Wisconsin budget surplus nears $1 billion

MADISON, Wis. (AP) -- Wisconsin's budget surplus was projected Thursday to reach nearly $1 billion, money that Gov. Scott Walker and Republican legislative leaders are eyeing for income and property tax cuts.

But news of the $977 million surplus, which was expected for weeks but larger than many anticipated, set off a feeding frenzy in the Capitol among lobbyists, special interest groups and lawmakers.

"Everybody and their cousins from other states will be coming home to get a piece of the money," said Republican Senate President Mike Ellis, who has served through several budget booms and busts since he took office in 1971.

Walker and Republican leaders tried to dampen expectations for more spending, saying the money generated mostly through higher-than-anticipated tax collections should be returned to taxpayers. But Democrats and other liberal advocacy groups said it should be used for everything from aid to public schools and higher education, Medicaid and worker training grants.

"The additional revenue should be returned to taxpayers because it's their money, and my administration will work with the Legislature to determine the most prudent course of action," Walker said in a statement.

Walker has been talking with Republicans who lead the Senate and Assembly about tax cut proposals he plans to release in his State of the State speech next Wednesday. Walker's spokeswoman Jocelyn Webster said the governor wants to adjust income tax withholding tables to put more money in taxpayers' pockets immediately and is also eyeing income and property tax reductions.

The question will be how any tax cuts are structured.

Walker's getting pressure from Republican Assembly Speaker Robin Vos to use the surplus to reduce property taxes levied and collected by technical colleges in Wisconsin. Republican Senate Majority Leader Scott Fitzgerald said he wasn't convinced that was the only approach that could be taken. Fitzgerald said some in his caucus will want to save a portion of the surplus to be used for ongoing spending commitments.

Still, the pressure to send some of the surplus back to taxpayers will be strong.

"My members wouldn't sit still for doing nothing," Fitzgerald said.

Meanwhile, Walker isn't saying much about what he will propose.

"The governor is focused on property and income tax relief and not necessarily other broad policy decisions at this point," Webster said.

Democrats called for using the money to spur job creation and programs like worker training that would help the middle class.

"Taxpayers need a balanced approach that rebuilds the rungs on the ladder of success, provides tax relief directed to the middle class and long-term financial security," said Assembly Democratic Minority Leader Peter Barca.

The net total surplus of $977 million was fueled by $893 million in tax collections above earlier projections, the nonpartisan Legislative Fiscal Bureau reported. Net tax collections are projected to increase by 2.2 percent by July and another 4.3 percent by mid-2015.

Vos is pushing for replacing the technical college property tax levy with general state tax dollars.

The 16 technical college districts in Wisconsin cover the entire state, so supplanting property tax revenue with state money would lower property tax bills for homeowners statewide. The average property tax levy this year was $1.76 per $1,000 of assessed value.

Depending on how it's structured the amount any individual homeowner would save would vary based on the value of their home and the amount of the local technical college district levy.

"I want to make sure we do something that everybody in Wisconsin feels," Vos said.

Replacing a portion of the technical college property tax levy with state money is the most equitable way to provide property tax relief statewide, Vos said. Technical colleges levied about $796 million in property taxes this fiscal year. That is the fourth most behind school districts at $4.8 billion, municipalities at $2.6 billion and counties at $2 billion.

Conor Smyth, a spokesman for the Wisconsin Technical College System, had no comment on Vos's idea.

"We're looking forward to learning more about what the proposal is," Smyth said.

Vos said he did not know if Walker would be proposing an income tax rate reduction in addition to changing income tax withholding tables. Changing withholding tables would result in taxpayers getting more money back in their paychecks immediately, instead of receiving a larger income tax refund. The tables have not been updated since 2009.