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Citizens, colleagues and friends. Mr. Speaker, Mr. President and distinguished members of the Legislature, thank you for hosting this joint session.
Before I get to the matter at hand, I want give special thanks to my wife, First Lady Laurie McCallum, for her support and understanding during these demanding times;
To Margaret Farrow, a good friend and a great lieutenant governor;
And to the members of my Cabinet, whose leadership and resolve will be evident to all in the coming weeks as they have been to me over this past year.
I come before you today to talk about our economic future, and to lay the foundation for a bold and unprecedented initiative that reforms and reshapes the roles of state and local government.
Our immediate task is solving a 1.1 billion-dollar shortfall - a shortfall brought on by the national recession and the resulting downturn in the Wisconsin economy.
While it is of little consolation, at least 40 states won' t meet their budget estimates this year. Legislatures across the country have been forced to react to recession and domestic security developments.
In August, when I signed the bipartisan budget that now must be adjusted, Wisconsin's economy was showing signs of rebounding, especially the manufacturing sector. But the cowardly acts of terrorists on September 11 forestalled any realistic chance for recovery at the end of the year.
I have been talking and listening with people all across Wisconsin since Sept. 11. People are concerned about their future, and some are more than a little pessimistic about Madison's ability to fix this problem. This should not be the case.
I relate this sentiment because I believe our mission in this special session goes beyond the act of balancing a budget. Our decisions will not be about now - but about shaping a better tomorrow for the hard-working families of this state.
That's why my plan that you will soon have before you is called the "Budget Reform Act of 2002." This debate is not just about a budget…. It is about the great people who make up the great state of Wisconsin.
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People know government has a role in their lives, but too often they view government as too unmanageable, too ineffective, too costly, and above all, too unaccountable.
My Budget Reform Act is about making government less costly, more manageable, more effective and more accountable.
Seldom have the stakes been higher for Wisconsin. What we say and do in the coming weeks will have a direct impact on the lives of hard-working Wisconsinites… from the teacher in La Crosse to the factory worker in Milwaukee… from the logger in Hayward to the nurse in Racine…the waitress in the Fox Valley, the poultry farmer in Barron… to the auto worker in Janesville.
Our decisions will have a direct impact on the millions of everyday Wisconsinites who have a simple wish of a financially secure future for their children.
No one pretends the road ahead will be smooth. These are hard choices, to be sure. But our path is clear. Just as thousands of Wisconsin families are adjusting their personal budgets, state and local governments must follow suit and begin to live within their means.
It is important that everyone understands how we spend the hard-earned dollars of the hard-working men and women of Wisconsin – the taxpayers.
Wisconsin ranks 6th among states in the amount of aid provided to local government. This accounts for over 60 percent of spending … AND is a major reason Wisconsin taxes are higher than in other states.
Sixteen percent goes to financial assistance for individuals in programs such as Medical Assistance, Wisconsin Works, and student aid.
The University of Wisconsin System's share is 9 percent, Corrections is 8 percent and the remaining state government operations are 7 percent.
This Budget Reform Act refocuses how we spend the taxpayers' money. My solution reflects the core values of every Wisconsin citizens:
I won't raise taxes. Taxes already are too high.
I will prioritize spending…. My family and your family have to live within a budget… so should government.
I have 3 kids, and I want to ensure that my children get the best education in the country… that's why education is one of our highest priorities….
Growing up in Fond du Lac, my dad was a factory worker and later a letter carrier, and my mom worked as a store clerk and a bank teller. My parents taught me the importance of being compassionate to our neighbors who might not be as fortunate as you and me, and that's why my plan protects the neediest of the needy.
I want to Build Wisconsin and provide citizens with good jobs. I want my children and your children to have a good job, too.
And I want to keep us safe.
These are values that I cherish, and these principles should be our guiding light in the days and weeks ahead.
Let me start by telling every citizen in Wisconsin what is NOT in my Budget Reform Act. There will be no tax increase.
