million tax cut package along party lines last week.
Minority Democrats voted against the plan put forward by Republican Gov. Scott Walker and tweaked by Republicans who control the Legislature. The plan will come up for final approval early next month.
Walker unveiled the tax cut package after new state revenue estimates projected a $1 billion surplus in the two-year budget that runs through June 30, 2015. The centerpieces of the package are a property tax cut and a reduction in income taxes through changes in the withholding tax.
The compromise reached ahead of the vote included leaving about $100 million of the surplus in the state's general fund, instead of its rainy day fund to lower the estimated deficit in the next two-year budget.
Walker's original package would have left the state with an $800 million structural deficit in the next budget while the revised one approved by the committee leaves the state with a $660 million shortfall. Walker officials believe improving tax revenues and natural growth will help erase that red ink.
Democrats argued more of the funds should go to pay down debt, go into the state's rainy day fund, and reimburse schools and local governments for previous cuts made during leaner years.
State sales and use tax revenues are estimated at $4.6 billion this year and $4.8 billion in fiscal 2015. That's up 5.2% in the first year and 3.8% in the second year. The estimates are $142 million higher in the first year and $208 million higher in the second year than the previous estimates.
State individual income tax revenues are estimated to generate $7.4 billion this year and $7.8 billion next year. Those are up a combined $265 million over prior estimates.
Fitch Ratings and Standard & Poor's assign AA ratings to the state's general obligation debt while Moody's Investors Service rates it Aa2. The state last year also received a first-time rating from Kroll Bond Ratings Agency.
