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How about a little more to bury Aunt Mildred?
Hiring a private investigator to trail a cheating spouse could cost a few bucks more; so could taking the dog to the vet or hiring a public relations firm to put a happy face on your next crisis.
As Wisconsin faces an unprecedented $5.4 billion budget hole through June 2011, legislators and the governor will be considering a broad range of new moneymakers for the state, lobbyists and experts said.
The suggestions are likely to go beyond just raising income or sales taxes, to a host of fee increases or targeted tax increases on individual products or services currently exempt from the sales tax.
“We have to take a position that everything’s on the table,” said Brandon Scholz, a lobbyist for the Wisconsin Grocers Association.
“We have to consider that somebody’s going to put on the table a plastic bag tax of
25 cents” until it’s determined that there won’t be such a tax, Scholz said. “We have to assume there will be a bottle deposit fee until we’re told there’s not. We have to assume there will be a soda tax until we’re told there’s not.”
A soda tax proposal was introduced by Sen. Mark Miller, D-Monona, in the last legislative session. While the measure ultimately failed, it gained bipartisan support. An aide to Miller said the senator likely won’t reintroduce the legislation next year, but the state’s dental association will be pushing it, and opponents say such a tax could be slipped into the state budget bill.
The projected shortfall — the largest in state history — has already prompted Gov. Jim Doyle to order state agencies to cut their budgets 2.5 percent now and to plan for at least 10 percent reductions in their spending requests for the fiscal biennium starting July 1.
He also has said he’ll revive plans to impose new taxes on hospitals and oil companies to generate a combined $600 million annually.
Doyle has raised the specter of general sales and income tax increases, though he said he wants to avoid them. But in a meeting with the State Journal last week, he said he is also considering lower-profile tax and fee increases.
“We’re going to look at those, but I’ve always taken the view that you’d better be able to justify a fee based on the cost of the services provided,” he said.
If lawmakers conclude new revenue is needed, history suggests they’ll be more inclined to enact a series of small tax and fee increases first.
In the last session, the Legislature and Doyle raised taxes and fees by $763 million in the two-year budget that ends June 30.
As a consequence, you’re now paying more for cigarettes, to register your vehicle and boat, to obtain official records such as birth, death and marriage certificates, have your clothes dry-cleaned and to apply to the University of Wisconsin System, among other items.
“There hasn’t seemed to be a backlash” from those increases, said Mordecai Lee, a professor of governmental affairs at UW-Milwaukee and a former Democratic state lawmaker.
Such increases could easily double to $1.5 billion in the next budget, Lee said.
Senate Majority Leader Russ Decker, D-Weston, said Democrats prefer first to close a state tax loophole that allows some state companies to shift their revenues to out-of-state subsidiaries to avoid paying state income taxes. But closing the so-called “combined reporting” loophole will only raise about $90 million annually.
Incoming Assembly Speaker Mike Sheridan, D-Janesville, said tax and fee increases are “something we’re going to have a lot of discussion about. Raising taxes and fees should be a last resort.”
Certain services
Lawmakers could quickly fill the budget gap with sweeping tax changes if they wanted to.
The state could raise $4 billion or more annually, for example, by taxing certain services currently exempt from the sales tax, reinstating the estate tax, increasing income taxes, eliminating itemized tax deductions, taxing oil companies and increasing vehicle registration fees, among other proposals, according to a recent report by liberal groups the Institute for Wisconsin’s Future and the Wisconsin Council on Children and Families.
Jack Norman, the institute’s research director, said the group believes some of the tax increases are needed to raise money to pay for state programs.
“It’s the recession that creates a political opening here,” Norman said. “I think there’s great receptivity on the part of legislators, both Democrats and Republicans, because of the economy.”
But George Lightbourn, executive vice president of the conservative Wisconsin Policy Research Institute, said the public isn’t ready for tax increases and said Doyle and the Legislature should pass a budget that uses existing tax revenues.
“They didn’t get elected to come down to Madison to do business as usual,” Lightbourn said of the Legislature. “And at a time families are struggling, is that the time to look at tax increases?”
Veterinarians ready
Nonetheless, Kim Brown Pokorny, executive director of the Wisconsin Veterinary Medical Association, said her members will be ready to fight any proposed extension of the sales tax to veterinary services. Any added expenses will be passed on to the consumer, she said.
While many pet owners wouldn’t be affected, it would make a difference for others, said Dr. Elizabeth Stokes, owner of Odyssey Veterinary Care in Fitchburg.
“If this vaccine or check up is going to be $40 I’ll do it, but if it’s $50 I won’t,’” Stokes said of some customers. “For people who are struggling financially and have to worry about their discretionary incomes, they’ll be more likely to suffer.”
Grocers are monitoring the possibility that taxes on soda, or increases in the taxes on beer and liquor will be proposed.
Dr. Michael Kaske of Twin Lakes, president of the Wisconsin Dental Association, said his group would again seek legislative backing for its proposal to tax soda by two cents a can. The group wants to raise $84 million annually through the tax to pay for dental services for poor people, but Kaske acknowledged that if the tax is enacted the revenue it raises could be used for any purpose.
Rep. Terese Berceau, D-Madison, said she has plans to reintroduce a bill to increase the beer tax.
“There are more legislators who will be willing to take a look at this,” she said.
Tim Metcalfe, co-owner of Metcalfe’s Sentry in Madison, said such tax increases would lead to higher prices on those or other products.
“In the end, and maybe not immediately, taxes will increase prices and have the potential to cost jobs,” Metcalfe said.
TAX AND FEE OPTIONS
Facing a $5.4 billion budget shortfall, lawmakers could consider dozens of tax and fee increases to help close the gap. Some of those options, and the amount they could raise per year:
SOURCES: Institute for Wisconsin’s Future, Wisconsin Council on Children and Families, State Journal research
Some tax breaks might have to wait
While lawmakers might consider tax and fee hikes to help close a projected $5.4 billion budget shortfall, they may also have to eliminate or postpone tax deductions they’ve already enacted, Gov. Jim Doyle told the State Journal recently.
In the 2007-09 budget, Doyle and the Legislature passed a series of tax cuts scheduled to go into effect as early as next year. They include deductions for:
“We’ve made some big tax reductions in this state, really targeted at things that really matter, but we have to put everything on the table,” Doyle said.
JS wrote on Dec 1, 2008 4:37 PM: