Assembly Republicans embrace new Gov. Scott Walker roads plan as Foxconn enters budget talks

Milwaukee Journal Sentinel

MADISON – Republicans in charge of the state Assembly on Thursday embraced a plan by Gov. Scott Walker to drop a proposed income tax cut to free up $200 million for highways.

But the GOP leader of the state Senate said his members weren't ready to sign onto the plan, which means the budget stalemate will continue for now.

Walker's plan emerged as efforts to lure a Taiwanese manufacturer to Wisconsin began to be incorporated into budget talks. One senator said Walker's administration is working on a memorandum of understanding with Foxconn Technology Group and another said landing the company could cost hundreds of millions of dollars in incentives.

Swapping a tax cut for transportation funding is aimed at ending a budget standoff that has lingered because of differences among Republicans who control the Legislature on how to fund highways.

The idea did not catch on with Senate Republicans, who discussed the plan for 90 minutes on a conference call Thursday afternoon. They want to use the money to end a property tax paid by businesses.

"There's no deal yet, that's for sure," Senate Majority Leader Scott Fitzgerald (R-Juneau) said.

At a stop in Sturtevant, Walker said he hoped the Senate Republicans would come around before long.

“This allows us to get to a reasonable compromise to get a budget passed," Walker told reporters.

Assembly Republicans have resisted borrowing for roads and they rallied behind Walker's plan a day after he proposed it in a private meeting with legislative leaders.

The state budget was supposed to be in place by July 1 but has been held up because of the differences over transportation. The Legislature's budget committee has not met since last month.

Rep. John Nygren (R-Marinette), co-chairman of the committee, said Thursday that he would like the committee to convene as early as next week. Fitzgerald said he thought it would be at least two weeks before the committee could meet again.

Walker initially wanted to borrow $500 million for roads, while Senate Republicans want to borrow $712 million. Assembly Republicans want no borrowing, unless taxes or fees are raised to help pay off the state's transportation debt.

Under Walker's latest plan, the state would not borrow any money for roads when the two-year budget starts. But the state would have the opportunity to borrow money later if the state secured extra federal aid.

Senate Republicans might not be willing to go along with that plan because they want to have money available so they can end the personal property tax, which is levied on businesses for their equipment and furnishings. Under the Senate plan, the state would pay local governments about $240 million a year to reimburse them for lost tax revenue.

Fitzgerald said Senate Republicans strongly support getting rid of that tax but to reach a deal might be willing to phase it out more slowly than initially envisioned.

What's more, Senate Republicans want to know how Walker's latest plan would affect specific projects, particularly in southeastern Wisconsin. Key senators are seeking to complete work on the Zoo Interchange in Milwaukee and I-94 in Racine County, and some want to begin work on the stretch of I-94 between the Zoo and Marquette interchanges.

Republicans are also discussing putting a new fee on electric vehicles to help pay for roads, Fitzgerald said.

Also influencing the budget talks is the effort to lure Foxconn to Wisconsin. The company manufactures iPhones and television screens and is considering building a massive U.S. plant that would employ thousands.

Company officials have visited Wisconsin and other states in recent weeks to meet with top elected leaders as they mull their options. In Wisconsin, much of the focus has been on Racine County.

Fitzgerald said the Walker administration is working on a memorandum of understanding with the company but he did not have details on it. He said he discussed the possibility of the firm coming here with Walker and Assembly Speaker Robin Vos (R-Rochester) on Wednesday as part of budget negotiations over rebuilding I-94 in Racine County.

Also Thursday, Sen. Luther Olsen (R-Ripon) said he wants to hold off on passing the budget until lawmakers know more about what it would take to get Foxconn.

An airplane that is reportedly Foxconn Chairman Terry Gou's was seen at Mitchell International Airport earlier this month.

Olsen said he doesn’t have a grip on what the state might need to do to land Foxconn but that Fitzgerald has told him it could require hundreds of millions of dollars in incentives.

Fitzgerald said he did not know the specifics but that securing Foxconn would require a "significant" investment. He said he wanted any incentive package to be taken up as stand-alone legislation, not as part of the budget.

"It could be a bipartisan bill," he said.

Walker said it was a sign of the health of Wisconsin's economy that news outlets were running stories about how seriously Foxconn was considering coming here.

“We do not have a specific proposal on the table," Walker said. "Anything that is being talked about right now is purely speculative.”

He deflected questions about a possible incentive package, saying one Michigan has put together wouldn't affect Wisconsin's efforts.

"What Michigan is doing is irrelevant to what we’re doing," Walker said.

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Olsen, who sits on the budget committee, said he believed lawmakers should hold back on passing a budget to make sure the state had enough cash on hand for an incentive package.