>> DUELING TAX AND SPEND PRIORITIES OUT OF THE CAPITOL.

REPUBLICAN LAWMAKERS WANT THE USE NAERL THREE-QUARTERS OF THE PROJECTED 4 BILLION SURPLUS TO LOWER TAXES IN THE THIRD INCOME BRACKET.

THE PROPOSAL WOULD REDUCE THE TAX FROM 5.3% TO 4.4% FOR JOINT FILERS EARNING BETWEEN 18,$420 AND $405,550 PER YEAR.

THE PLAN WOULD ALSO EXCLUDE THE FIRST $150,000 OF A COUPLE'S RETIREMENT INCOME FROM TAXES.

WHILE THE STATE ASSEMBLY MOVED QUICKLY TO A PUBLIC HEARING ON THE PLAN, SENATE LEADERSHIP SAYS ONLY THAT THE PROPOSAL IS UNDER DISCUSSION.

BUT SENATE CO-SPONSOR OF THE TAX CUT, REPUBLICAN RACHEL CABRAL GUEVARA SAYS CONSTITUENTS ARE STRUGGLING TO MAKE ENDS MEET FOR SCHOOL SUPPLIES AND EVERYDAY PURCHASES.

>> ALL OF THESE LITTLE COSTS ARE ADDING UP, ADDING UP, ADDING UP.

WE ARE SITTING ON ALL THIS MONEY THAT THESE INDIVIDUALS HAVE EARNED AND PAID IN.

IT NEEDS TO GO BACK.

>> GOVERNOR TONY EVERS SAYS HE WOULD LIKE TO CONSIDER THE PLAN BUT HIS OFFICE HAS CONCERNS THAT WOULD JEOPARDIZE MORE THAN 2 BILLION IN FEDERAL RELIEF FUNDS, WHICH STATES ARE PROHIBITED FROM USING TO OFFSET TAX REDUCTIONS.

HE ALSO WANTS REPUBLICANS TO CONSIDER FUNDING HIS PRIORITIES LIKE CHILDCARE AND THE UNIVERSITY SYSTEM.

HERE TO UNPACK THIS PROPOSALAL, JASON STEI N FROM THE WISCONSIN POLICY FORUM.

THANKS FOR BEING HERE.

>> MY PLEASURE, THANKS FOR HAVING ME.

>> THE RETIREMENT INCOME EXCLUSION UP TO 150 THOUSANDED IS NEW.

WHAT IS YOUR REACTION IN THIS PACKAGE?

>> IT IS OBVIOUSLY SOMETHING THAT COULD BE A POPULAR PROPOSALAL.

IT IS A GROUP THAT HAS MANY VULNERABLE PEOPLE IN IT.

ALSO HAS MANY VOTERS IN IT.

THAT IS SOMETHING THAT IS ALWAYS IN LINE FOR POLITICIANS.

AT THE SAME TIME, WE ARE AN AGING STATE.

THAT MEANS THIS IS A VERY LARGE-TICKET ITEM.

ALSO WE ARE A STATE THAT IS TRYING TO RECRUIT YOUNGER WORKERS.

SO TO THE EXTENT WE PUT IN A BIG TAX BREAK FOR PEOPLE AT THE UPPER END OF THE AGE SCALE, THAT IS GOING TO BRING TENSION WITH TRYING TO RECRUIT WORKERS AT THE YOUNGER END.

>> SO IS IT SOMETHING THAT YOU THINK PIQUES THE GOVERNOR'S INTEREST?

>> YOU KNOW, IT IS SOMETHING THAT WOULD AFFECT PEOPLE ACROSS THE INCOME SPAN OR AT LOWER OR MIDDLE INCOMES, SO THAT MAY MAKE IT SOMEWHAT MORE ATTRACTIVE TO HIM.

AT THE SAME TIME I THINK THE SIZE OF THE PACKAGE IS PROBABLY BEYOND WHAT HE WOULD LIKE TO SEE, GIVEN HE HAD OTHER PRIORITIES FOR THE SURPLUS.

>> SO AS TO THE GOVERNOR, HIS OFFICE SAYS THAT THIS INCOME TAX REDUCTION PUTS IN JEOPARDY MORE THAN $2 BILLION OF FEDERAL RELIEF FUNDS BECAUSE THEY ARE PROHIBITED BEING USED THIS WAY AS TAX REDUCTION OFFSETS.

IS THAT STILL TRUE, TO YOUR KNOWLEDGE?

>> YOU KNOW, I THINK THERE'S A LEGITIMATE CONCERN THERE TO THE LEVEL THAT THE STATE SHOULD LOOK AT THAT CAREFULLY AND POTENTIALLY CONSULT WITH THE U.S. TREASURY ABOUT THAT.

AT THE SAME TIME WE DO HAVE A SURPLUS, WE HAD A SURPLUS GOING IN THIS BUDGET OF ROUGHLY 7 MILLION.

SO I THINK THE ARGUMENT COULD BE MADE THAT THE STATE HAD FUNDS IN ADDITION TO THE 2.5 BILLION WE RECEIVED FROM THE FEDERAL GOVERNMENT IN EXCESS OF THAT TO MAKE TAX CUTS.

