. . . meeting our commitments.
. . . protecting the environment.
. . . doing more to help businesses grow so they can create new and better jobs.
. . . helping families thrive.
. . . showing compassion for the neediest members of our society.
. . . working cooperatively to take care of the people's business.
For me . . . a budget is a statement of who we are . . . and what we value . . . it defines those principles we are willing to fight for.
We all know that . . over the course of the next several months . . great debates will rage over how our values and our priorities are reflected in the final budget document.
But I want to make one thing very clear.
I want to work with each one of you . . . in both houses . . . in both parties . . . to make sure we all share in the making of Wisconsin and that the values we all bring to this endeavor will be reflected . . . to the greatest extent possible . . . in the final version of this budget.
The proposed budget reflects what I believe are the values all citizens of Wisconsin share . . . and I am more than willing to talk about how we can work together to reach common ground for the common good.
But you also need to know from the outset that I will not support any budget package which would impose a financial burden on Wisconsin taxpayers that exceeds their ability to pay.
Has this been an extraordinarily difficult budget to assemble?
You bet.
Do I wish we could go farther or faster in some areas?
Absolutely.
However, I also believe it's important for governments . . . just like our families . . . to live within their means.
The daily lives of all the citizens in this state are filled with difficult choices as they decide how to balance expenses with income.
Can they afford a new car?
A new home?
Can they cover their heating bill?
Buy enough food?
How much can they afford to save for their children's education?
Or investing for retirement?
And from these hard-working people we take taxes.
They trust us with their money and they trust us to spend their money wisely as we work not only to sustain . . . but to improve . . . the quality of life we have all come to enjoy in Wisconsin.
We must never abuse that trust.
In my inaugural address . . . I said it's time for government to demand less so our citizens can do more for themselves and their families.
This is the time.
This is the budget.
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This is when we need to make sure Wisconsin's financial house is built on a solid foundation.
We've been using the taxpayer's credit card to increase spending and we've come up short in producing the money to pay the bill . . . so now we've got to make some painful decisions and take steps to make sure this situation is not repeated.
I can tell you today that the 3 percent and 2.9 percent spending increases in this budget are the lowest GPR spending increases in over 30 years!
There are two over-arching themes which guided the development of the budget I present to you today.
The first is the need to control state spending and provide a mechanism to lower taxes and avoid larger budget deficits.
The second is my commitment to build an even more vibrant state economy . . . to invest in the creation of good paying jobs . . . to build upon the solid economic foundation which has been laid over the past 14 years.
I believe this budget accomplishes these goals.
My proposal to cap state spending increases at the rate of growth in personal income will get state spending under control. And . . . if you're wondering . . . the spending increase in this budget would come in well under the cap . . . if it were in place today.
My proposal to return half of all future surplus funds to state taxpayers provides a mechanism for additional tax relief.
My proposal to direct half of any future budget surpluses to the Budget Stabilization Fund will help avoid a repeat of the deficit challenge we faced in putting this budget together.
However . . . I also know that others here have been at work on these same issues . . . fighting for the same sound approach to spending and taxes.
When the last biennial budget was passed . . . I expressed my personal concern about the rate of spending growth in that budget.
We have now seen where excessive spending takes us.
We began this budget planning process with a structural deficit estimated to be $475 million in the current fiscal year.
However, the nation's economic slowdown over the past few months has forced us to revise our revenue figures downward . . . and these lower revenue projections pushed the deficit up to $557 million in each year of the upcoming biennium.
That means we have to use $557 million of revenue growth in the first year of the upcoming biennium . . . and another $557 million of growth in the second year just to sustain our current levels of spending.
And . . . as you all know . . . this $1.1 billion structural deficit . . . the largest in state history . . . must be covered before a single dime is allocated for a single new program.
My friends . . . let us vow . . . right here . . . right now . . . to work together to make sure that no future governor . . . regardless of party . . . will be forced to begin a biennial budget cycle with a deficit of this magnitude.
Furthermore . . . and let me say this in unambiguous words . . . as long as I am governor . . . . I will do all I can to make sure the state of Wisconsin does not face a deficit of this magnitude again.
You also need to know that part of the equation for balancing this budget is my proposal to "securitize" the stream of payments Wisconsin is slated to receive from tobacco companies as part of the recent national settlement.
By selling the state's right to receive these payments to bond investors and by turning the bulk of their immediate payment over to the Wisconsin Investment Board to invest . . . Wisconsin can turn an expected $5.6 billion in payments over the next 30 years into about $6.8 billion over that same period of time.
