Wisconsin state budget (2008-2009)
- 1 Impact of budget woes
- 2 Budget background
- 3 Ideas about why the crisis occurred
- 4 Proposed actions
- 5 Budget transparency
- 6 See also
- 7 External links
- 8 Additional reading
- 9 References
The Wisconsin state budget operates on a biennium, covering two fiscal years at a time, and is decided by the state's governor. Wisconsin was facing a budget gap estimated at $5.9 billion, or 17 percent of the biennial budget. In order to address the state's low revenue and increasing budget deficit Gov. Jim Doyle emphasized, "This is clearly a time when we will have to make very deep cuts. This budget makes the largest cuts we’ve ever seen." However, Gov. Doyle said that despite necessary budget cuts education, health care, public safety and the state's job market must be protected from severe cuts that could endanger state programs. In early 2009 the legislature passed a budget repair bill that took $700 million off of the projected shortfall by raising taxes on some multi-state corporations, taxing hospitals and applying the 5-cent sales tax to Internet downloads and specialized computer software. The governor's proposal for FY 2010 called for a combination of budget cuts, approximately $2 billion in tax increases and $2 billion in federal stimulus funds in order to balance the budget. At the end of the 2010-2011 biennium the governor said that he expected not just to have eliminated the deficit but to have a positive balance of $270 million.
For the first time in approximately 30 years, state lawmakers finalized the state budget before the June 30 deadline. On June 29, 2009 Gov. Doyle signed into law a $62.2 billion budget with several cuts and tax increases to help close the state's budget deficit. Some of the cuts included a five-to-ten percent decrease in funding for state agencies, 16-day furloughs and the potential layoff of 1,400 state employees. Some of the tax increases included a 75-cent addition to the cigarette tax, a 75-cent fee every month for anyone who owns a cell phone, land line, or other device that can call 911 service and higher income taxes. The state sales tax, however, would not increase.
Impact of budget woes
- See also: State budget issues, 2009-2010
- Under the governor's budget plan the University of Wisconsin-Milwaukee would take a $19.8 million budget cut over the next two years. The University would account for 11 percent of the total $174 million budget reduction to the state university system. The biggest cut - $63.4 million - came from the state's public flagship university, UW-Madison. UW-Parkside's cut totals $3.4 million over two years, and UW-Whitewater would slash $7.5 million.
- On February 19, 2009 Gov. Doyle approved imposing a 5 percent sales tax on a number of digital goods - including music, ringtone and video game downloads - as part of a bill aimed at narrowing the state budget deficit. The new tax would go into effect October 1. The tax was expected to raise about $10.9 million for the state between 2009 and 2011.
- Wisconsin’s unemployment rate for January 2009 jumped to 7.6 percent, up from 5.8 percent in December 2008 and 2.7 percentage points higher than the January 2008 rate of 4.9 percent, according to the Wisconsin Department of Workforce Development.
- In the FY 2010 budget Gov. Doyle proposed a 75 cent per pack tax increase on cigarettes. The tax was expected to generate about $290 million of revenue over the next two years.
- The governor's FY 2010 spending plan would increase gun background check fees from $8 to $30. The FBI runs background checks on long rifle buyers in Wisconsin. The state Justice Department handles handgun checks through a hotline for dealers. The fee had not been changed since 1991.
- See also: Wisconsin state budget
Wisconsin operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year; however, the biennium begins July 1 of odd-numbered years. Agency budget requests are submitted in September of even-numbered years. During the following months, the governor meets with the departments and agencies to hear their budget proposals for the following fiscal year. Following the hearings the governor issues a budget recommendation for the upcoming fiscal year to the legislature. Both the State Assembly and the Senate are required to make any necessary changes or adjustments to the budget until the bill is passed in both houses. Although it is roughly estimated that the budget process end by July 1, the beginning of the next fiscal year, the legislature has generally not completed work on the budget by June 30 of the odd-numbered year as required by law in recent years. When the legislature passes the bill the governor can approve of the bill as a whole, veto the entire bill or execute line-item vetoes.
The following table provides a history of Wisconsin's expenditures and gross domestic product (GDP).
|Fiscal year||Expenditures (billions)||GDP (billions)|
- NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.
