“Speaker Huebsch, Speaker Pro Tem Gottlieb, President Risser, Majority Leader Robson, Lieutenant Governor Lawton, Constitutional Officers, members of the Legislature, tribal leaders, members of the Cabinet, distinguished guests, and fellow citizens of Wisconsin.
Tonight, I come before you to submit my budget for the next two years ... a budget with three goals: being fiscally responsible, investing in our shared priorities, and creating opportunity for working families.
It is a plan that not only invests in the needs of all Wisconsinites, but reflects the greatest hopes and aspirations of our people.
My budget says every child ... every family ... should have a chance to get ahead and live the American dream.
This is not a budget for the big oil companies or the big tobacco companies ... it is a budget for the middle class - and those trying to get there.
An opportunity budget ... that cuts taxes on hardworking families.
An opportunity budget ... that is responsible with taxpayer dollars.
An opportunity budget ... that invests in schools and better jobs for our citizens.
An opportunity budget ... that says health care for all of our citizens is within our grasp ... and now it's time to reach for it.
An opportunity budget ... reflecting Wisconsin's values, protecting Wisconsin's priorities, and investing in Wisconsin's people.
Fiscal responsibility
Of course the first thing - the best thing - state government can do to create opportunity for the middle class is to get its own fiscal house in order.
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The truth is, this state got itself into a tremendous hole in the 1990s. Expensive new programs, excessive use of one time money, exploding corrections costs, and runaway deficits. To clean up the mess, we sold cars, airplanes, buildings and state property, cut government waste and eliminated overhead. We used our bargaining power to get discounts on everything from office supplies to prescription drugs.
We cancelled and consolidated government contracts, achieving the first reduction in contracting for at least a decade - and saving taxpayers more than $40 million dollars.
Together, as Democrats and Republicans, we balanced two straight budgets.
And because we know that Wisconsin families should keep more of what they earn, we did it all without raising income taxes...
...without raising sales taxes...
...without raising business taxes...
...and we held local property taxes to their smallest increase in a decade. You should take pride in what we did together - providing real property tax relief to Wisconsin families.
As a result, as a percentage of income, the state tax burden in Wisconsin is the lowest in 35 years.
We also stopped the decline in our bond rating. For the first time in six years, our bonds have been given a positive outlook by Standard and Poors.
But despite all of that progress, we still face real, long-term challenges.
Unless we make hard choices now, the choices we'll face in just a few more years will be unbearable: eroding the quality of our schools, laying off thousands of police and firefighters, abandoning our commitment to children and vulnerable families, or higher taxes for everyone.
So this budget begins with more hard cuts - continuing the progress of the last four years. We'll control the cost of prisoner health care, streamline the administration of Medicaid, cut information technology contractors, and sell state property. We'll eliminate duplicative human resource systems and use technology to save almost $100 million throughout government.
Tonight, I'm sending you supplemental legislation to begin that cutting immediately - reducing spending at our largest agencies by 2 percent this year.
Your state government will be leaner, more efficient, and more focused on the priorities of middle class families.
It's taken a long time to recover from the financial mess created in the 1990s, but this is the budget that turns the corner.
Let me show you the progress we're making:
When I took office, the budget I inherited was projected to end hundreds of millions of dollars in the hole.
We changed course ...
...showed a small surplus in 05 ...
...a surplus for 07 ...
...and the budget I present tonight will have a surplus of $130 million in 2009. Now that's progress.
We also had to address this state's over-reliance on one-time money to balance the budget. Prior administrations did things like cash in the tobacco settlement for a temporary budget fix.
Over the last four years, we've dramatically reduced the use of one-time spending ... to the lowest amount in years. The budget I present tonight relies on one-time money for less than one percent of the budget - a very responsible level.
Some level of advanced commitments - the so-called structural deficit - is normal in a budget, like tax cuts that grow over time. But you need to keep those in line ... and previous Administrations let this get out of control.
As you can see here, we've dramatically reduced our advanced spending commitments in the last two budgets.
And in this budget, to assure our long term fiscal health, we've kept our advanced spending commitments to their lowest level in 12 years.
The real problem with advanced commitments is how they compare to the growth in revenue.
The red line is advanced spending commitments. The yellow line is projected revenue growth that you need to pay for those commitments. Something's really wrong when the red line is above the yellow line.
Generally, revenue grows at about 5 percent a year. Before I took office, advanced commitments far exceeded revenue growth. In fact, the budget I inherited four years ago had $2.8 billion in advance spending commitments, but only about $1 billion in expected new revenue to pay for it. That left us with a huge gap.
The budget I present tonight will leave us with just $670 million in advanced commitments - and those commitments will be more than covered by the $2 billion in new revenue projected for the next budget.
Tax Cuts
The progress we've made in the past four years puts us in position to offer Wisconsin something important: real, meaningful middle class tax relief.
Because the middle class is being squeezed ... I propose to make every dollar you pay for health insurance completely tax free.
This simple change will save a typical family more than $300 dollars annually and help make heath care a little bit more affordable. It represents more than $250 million in middle class tax relief over the next five years.
To keep our commitment to seniors, we'll eliminate the state tax on Social Security next year.
To help working families, we'll make the cost of child care tax deductible, saving parents up to $400 a year.
And to help our students, we'll dramatically expand the tuition tax deduction ... saving families up to $400 off their tax bill - and making college more affordable. For the first time in history, students and families throughout the UW system, technical colleges and private colleges will be able to use this deduction not only for tuition, but for fees as well.
