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Doyle talks budget in Superior, Murphy oil officials say oil tax unfair

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New Richmond, 54017

New Richmond Wisconsin 127 South Knowles Avenue 54017

Deep cuts in state shared revenue never materialized when Wisconsin's governor delivered a budget address that promises to spread the pain of a projected $5.7 billion budget shortfall in the next biennium.

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"We are in a tough spot," Doyle said to a crowd of city and county officials, and workers from Lakehead Constructors and Murphy Oil Friday in Superior.

"The entire country's in a tough spot. We all know what the consequences of a slowing economy and Wall Street collapsing have been all the way to Superior," he added.

Doyle delivered a budget proposal Tuesday that would increase funding for K-12 education, preserve health care and limit the impact on local government.

"I believe strongly that we just cannot say to a second-grader 'come back in five years, do second grade when the economy gets better," Doyle said. "We have an obligation to make sure that second grader, fourth grader, 10th grader that they get the appropriate education the year they are coming through."

Funding for education in grades K-12 was increased $426 million over the next biennium. While the university system took about $174 million in cuts, Doyle said plans for the academic building at the University of Wisconsin-Superior will proceed.

Rumors projected cuts in shared revenue ranging anywhere from 5 percent to 25 percent before the governor delivered his budget to the Legislature on Tuesday. The governor's budget only eliminated 1 percent of the state shared revenue that helps fund local government services.

Superior and Douglas County officials agree the lost of state revenue is something they can live with, even though it gets tougher every year to maintain the level of service when revenue declines and costs increase. Still, it was a less bitter pill than the 10- to 25 percent cuts that were rumored in the days before the governor's address Tuesday.

Doyle also outlined some of the proposed tax increases expected to balance a budget that cuts $2.2 billion in state spending.

Doyle said people earning more than $300,000 would pay another 1 percent in income taxes, and the exemption on capital gains taxes would drop from 60- to 40 percent, in addition to a 75-cent per pack increase in the tobacco tax.

However, he never mentioned the proposed tax on oil company revenues, a proposal that could have a significant impact on Murphy Oil in Superior, the state's only refinery, and generate about $250 million in revenue in the state budget.

Doyle said the taxing proposal is crafted as it was amended two years ago, when the Legislature rejected the proposition. That amendment was made by Sen. Bob Jauch, D-Poplar, to reduce the impact of the tax on revenue that cannot be passed along to customers on Murphy Oil, which owns the only refinery in the state in Superior.

It won't eliminate it entirely, but it will reduce the impact, Jauch said today.

Refinery manager Dave Podratz said the concern he has with the tax proposal is that it targets revenue rather than profits, and the company wouldn't be able to pass along the expense to customers.

"There are so many factors that impact the price of oil or gasoline, and if the price of gasoline ticks up a little bit, now you're going to be subject to endless investigations," Podratz said.

"Did you try to pass (the cost of the tax) through or was it normal market forces? The Department of Revenue said two years go they're not going to be able to enforce it," he added.

"It's not fair," Ross said. He said if the refinery operated independently without Murphy Oil behind it, the refinery would be shut down.

"If something happens to the refinery, you might as well shut off the lights in Superior, Wisconsin, said Steve Hansen, a 37-year employee of the company.

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