A letter from Assembly Republican leadership to Governor Scott Walker indicates that an agreement has been reached on the issue of transportation funding in the state budget. More additional money will be spent on transportation without more borrowing, but at the expense of not lowering income taxes by $203 million.

“The proposal you outlined yesterday is a positive step forward in our desire to find a long-term solution and we believe the leadership you have displayed has bridged the gap between our two houses,” the letter reads. “The Wisconsin State Assembly majority leadership has deliberated on your suggestions and accept your proposal.”

A second letter from Joint Finance Committee Co-Chair Rep. John Nygren, R-Marinette, to his counterpart Sen. Alberta Darling, R-River Hills, says that budget negotiations can resume in the committee. “In light of Governor Walker’s proposal, I believe that we should resume the Joint Finance Committee process and convene as early as next week to continue work on the remaining agencies and budgetary items,” Nygren wrote.

In the letter to Walker, the Assembly described the compromise that was reached with going into specifics. The governor’s proposal, according to the letter, “acknowledges that the state should not issue more transportation bonds without having a sustainable way to pay for that debt.”

“We believe this compromise utilizes our current resources wisely by taking all or a significant portion of the proposed income tax cuts from this budget and using the savings to provide funding for the transportation system,” the Assembly Republicans wrote.

The letter said while there was the possibility of no new transportation bonds being issued, that could change if the governor is correct and more transportation money is received from the federal government.

It was unclear how this would affect the Senate Republican proposal to eliminate the Personal Property Tax, a high importance agenda for the state’s business interests. The Senate Republican budget proposal released Tuesday would use the $203 million the governor proposed for the income tax reduction to eliminate the Personal Property Tax.

The Personal Property Tax has been an issue of special concern to small businesses in the state who have complained about the unfairness of the tax and also the cost of compliance. The tax is imposed by local governments on business equipment, machinery and furniture.

The Associated Press is reporting that Nygren said not using the $203 million for permanent income tax cuts would free that money for later use to lure Foxconn to Wisconsin.

The letter from the Assembly Republicans to Walker can be seen at the link.