Governor Doyle: Signs State Budget

Ethnie Groves, Office of the Governor, 608-261-2156

Protects Education, Freezes Property Taxes

Surrounded by students, local officials, business leaders and other Wisconsin citizens at the Executive Residence, Governor Jim Doyle signed into law today a budget that fixes the state’s $1.6 billion deficit without raising taxes, while protecting education and freezing property taxes.

“Two years ago, I signed a budget that brought us out of the depths of the worst deficit in the state’s history, and today I sign a budget that continues to move Wisconsin forward,” Governor Doyle said. “It is a balanced budget that embodies the values of the people of this great state and keeps Wisconsin on the move. Because of savings we’ve achieved and economic growth that we’ve seen, we can now invest in Wisconsin’s priorities – improving education, creating jobs, and protecting property taxpayers.”

Governor Doyle used his veto power to reverse the Legislature’s cuts to school revenue caps and returned the state to its goal of funding two-thirds of local school costs. The increase in state school aid necessary to reach two-thirds is funded by increasing the general fund balance by almost $360 million through vetoes of excessive state spending, unnecessary financing strategies, ill-conceived tax giveaways, and pork barrel projects.

In addition to providing tax relief through not raising taxes and enacting a responsible property tax freeze, the new State Budget includes more than $325 million in additional tax cuts over the next four years. It cuts a penny off the gas tax. It allows parents to deduct the cost of college tuition up to the cost of the average University of Wisconsin tuition. It allows working people who are not provided health insurance benefits and the unemployed to deduct health insurance costs. It allows members of the military to deduct their military income, and disabled veterans and widows of those killed in action to get property tax credits. It also provides a 100 percent exemption of Social Security benefits one year earlier than the legislature proposed

“I have always believed taxes are too high in Wisconsin and that is why I pledged to balance the budget without raising taxes,” Governor Doyle said. “Now that the state’s economy has improved, we are returning more money to the taxpayers in the form of a property tax freeze and tax cuts directed specifically at the kind of costs that middle class families and seniors are struggling with – property taxes, health care costs, college tuition, and gas prices.”

The 2005-2007 Budget increases state funding for schools and property tax relief by more than $400 million compared with the Legislature’s budget. It restores $330 million to general school aids over the biennium to deliver real property tax relief and provide school districts sufficient revenue to continue providing a high-quality public education.

“After five months of debate – too often in the wee hours of the morning and out of public sight – the Legislature gave me a budget that froze property taxes at the expense of our schools,” Governor Doyle said. “At a time of record gas and utility price increases, schools were told they would have to live with only a one percent increase, which would have resulted in more than 4,000 teachers losing their jobs, larger class sizes, and cuts to programs ranging from math to music. I could not and would not allow that to happen to our schools, and am pleased to announce the state’s return to its commitment of funding two-thirds of every child’s education.”

Under the 2005-2007 Budget, schools will be able to spend about an additional three percent annually – the same level of increase that they have been allowed for years under both Republican and Democratic administrations. By fully funding its two-thirds commitment to schools, the state will able to shoulder the burden of increased educational costs over the next two years so that property taxes can be frozen.

“They say that a budget is the clearest reflection of your priorities, and I have been up front from the start of this process that my biggest priority is protecting education and property taxpayers,” Governor Doyle said.

The budget signed by the Governor will freeze the average homeowner’s property taxes this December and will reduce it by an average of $5 next year. Homeowners have seen an average annual increase of $119 in their property taxes for the past five years. Under the Governor’s freeze the average homeowner would see no increase in December 2005 and a five dollar reduction in December 2006. Over the next two years, the property tax freeze will also save Wisconsin businesses more than $270 million, compared to estimated levy increases without a freeze.

“When we think of property taxpayers, we think of the elderly couple or the young family, but many Wisconsin businesses pay property taxes as well,” Governor Doyle said. “This tax cut will give businesses the resources they need to expand and create new jobs to grow Wisconsin’s economy.”

As a responsible property tax freeze, the Governor’s plan does four main things: maintains current revenue cap limits, preventing schools from having to make devastating cuts; enables all communities to deal with the impact of inflation on providing services by allowing a minimum increase of two percent, or the rate of growth, whichever is higher; maintains current law limits on technical colleges so they will not have to raise tuition or cut worker training programs; and it lasts for only two years – the same as the budget cycle – because the Governor believes the state shouldn’t put a freeze on communities longer than it can guarantee a funding commitment to them.

“We’ve worked hard during the past two years so that we can now give our citizens the property tax relief they deserve without sacrificing the quality of our schools and vital local services,” Governor Doyle said. “We would not be in the position to invest in our schools, freeze property taxes, and afford tax cuts if we hadn’t taken aggressive action in reducing government spending. This budget, along with the previous one, achieves major reductions in government spending so we can invest in Wisconsin’s priorities.”

Some of these reductions include:

Cuts totaling $272 million from agency operating budgets and reduction in the state government workforce by 1,900 positions.

Savings of almost $150 million over the next four years through the Governor’s Accountability, Consolidation and Efficiency (ACE) Initiative that takes advantage of the state’s bulk purchasing power, encourages better commodity contract negotiation strategies, consolidates computer network servers, and streamlines human resources management.

Savings of $36 million from the sale of low-priority state buildings and assets due to improved use of state-owned office space.

Continuation of controlling state health insurance costs by leveraging the state’s purchasing power. This year’s health insurance cost increases were held to less than five percent (less than half of the national average) and prescription drug costs have been reduced by $25 million.

State Medicaid cost savings of more than $130 million, including $40 million proposed by the Governor and adopted by the Legislature and approximately $90 million saved through vetoes. These savings will come from further prescription drug cost containment measures, improvements in quality control and fraud prevention, expansion of managed care, increases in federal support, and vetoes of unfunded rate increases for certain providers. State Medicaid program costs totaling $93 million will also be decreased by a renegotiated fiscal agent contract.

Savings by reducing the number of state automobiles by 1,000.

Through his veto power, the Governor also restored several cuts made by the Legislature. He vetoed $43 million in cuts to the University of Wisconsin system and financial aid – including adding back $8 million to increase financial aid, thus doubling the state’s contribution to financial aid for University of Wisconsin students over four years. He vetoed the directives in the Legislature’s budget for the Knowles-Nelson Stewardship Fund to spend $80 million to buy land that the state already owns, and used his veto to preserve the Smart Growth program. He vetoed a plan to reduce the state’s tipping fee by 25 percent, preventing Wisconsin from becoming an attractive dumping ground for out of state trash haulers. Finally, Governor Doyle also restored $8 million in cuts to child care quality improvement efforts and vetoed the Republican proposal to increase child care costs for working families by as much as $500 a year.

“Wisconsin is a great state because we have always been optimistic about our future,” Governor Doyle said. “And I am optimistic for Wisconsin – present and future. The budget I signed today keeps us on course to a brighter future for all Wisconsin citizens.”