Governor and legislative leaders outline new deficit reduction plan

Additional cuts in state programs and a mix of other tax and fee adjustments – but no expansion of the sales tax base – were proposed yesterday by Gov. Jim Doyle and legislative leaders. Joint Finance Committee Co-Chairs Mark Pocan and Mark Miller joined the governor at a May 21 news conference to outline steps they propose to resolve $1.6 billion in additional state revenue shortfalls for the upcoming biennium projected on May 11 by the Legislative Fiscal Bureau.

Highlights of the plan include an additional 5% state agency budget reduction and 2.5% cuts in school aids and shared revenue payments. Other steps include adjustments to the Medicaid/hospital assessment, reallocation of cell phone fees, deferral of tax credit expansions and debt restructuring.

Doyle said the 5% agency budget reductions will be across-the-board and predicted that 1000 state employees are likely to be laid off and that another 400 are at risk if represented employees refuse to reopen labor contracts and roll back a planned 2% pay increase.

The State Bar has joined with other professional associations to resist rumored plans to expand the sales tax to include various services, including legal services. State Bar President Diane Diel has also expressed the Bar’s opposition to such a step.

“My priorities in addressing this historic budget deficit are clear – first, I am not proposing any new taxes,” Doyle said. “Second, we must make deep cuts to state government spending. Third, we must preserve our essential services such as education and public safety.”

The following chart outlines the fiscal impacts of the proposed budget adjustments:

Continue to monitor Wisbar and visit the Bar’s Government Relations page for updated budget information.