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Republicans and Gov. Evers want to end a business tax. Can they agree on how to do it?

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Pine Hill Farm Market in Watertown, WI.jpg

WATERTOWN (WKOW) -- Gov. Tony Evers said Tuesday he's confident his administration will find enough common ground with the Republican-controlled legislature this year to end one of the state's oldest taxes.

Businesses across Wisconsin pay the personal property tax on equipment such as furniture, equipment and fixtures. 

Republican lawmakers are circulating a bill at the Capitol that would eliminate the tax. Evers, who was visiting Watertown Tuesday, told reporters he also wanted to get rid of the tax and was optimistic the legislature will iron out the wrinkles that caused him to veto the bill in 2021.

"We should be able to get through that this session," Evers said. "There was some minor things that were of concern. It's my understanding they have been addressed, and so I would anticipate we will be in good shape there."

Detractors of the tax say it's unfair because businesses already pay a sales tax when purchasing the equipment. The Wisconsin Grocers Association is among the business groups lobbying for the tax to be eliminated.

"Those small, mom-and-pop retailers are gonna have to categorize, they're gonna have to track each one of these assets, and then pay tax on it every single year," Mike Semmann, the association's vice president of government affairs said. "That's something that we're hoping goes away pretty quick."

Republicans passed the bill in the summer of 2021 with support from several Democrats in the Assembly, including now-Lt. Gov. Sara Rodriguez.

Evers vetoed the bill. In his veto message, Evers said it was because lawmakers took a "haphazard" approach that didn't account for unintended consequences.

The Evers administration said because the bill's language extended the tax's elimination to utility taxes, which the administration estimated could cost the state tens of millions of dollars.

Rep. Dan Knodl (R-Germantown) is one of the bill's authors. In an interview Tuesday, Knodl said he was introducing the exact same language as the 2021 bill.

Knodl said he believed lawmakers could work with the Department of Revenue to address any lingering concerns.

"I'm asking, looking for if there's any very specific items that need to be addressed," Knodl said. "And I'm certainly willing to do that."

UW-Madison Economics Professor Steven Deller said another concern with eliminating the personal property tax was the revenue is currently one of the few ways local governments generate tax dollars.

While the Wisconsin Policy Forum noted in 2016 the tax doesn't bring in nearly as much money as it once did, thanks to a growing list of exempted items, it still generated between $200 and $300 million each year.

"It flows to public schools, it flows to counties, it flows to municipalities," Deller said. "If we were to eliminate that, how are we going to make those local governments whole?"

Knodl said lawmakers would be able to cover local government's losses by dipping into the state's unprecedented surplus of $6.6 billion.

The Germantown Republican, who's running for the Senate seat currently open following the retirement of Alberta Darling, said the big difference between now and 2021 is lawmakers are taking up the issue before crafting a new two-year budget.

Knodl said, this way, lawmakers can account for what local governments will need when rewriting Evers' proposed budget, which he'll present to the legislature next month.

"[Local governments are] guaranteed to be made whole," Knodl said. "The bill will eliminate the tax and will address that local communities will be backfilled."

While Evers said he was confident there'd eventually be an agreement on how to eliminate the tax, he indicated there could be hurdles lawmakers and the Department of Revenue would first have to clear. 

"I haven't seen the bill yet," Evers said. "So hopefully, the issues that were problematic are no longer problematic."

Capitol Bureau Chief

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