GOP senators urge Thompson to scrap tax cut

Journal Madison bureau

Madison, Wis. Senate Republican leaders are urging their governor to scrap a proposed income tax cut for the wealthy to avoid cuts in services benefiting elderly and disabled people.

Senate Majority Leader Michael Ellis of Neenah and Sen. Joseph Leean of Waupaca, co- chairman of the Joint Finance Committee, are suggesting Gov. Tommy G. Thompson reconsider his budget priorities.

A letter sent to the governor Tuesday also was signed by Sen. Gary Drzewiecki of Pulaski. In the letter, they said they planned to stick with the existing tax structure.

In his budget, Thompson proposed a drop in the top income tax bracket, from the current rate of 6.93% to 6.87%. The tax cut would mean an annual loss of $25 million in revenue.

He also proposed Medicaid changes affecting elderly and disabled people. One would end pay to personal care workers serving both groups in their homes. The other would further limit the income and assets of a spouse whose mate is in a nursing home, so-called spousal impoverishment provisions.

"The tax cut is nice, but people weren't clamoring for an income tax cut," Leean said in an interview. He noted that in Thompson's eight years as governor, income taxes had been cut by 30%.

"When you balance that off against some of the elderly and the disabled who are going to suffer with the dip in personal care and the change in spousal impoverishment, it just seemed better to take the $25 million and apply it towards these two programs," he said.

Leean said he and his colleagues were hopeful Thompson might agree to restoring some services for elderly and disabled people because they had proposed a way to finance those services by dropping the tax cut.

"We can't restore them all the way," he said.

Governor's Aide Responds

The suggestion drew an ambivalent response from Administration Secretary James Klauser, Thompson's top aide and budget architect.

"The governor had indicated he favors retaining the spousal impoverishment program as it is, if it's fiscally possible," Klauser said. "So the governor certainly is not adverse to retaining the current levels of the spousal impoverishment program."

True, the administration already has achieved major tax cuts, he said.

"But I think the governor feels it's desirable to keep lowering tax rates, so that spending will be curtailed in future years as well as this one," Klauser said.

Proposed Changes

Thompson's proposed Medicaid changes would eliminate benefits that pay the state's 6,000 personal case workers. The governor wants to take the $15.4 million now spent on those salaries and give it to counties as part of community aid they receive to finance local social services. In doing so, the state would forego $23 million it receives from the federal government as matching money to cover Medicaid costs.

Spouses with mates in nursing homes or adult day care under the Medicaid program also would have a tougher time under the governor's budget. The law now lets the spouse who remains at home keep the house and some of the couple's assets, while Medicaid pays the nursing home or day care bills.

Thompson's budget would tighten the income limits for a spouse, reducing the income limit from the $21,798 now allowed to $19,680. Assets also would be targeted. Now a couple's assets above $72,660 are tapped for a spouse's medical care. The budget proposes that a couple's assets be cut to either half of their holdings or a new minimum of $14,532, whichever is greater.

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