MADISON – Democratic Gov. Tony Evers on Monday rejected a Republican proposal to cut income taxes by $2 billion and expand a tax credit parents may use to pay for child care costs, calling it a “completely unserious” bill that “fails to meaningfully and sensibly address” the state’s workforce issues.
Evers in August called on lawmakers to take up his plan to funnel $1 billion into child care services and workforce programs in a special legislative session, but Republican leaders immediately criticized the amount of spending the governor proposed. They instead gutted Evers’ proposal and rewrote it with their own provisions.
The GOP-led Legislature sent the legislation to Evers last week.
“Clearly, Republicans have yet to wrap their heads around our state’s challenges, and their inability to take this issue seriously is affecting Wisconsinites’ livelihoods, our workforce and economy, and our kids’ futures,” Evers said in a statement after vetoing the bill on Monday.
The GOP proposal would have lowered taxes for Wisconsinites in the state’s broad third income tax bracket, increased the amount of the state credit a taxpayer can claim for dependents and increased the amount of money parents can deduct for sending their children to private school. The bill would have also overhauled licensing in Wisconsin and added requirements to receive government assistance while unemployed.
Both proposals leaned on the state’s $4.1 billion budget surplus.
In the proposal Evers vetoed, Republicans sought once again to to reduce the state’s second-highest income tax rate from 5.3% to 4.4%, lowering taxes for individuals earning between $27,630 and $304,170 and for married couples earning between $36,840 and $405,550 per year.
Evers previously partially vetoed a GOP proposal in the state budget that would have reduced all four income tax brackets and focused relief on the state’s wealthiest residents. He kept in place reductions for the third-highest tax rate, which covers those who earn $36,840 and less as a couple, from 4.65% to 4.4%.
Under current law, a person who is eligible to claim the federal child and dependent tax credit may also claim a state income tax credit equal to 50% of the federal credit they receive. The GOP bill would have increased that to 100% of the federal credit. It would have also increased the amount of employment-related expenses a person with dependents can claim — from $3,000 to $10,000 for one dependent and from $6,000 to $20,000 for two or more dependents.
Parents who send their children to private school can, under current law, deduct up to $4,000 for an elementary school student and up to $10,000 for a secondary school student. The Senate GOP proposal would have increased the deduction to $5,070 for an elementary school student and $12,660 for a secondary school student. The deduction amount would have increased based on inflation going forward.
Evers proposed his plan in an attempt to extend funding for Child Care Counts, a federally funded pandemic-era program that has helped keep child care centers open in an unstable economy. Evers and Democrats tried on multiple occasions to include $340 million in permanent funding for the program in the new two-year state budget, but Republican lawmakers opted to include $15 million for other child care services instead.
Child Care Counts was set to out of funds by January 2024 without additional funding, something Democrats and program advocates warned could trigger large tuition hikes for parents, worsen staff shortages and shutter child care programs. Evers announced plans last month to funnel $170 million in “emergency funding” to keep Child Care Counts operating at current levels through June 2025.
The workforce plan Evers originally proposed included:
- Putting $365 million toward child care programs, including funding to extend Child Care Counts payments to providers.
- Guaranteeing 12 weeks of paid family and medical leave for Wisconsin workers.
- Increasing general aid by $40 million for the Wisconsin Technical College System.
- Funding $17.3 million in need-based financial aid for college students over the next two years.
- Investing $66.4 million in the University of Wisconsin System, including funding UW-Madison’s engineering building project.
- Allocating about $176 million toward programs to address shortages of teachers, nurses and other health care workers.
Republicans scrapped Evers’ plan and passed their own, which included:
- Reducing the second-highest income tax rate from 5.3% to 4.4%. That applies to individuals earning $27,630 to $304,170 and for married couples earning $36,840 to $405,550.
- Expanding the state child and dependent tax credit and private school tuition tax deductions.
- Overhauling licensing in Wisconsin, including extending credential renewal periods.
- Using funding to assist unregulated child care providers in becoming certified or licensed.
- Creating apprenticeship grant programs for technical and tribal college students and people seeking a commercial driver’s license.
- Adding requirements to unemployment programs, including specifying two of four work searches per week must be direct contacts with potential employers and jump-starting a drug test requirement.
In a statement, Senate Majority Leader Devin LeMahieu, R-Oostburg, said the Legislature’s plan “would have provided meaningful relief for Wisconsin families to address inflation and rising child care costs.”
“It is disappointing that Gov. Evers continues to insist on leaving billions of dollars in Madison coffers rather than returning the surplus from where it came — taxpayers,” LeMahieu said.
A spokeswoman for Assembly Speaker Robin Vos, R-Rochester, did not immediately respond to a request for comment on the governor’s veto.
Jessie Opoien can be reached at jessie.opoien@jrn.com.
Read More: Evers vetoes GOP’s $2 billion tax cut and child care credit expansion
