MacIver News Service | March 1, 2011
State spending would be reduced, taxes would not increase and the University of Wisconsin’s flagship campus would be granted independence from the UW System under the biennial budget introduced by Gov. Walker on Tuesday.
“I’ve heard from Wisconsinites who are doing more with less and making sacrifices to keep their families going,” Gov. Walker said. “ Good people like the retired couple on a fixed income or the new parents paying for daycare and the mortgage on their first house or the middle-class working family where mom and dad still have jobs, but keeping them meant taking a pay freeze. All of them, and others like them across Wisconsin, need true property tax relief and this budget delivers.”
In a speech before the legislature, Walker addressed how he’d like them to close the state’s $3.6 billion deficit. The Republican introduced his first two year spending plan saying the state’s budget is broken due to an overreliance on one-time fixes, illegal fund transfers, reliance on unsustainable and one-time federal funding and economic weakness due to high taxes and job-killing regulations.
“Previous governors and legislatures from both parties took money from our tobacco settlement. They raided more than a billion dollars from the transportation fund and $200 million from the patients’ compensation fund,” said Governor Walker. “ They increased taxes on the sick and set up shell games to draw down additional federal funds. They relied on one-time federal stimulus dollars as if the money would be there forever – but it’s already gone.”
On Tuesday, Walker outlined a budget he said was based on three essential goals.
- Foster meaningful long-term economic growth and job creation, laying the groundwork for creating 250,000 jobs by 2015.
- Recognize the tax burden on people by balancing the budget through measures that generate savings at the state and local level.
- Ensure a strong and sustainable budget outlook by bringing ongoing spending in line with ongoing revenues.
According to budget documents obtained by MacIver News Service, the plan includes significant cuts across almost every area of the budget.
“As we decrease spending, we also increase flexibility so local government and state government have the tools to deal with reduced revenue,” said Walker. “It’s true we are reducing aid to local government by just over one and a quarter billion dollars, but we are providing almost $1.5 billion in savings through our budget repair bill. If the 14 Senate democrats do not come home, their local communities will be forced to manage these reductions in aid without the benefit of the tools provided in the repair bill. On the other hand, if the Senate democrats do come home, local units of government overall will actually see a net increase in revenue plus savings of more than $150 million.”
The budget reduces all funds spending by over $4.2 billion biennially compared to the fiscal year 2010-11 adjusted base, a 6.7 percent reduction over base year doubled. The overall general fund budget increases by $384 million, a 1.35 percent increase over base year doubled. The Walker administration boast that this ‘small increase’ in general purpose revenue (GPR) is achieved in spite of a $1.26 billion GPR increase in funding for Medicaid to replace an equal amount of one-time federal stimulus funds in the last budget.
In order to balance the budget and fund Medicaid, the remainder of the budget is cut by a net $879 million GPR. Most significantly, Walker’s team says, the structural deficit is nearly erased with an estimated gap between current law revenues and expenditures of less than $100 million in fiscal year 2013-14 and a two year gap of less than $250 million by the end of the 2013-15 biennium.
Savings have been realized through higher employee contributions for pension and health care benefits – reducing both state operations appropriations and assistance to local governments and school districts. Growth in property taxes is held in check through reductions in per student revenue limits and a no-growth levy cap on municipalities, counties and technical college districts. Many nonfederal and non-segregated fund appropriations, excluding salaries and fringe benefits, have been reduced by 10 percent or more.
Protesters who had been chanting, drumming and shouting all day outside the Governor’s East Wing office, moved to outside the West Wing where the Assembly Chambers are housed just shortly before Walker’s scheduled 4pm speech.
Senate Democrats, who have reportedly been hiding out in Illinois for more than a week to deny the Senate a quorum by which they could advance Walker’s earlier introduced Budget Repair Bill, were not in attendance.
Walker addressed the tension in his speech.
“Democracy does not just expect differences, it demands them. It’s the manner in which we discuss and resolve those differences that leads to bold solutions and innovative reforms,” Walker said. “I ask that we continue to be mindful of our differences – as well our similarities – in the coming days, weeks and months. Above all, let us not lose sight of the fact that we were each elected to represent the people of this state by participating in our democratic process.”
On an annual basis, the Governor’s all funds budget for fiscal year 2011-12 represents a seven point eight percent decrease ($2.486 billion) over the fiscal year 2010-11 adjusted base. The second year of the budget, fiscal year 2012-13, represents a 2.5 percent increase of ($723.6 million) compared with the proposal’s first year.
