POLITICS

Gov. Scott Walker pans increase in gas taxes for Wisconsin

Jason Stein, and Patrick Marley

Milwaukee Journal Sentinel

MADISON - Gov. Scott Walker has rejected the heart of a GOP roads plan, saying it amounted to a net tax increase on fuel of more than $400 million over two years.

Assembly Republicans put forward the proposal Thursday to apply new taxes on fuel, cut the state's required markup on gas and dramatically scale back income taxes over the next 12 years.

In a phone interview late Friday, the GOP governor made clear he's unwilling to drop his pledge not to raise gas taxes.

"So if people are buying fuel for their vehicles, their cars and trucks, that is a net tax increase of $433 million, which obviously to me is problematic," Walker told the Milwaukee Journal Sentinel.

Gov. Scott Walker's administration is recommending moving state employees to a self-insurance program.

Walker cautioned he was still reviewing the transportation and tax plan but still raised several other concerns about the proposal's key parts.

Under that proposal, drivers would pay 7.2 cents more per gallon of gas when prices are at $2.40 per gallon, according to the Legislature's nonpartisan budget office. The package would cut the state's 32.9-cents-per-gallon gas tax by 4.8 cents, but then apply the state's 5% sales tax to gas.

Walker said adding the sales tax addition to gasoline would raise state and local taxes by $711 million over two years. Though the gasoline tax would drop by $278 million, the taxes on fuel would still go up by a net amount of $433 million, he said.

The plan's backers say it would counteract the cost increase for motorists by reducing the state's mandate on retailers to mark up the price of gasoline before selling it. But Walker expressed skepticism of that idea Friday, saying there's no guarantee that reducing the markup would lead retailers to lower gas prices.

The plan's author, Rep. Dale Kooyenga (R-Brookfield), pointed out Friday that his plan has won the endorsement of both the Metropolitan Milwaukee Association of Commerce and the free-market group Americans for Prosperity-Wisconsin.

In an interview, Walker called the gasoline tax increases "sizable" and "massive" — claims Assembly Republican disputed.

"When I saw the words, 'massive,' 'sizable' and 'problematic,' I thought he might be talking about the amount of bonding he is doing," Assembly Majority Leader Jim Steineke (R-Kaukauna) said. "Overall, it's a tax decrease, not a tax increase."

Kooyenga's plan would trim income taxes next year and in the years after, eventually reaching more than $2 billion a year in tax cuts — roughly equal to the state's annual spending on prisons and the University of Wisconsin System combined.

Supporters argue that the income tax cut would make up for the tax increase on gasoline. Walker isn't so sure.

"If their argument it's a shift — trading one off for the other — even that doesn't add up. Because the thrust of the income tax changes are in the future," the governor said.

Among its many provisions, the legislation would reduce the number of tax brackets from four to one and cut the married couple tax credit, the renters tax credit and a property tax credit aimed at helping middle-class homeowners. Walker said he is concerned that detailed analysis may show the proposal raises taxes on some middle-income families.

The governor said he was also wary of the Assembly's proposed federal request to allow tolling in Wisconsin. Tolling should only be put in place if the state can use it to lower gas taxes, Walker said.

Assembly Minority Leader Peter Barca (D-Kenosha) said the plan was "half-baked" and wouldn't solve the state's challenges funding road projects.

"Instead, it gives tax breaks to the richest and raises certain taxes for thousands of Wisconsin families," Barca said.

Republicans who control the Senate praised Kooyenga for putting out a detailed plan, but many of them greeted key provisions of it coolly.

“What we come up with in the end will look a lot different than this,” said Sen. Alberta Darling (R-River Hills), co-chairwoman of the budget committee.

Sen. Chris Kapenga (R-Delafield) said he liked the proposal’s income tax cuts but did not believe the state should put more money toward highways until it has a better handle on how the Department of Transportation is operating.

“The proposed plan gives additional revenue to a broken system,” he said. “That’s not responsible.”

Perhaps the strongest opposition came from Sen. Steve Nass (R-Whitewater), who said it would increase what middle-income families pay in taxes on gasoline and income.

“I can’t support adding the state sales tax on gasoline and won’t support any budget that increases state income taxes on middle-class families,” he said in a statement.

Sen. Luther Olsen (R-Ripon) questioned the plan’s tolling provisions and said he thought it was a “fallacy” that reducing the minimum markup would offset the increases in taxes on gasoline.

He also expressed opposition to moving the state in coming years from four tax brackets to one.

“We’ve had a progressive taxing system for a long time,” Olsen said. “If you make a lot of money, maybe you should be a little higher percent.”

Kooyenga said he's still waiting for a full analysis of the impact of the plan on taxpayers of different incomes and is willing to adjust the bill if needed to prevent middle-income earners from paying more.

"We're willing to make changes on that front," Kooyenga said.