This budget does nothing less than position Wisconsin to lead the way into the next century.
It does this by turning a challenge into an opportunity.
Here is the challenge we faced: to come up with an additional $1 billion for schools in this state.
$1 billion dollars. That's a lot of money.
Now some people, when they hear $1 billion dollars, their first response is "raise taxes!" ... "you've got to raise taxes!"
It doesn't even cross their minds that there might be another way. And it completely escapes them that we've tried their way before:
In 1911, Wisconsin created the nation's first income tax ... For property tax relief.
Did it work? No.
In 1961, we raised the income tax and the sales tax ... For property tax relief.
Did it work? No.
In 1969, we raised the sales tax for property tax relief. In 1982, we raised the sales tax again.
Did it work? No.
Raising taxes to cut other taxes just does not work.
What we accomplish in this budget is unprecedented. For the first time in Wisconsin history, we are cutting the property tax without raising other taxes.
Now, when I sat down to work on this budget, I decided to see it as a one-billion opportunity to improve education in this state ... And to completely re-shape and re-define state government.
It wasn't easy. We had to make some very tough decisions. We had to make some cuts.
I am going to be honest with you. There is some pain in this budget ... Pain that we will all have to share.
But we gave every cut every consideration. They were not arbitrary.
I have been working on this budget since last April ... For almost an entire year.
We have never spent more time putting a budget together ... Literally thousands of hours combing through agency budgets line by line ... Looking for efficiencies ... Looking for programs and positions that are no longer fundamental to our state responsibilities.
As I said, it wasn't easy. But this budget is straightforward ... It is honest ... It is deliberate ...
It turned a tremendous challenge into a tremendous opportunity ...
And it provides the largest single tax cut in the history of this state.
How did we do it?
Here was the problem:
· We had to meet our commitment to pick up two-thirds of the school costs for the state ... A commitment of $1.2 billion over the next two years.
This means school funding will have to increase by more than $250 million for the 1995-96 school year ... And by more than $950 million for the 1996-97 school year.
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· Meeting other advance commitments such as shared revenues, county mandate relief and community aids will require funding increases of about $160 million over the next two years.
In sum, meeting our commitments will mean funding increases of about $400 million in the first year of this biennium ... And approximately $1 billion in the second year.
Revenue growth from our growing economy will cover our obligations for the first year.
The big budget challenge is funding the additional $1 billion for school aids and other programs in the second year of the budget.
This is how we're going to do it:
1. Actions we are taking this year will provide savings of $232 million to carry into the next two years.
· This includes a hiring freeze for all state agencies.
· It also includes $128 million in medical assistance savings. Wisconsin is recognized as the best in the nation for managing our medicaid program.
2. We are cutting state agency budgets by 5% in the first year ... And 10% in the second. This along with savings from reorganization will produce $158 million.
3. We expect about $407 million in revenue growth from our growing economy.
4. We are saying no to almost all agency requests for increased spending.
5. We are closing tax loopholes and making the tax code more equitable, generating $60 million.
6. And we are increasing the school levy tax credit to provide $150 million for the 1996-97 school year.
This is how we fund the $1 billion commitment.
Not only do we meet the commitment ... We are also able to reduce the top income tax rate from 6.93% to 6.87% ... Which is the lowest rate since the great depression.
We are not shifting the spending and tax burden on to county and local governments.
· In fact, we are increasing increases shared revenues by $15 million next year to $931 million.
· We are also increasing funding for the expenditure restraint program for local governments by $4 million ... To $48 million.
· I made these commitments to local governments ... And I am sticking to them.
We are also taking major steps to relieve mandates on local governments. Just as I am asking the federal government to give states the freedom to conduct our own business ... I am giving the same freedom to Wisconsin's local governments.
· The state currently picks up 44% of circuit court costs. This budget picks up 90% ... More than doubling the state's share.
· We are lowering the age of majority for felony offenses to 17, meaning the state will assume the costs of incarcerating these young criminals.
· We are increasing funding for the county mandate relief account from $4.7 million this year to $20.2 million over the next two years.
· And we are relieving the counties of the mandate to provide funding for general relief.
This budget re-defines the role of state government. General relief is not a state responsibility. We didn't have anything to do with it until the early 1980's ... And the legislature tried to end it in 1993.
If the counties wish to continue it, they are receiving more than $200 million in shared revenues. It is up to them. The state will provide only enough funding for emergency medical care.
This is the solution. This is how we are meeting our commitments ... How we are providing real property tax relief.
This budget is complex ... It is comprehensive ... It is controversial ... But it is right.
It is the culmination of everything we have been able to accomplish over the past eight years:
· We built an economy that is the envy of the nation ... An economy that has given us the freedom to innovate and lead the way in welfare reform, education reform, environmental protection and crime prevention.
· We have balanced the books and controlled spending for the past eight years.
· We have actually reduced the per capita state tax burden ... One of only a handful of states in the nation to do so.
· We cut income taxes ...
· We eliminated inheritance and gift taxes ...
· We retained a 60% exclusion of the capital gains tax ...
· We have cut the unemployment compensation tax three times.
· And this year I am proposing to cut the income tax rate once again.
We are the only state taking $1 billion off the property tax ... And cutting income taxes at the same time.
Once again, Wisconsin is actually doing what everyone else is only talking about.
In eight years of solid economic growth and tax cuts, the only tax that has eluded our grasp is the property tax.
Not anymore.
Today we take the final step in our hard-fought battle for property tax relief.
Today we tell the taxpayers of Wisconsin ... We did it.
And we never could have done it without cost controls.
Eight years ago I stood before this legislature and said we needed to control local spending before we could control property taxes.
Seven years ago I stood here and said we needed to control local spending before we could control property taxes.
Six years ago I stood here and said we needed to control local spending before we could control property taxes.
I think you get the picture.
After seven long years -- and thanks to the leadership of people like Senate Majority Leader Mike Ellis ... Senator Joe Leean ... And Representative Ben Brancel -- we finally won the cost control battle.
Why are cost controls so important?
Take a look at state school aid increases since I have been Governor.
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Every year I have been in office, direct state aid to local schools has increased ... A total of more than $1 billion in the last eight years.
Schools make up the largest portion of your property tax bill.
So, logic would tell you -- if the state keeps putting more and more money into schools -- eventually you should see your share of the costs go down.
This hasn't happened ... As any property taxpayer in the state can tell you.
Why hasn't it happened? Because there were no controls on local school spending. The more money the state put in ... The more money schools spent.
What a difference cost controls make.
1990 ... 1991 ... 1992 ... Each year the state put more money into schools ... And each year property taxes kept going up.
But look at 1993. Cost controls begin.
1994 ... 1995 ... And here's my favorite -- 1996.
If we had established cost controls in 1987 -- when I first asked for them -- property taxpayers in this state would be paying 25% less than they are right now.
Cost controls work ... And I want to see them made permanent.
