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Belt tightening not extra taxes for budget fix say local legislators

More taxes aren't the answer.

Spending must be cut, say local lawmakers as the Legislature and Gov. Jim Doyle's administration tackle a biennial budget deficit projected at $652 million.

Since last week, Wisconsin legislative leaders and Doyle's administration have started discussions on three disparate proposals to solve the shortfall.

In early March the Department of Administration announced an expected biennium shortfall due to lower than estimated tax revenues.

Doyle's administration offered a plan that begins by reducing funding from executive branch agency appropriations by $330.4 million over the biennium.

That includes $200 million in cuts state agencies were required to make under the budget signed in October.

The governor is also proposing a 0.7 percent assessment on hospital revenues to help the state secure an estimated $700 million in new federal revenue over the biennium. That tax would sunset in 2009.

The governor's plan calls for taking money from the transportation fund, additional bonding for transportation projects, an increased business tax and saving $15 million by refinancing the tobacco bonds.

"There's no need to drag this out," said Rep. Kitty Rhoades, R-Hudson, last week.

She said the Assembly repair bill, adopted on a 51-46 vote March 13, includes no new or higher taxes and no extra borrowing and leaves it up to Doyle to cut $200 million from general spending.

"It's the credit card," said Rhoades, dismissing the attempt to borrow rather than cut spending.

The Assembly proposal does dip into the state's "rainy day" fund, admitted Rhoades: "Our proposal uses quite a bit of that, saying it's raining."

While the Assembly repair bill calls for spending cuts, Rhoades said it protects K-12 education funding, Department of Transportation funding, shared revenue to local municipalities and federal money.

Both the Assembly and Senate bills would delay $125 million in payments to school districts until just after the two-year budget officially ends June 30, 2009, thus moving the expense from one biennium to the next.

Rhoades said some school districts may have to borrow money for a short time if the state does that. But, she said, the Assembly budget proposes covering those finance costs.

Cutting spending and using money set aside for a rainy day such as this are the right choices, agreed Rep. John Murtha, R-Baldwin.

"If we go (to shared revenue cuts), it's just going to come up on the other side," said Murtha.

He said that as a town chairman, he knows if the state cuts revenue to municipalities, they need to increase income some other way.

Instead of the Legislature micro-managing state government, lawmakers should leave it up to the governor and his administration to find the cuts, agreed Rhoades and Murtha.

The budget repair bill adopted by the Democrat-controlled Senate last week digs the budget deficit hole even deeper, complained Sen. Sheila Harsdorf, R-River Falls.

She said the Senate bill includes "job-killing tax increases," new taxes on health care and increased government spending.

The bill, passed on 18-14 party-line vote, would tax the profits of parent companies, instead of the current system of taxing only the profits of their subsidiaries in Wisconsin.

This "combined reporting" change would cost businesses $130.5 million by mid-2009, according to the Legislative Fiscal Bureau.

"This is exactly the wrong prescription for Wisconsin's economy and symptomatic of flawed leadership that looks to grow government at every opportunity," said Harsdorf. "With a lagging national economy, it is unfathomable that we would tax health care and job providers more."

The Senate didn't call for a conference committee to work out compromises between its bill and the Assembly bill. Instead Senate and Assembly leaders and the governor's representatives are talking among themselves.

That's a good sign, said Rhoades' Chief of Staff Eric Schutt. He said before the budget was first adopted, a conference committee spent months working on the budget, which wasn't finalized until party leadership took the reins.

"This time the three sides are talking right away to try to find some common ground," said Schutt.

"There's no need to start this fight all over again," said Murtha. This is a budget repair bill, not a whole new budget process, he said.

"If we don't act quickly, bad things can start happening," said Rhoades. "There's no need to go through that."

Contact Judy Wiff at or 715.426.1049.