The House tax committee passed their omnibus bill on Monday, and similar to the Senate, it focuses primarily on policy items and has a small fiscal impact. The bill raises $864,000 in FY 2011 and $1.2 million in FY 2012-13.
The bill directs the Department of Revenue to conduct studies on some issues that are sure to get more attention in the next legislative session: tax reciprocity with Wisconsin, tax expenditures, and the fiscal disparities program.
It also includes the provisions requested by the administration to deal with the state’s serious cash flow problems, with some slight adjustments.
One of the few surprises came when a majority of committee members voted to remove the bill’s moratorium on city local option sales taxes. Cities have to get the state’s permission to collect local sales taxes. Most of local sales taxes approved in recent years were for infrastructure projects and required the approval of local voters. Some policymakers think that local option sales taxes increase disparities between cities with the ability to raise funds this way and other cities who do not (either because they have not gotten a local sales tax approved or they simply don’t have enough retail in their area to raise much revenue). Others argue that, given the recent cuts in local aids and other fiscal pressures on cities, they should be given more flexibility in how they raise revenues to fund local services.
The legislation is being debated on the House floor on Friday and will then head to a conference committee with the Senate to work out a compromise between the two bills.
This is the committee’s third major bill to pass this session. The first bill made $105 million in cuts to aids to local governments, and the second included investment credits and economic development provisions in what was dubbed the “job creation” bill.
Another proposal discussed by the Tax Committee passed this week as part of the Health and Human Services omnibus bill. As we previously reported, House members passed an amendment that provided funding for nursing homes and services that help the elderly and people with disabilities live independently by making two changes to corporate tax law.
It is unclear how much the picture has now changed because of the unallotment ruling. That outcome likely means the question is not yet settled as to whether the state will raise revenues as part of the budget solution.
-Nan Madden
