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MADISON - The state
will have to leave 3,500 state jobs vacant, eliminate employee
bonuses and cut agencies' budgets by 2.5 percent to deal with the
worst projected budget deficit in its history, Gov. Jim Doyle said
Thursday.
Doyle also called
for targeted tax increases and wouldn't rule out a general sales or
income tax hike, although he said he wanted to do everything
possible to avoid that. He's also ordering that $30 million in state
grants not be awarded.
The problem is a
$346 million budget shortfall this fiscal year that is expected to
grow to $5.4 billion by mid-2011. That is more than 17 percent of
the entire budget and would be the largest in state history.
Doyle said he
doesn't want to lay off state workers. While Doyle outlined some
steps to plug the immediate budget gap, he said more will be needed
and he will work with legislative leaders to enact those. He said he
hoped to avoid having to call a special session.
The governor said
he would push for quick passage early next year of a new tax on
hospitals that could generate an estimated $75 million a year for
the state, plus hundreds of millions in federal reimbursements for
hospitals. He also supports a $390 million tax on oil companies.
"Families are
struggling to make ends meet and higher taxes will make things
worse," said state Rep. Jeff Fitzgerald, R-Horicon. "We
cannot put a higher priority on the state budget than we do on the
family budget."
Doyle's plan for
the next two-year budget, which starts in July, will be delivered in
February. He's already told state agencies to plan for cuts of more
than 10 percent.
The governor has
been sounding the alarm for weeks, and the news wasn't any better
Thursday.
"State
government is going to take heavy cuts," Doyle said.
"Everything will be on the table for cuts."
State tax
collections are expected to drop 2.2 percent this year and 3.9
percent next year. The state has lost 27,300 jobs since October
2007. Personal income growth in Wisconsin is expected to decline
from 5.7 percent last year to 3.2 percent this year and just 1.6
percent next year.
The state will be
hard hit by the global and national recessions, Department of
Administration Secretary Michael Morgan told the governor in a
letter delivered Thursday. As a result, the state can give only the
highest priority programs more money and must severely cut or
eliminate many parts of its budget, he said.
The situation could
get worse if the economy continues to fail. The state's budget
shortfall has already gotten dramatically worse in a matter of
weeks. Doyle said in mid-October the deficit would be around $3
billion. Last week, he said it would be at least $5 billion, and on
Thursday, it came in at $5.4 billion.
Also, the budget
requests state agencies already submitted don't include fuel costs,
money for building projects, or University of Wisconsin faculty pay
increases. The deficit could be worse when those are added in.
The agencies have
asked for 8 percent more in state funding for next year, and 3.1
percent more the following year. That adds up to about $1.1 billion,
including $488 million the Legislature has already allocated to
schools and Medicaid.
Doyle reiterated
his intention to protect education as much as possible, but said
schools and the University of Wisconsin will have to share in the
cuts.
Incoming-Assembly
Speaker Rep. Mike Sheridan, D-Janesville, said the state must
maintain its commitment to funding schools and local communities,
creating jobs and protecting health care.
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