Assembly GOP Proposes Middle-Class Tax Cut Paid for by State Surplus Funds

The Assembly GOP plan calls for increasing the standard deduction on the state income tax effective in 2020. For married taxpayers filing jointly who would qualify for a tax cut, it would average $231, according to the Legislature’s nonpartisan fiscal bureau.

The Assembly GOP plan would reduce state tax collections by about $490 million in the second and final year of the next state budget cycle. That includes an ongoing total tax reduction of $338 million plus a one-time cost of $152.1 million to account for the timing of the change.

In June the state ended the last fiscal year with about $588 million in the general fund after revenues outpaced expenditures by $9.5 million. In the current fiscal year, a $34.1 million surplus is expected to increase the fund balance to $622.6 million. An updated projection on state finances is due from the fiscal bureau next week.

Vos said Assembly Republicans want to advance the tax cut in a separate bill from the state budget.

Senate Majority Leader Scott Fitzgerald, R-Juneau, praised the plan in a statement issued immediately after the Assembly press conference, saying he’s “glad to see that our colleagues in the Assembly are prioritizing plans to lower taxes.” Fitzgerald said he has asked a trio of GOP senators to work “on a plan to deliver tax relief for hard-working families.”

Evers spokeswoman Melissa Baldauff said in a statement the Assembly GOP plan “falls short” of what he seeks.

“The governor’s sustainable plan to cut taxes for middle-class families — which is funded by rolling back tax giveaways for millionaires — would provide relief for 86 percent of taxpayers without adding to the deficit or relying on one-time funds,” Baldauff said.