Governor’s Budget Includes $600 Million in Tax and Fee Reductions

Gov. Scott Walker on Wednesday called for nearly $600 million in reduced taxes and fees along with significant new spending in areas where he made sizable cuts in the past as part of his $76.1 billion two-year budget proposal.

Walker is proposing to cut the state’s two lowest income tax rates by a tenth of a percentage point — to 3.9 percent and 5.74 percent — and increase the amount of income taxed at the second-lowest rate by about $30,000. A median income four-person family making about $86,000 a year would save $139 over two years, while state revenues would decline by $203 million under the proposal.

Walker is also seeking to make good on a promise to reduce property taxes below 2010 levels by eliminating a state forestry property tax that brings in about $90 million a year and paying for the programs it funds with other state tax revenue; boosting a property tax credit by $87 million; and increasing aid to school districts by $72 million, which, paired with a state-imposed lid on district revenues, will drive down property taxes.

Walker also plans to create a sales tax holiday in August on certain school supplies, clothing and computers, estimated to cost the state about $11 million in lost sales tax revenue.

His budget also increases a tax credit for low-income working families with one child and increases the Homestead Tax Credit for seniors and the disabled.

For the 2017-19 state budget, Walker and lawmakers are working with revenue estimates that are about $700 million better than expected in the fall when agencies prepared their budget requests. The better budgeting position comes from improved economic forecasts since the November presidential election, which translates to higher tax collection projections and lower-than-anticipated Medicaid costs.