State agencies were ordered to cut $111 million from their current-year budgets in response to a new revenue forecast from the nonpartisan Legislature Fiscal Bureau that shows a $650 million deficit in the fiscal 2008-2009 biennial budget.
“The revenue shortfalls announced by the Legislative Fiscal Bureau today show the significant impact of a slumping national economy on Wisconsin’s economy and state budget revenues,” Department of Administration Secretary Michael Morgan said in a statement. “In anticipation of lower revenue estimates, yesterday I took administrative actions directing state agencies to cut an additional $111 million from their budgets this fiscal year.”
“I will carefully review the fiscal bureau estimates and consult legislative leaders to determine the next steps we should take to address the shortfall,” Morgan added.
Various ideas have been floated to compensate for lackluster tax collections. Democrats have proposed extending collection of an estate tax that expired at the start of the year and enacting a hospital tax to leverage at least $400 million in additional federal Medicaid matching dollars. Republicans did not endorse the proposals but said they would consider all options.
Wisconsin entered the new year with warnings that a $300 million to $400 million deficit loomed, but the bureau revised its estimate last week to $652 million. In addition to the cuts, state officials said repayment of a short-term loan would be delayed, bringing down the current deficit by another $125 million.
