CHICAGO – Wisconsin Gov. Scott Walker signed into law a $68 billion, two-year budget Sunday that authorizes $2 billion in new general obligation and revenue-backed borrowing and permits up to $2 billion of general obligation bond refunding debt.

The budget cuts income taxes by $650 million, allocates an additional $322 million in school aid, caps tuition at the University of Wisconsin system, and limits property tax increases. Aid to local governments would increase less than 1% after several years of deep cuts.

The budget also authorizes the sale of some state assets such as parking garages, roads, and college dormitories with the approval of the State Building Commission.

Walker vetoed 57 items. One measure vetoed would have required him to trim $250 million off of his original borrowing request. Walker said in his veto message he supported the legislative goal of reducing by $250 million his proposal, but he objected to language in the bill and wanted to maintain flexibility.

Walker also used his veto pen to strike language that limited GO refunding to occasions where annual principal payment on the refunding bonds does not exceed annual principal on the current bonds.

“I am partially vetoing this section to remove this restriction because it prevents refunding transactions from occurring in market environments where principal payments may be higher while still providing debt service savings,” Walker said. “With this veto, I am ensuring that refunding transactions and debt service savings can be realized in different market conditions.”

The spending plan closely resembled the budget proposal he sent to the GOP-controlled Legislature earlier this year. Walker and the Legislature rejected additional federal support to expand Medicaid under federal healthcare reform.

Lawmakers approved $1.8 billion in new borrowing, including $409 million of revenue-backed bonds for major highway projects and $1.4 billion of general obligation bonds, before the governor’s veto restored $250 million from his original borrowing request.

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