All together, my opportunity budget includes more than a dozen separate tax cuts aimed at creating jobs and helping families in their daily lives ... saving the taxpayers of Wisconsin $1.7 billion over the next four years.
Education
Not only will we provide tax relief, but we'll do it while investing in the priorities of Wisconsin's families. And the first of these is education.
Like every parent in this state, I can still remember the day I walked our oldest child to school for the very first time.
With a smile on his face and a bookbag on his shoulder, Gus grabbed my hand and we walked a few blocks down to Midvale elementary. By the time we got there, he was bursting with energy, ready to go into that school and begin a whole new chapter in his life.
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I'll never forget welling up with tears as I let go of his hand and watched him walk through those doors.
We live our whole lives for moments like that. You're taking a leap of faith with that school, entrusting it with all your hopes for your child.
As Governor, I often think about that day at Midvale Elementary.
We have a special and sacred obligation to the children of this state. This budget is not merely a set of numbers and actuarial tables. It is a statement of priorities and values ... our commitment to nourish the abilities, energy and creativity of every Wisconsin child.
First and foremost, this budget maintains the state's commitment to fund two-thirds of the cost of our kids' education.
Especially when you consider how much more it costs just to fuel the busses and heat the schools, the funding I'm providing is hardly extravagant. Schools will have a modest, 3 percent increase to keep up with inflation - so that our kids continue to get a great education.
Second, we should make a major new investment in school breakfast, four-year-old kindergarten, and smaller class sizes from kindergarten through third grade ... because getting the right start is so critical to our kids' education.
Third, we must reform the school financing formula to make it fairer, more flexible, and more focused on the needs of our kids.
We can start by helping rural districts with transportation costs, providing relief to schools with declining enrollment, and continuing to address the disparity faced by our lowest spending districts.
I believe schools should never have to choose between teachers and police officers. We should give communities the flexibility to partner with local law enforcement ... put more police in the schools ... and protect our kids.
As part of this reform plan, we should allow communities the flexibility to devote more resources to mentoring new teachers...to help young educators be the best they can be.
Fourth, because Wisconsin's kids deserve America's best teachers, we must repeal the outdated, inflexible QEO.
Instead of just paying teachers for seniority, we'll give them the opportunity to get bonus pay of up to $5,000 a year by upgrading their skills, becoming state or nationally certified, and taking on teaching assignments in the most challenging schools.
Finally, let's make sure that the dream of college remains affordable to all.
My budget launches the Wisconsin Covenant, a guarantee that every young person who is willing to work hard and make the grade will have a spot in college and a financial package to help pay for it.
Tonight, to prepare for the first class of Covenant Scholars - and to help middle class families afford a college education - I propose a major increase in financial aid. In fact, we'll be on pace to triple financial aid since the day I took office.
In addition, we'll make a strong investment in the University of Wisconsin system to hold down tuition. Depending on what decisions are made about faculty raises, the Regents should be able to hold tuition to about 4 percent. And every student on financial aid will see an increase in their scholarship that will match the tuition increase, dollar for dollar.
I know the cost of college is a big concern for so many families. But everyone should also know that the University of Wisconsin remains the best value anywhere in higher education.
In fact, under this budget, in-state tuition will be $3,000 less than at the University of Minnesota, $3,400 less than the University of Michigan, $3,600 less than Illinois, $2,300 less than Ohio State and $6,000 less than Penn State. We're always at the top in football and basketball, but when it comes to tuition, we will be the second lowest of any Big Ten school.
Health Care
Two weeks ago, I called for bold action to ensure that Wisconsin's citizens have access to affordable, comprehensive health insurance.
For the mother who goes to bed listening to a sick child crying in the next room, wondering if she can afford to take him to the doctor in the morning...
...for the father who worries how he'll support his family if he gets sick...
...for the family that's forced to choose between paying the doctor bill and paying for groceries...
...we must do better. In 2007, in the United States, in our state, we can do better -- and together, we will.
By expanding health coverage to children and adults, and helping reduce the cost for hardworking families, we plan to make Wisconsin America's leader. At least 98 percent of our citizens will have access to health care coverage - more than any other state in the nation.
Tonight, I send you a budget bill that pays for this goal in a responsible way, making health care more affordable for Wisconsin families.
First, we'll work through the Medicaid system to get more federal revenue - an additional $575 million of federal money. Other states use financing tools that generate substantially more money than Wisconsin receives ... and I believe we shouldn't let any special interest group stand in the way of getting our fair share from Washington.
As another example, by extending health care coverage to 71,000 hardworking men and women making up to $20,000 a year, we'll receive an extra $100 million from Washington.
Second, just like we've done since day one, we're streamlining administration, cutting paperwork and slashing red tape.
For example, right now, when families apply for BadgerCare, a computer writes them a 12 page letter so complicated you might need a lawyer to understand it. We're going to simplify it dramatically ... giving families a straight answer and giving taxpayers a break.
We'll require people's eligibility for BadgerCare to be checked at least once a year ... and rechecked whenever their income goes up substantially. But we'll reform rules written in the 1960's that last year required state workers to perform more than 300,000 needless eligibility checks that never resulted in a single change in coverage.
This streamlining of the program, combined with other reforms, will generate at least $40 million in savings ... enough to pay the state's full share of extending health care coverage to every Wisconsin child.
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Third, building on the progress we've already made in BadgerCare, I'm ordering a top to bottom review of the entire $9 billion Medicaid program to find cost savings. This effort will be led by our new Secretary of Health and Family Services, Kevin Hayden - the former President of Dean Health Systems.
