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Wis. Senate pass budget that removes new oil tax

MADISON, Wis. (AP) — Taxes on capital gains would go up by nearly half a billion dollars over the next two years, but there would be no new tax on oil companies under the state budget that passed the Wisconsin Senate Wednesday night.

No Republicans voted for the plan and one Democrat, Sen. Jim Sullivan of Wauwatosa, voted against it. It passed 17-16.

Republicans assailed the Democrats' plan for the way it would plug a $6.6 billion budget hole, especially the removal of all capital gains tax exemptions. That would raise taxes $485 million over the next two years. It was not included in the budget passed by the Assembly on Saturday.

"It's nuts. This is silly," said Sen. Ted Kanavas, R-Brookfield, of the capital gains tax. "It's a complete, huge mistake. People will invest, they just won't do it here."

Democrats defended their budget plan, saying Republicans failed to come up with an alternative. They also touted the fact that there is no general sales or income tax increase or higher payroll taxes.

"This is a bold and innovative budget during trying times," said Senate Majority Leader Russ Decker, D-Weston. "We think we put together a pretty good progressive budget for the state of Wisconsin and working families."

Because the budget passed the Senate and Assembly in different forms, a special committee of lawmakers will have to meet to reach a compromise. Those meetings could begin as soon as Thursday.

Gov. Jim Doyle, a Democrat expected to seek re-election next year, objected to a couple pieces of the budget passed by the Senate that differed from what the Assembly approved on Saturday.

Doyle said he preferred lowering the capital gains tax exemption from 60 percent to 40 percent, as he proposed. The governor also wants to keep the oil company tax as he proposed it.

Doyle's plan was to tax oil companies to raise $260 million over two years to help balance the budget and pay for road projets. His plan included a ban on those companies passing along the cost of the tax to customers at the pump.

Doyle, a former three-term attorney general, reiterated Wednesday that he believed it would be constitutional based on a 1988 U.S. Supreme Court decision that said Puerto Rico could regulate fuel prices. However, that decision did not specifically address the provision in Puerto Rico's law barring companies from passing the tax on to drivers.

Opponents point to a 1983 New York Supreme Court decision that a state law prohibiting oil companies from passing along a similar tax violated the U.S. Constitution's commerce clause, which regulates trade between states.

The Senate also voted to eliminate a budget provision to allow illegal immigrants to receive a special card that would allow them to legally drive on Wisconsin's roads. Doyle had not proposed that and would not comment on it Wednesday.

The driver's card would have made Wisconsin the only state other than Utah to offer such an option. The idea was added at the last minute by the budget-writing committee and approved by the Assembly.

The Senate also voted to remove a provision Doyle wanted to allow children of illegal immigrants to pay in-state tuition at Wisconsin's colleges and universities.

Voces de la Frontera, an advocacy group based in Milwaukee, has lobbied for years in support of in-state tuition for immigrants and the creation of the driver's cards.

"Latinos over the last two elections have shifted their votes toward Democrats with the expectation that it would represent a platform of equality for Latinos and immigrants," said Christine Neumann-Ortiz, the group's director.

The Senate agreed with the Assembly to remove from the budget a change in the state's liability laws to make it easier to collect damages when more than person is at fault. That was pushed by Doyle and trial attorneys but opposed by the business community.

The spending plan includes $2.1 billion in tax and fee increases, raises cigarette taxes 75 cents per pack and imposes a new 75-cent monthly fee on all phones. It also slashes the budgets of most state agencies by 6 percent, rescinds a 2 percent pay raise, calls for up to 1,400 to be laid off and requires state workers to take 16 unpaid days off.