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Doyle goes for hospital tax to help fix budget hole

To help make up an estimated $652 million state budget shortfall caused by lower than estimated tax revenues, Gov. Jim Doyle is once again proposing a tax on hospital revenues.

Doyle's secretary for the Wisconsin Department of Administration, Michael Morgan, presented the administration's plan to fill the projected budget hole to legislative leaders on Monday.

Last week Doyle called a special session of the Legislature for March 13 when lawmakers will take up the budget-repair proposal.

The hospital tax was part of Doyle's original biennial budget, but was dropped during budget negotiations after stiff resistance from state Republicans who said the tax would cause health care costs to go up.

Doyle is proposing a 0.7 percent tax on hospital revenues which he says will gain the state $700 million in new federal revenue during the biennium. He also says it will save state taxpayers $125 million in Medicaid funding.

"With the rising cost of health care, now is doesn't seem logical to tax health care," said Rep. Kitty Rhoades, R-Hudson, co-chair of the Joint Finance Committee.

The governor's proposal also provides for a rural hospital supplement of $2.5 million and would end the hospital tax at the end of the biennial budget.

One of the key opponents to the original hospital tax proposal was Assembly Speaker Rep. Mike Huebsch, R-West Salem.

"We can do better than reaching into other people's pockets to fill the government's, especially when Wisconsin is already the eighth-highest taxed state in the country," said Huebsch in reaction to Doyle's budget repair proposal.

The primary means by which Doyle is proposing to fix the budget deficit is to lapse spending or transfer from the executive branch $330.4 million over the biennium.

"The budget repair that I am announcing today (Monday) is a good responsible plan, and it is important to act on it as quickly as possible," said Doyle in a statement.

The proposal did not mention specifically what programs passed in the last budget would be lapsed.

"We are hoping to determine that through administrative actions as opposed to specific program cuts," said Carina Marquez-Barrientos, a DOA spokesperson.

Doyle also relies on bonding to fill the hole.

His plan calls for taking $293 million out of the transportation budget, but then authorizing $190 million in new general purpose revenue-funded general obligation bonds and another previously authorized $67 million in bonds for transportation programs.

Another $5 million would be saved under Doyle's plan because of what the governor says are federal delays in implementing the federally-mandated REAL ID law.

Doyle also wants to save $15 million from refinancing tobacco bonds.

"We made it very clear that the Republican Assembly does not believe people can pay more. With the economic downtown it seems like the time to reduce spending," Rhoades said.

Under their plan the Doyle administration says the state would end up with a $100 million surplus at the end of the biennium.