Ideas about why the crisis occurred
- The total of delinquent taxes owed state government rose about 27 percent from 2007 to 2008, going from $800 million to $1.03 billion on July 1, 2008, according to Revenue Department figures. Of the $1 billion owed, $204 million involved accounts that were more than 9 years old.
- From December 2008 to January 2009, total Wisconsin non-farm jobs decreased by an estimated 87,900 to 2,755,600. Private sector jobs shrank by 72,500. Trade sector jobs fell by 17,600 over the month, while government 15,400 jobs and manufacturing jobs decreased by 13,500.
- For some areas of Northern Wisconsin, the winter months prove to be businesses' only form of revenue, particularly for the tourism sector when a lot of people travel to go hunting. The city of Hayward, for example, collected $130,349 in room tax in 2008, well below 2007’s record of nearly $140,000.
- According to the Department of Revenue, as of January 2009, income tax revenue fell 10 percent as compared to January 2008. General sales and use was at $379 million compared to 2008 at $387 million, a 2.1 percent drop; corporation and franchise income fell a reported 245 percent from $13 million in 2008 to -$19 million; cigarette taxes increased 67.6 percent from $27 million in 2008 to $46 million. In total, January 2009 saw a 9.5 percent decline in tax revenue as compared to January 2008.
Governor Jim Doyle
For fiscal year 2010 Gov. Doyle proposed a total of $1.7 billion in tax hikes for the next two years. The governor's tax proposals included a 75 cent per pack increase in the state cigarette tax, a higher income tax on married couples making more than $300,000 a year, a tax on oil companies and a range of complex tax increases on corporations that did business in states besides Wisconsin. These tax proposals would be in addition to the FY 2009 budget repair approved taxes on multi-state corporations that were estimated to produce $215 million in revenue over two years. In addition to tax increases, the budget recommendation relied on $2 billion in federal stimulus funds.
Gov. Jim Doyle said that the various business tax increases in his latest budget proposal would help eliminate any steep cuts in state educational, university, police and health care programs. "I'm not prepared to cut the schools and cut the universities," said Doyle.
Wisconsin Republicans said that Gov. Doyle's budget recommendation relied too heavily on the increase of taxes and did not do enough to create new jobs or cut spending in government operations. The $63 billion FY 2010 two-year budget being considered by the legislature would increase spending 7.7 percent over the next two years. Sen. Alberta Darling said that with the current budget proposal there would not be enough money to balance the budget once the federal stimulus funds ran out. Rep. Robin Vos said that although there were not any increases to income or sales tax, "If you live in Wisconsin, under this budget, you will pay higher taxes," he said. In addition to tax increases Gov. Doyle added a “prevailing wage” provision, which would mandate what developers pay in wages. This, said Mark Jefferson, Executive Director of the Republican Party of Wisconsin, would hurt job creators looking to employ. “While employers shut their doors and folks lose their jobs, Governor Doyle should be looking for incentives to create jobs and put Wisconsinites back to work instead of making it more expensive for employers to hire our workers and do business in our state,” said Jefferson.
Democratic lawmakers in Wisconsin said that they planned to use use the 2009-2011 budget and federal stimulus money to add and keep jobs. Assembly Majority Leader Tom Nelson said Wisconsin’s budget crisis was so intertwined with the country’s economic crisis that when the nation’s problem was fixed, the state’s would be, too. Nelson added, “We know the budget deficit is largely cyclical” and, therefore, he proposed that the federal stimulus money be used to patch the shortfall in state revenue and improve Wisconsin’s human capital by investing in education and its physical capital by investing in roads, bridges and schools. In March, Speaker Mike Sheridan and Senator Russ Decker issued a proposition to repeal the scheduled raise for the next session starting in 2011. Sheridan noted that eliminating the pay raise would save the state $314,000 over three years. "In the face of these historic economic and fiscal challenges, we must find ways to cut costs and save Wisconsin taxpayer dollars," said Sheridan.
Economic stimulus package
Wisconsin was expected to receive $3.8 billion from the $787 billion dollar economic stimulus. All told, the federal stimulus plan would create or save 70,000 jobs in Wisconsin, based on White House estimates.
