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Doyle would let tax cuts stand: But in light of deficit, he might try to revive estate tax
(Milwaukee Journal Sentinel, The Via Acquire Media NewsEdge) Dec. 6--MADISON -- Gov. Jim Doyle said Friday that he does not plan to delay tax deductions on health insurance premiums or reverse an income tax deduction on Social Security benefits to help solve a record $5.4 billion deficit.
"Those tax cuts were aimed at people who are out there working really hard -- middle-class families -- and I think in today's economy they're even more important," Doyle said after lighting the Capitol Christmas tree.
The governor also said he doesn't expect to recommend an increase in the $75 annual vehicle registration fee to ease the two-year deficit when he presents his budget early next year. That fee rose from $55 this January.
But he is considering reviving the estate tax before it is scheduled to return in 2011.
He also still plans to recommend a tax on oil-company profits and a tax on hospitals that would trigger more federal aid to offset health care costs. That plan was killed by Assembly Republicans last year, but Doyle's fellow Democrats will control that house for the next two years and likely will approve that plan.
Since the budget crisis emerged this fall because of the faltering national economy, Doyle has repeatedly said he hoped to avoid a general increase in sales or income taxes.
In past budgets, Doyle approved phasing in tax deductions for Social Security income and health insurance premiums, which won't take full effect until 2011. The Social Security tax break was fully phased in this year, meaning people can take those deductions when they file taxes in April.
Delaying or reversing those tax breaks could save about $133 million a year.
Senate Minority Leader Scott Fitzgerald (R-Juneau) said in a statement he was pleased Doyle opposed changing the taxes on health insurance and Social Security income.
"But if he recognizes the harm that those tax increases would do, I can't understand why he would want to raise taxes on hospitals and oil companies knowing that those same struggling families ultimately are going to pay for those, too," Fitzgerald said.
Todd Berry, president of the Wisconsin Taxpayers Alliance, said most budget decisions result in tax increases or cuts in services. He said one alternative would be to delay tax breaks that are being phased in over time -- the potential $26 million annual break for health insurance premiums, for example.
"It would seem to me you would want to delay these things so you wouldn't have to increase people's taxes permanently or cut their jobs or services," Berry said.
Options weighed
Sen. Mark Miller (D-Monona), co-chairman of the Legislature's Joint Finance Committee, said legislators are reviewing all possible ways to fix the budget deficit, including spending cuts and ways to raise new revenue.
Miller said it is premature to begin listing what will be in the committee's budget bill but noted Democrats who control the Legislature would work closely with Doyle on a plan.
Rep. Mark Pocan (D-Madison), the other co-chairman of the Finance Committee, said no budget decisions can be made until the "totality" of the deficit problem is known. He said the 52 Democrats who will control the 99-member Assembly for the next two years have not met to discuss the deficit.
"I don't rule anything in or out," he said.
The 16-member Finance Committee will review the budget that Doyle submits early next year and recommend changes before it goes to the full Legislature.
Doyle has long said he wants to help the state's transportation budget by imposing a gross-receipts tax on oil companies. Originally, that was estimated to bring in almost $400 million through mid-2011, but it now appears it would generate far less because oil prices have fallen from $147 to $40 per barrel since July.
But Doyle said he still wants to pursue that tax on oil company profits, and he left open the possibility of transferring some transportation funds to other accounts to shore up the state budget.
The transportation industry has quarreled with Doyle about those transfers.
"We need to restore people's trust in some level of integrity that the money they pay in for transportation stays in transportation," said Pat Goss, executive director of the Wisconsin Transportation Builders Association.
Doyle said he is looking at options that don't involve another increase on the annual vehicle registration fees.
"I really don't see that as a place to go this time," he said. "I am trying to be very mindful -- and we have to be -- on the things that really affect people who are right now facing very, very difficult circumstances."
Doyle said he also hoped Congress would give Wisconsin "multiple hundreds of millions of dollars" to help close the shortfall as part of a national economic recovery plan. Much of that money would flow into public works projects, and Doyle said he would like to direct some of those funds for maintenance on University of Wisconsin System buildings around the state.
Under a plan adopted in 2002, the state's estate tax ended this January but is scheduled to be revived in 2011. Doyle left open the possibility of bringing back the estate tax before then.
To see more of the Milwaukee Journal Sentinel, or to subscribe to the newspaper, go to http://www.jsonline.com.
Copyright (c) 2008, Milwaukee Journal Sentinel
Distributed by McClatchy-Tribune Information Services.
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