State budget hole now worst in history

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Wisconsin is now facing its worst budget deficit in history, according to Michael Morgan, secretary of the Wisconsin Department of Administration.

Morgan issued that statement in the annual DOA budget report issued Thursday.

In the report, DOA officials noted that the state will be facing a budget hole of $346.2 million in June - the end of the current biennial state budget.

Department officials say that the deficit will grow to around $5.4 billion by June 30, 2011 - the end of the next biennial state budget.

Morgan puts the blame for the deficit on the country's current economic problems which is causing a reduction in state sales tax collections.

Another reason for the big hole, according to the report, is requests by state departments and agencies for annual spending increases totaling more than $1.4 billion.

Gov. Doyle said Thursday afternoon he has ordered state agencies to reduce current spending by 2.5 percent in the remaining months of the current fiscal year.

He said that will generate about $20 million in savings toward the $346 million deficit now anticipated for the fiscal year ending June 30, 2009.

In another move, Doyle said that he was ordering immediate spending cuts and canceling $30 million in state grants.

Doyle also said he expects there will be up to 3,500 state jobs left unfilled between now and the end of the biennium, but he put no anticipated savings on that.

The governor said he "will try to avoid furloughs" of state employees.

"This is going to be a difficult time for all of us," said Doyle.

He said the state will sell 500 fleet vehicles and stop all employee bonuses for the current year as part of the savings program.

The governor said he will work with legislative leaders in the new session before deciding whether to call lawmakers into session in January to work out the deficit in the current fiscal year.

He suggested both the current deficit and the next biennial budget could be worked together.

Also, Doyle said he will push early for passage of the hospital assessment which is expected to net the state about $75 million for general fund purposes. He also endorsed the oil company excess profits tax he proposed in his last budget, but was struck down by Republicans.

Doyle said his first priority in the budget process is education and he will work to avoid any cuts there, but said that may not be possible. He said he did not want to pass the "burden" on to local governments, which would increase property taxes.

"The new budget numbers are disappointing, but not surprising given the state of the national economy," said Sen. Russ Decker, D-Weston, Senate majority leader.

Decker said that he agrees that the state has to tighten its belt and protect jobs.

"The best way out of this is to mirror the efforts at the federal level to stimulate the economy by protecting the jobs we have and creating new jobs. Growing our way out of this is the only way to move our state forward," said Decker in a released statement.

Assembly Republican Leader, Rep. Jeff Fitzgerald, Horicon, said now is not the time for the state to increase taxes.

"Moving forward, we simply cannot turn to struggling families and ask them to send more money to Madison," said Fitzgerald.

Fitzgerald also noted now that both houses of the Legislature are controlled by Democrats, Doyle (also a Democrat) will likely get everything he is asking for.

"While Gov. Doyle listed some new agency guidelines as steps to modestly reduce spending, his first legislative requests will unfortunately be tax increases. As Democrats control all aspects of state government, he will likely get his wish," he said.

Dick Wheeler is the owner of the Wheeler Report (www.thewheelerreport.com).

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