According to preliminary reports, Wisconsin was expected to receive:
- $1.2 billion towards Medicaid
- $107 million for the Clean Water State Revolving Fund
- $529 million for highway funding
- $81 million for transit
- 27 million for homelessness prevention
- $55 million towards the state energy program
- $144 million towards weatherization
- $9 million towards Head Start
- $717 million towards the education stabilization fund
- $180 million towards Title I education for the disadvantaged
- $8 million for education technology
As of 2009, Wisconsin had no government-sponsored state spending database. As mentioned below, Milwaukee residents had some level of transparency, thanks to the independent transparency site hosted by Citizens for Responsible Government (CRG).
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State database||Searchability||Grants||Contracts||Line item expenditures||Dept./agency budgets||Public employee salary||Exemption level|
Economic stimulus transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.
- Wisconsin was expected to receive an estimated $2,495,140,902.
Support for creation of the database
State Representative Bill Kramer announced his intention to re-introduce a comprehensive transparency bill to the Wisconsin State Legislature.
Independent transparency sites
The Citizens for Responsible Government (CRG) group sponsors the Government Accountability in Spending Project, a movement to place all of Wisconsin’s government spending online in a searchable database format. As of 2009, the group was focusing on the Milwaukee area, and had a database of agency expenditures and vendors. Thanks to CRG efforts, information from the Milwaukee Public Schools was available. As of September 15, 2008, the Milwaukee Area Technical College District financial data had been placed online.
Public employee salary information
- See also: Wisconsin state government salary
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Wisconsin Policy Research Institute
- Lucy Burns Institute
- Taxpayers Network Incorporated
- Wisconsin Department of Administration
- Wisconsin Executive Budget, 2007-2009
- State Contract Information
- Citizens for Responsible Government Network
- Government Accountability in Spending Project
- Citizens for Responsible Government Foundation's school spendingreports.com
- State of Wisconsin, "State of the State fact sheet," January 29,2009
- State of Wisconsin, "Governor Doyle’s 2009-2011 Budget Address," February 17,2009
- Associated Press, "Republicans criticize Wis. gov for raising taxes," March 17,2009
- WBAY, "Governor Signs Deficit-cutting Budget Ahead of Deadline," June 29, 2009
- Journal Sentinel, "State cuts may cost UWM $20 million," March 2,2009
- The Spectator, "Digital downloads get state sales tax," February 26,2009
- The Business Journal of Milwaukee, "Wisconsin unemployment rate jumps," February 26,2009
- Wisconsin State Journal, "Doyle's plan had $1.7 billion two-year tax hike, budget office says," March 18,2009
- Associated Press, "Wis. gov. wants to increase gun background fees," March 2,2009
- Mental Health America of Wisconsin, "Wisconsin budget process," accessed March 18,2009
- State of Wisconsin, "The Wisconsin Biennial Budget Process Overview of Governmental Structure," accessed March 18,2009
- US Government Spending, "Wisconsin State and Local spending," accessed March 18,2009
- Journal Sentinel, "Unpaid taxes in Wisconsin reach $1 billion mark," March 3,2009
- Business North, "Despite tourism industry’s challenges, recession gloom seems overstated," March 18,2009
- Department of Revenue, "Department of Revenue Collections, January FY2009," February 19,2009
- Journal Sentinel, "Governor defends budget proposals, tax increases," March 5,2009
- Republican Party of Wisconsin, "Prevailing Wage Policy Doesnt Belong in the Budget," March 18,2009
- River Falls Journal, "Adding, keeping jobs was basic to state budget says majority leader," March 18,2009
- WKOW-TV, "Top lawmakers move to freeze pay," March 13,2009
- State of Wisconsin, "American Recovery and Reinvestment Act Estimates for the State of Wisconsin," accessed March 18,2009
- American Recovery and Reinvestment Act, "Estimated job effect," accessed March 18,2009
- National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- Wall Street Journal, "Stimulus Spending by State," March 12,2009
- Citizens for Responsible Government, "Milwaukee County GASP Database"