No sales tax increase.
No income tax increase.
No property tax increase.
No corporate tax increase.
No tax increase, period!
I will do everything to protect the taxpayer from the Big Spenders who mistakenly think they can spend …. without limit … the hard-earned dollars of hard-working Wisconsinites.
Wisconsin's future is bright and full of opportunity and promise. The hopes and dreams of all Wisconsin will not be rained on. Wisconsin will NOT become the Number One tax state in the country…. NOT on my watch.
In this time of economic crisis, we will not increase taxes to feed spending habits. It is time all of government in Wisconsin … all of government in Wisconsin …begins to live within its means.
That's exactly what my Budget Reform Act does. I have set priorities. I will call for reform. And I will do this with a balanced plan that I lay before you today. There are substantial cuts to government spending. But there also are a number of essential services that I am declaring off-limits from any spending reduction. My priorities are clear:
I will fully fund elementary and secondary education.
I will fully fund smaller class sizes, school breakfast and special education.
I will fully fund our new senior care program to help seniors with prescription drugs.
I will fully fund medical assistance. BadgerCare. FamilyCare. community aids.. and many other programs that directly serve our neediest citizens.
Wisconsinites understand that their future is in the hearts and minds of our children, and that's why I will maintain full state support for schools. We will continue to fully fund two-thirds of local school instruction.
Wisconsinites are quick to lend a helping hand to the neediest of the needy. That's why I have exempted direct assistance to our most vulnerable citizens. This is exactly the wrong time to reduce funding to programs that provide a safety net for people who can't help themselves.
In response to the tragic events of Sept. 11, I will continue to work aggressively to keep citizens safe. My Budget Reform Act contains a domestic security initiative that will strengthen the state's readiness on many different fronts, including grants to local police and fire departments for equipment and training, and money for the creation of a statewide trauma system that links the front-line personnel with doctors and medical specialists.
September 11th changed our lives in countless ways. among the most important lessons we have learned are how we sometimes take for granted the service of our public safety officials. When we talk about domestic security, these men and women serve on the front line.
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One of the keys to building a stronger economy in Wisconsin is to increase the skill level of Wisconsin's work force. My Budget Reform Act helps displaced workers and protects ongoing economic development. I urge this Legislature to act quickly on an important plan that I outlined earlier this month, an emergency 8-week extension of benefits for unemployed workers.
In these challenging times, government spending must be reduced in the most fair manner possible.
Here's how I will do that.
State government operations will absorb the largest share of the belt-tightening with an 11.5 percent reduction in spending. Incidentally, the Governor's Office budget is reduced 16.5 percent.
The Budget Reform Act reduces the Department of Corrections budget by 6 percent. This was a difficult decision, and the cuts are deep. But I stress that we will continue to keep Wisconsin safe from the criminals who want to ruin our quality of life.
New institutions that were authorized in the budget must be delayed. While elimination of out-of-state contract beds remains a priority, eliminating the budget deficit must come first.
The Budget Reform Act also will reduce the University of Wisconsin and Technical College System budgets by 4.5 percent each. I don't want these reductions passed on to students, so tuition increases above the already-approved 10 percent level must be passed by the Legislature's Joint Finance Committee.
The final component is a 4 percent reduction to local government budgets in calendar year 2002.
These are tough decisions, but they ARE manageable, and more importantly, the right thing to do. When implemented, they will set the stage for an even greater and more vibrant Wisconsin.
My plan does contain a warning, however. Because we are reigning in spending, you are going to hear a new kind of defeatism from the Big Spenders who believe government spending can only go up, never down.
Have you heard the term "Buyer, Beware?" I offer a slightly different twist: "Taxpayer, Beware!" the spenders will make claims of big property tax increases and the elimination of vital services.
But don't be fooled by their rhetoric. Don't let the defeatists defeat you.
