- Associated Press - Wednesday, January 18, 2017

MADISON, Wis. (AP) - Wisconsin’s state budget got a burst of good news Wednesday with news that tax collections will be nearly half a billion dollars more than estimated two months ago.

The improved outlook from the nonpartisan Legislative Fiscal Bureau will form the foundation of Gov. Scott Walker’s two-year spending plan and make it easier for the Republican to deliver on his promises as he looks ahead to running for a third term in 2018.

The rosier outlook, combined with less spending than previously anticipated, should be more than enough to wipe out a projected $693 million shortfall based on state agency spending requests.

“While this is certainly good news, our budget priorities will remain the same,” Walker said in a statement. “We will increase funding to public education at all levels, continue tax relief, and reward work.”

Walker has pledged to significantly increasing funding for K-12 schools, cut tuition for University of Wisconsin undergraduates and spend more money for worker training. He’s promised to do all that, and plug a nearly $1 billion transportation budget shortfall, without raising taxes.

Walker is set to release his budget early next month. The spending plan, which runs from July 1 through June 30, 2019, affects nearly every person’s life in the state. It sets how much gas costs, when hunting season begins and ends, who is eligible for state-funded health insurance through Medicaid, and how much income, sales and property should be taxed.

The Fiscal Bureau report said the state will end the current fiscal year with a net balance of $362 million, which is $322 million above a prior report issued by Walker’s administration in November. That is fueled by about $96 million in higher revenues, $226 million less in state spending.

Over the two years of the next budget, the state is projected to collect about $391 million more than expected in November.

Democratic Senate Minority Leader Jen Shilling, of La Crosse, said budget priorities continue to favor corporations over working families.

“Rather than handing out taxpayer subsidies to companies that outsource jobs, we need to focus on expanding economic opportunities and growing our middle class,” she said.

Earlier Wednesday a coalition of liberal advocacy groups urged Walker and the Legislature to repeal a manufacturing tax credit and increase taxes on capital gains to free up $900 million in the budget.

The coalition - A Wisconsin Budget for All - said the nearly $1 billion in tax increases could be diverted to public schools, health care and worker training programs.

Republicans have championed the tax cuts the groups are pushing to undo, making it unlikely the proposals will find much traction.

Given the unlikelihood that Republicans will embrace the proposal, the goal is to “begin a different kind of conversation,” said Ken Taylor, executive director of Wisconsin Council Children and Families.

The coalition called for the repeal of a manufacturing and agriculture tax credit program that has been phased in over the past four years and will cost an estimated $569 million over the next two years. It also wants to increase taxes on investment income known as capital gains, arguing that the way taxes are structured now unfairly benefit the wealthy. Taxing capital gains like ordinary income would generate $328 million over two years.

Groups in the coalition represent a variety of church leaders, teachers, the elderly, social workers, labor unions, nurses and others. They include the state chapter of the Service Employees International Union, the statewide teachers’ union Wisconsin Education Association Council, the Coalition of Wisconsin Aging Groups, the Wisconsin Council on Children and Families, Citizen Action Wisconsin and the Wisconsin Democracy Campaign.


Follow Scott Bauer on Twitter at https://twitter.com/sbauerAP and find more of his work at https://bigstory.ap.org/content/scott-bauer

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