I am proposing that $350 million of the amount we initially receive be used to offset the current structural deficit and that the balance be assigned to a permanent endowment fund. The earnings on the endowment fund will be used to support anti-smoking efforts and other health-related programs.
This is sound fiscal management which will yield both short and long-term financial and health benefits for Wisconsin's citizens . . . but only if we act responsibly in managing the proceeds of this settlement.
As we work together to come to agreement on this budget . . . I would ask that you not jeopardize the state's bond rating . . . or mortgage our children's future . . . by dipping further into this fund.
This is just one example of how this has been a daunting budget process . . . perhaps the most difficult budget in many years . . . but it's also provided us with some great opportunities.
And it's those opportunities I am most excited to talk about today.
The opportunity to focus on performance and productivity . . . rather than spending.
The opportunity to look for ways to further streamline government . . . at all levels.
The opportunity to provide more efficient and more effective services at a lower cost.
The opportunity to re-focus our priorities on those things which most need our attention and our resources.
Call it . . . the re-making of Wisconsin.
That is the opportunity this budget has presented to us . . and . . together . . we must accept the challenge.
The budget I present to you today does not shift the state's financial shortfall to other units of government . . . it does not raise taxes . . . and it does not rely on accounting tricks to balance the books.
This is a budget built on the same principles we all learned in Accounting 101 . . . you don't spend more than you take in and you don't rob Peter to pay Paul.
It's common sense.
It's sound fiscal management.
It's our sacred obligation as public servants.
Despite the challenging budget picture . . . I am recommending major new financial investments in the following areas:
$540 million more for public schools . . . to help fund school costs and continue to provide much-needed property tax relief.
$206 million more for corrections . . . for a more compassionate and effective approach to rehabilitation and making sure that our citizens are more secure.
$201 million more for medical assistance . . . to provide more medical services to the neediest in our state.
There is also new money to grow and build Wisconsin's economy and to help create more high-skill . . . high-wage jobs. In other words . . . more opportunities for our citizens to improve their lives by moving up the economic ladder.
⋅ Twenty technology development zones will be created to help develop high-tech . . . high-skill . . . high-wage jobs.
⋅ An airport hub property tax incentive will be provided to encourage airlines to create high-paying jobs in Wisconsin.
⋅ The single sales factor approach to apportionment of corporate taxes will be phased in . . . so that Wisconsin is more competitive with our neighboring states when it comes to locating new plants and creating new jobs.
⋅ A "Rural Initiative" to reinvigorate Wisconsin's historic commitment to small towns and farms by providing grants and start-up assistance to small business owners and family farmers.
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⋅ Funding for the TechStar program . . . which will provide grants to a consortium of southeastern Wisconsin universities to help turn their research efforts into marketable products.
⋅ Funding for the "Milwaukee Idea" . . . which will increase the number of faculty and students enrolled at the University of Wisconsin-Milwaukee in high-demand occupational areas. This money will also provide for creation of the "Academy of Excellence" honors program on the Milwaukee campus . . . which is an initiative aimed at keeping Wisconsin's best and brightest students learning . . . and, hopefully, working . . right here at home . . . in Wisconsin.
⋅ Another $11.8 million for the "Madison Idea" . . . which focuses on increasing educational options for students at the University of Wisconsin-Madison and for enhancing economic development.
⋅ Funding will be provided to the Wisconsin Technical College System to create a 17th campus. But this one will be a virtual technical campus . . . on-line.
⋅ The gross receipts tax on wholesale power transactions will be cut in half to help increase the supply of energy and reduce the cost.
⋅ We will begin the process of reconstructing the Marquette Interchange in Milwaukee. This is a crucial . . . indeed indispensable . . . link for commerce flowing throughout the entire state of Wisconsin.
⋅ Ten million dollars will be earmarked for the Canal Street project in Milwaukee to help facilitate redevelopment in the Menomonee Valley.
⋅ $9.1 million will be provided for infrastructure improvements around the soon-to-be-refurbished Lambeau Field in Green Bay.
Technological changes are also having a big effect on state government . . . and in defining the way we provide services to the people of Wisconsin.
That is why I am proposing creation of a new Wisconsin Department of Electronic Government . . . to be headed by a state Chief Information Officer . . . and which will be responsible for technology planning and project implementation.
This new department . . . which will be formed from existing divisions within DOA . . . will help incorporate emerging technologies into the workplace . . . and will help us provide better and more efficient services . . . and at a lower cost.
And when we speak of "efficiency" . . . we must take a moment to speak of Don Kettl . . . one of Wisconsin's most valuable resources.
In January . . the Kettl Commission presented its report on State-Local Partnerships and this budget includes the commission's recommendations on municipal shared revenue.
