Doyle says state budget hole could be $5 billion

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Gov. Doyle said Tuesday the state is facing the prospect of a $5 billion deficit in the budget legislators will take up next year for the two-year period starting next July 1.

For the current year, which ends June 30, 2009, Doyle said there is potential for up to a $500 million deficit.

Doyle said preliminary figures show the 1.5 percent increase in state revenues projected in February for the current fiscal year are now a negative 2.5 percent, resulting in about a $500 million blow to the General Fund.

"We are looking at a deficit that will exceed $5 billion," said Doyle of the next budget cycle.

Doyle said there could be further decreases in revenues next 2010 before there is a "modest" turnaround in the state's fiscal situation. He said for state agencies a "flat line is an increase" in appropriations.

Doyle said he has not determined yet whether the Legislature will have to take care of current budget problems before the next biennial budget is approved or whether the current fiscal year problems can be worked out in that budget.

He said there is "no doubt there will be reductions in jobs."

Look back to the early 1980s and you'll find state government faced a similar deficit, and Dale Knapp, Research Director for the Wisconsin Taxpayers Alliance, says a couple of solutions were found.

"One was a 'temporary' increase in the sales tax from four percent to five percent," said Knapp That temporary increase became permanent.

"The other thing that did was a one year, ten percent surcharge on both corporate and personal income taxes," he added.

Neither solution was popular, contributing to then Gov. Tony Earl's loss to Tommy Thompson.

So what's left? Forty to 45-percent of the state budget is aid to school districts.

The second largest state program, Medicaid, appears to off the table, at least as far as Doyle is concerned.

Knapp says that leaves legislators and the governor with few options.

"It's going to be an uphill battle to make the budget balance, but we'll get through it." said Sen. Russ Decker, D-Weston, Senate majority leader.

Decker said passing the oil assessment and the hospital assessment "won't be a problem" for Senate Democrats. They have supported both in the past.

"I think it's a good way for us to bring in some federal money to balance out the books," he said.

Despite the deficit Decker said that the Legislature will try to put through Health Wisconsin - a universal health care plan that Doyle is opposed to.

"The Senate is still working on it and Sen. Jon Erpenbach, (D-Waunakee) has some ideas on how to make it even better."

Decker said he doesn't see insurance reform and regulation or addressing the physician shortfall as part of Healthy Wisconsin. He said the Senate will be able to pass autism and cochlear implant coverage since they have passed them in the past.

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