Tony Evers vetoes the GOP tax cut bill but plans to include his own cut in the state budget

MADISON - Gov. Tony Evers issued his first veto Wednesday, rejecting a Republican plan to cut income taxes for middle-class families by using money leftover in the current state budget.

Instead, Evers will include the same size tax cut — 10 percent — in his first two-year budget proposal set to be released next week. 

Evers in his veto message said he was rejecting the bill because he objected to passing a major fiscal policy item outside of the state budget process.

The move irked Republicans, who authored the plan in response to Evers' campaign proposal to enact a middle-class tax cut but by reducing a tax credit that manufacturers receive.  

"Let me be clear with the governor: I will not support raising taxes on our state’s job creators," Senate Majority Leader Scott Fitzgerald, R-Juneau, said Wednesday.

Fitzgerald's comments foreshadow a potential second showdown between Evers and Republicans by suggesting lawmakers on the GOP-controlled budget-writing committee would not accept Evers' tax cut the way he wants it. The panel could rewrite the plan to match the bill vetoed Wednesday or scrap it altogether. 

Assembly Speaker Robin Vos, R-Rochester, said he "expected more from someone whose first speech included a promise to work together."

"Unfortunately, Governor Evers is starting to show his true colors," Vos said. "Only a Madison liberal would believe the only way to cut taxes is to raise taxes on others."

Evers said in his veto message he was troubled by the way the GOP-authored plan passed the Legislature and has opposed paying for the cut with surplus funds that aren't guaranteed in the next budget. 

"I am troubled and disappointed that this major fiscal policy was introduced and passed without bipartisan support and cooperation," Evers said. "The people of the State of Wisconsin expect and deserve for their leaders to work together, and I plan to do my part to ensure that happens."

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The dueling plans agreed in goal but not in how to get there.

Evers wants to provide tax relief by increasing the tax burden for manufacturers, which is almost nothing under the state's current tax credit program for them.

But Republicans say that funding mechanism would hurt job creators, and say using budget surplus money would be preferable. 

The fight over how to implement a tax cut will likely continue for months — the battle will resurface in the coming weeks as Evers and GOP lawmakers take up the state budget set to be introduced next week. 

Republican lawmakers will rewrite Evers' proposal over the following months, but Evers will have the final say on the budget, which he can reshape by using his veto powers to strike out provisions, dollar figures and individual words. 

The Republican plan would have given taxpayers $490 million in its first year and $338 million annually after that, according to the nonpartisan Legislative Fiscal Bureau. 

In the short term, Republicans would rely on a projected surplus of nearly $700 million to pay for the tax cut. 

Evers' plan would provide more than $440 million in tax relief this year to lower- and middle-class people while increasing taxes by more than $220 million on manufacturers.

Taken together, the plan would reduce state tax collections by about $219 million this year, according to the Evers administration.

In addition to the tax break for the middle class, Evers' plan would expand the earned income tax credit, which provides the working poor with tax breaks or cash payments. 

Evers has said his plan is fiscally sound because it has less of an effect on the state's bottom line.