CHICAGO — Wisconsin Gov. Scott Walker toured the state Wednesday to promote his $59 billion budget proposal that would eliminate a $3.6 billion deficit with steep spending cuts that Democrats, school districts, and some local governments warned would strain budgets and hurt students, services and jobs.
Overall, all-funds spending in the next biennium that begins July 1 will drop by $4.2 billion, or 6.7%. The operating budget totals $29.3 billion for fiscal 2012 and $30 billion for fiscal 2013.
The budget trims education spending in fiscal 2012-13 by $834 million. Funding for the University of Wisconsin system will fall by $250 million, while technical colleges face a $71 million cut and Medicaid is being trimmed by $500 million. Municipalities and counties will lose $96 million.
The budget also eliminates more than 700 vacant positions. All totaled, local governmental bodies will face $1.25 billion in cuts, and proposed property tax and revenue limits would preclude them from passing on the cuts to their property tax rolls.
Walker on Wednesday sought to boost pressure on Senate Democrats who fled the state on Feb. 17 to prevent a vote in their chamber on Walker’s budge- repair bill to address a current-year deficit.
The budget repair plan would restructure $165 million of debt service coming due May 1, eliminate most collective bargaining rights for local and state public employees, and require employees to make higher pension and health care premium payments.
The state expects to save $30 million in the current fiscal year and $300 million in the next biennium with the employee changes.
The bargaining-rights issue prompted the Democratic walkout and protests that have drawn international attention.
Walker said local governments and districts, which are facing $1.25 billion in aid cuts, could realize $1.5 billion in savings with the budget repair bill’s measures.
The bill “gives our local governments the tools to offset the reductions in the budget,” Walker said Wednesday.
If no action is taken amid the ongoing stalemate, Walker warned he would announce state layoffs by the end of the week.
Local and state Republican officials praised the spending plan for requiring Wisconsin to live within its means, though Democrats and schools expressed concerns.
Democratic Senate Minority Leader Mark Miller slammed the budget plan and Walker’s continued efforts to push passage of the budget-repair bill as the only means to avoid local cuts and layoffs.
“He is balancing the budgets on the backs of the working class and ordinary taxpayers,” Miller charged. “He is bent on breaking the backs of working men and women.”
“It’s going to have an impact on every part of the city government as well as services provided by the schools, by the county for transportation,” said Milwaukee Mayor Tom Barrett, who lost to Walker in the November governor’s race.
“These drastic cuts to education cannot be absorbed by districts and will have a rippling effect in communities across the state as they deal with unprecedented teacher layoffs, elimination of programs, and reductions in standards,” the Wisconsin Education Association Council said in a statement.
The budget includes authority to sell $1.4 billion of new debt, according to capital finance director Frank Hoadley.
General obligation bonds make up about half of the authority at $732 million, with transportation revenue bonding representing $342 million and clean-water bonding accounting for $353 million.
The GO authority includes the restructuring of $364 million of GO debt service due in fiscal 2012 for budget relief. The budget anticipates the sale of $800 million of operating notes for cash-flow purposes in each of the next fiscal years.
Hoadley said he expects to sell notes in June.
The state’s capital budget will include additional bonding authority, but that plan has not yet been released and must be approved by the State Building Commission.
Fitch Ratings, Standard & Poor’s, and Moody’s Investors Service all rate Wisconsin’s $7.2 billion of GOs in the mid-double-A category with stable outlooks.
The state has existing authority to sell at least $61.6 million of bonds this month to restructure a portion of a May 1 debt-service payment to help ease the current year deficit. If the budget-repair bill passes, the state would boost that by $165 million. The debt-service payment coming due May 1 must be funded by March 15, so little time remains to complete the transaction.
The budget proposal marks a sharp departure from those of recent governors from both parties who relied more on one-time maneuvers to deal with deficits without significant tax increases.
Walker said his budget plan would reduce the state’s structural deficit — which occurs when recurring revenues fail to cover ongoing expenses — to $250 million from $2.5 billion.