Our View: Holding the line on tax hikes?
Legislative leaders and Gov. Jim Doyle seem reluctant to raise taxes to fix the state's budget challenges.
That's good news for Wisconsinites, who have seen their incomes shrink and their jobs evaporate away. It's also good news for businesses, which face higher costs and lower profit margins.
The problem is the no-tax-hike goal may be impossible to manage.
Doyle administration projections are that the state's budget deficit could reach $5.4 million by 2011. That's a huge number.
Some experts say the reported deficit figure is artificially high and the crisis isn't nearly as bad as Doyle claims.
But red ink is clearly on Wisconsin's horizon (whether the figure is $5.4 billion or not) and 2009 is as good a time as any to do something about it.
Wisconsin state government, under the direction of Doyle's initiatives, has become more efficient in recent years. But the administration is doing its best to cut out even more fat as state sales and income tax revenues continue to fall.
Doyle is suggesting that state government scale back to mirror the things Wisconsin businesses have had to do in order to survive. He is directing state departments to cut 12.5 percent of their spending to help balance the budget.
The state is instituting a hiring freeze and keeping 3,500 state job positions open instead of hiring replacements. The state will also sell off about 500 of its car fleet to save money. Additionally, employee bonuses are being cancelled and $30 million in grant payments are being delayed.
The cuts are similar to those Doyle's administration has made previously, so it's likely to have some impact on the state's bottom line.
The planned cuts, however, will do little to dent the huge budget crunch if the economic picture doesn't improve dramatically over the coming months.
That's why Doyle doesn't completely rule out tax hikes, even though he's not wanting to discuss the topic right now.
He is saying, however, that school funding and higher education could be on the table for cuts in the future. That should be a concern to all of us.
We understand that education is the state's biggest expenditure and a nasty deficit projection requires a serious look at all areas that receive state monies.
But education remains our nation's number one ticket to an improved economy and slicing public school and university funding could have a negative impact on our ability to progress quickly beyond the current crisis.
It's possible that the threat to cut school funding is just an attempt to lay the ground work for eventual tax increases. The public probably won't stand for reduced education aid as the debate builds, so increased revenue sources may be the only hope for a balanced budget. Doyle and others would then have their justification for doing the unthinkable -- raising taxes.
Of course, the one way to cure the mess is for the economy to rebound quickly. Maybe as 2008 turns into 2009 the financial picture will brighten faster than the experts predict.
We can only hope.
If not, things could get ugly in Madison as elected officials grapple over possible budget fixes.