YOU KNOW, AT THE END OF THE DAY I THINK THE MAIN QUESTION HERE FOR THE PUBLIC AND FOR ELECTED OFFICIALS IS, WHAT IS THE BEST AND HIGHEST USE OF THAT MONEY.

THEN WE CAN WORRY ABOUT, YOU KNOW, MORE MINOR TECHNICAL ISSUES LIKE THAT.

>> WELL, SPEAKING OF THE BEST USE OF THAT MONEY, THE GOVERNOR, OF COURSE, THINKS ONE OF THE BEST USES WOULD BE HIS BILLION DOLLAR CHILD CARE PACKAGE AND GIVING MORE TO THE U PACKAGE BUT THE GOP HAS ITS OWN PACKAGE, WHICH DOESN'T ADDRESS WITH MONEY; IT IS MORE LIKE -- >> REGULATIONS.

>> YEAH, THAT KIND OF THING.

THAT IS KIND OF STAND-OFF HERE.

>> SURE.

>> HOW DO YOU THINK THAT MIGHT RESOLVE?

>> AGAIN, I THINK THERE ARE ALL THE ELEMENTS HERE FOR THE TWO SIDES TO REACH SOME SORT OF DEAL.

THEY HAVE, QUITE FRANKLY, BEEN MORE ADEPT AT DOING THAT THAN SOME OF US THOUGHT THEY WOULD BE.

SO BOTH IN TERMS OF DIALLING DOWN THE TAX CUT, MAYBE DIALLING DOWN WHAT THE GOVERNOR WANTS FROM THE CHILD CARE FUNDING AND PERHAPS THE REGULATION SIDE FOR CHILD CARE.

THERE COULD BE A PACKAGE THAT COULD BRING THE SIDES TOGETHER AND LEAVE THE STATE WITH A HEALTHY BALANCE TO WEATHER ANY UNFORSEEN CHALLENGES THAT COME UP.

I THINK IT IS REALLY A MATTER OF POLITICAL WILL HERE.

I DON'T SEE ANY REASON WHY.

THERE IS NO IDEALOGICAL BRIDGE THAT CAN'T BE BOUND.

>> THAF IS WHAT WE SAY BUT IN TERMS OF THE PACKAGE THE SPONSOR SAYS IT WOULD SAVE THE AVERAGE TAXPAYER OVER $750 A YEAR.

WHAT ABOUT THOSE AT THE TOP OF THAT BRACKET .

TABQ.

>> AGAIN, THIS IS GOING TO BE A PACKAGE THAT IS GOING TO BE PRETTY FAVORABLE TO THOSE AT THE UPPER END.

IT WILL HAVE ITS BIGGEST EFFECT FOR THOSE THAT HAVE THE MOST INCOME SUBJECT TO IT.

OBVIOUSLY YOU CAN HAVE INCOME FOR MARRIED COUPLES ABOVE $$400,000.

THAT BEING SAID THIS IS STILL PROVIDING INCOME FOR LOWER OR MID TAXPAYER, PARTICULARLY IF THEY ARE RETIRED.

THIS IS MOVEMENT I WOULD SAY ON SIDE OF REPUBLICANS WHERE GOVERNOR EVERS HAD WANTED.

JUST NOT AS MUCH AS HE WOULD LIKE TO SEE.

>> IS IT YOUR SENSE THE SENATE LEADERSHIP IS NOT MOVING AS QUICKLY BECAUSE THEY WOULD LIKE TO SEE EVEN MORE TAX CUT S?

>> THAT IS POTENTIALLY TRUE.

I THINK THE ASSEMBLY HAS ALWAYS BEEN A MORE TOP-DOWN DRIVEN HOUSE THAT.

MAKES IT EASIER FOR LEADER SHIP TO PROPOSE THINGS.

IT'S ALWAYS BEEN THE PRACTICE OF SENATE LEADERS TO KIND OF SIT BACK AND WAIT AND SEE IF EVERYONE CAN GET ON THE SAME PAGE.

THEN THEY JUST MOVE TO THE HEAD OF THE PARADE AND START LEADING IT.

BUT WE WILL SEE.

>> WHAT KIND OF POSITION DOES THIS PUT GOVERNOR EVERS IN?

EVERYBODY LIKES A TAX CUT.

>> ABSOLUTELY.

THIS IS POTENTIALLY VERY, YOU KNOW, ATTRACTIVE TO A BIG VOTING BLOCK.

AT THE SAME TIME, HE'S HAD SOME MOVEMENT IN HIS DIRECTION, SO I THINK THERE'S POTENTIALLY AN OPENING FOR HIM TO COME TO THE OTHER SIDE AND SAY, WELL, YOU KNOW, THIS ISN'T WHAT I WANT BUT HERE IS SOMETHING THAT WOULD BE CLOSER TO SEE IF THE TWO SIDES -- THEY ALSO HAVE NOAH PARK OR AMERICAN FAMILY FIELD, BREWER STADIUM, WHERE THEY WILL NEED TO COME UP WITH A DEAL.

THAT POTENTIALLY WILL COST AS WELL.

I THINK HE'S GOT TO THINK ABOUT THE BIG PICTURE ABOUT WHAT HE NEEDS TO DO OVER THE NEXT YEAR AND COME UP WITH A COMPROMISE THAT FITS.

>> ALL RIGHT.