A Wisconsin finance panel has approved a budget proposal that would cut the state’s fuel tax by a penny per gallon to 31.9 cents.

The Legislature’s Joint Finance Committee, however, dropped a plan by Democratic Gov. Jim Doyle to increase vehicle registration fees by $10.

Despite the panel’s decision to trim 1 cent off the fuel tax, the budget bill wouldn’t eliminate the annual automatic “indexing” feature that ties the fuel tax rate to inflation. This year, the rate increased 0.8 cents a gallon.

The tax cut would lower the 3-cent tax to clean up polluted land to 2 cents a gallon while leaving highway spending untouched, the Milwaukee Journal Sentinel reported.

The Republican-led panel also approved earmarking $38 million to study rebuilding the Zoo Interchange and part of U.S. 45, from West Allis, WI, to Germantown, WI, in addition to $29 million for preliminary engineering on reconstruction of Interstate 94 from Mitchell International Airport in Milwaukee to the Illinois line.

In addition, lawmakers killed nearly half of the $486 million in transfers that Doyle sought from the transportation account – made up of fuel tax and other fees – to the general fund. Many of the rejected transfers would have gone to education.

The full Legislature will take up the budget – AB100 – later this month before forwarding it to the governor.