Doyle: Wisconsin In Trouble Without Budget

CHICAGO — As Wisconsin this week entered its fourth month without a new budget, Gov. Jim Doyle urged lawmakers to resolve their differences as he warned of road construction delays, the loss of federal matching funds, and of the hardships faced by school districts and health care providers reliant on additional funding in a new budget. “The Legislature’s job is to pass a budget,” the Democratic governor said in a statement. “A week ago, both sides were billions apart, but today we have significantly narrowed the differences. But there is still work to do. I am available to both sides around the clock in order to help them come to an agreement. As governor, I have to plan for the real consequences that will hit this state if the Legislature continues to fail to pass a budget.” Doyle in February first unveiled his proposed $58 billion budget for the fiscal biennium that began July 1. Despite some compromises, a conference committee of members from the Democrat-controlled Senate and the Republican-controlled Assembly has remained at loggerheads, with members unable to resolve their differences on spending and revenue increases. Wisconsin is unique among most states in that an ongoing appropriation allows the government to continue operating and to meet its financial obligations into a new biennium, including debt service, without a new spending plan in place.While the government may continue to operate, it is at previous funding levels, and that’s what is now prompting the escalating warnings from the administration, schools, health care providers, and rating analysts that the longer the state goes without a budget, the more deeply the impact will be felt.Doyle warned that without a budget in place by mid-month when the state’s Department of Public Instruction releases its school aid levels, school districts will be forced to cut costs or turn to taxpayers to raise $80 million of additional revenue they expected in the new budget. Public universities and colleges could be forced to levy an $800 surcharge on students and the Department of Corrections will face a more than $370 million shortfall. Health care programs face cuts that will impact seniors, the poor, and families with relatives in subsidized long-term care. The state could also face the loss of $400 million in matching federal health care funds. The lack of new bonding authority for transportation projects could force delays in various projects and the loss of federal matching funds. Doyle has also asked his cabinet to look at possible spending cuts.Standard & Poor’s recently warned that the lack of a budget threatens the Wisconsin’s chances of winning an upgrade of its AA-minus general obligation credit while also posing a fiscal threat to the liquidity of local governments and school district. A series of revenue increases — some of which were to be collected at the start of the new fiscal year — would help achieve a balanced budget, reduce reliance on one-time revenues, increase reserves, and improve the state’s unreserved ending balance.“While the budget appropriation for fiscal 2007 is lower than 2008, the 2008 plan isn’t really achievable unless you have the revenue enhancements the governor has proposed,” Standard & Poor’s analyst Peter Block said. The state carries a positive outlook. This week, Republican and Democratic leaders traded barbs as negotiations continued.House Republicans said they didn’t believe a budget agreement could be reached by mid-October, prompting Democratic Senate Majority Leader Judy Robson to question GOP motives given the Democrats willingness to drop a series of demands to reach a compromise. Democrats have accused Republicans of stalling an agreement to leave current funding levels from the previous budget in place until the end of the year.“There’s a big difference between not being able to and not wanting to get this budget done in the next two weeks,” Robson said.” It’s impossible to think that after a week of give-and-take with major tax and spending policy differences like Healthy Wisconsin, the hospital assessment, the real estate transfer fee, the cigarette tax, and the nursing home bed tax, that we can’t bridge the remaining budget gaps in a matter of days.” Republicans remain opposed to a proposed tax on oil company profits that would generate about $275 million in new revenue. “Will Assembly Republicans hold the entire state budget hostage to protect the multibillion dollar profits of the big oil companies?” Robson said in her statement.Republican Assembly Majority Leader Jeff Fitzgerald accused Robson of exaggerating the advances made by negotiators. “Senator Robson, in an attempt to reverse her actions of stall and delay playing to the cameras in the conference committee, is claiming a great deal of progress in negotiations,” he said in a statement. “She cites a number of items that were discussed during negotiations as if they were agreed upon. Once again, she is presenting a view through rose-colored glasses.” Fitzgerald said the Democratic offer to pull their proposal for a $15 billion universal health care program was conditioned on Republican support for $1 billion of tax increases and the offer to drop several of the taxes required Republican support for other tax increases. “We are still far, far apart when it comes to taxes and spending,” he said.Republicans also criticized Democrats for refusing to vote on a school funding bill that would have allocated additional funds for school aid payments. Senate Democrats refused to vote on the measure as they want it included in an overall budget agreement.Under tentative agreements, Democrats would drop their universal health care proposal and a $418 million hospital assessment tax Doyle proposed, while Republicans have said they would support a $1.25 per pack increase in the cigarette tax Doyle wants.The governor’s original proposed budget eliminated a $1.7 billion deficit primarily through spending cuts and $1.7 billion in tax increases. The budget also included $1 billion of new general obligation and revenue-backed borrowing, $1.2 billion of cash-flow notes, and the authorization to establish an endowment funded by a restructuring of the state’s $1.7 billion tobacco securitization planned for later this year or next year. The cigarette tax was proposed as part of a larger health care and anti-smoking campaign that would use the tobacco deal proceeds to establish an escrow with interest earnings paying for tobacco-related health expenses.Wisconsin’s $4.6 billion of outstanding GOs carry ratings of AA-minus from Fitch Ratings and a Aa3 Moody’s Investors Service.