When you hear the complaints of Big Spenders, realize that my Budget Reform Act places strict property tax limits on local governments. Spending reductions will not mean property tax increases. Let me repeat, because this is critical: my Budget Reform Act places strict property tax limits on local governments. Spending reductions will not mean property tax increases.
And let me say this to the Big Spenders: If you can't live without a property tax increase, take your case directly to the taxpayers with a referendum. Let the working people decide.
When you hear the complaints of Big Spenders, recognize that I am not asking local government to do anything different than what state government is expected to do - and what families and businesses have been doing for months: Live within their means.
State government operations budgets are being reduced 11.5 percent, and we will continue to deliver essential services. Local government budgets are being reduced only a third of what state government is absorbing… they should not have to stop essential services like fire and police protection and garbage collection. To the contrary. My Budget Reform Act includes language that directs local governments to protect the health and safety of our citizens.
Every taxpayer fully expects local government to handle these reductions responsibly and continue to provide essential services.
The Budget Reform Act balances the budget for this biennium, but I will not stop there. The budget shortfall allows us to look at costly decisions that we can no longer afford. We must learn from this, or we will be right back in a financial predicament next year. So today, I am forwarding to you a bold plan that completely restructures the state and local financial partnership… a plan that forces a major examination of how local governments are funded, organized and provide services.
Here's what I'm talking about.
Within a 10-mile radius of downtown Appleton, there are over 50 units of government - including 3 counties… 4 cities… 5 villages… 8 school districts
… 16 towns… and 19 sanitary districts.
Who do you suppose is paying for all this? The hard-working families of Appleton are footing this bill for this overlap.
The Kettl Commission set the stage for changing the state and local government relationship, but many circumstances prevented the Commission report from being adopted. The greatest barrier to the Kettl Commission recommendations was lack of urgency. We just didn't have to do it. We could afford to do everything. We could afford more government. We could afford to be the third-highest tax state. We could afford to have too much government.
Well, fellow Wisconsinites, we can't afford it anymore.
My Budget Reform Act takes Kettl from debate to ACTION by recommending that we:
∅ Phase out the current shared revenue program over the next three years
∅ Borrow $794 million from tobacco endowment revenues as a bridge only to replace a portion of shared revenue in the transition period
∅ develop A REPAYMENT SCHEDULE FOR THE ENDOWMENT
∅ Establish within my Administration a mandate appeals process for local governments
∅ Create a Blue Ribbon Commission on local government finances to review local government spending, delivery of services, state mandates and local revenue sources.
The goal of the commission is accountability, efficiency and the best return for the taxpayers' dollar.
Proceeds from the sale of tobacco revenue bonds provide a unique opportunity to help in the transition to a new relationship between local government and the citizens they serve.
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The spenders will say there is no support for cutting local government. If that is your argument, then I ask: Is there support for breaking promises to our schools that will result in larger class sizes and reduced services for special education?
Is there support for turning our backs on your most vulnerable neighbors - the elderly, the disabled and the poor who covet dignity and independence?
Is there support in your community for increasing taxes to feed a government that spends too much as it is?
While funds are short, I realize there will not be a shortage of critics of my Budget Reform Act. I welcome the discussion, but I also say this to the Big Spenders who want to spend more money: Tell me specifically where you will get that money. A critic without a solution is of no value in this debate.
My Budget Reform Act is the right thing to do. My Budget Reform Act is fiscally responsible, and more importantly, it is right for Wisconsin.
This is a pivotal time in Wisconsin's fiscal history, and I urge this Legislature to act quickly and without hesitation for the future of Wisconsin's families. There is much work to be done.
Join me in being creative, determined and unafraid to face the critics. Join me in answering the critics who say it can't be done. Join me in protecting the taxpayers, not the Big Spenders.
The people we represent are ready to chart a new course. They want a government that serves them well - not a government that obstructs common-sense solutions.
They want a government that will validate their trust, not engage in petty politics and spread distrust.