The 2011-13 budget assumes the state will issue $800 million in operating notes in each year.
In response to changes in the state’s cash structure due to the creation of the University of Wisconsin-Madison authority and the treatment of its non-GPR revenue, the budget increases the general fund 30 day interfund borrowing limit from 3 percent to 6 percent of general fund appropriations.
Hard Property Tax Limits
Walker recommends restraining the growth in property tax levies by extending county and municipal levy limits for the next two years and limiting the growth in levies to the greater of 0 percent or the change in equalized value due to net new construction.
To avert property tax hikes, the Governor wants to reduce school district revenue limits per pupil by 5.5 percent below the amounts authorized in fiscal year 2010-11 and maintain those same amounts over the biennium.
To avoid state aid reductions being offset with property tax increases, prohibit technical college districts from increasing property taxes above the amounts levied in fiscal year 2010-11, or 1.5 mills, whichever is less.
Effective July 1, 2011, Walker wants to restructure the University Wisconsin-Madison as a public authority separate from the University of Wisconsin System and its remaining 12 campuses. The Governor says providing greater independence for the Madison campus will enable it to compete more effectively with other major research universities, both public and private, for high-quality faculty and research funding. In addition, providing more flexibility to access nonstate funding to offset GPR reductions will help the state address its budget shortfall without sacrificing quality.
In addition to changing the governance of the University of Wisconsin, Walker proposes eliminating the enrollment caps on public online (virtual) charter schools as well as the cap on the Milwaukee Parental Choice Program. He further plans on expanding the program from the City of Milwaukee to the County of Milwaukee and makes changes to the income eligibility requirements.
The Governor called Wisconsin’s Medicaid programs, including Medical Assistance, BadgerCare Plus, Family Care and SeniorCare, an essential safety net for low-income individuals and families who lose or cannot afford employer-sponsored health insurance, and are the main source of health care coverage for many people with significant disabilities and individuals in need of nursing home care.
Wisconsin’s broad eligibility criteria and comprehensive benefits offered by the program have helped Wisconsin maintain the second highest rate of health insurance coverage in the country. However, the budget documents released Tuesday noted the cost of the programs has grown tremendously, exerting pressure on all other areas of the state budget and putting the future of the programs at risk.
Over the past five years, expenditures for the Medicaid programs have increased an average of 11 percent per year, growing from $4.4 billion all funds in fiscal year 2005-06 to $6.6 billion in fiscal year 2009-10. Through a series of waiver requests of the federal government and eligibility policy changes the Department expects significant savings without altering the benefits, However, the Governor warned Wisconsin would have to eliminate coverage of nondisabled, nonpregnant adults with family incomes over 133 percent of the federal poverty level on July 1, 2012, if the federal waiver is not approved by January 1, 2012.
Under the Governor’s plan, benefits and income eligibility levels for the SeniorCare drug assistance program will not change. However, effective January 1, 2012, the Department of Health Services would require eligible individuals to enroll in Medicare Part D drug coverage as a condition of SeniorCare enrollment.
Walker wants to merge the regulatory activities of several state agencies. The budget proposes reorganizing the Department of Regulation and Licensing into the Department of Safety and Professional Services. The new agency would consolidate the regulatory functions from the Department of Regulation and Licensing, the Department of Commerce, the Department of Agriculture, Trade and Consumer Protection, and the Department of Veterans Affairs. This consolidation, Walker argues, will result in greater administrative efficiency and improved oversight, with no increase in the fees for licensure or certification.
The elimination of vacant positions reduces state positions by 735 Full Time Equivalent (FTE) positions
Walker proposes transferring the FoodShare, State Supplement to Federal Supplemental Security Income and Caretaker Supplement programs from the Department of Health Services to the Department of Children and Families to consolidate economic welfare programs into one agency and streamline state services.
The Governor is proposing consolidating the institutions that house the state’s juvenile offenders, proposing to close the Ethan Allen School for Boys and Southern Oaks School for Girls. Declining population allows the Department of Corrections to consolidate the facilities, the Governor said.
Eliminating the Department of Commerce and University of Wisconsin Hospital and Clinics Board, reduces FTE positions by 2,745
“This is a reform budget,” Walker said. “It is about getting Wisconsin working again – and to make that happen, we need a balanced budget that works — and an environment where the private sector can create 250,000 jobs over the next four years.”