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Assembly Republican road-funding plan cuts, raises taxes

Wisconsin Assembly Republicans hold a news conference at the state Capitol May 4, 2017, to propose a plan to fund roads in the state. (WLUK/Courtney Ryan)

MADISON (AP) -- Assembly Republicans unveiled a complex and far-reaching road-funding proposal Thursday that would cut gas taxes in Wisconsin, apply the sales tax to fuel purchases, put a new fee on hybrid vehicles and lower income taxes with the goal of moving to a flat tax.

Assembly Speaker Robin Vos, speaking with dozens of fellow Republicans standing behind him in support, called the plan a "new starting point" for negotiations with Gov. Scott Walker and Senate Republicans to fund transportation.

"Is this perfect for anybody?" said Rep. Dale Kooyenga, the primary architect of the plan. "Is this like a Utopian plan for transportation or income taxes? No. But we're Wisconsinites, we get along with our neighbors, we understand how to compromise and we move forward as a team."

The myriad changes shouldn't result in the price at the pump changing much from what it is now, but that's impossible to predict, Kooyenga said.

Finding a solution to a projected $1 billion transportation funding shortfall is proving to be the most vexing issue facing the Republican-controlled Legislature as it works on passing a $76 billion state budget.

Walker's solution was to delay projects and borrow $500 million. The Assembly GOP plan would raise $660 million in new revenue which would be used to cut borrowing by $300 million. It puts off any decisions about which roads projects to prioritize and it would not take money from the state's main account to pay for roads, an approach Senate Majority Leader Scott Fitzgerald and Walker have both said they are examining and would support.

Fitzgerald said in a statement that the plan "contains a number of good ideas that are worth a closer look." Walker's spokesman Jack Jablonski said the governor was reviewing the plan.

Democrats assailed the plan as hurting both workers and businesses through its numerous tax changes.

"Instead of focusing on a solution, Republicans have proposed even more ways to make workers and businesses pay for their lack of leadership," said Democratic Rep. Katrina Shankland, a member of the budget-writing committee.

The conservative group Americans for Prosperity praised the plan's move toward a flat income tax and other portions of the plan calling it "worthy of consideration."

The Assembly GOP plan would:

  • Eliminate a host of income tax credits to move toward a 3.95 percent flat tax for all taxpayers by 2028. Income taxes currently range from 4 percent to 7.65 percent, depending on how much a person earns.
    Critics of the flat tax say it benefits the wealthy, who would pay a smaller percentage of their income in taxes than people who earn less. Supporters say it simplifies the tax system and encourages people to earn more because they're not penalized with higher taxes in the upper brackets.
    Tax credits targeted for elimination include the marriage credit, the itemized deduction credit, a credit for people renting homes or apartments, the alternative minimum tax, an internet access tax and the first dollar credit used to reduce property taxes.
  • Lower the state's minimum markup applied to gas from 9.18 percent to 3 percent. The minimum markup law prohibits the sale of gas below what it costs the retailer to purchase.
  • Apply the state's 5 percent sales tax to fuel purchases while also lowering the 32.9-cent-per-gallon gas tax by 4.8 cents per-gallon.
  • Repeal the minimum wage, known as the prevailing wage, requirement on public projects.
  • Eliminate 180 Department of Transportation engineer positions.
  • Forbid local governments from imposing new wheel taxes, although those in place before April would be allowed to continue.
  • Allow local communities to increase the sales tax half a cent to pay for local transportation needs.
  • Create a system for approving toll roads, which have to get signoff from the federal government.
  • Require local approval of any new roundabout.
  • Impose a new $30 fee on hybrid vehicles and a $125 fee on electric cars, raising nearly $5 million over two years.

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