No increase in revenue estimates forces tough budget decisions
By Patrick Marley And Jason Stein Updated: 12:38 p.m.
Madison — State lawmakers can't count on any additional money to bail them out of budget cuts proposed by Gov. Scott Walker, the Legislature's nonpartisan budget office reported Wednesday.
For months, the governor and fellow Republicans who run the Legislature have repeatedly said they believed an economy revved up by their tax cuts would allow the state to take in more money over the next two years than originally projected. That would have helped them to mitigate cuts proposed by Walker of $127 million for K-12 schools and $300 million for the University of Wisconsin System over two years.
But the nonpartisan Legislative Fiscal Bureau reported Wednesday that it believed the initial estimates would hold and there would be no May flowers for elected officials.
Expressing disappointment, Assembly Speaker Robin Vos of Rochester said Republican lawmakers were committed to reversing Walker's cuts to public schools even without new money.
"For those of us who have been crossing our fingers and going to church on Sunday, it didn't work," Vos said of the flat projections. "We'll figure a way to make it all work out in the end."
Like Vos, other top Republicans said they were committed to putting more money to K-12 education, but they were less certain about what they would do with the university system. Rep. John Nygren (R-Marinette), a co-chairman of the budget-writing Joint Finance Committee, said he was optimistic the $300 million cut could be lowered, but said it probably could not be erased entirely.
Vos spoke at a conference of the Transportation Development Association. He told those in attendance that lawmakers would not raise the gas tax, but said they may increase vehicle registration fees to reduce the record $1.3 billion in bonding for transportation that Walker is seeking.
Nygren and Sen. Alberta Darling (R-River Hills), a co-chairwoman of the budget committee, said they were considering registration hikes of $25 to $35 a year. The current fee is $75 for automobiles and more for some light trucks.
A $25 fee increase on automobiles and light trucks would raise $204 million over two years.
Vos, Darling and Nygren said they hoped to reduce transportation bonding by about $300 million. That would put it in line with the level of borrowing lawmakers approved for the current budget two years ago.
Vos told the transportation group he eventually wants to allow tolling in Wisconsin — something that would require federal approval for many highways — and supported including money in the state budget to study the issue.
Surplus went to tax cuts
Only last year, the state was looking at a budget surplus. Republicans used that surplus to add to a series of property and income tax cuts that they have passed since 2011 and are now proposing the cuts to state programs in part to ensure that the state can keep its spending within the new limits of its tax revenue.
Democrats immediately highlighted that fact, with the party's members on the Joint Finance Committee saying the state should avoid the proposed education cuts by accept federal money to offset state health care spending, halting the phase-in of tax breaks for manufacturers, and not expanding state money for voucher programs for private K-12 schools.
"Earth to Walker: It's not working. We know it's not working," said Sen. Lena Taylor (D-Milwaukee).
Walker was in Milwaukee for a ceremony for law enforcement officers on Wednesday, but an aide said he would not meet with media to answer questions.
But Walker spokeswoman Laurel Patrick said the state would end the year in June with a balanced budget and that the 2015-'17 budget would improve the state's financial situation.
"Wisconsin will end the biennium with a balanced budget and our proposed budget will result (in) a near $500 million surplus," Patrick said. "In the next couple months, we will continue to work with legislative leaders to protect public school funding and ensure it remains whole."
The details of the short memo from the Legislature's budget office did little to dispel its pessimistic conclusion.
Bob Lang, the veteran head of the fiscal bureau, said that tax revenue for this fiscal year are actually running slightly behind projections.
During this fiscal year ending on June 30, tax revenue was expected to grow by 3.7% and so far it is growing at a rate of 3.4%, putting it roughly $60 million behind as of the first nine months of the fiscal year, Lang reported.
That's a modest decrease in the context of the $14.4 billion that the state expects to take in this year. But meanwhile the national economy now appears set to grow at a slower rate than originally expected over the 2015-'17 budget, Lang wrote.
That means lawmakers will have to stick with Walker's cuts or find others, raise taxes or fees or use borrowing and accounting tricks or some combination of those approaches. Republican leaders have stood firmly against raising taxes, leaving them few sustainable options except to make cuts.
Assembly Minority Leader Peter Barca (D-Kenosha) told the Transportation Development Association the revenue estimates show the GOP approach to budgeting isn't working.
"This is tea party budgeting is not working for Wisconsin," Barca said.
The budget development comes as the Joint Finance Committee moves into high gear and Walker prepares to run for the presidency. The committee is expected to complete its work in May, and then hand the budget over to the Assembly and Senate for final votes.
Overall, the state is left about where longtime budget watchers expected it to be for many months: in a challenging spot that is worse than the 2013-'15 budget but not as bad as Walker's first 2011-'13 budget. The difference is that Wisconsin now is having to cut key parts of the state budget amid a slow economic expansion, rather than four years ago when the state was doing so as it came out of a deep recession.
Under Wisconsin law, Walker has some of the most expansive veto powers of any governor in the nation, and he can use those to reshape whatever spending plan lawmakers ultimately give him.
Don Walker of the Journal Sentinel staff contributed to this report from Milwaukee.
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