CHICAGO - Wisconsin Gov. Jim Doyle yesterday signed a two-year, $61.8 billion state budget that authorizes $3.58 billion of bonding and wipes out a $6.6 billion deficit through a mix of federal stimulus funds, spending cuts, tax and fee increases, and debt restructuring.
The debt authorization permits $2.9 billion of general obligation borrowing and another $680 million of revenue-supported bonds. The figure includes $285 million of borrowing to restructure existing debt, pushing off some near-term debt payments.
In completing work on a budget, the state grappled with a record $6.6 billion deficit. To remain in the black, Wisconsin will tap $2.2 billion in federal stimulus funds and raise $2 billion from increased fees and taxes - including $1.7 billion that will go into the general fund. About $3 billion in spending was cut.
"Nobody enjoys making deep cuts, particularly during a time when people need services most," Doyle said at the budget signing ceremony. "But just as Wisconsin families and businesses cut back, so can state government. When times are better, we can restore what is necessary and we can invest to make our state stronger. These cuts - over $3 billion - are painful and frustrate me personally because we have been forced into this by national and international economic forces that are not in our control."
The state will save money by ordering employee furloughs, repealing a 2% pay raise, and laying off 1,000 employees. Local government aid was cut by $28 million. Schools will receive an additional $107 million.
The increased revenues will come from a hike in the income tax imposed on the state's top earners as proposed by Doyle, an increase in the cigarette tax and from a reduction in the current 60 % capital gains exemption to 30%. Doyle had proposed a reduction to 40%. The final budget did not include Doyle's proposal to tax oil company profits.
"The governor's goal was to protect the middle class taxpayers and this budget accomplished that through targeted revenue increases and deep cuts," said budget director David Schmiedicke.
The state anticipates closing the next fiscal biennium with an ending balance of $270 million. Its rainy-day fund was previously depleted and no deposits are expected unless revenues pick up significantly. The state expects to close out the current fiscal biennium June 30 with a $70 million balance. Revenues are expected to decline by 3% in fiscal 2010 and then grow by 4% in fiscal 2011.
Doyle cut about $10 million from the final budget through his line-item veto powers yesterday. The Senate and House on Friday adopted the final budget plan after several months of haggling over the tax proposals and spending cuts.
Despite the differences, the state ended up completing its work on the budget plan ahead of the start of the fiscal year. That's a first since 1977. Doyle is a Democrat and both chambers are controlled by Democrats.
Republicans blasted the final spending plan.
"At a time when our state needs to create jobs, the Democrats are killing them. They are haphazardly increasing taxes and fees that will harm our state and threaten its future financial and economic health," said Senate Minority Leader Scott Fitzgerald.
In other action, Doyle vetoed a measure in the budget that would have required Dane County - home of the state capital - to hold a referendum on a half-cent sales tax to raise funds for a newly authorized regional transportation authority. The governor also vetoed a measure that would have allowed the Milwaukee County Board to raise the sales tax to fund bus improvements and for public safety costs.
Wisconsin's GO ratings are AA from Standard & Poor's, AA-minus from Fitch Ratings, and Aa3 with a negative outlook from Moody's Investors Service.