Chairperson
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Senator A. Lasee, with unanimous consent, asked that the Senate recess until 6:45 P.M..
10:19 A.M.
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6:45 P.M.
The Senate reconvened.
Senator A. Lasee in the chair.
Senator Lasee, with unanimous consent, appointed Senators Darling and Decker to act as escorts to his Excellency the Governor.
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Senator Panzer, with unanimous consent, asked that the Senate recess for the purpose of convening in a joint convention to receive the Governor's budget message and adjourn until 9:00 A.M. Thursday, February 20 upon the rising of the joint convention.
6:56 P.M.
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The President of the Senate in the Chair.
The committee to await upon the Governor appeared with his excellency the Governor, who delivered his budget message as follows:
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Mr. Speaker, Mr. President, Mr. Speaker Pro-Tempore, Lieutenant Governor Lawton, Constitutional officers, members of the Cabinet, distinguished members of the Legislature and fellow citizens of Wisconsin:
Tonight we embark on a difficult journey together. The course will be demanding. The hardship will be real. But the destination is unmistakable: a brighter tomorrow for Wisconsin. Our state will be a better place for the choices we make. Fiscal responsibility will be restored. Our economy will be revived. And faith in government will be renewed.
Let me state this clearly … For too long, state government has spent too much and led too little. And it stops tonight. For the first time in 22 years, Wisconsin will live within its means. Our budget will be balanced -- not just on paper, but in practice. And I am proud to announce that despite a fiscal crisis of historic proportions, we have balanced this budget without raising taxes.
Just as important, we have done it without destroying what's most precious to us.
We all know how we arrived at this point. For years, state government has spent more than it could afford. The state bureaucracy has ballooned. At the height of the economic boom of the 1990s, Madison went on a spending binge but barely put a dime aside for a rainy day.
When the economy faltered, state government had a choice -- to look our problems in the eye or look the other way -- and it chose the easy road of the temporary fix. Tragic mistakes like selling the tobacco settlement made the problem worse while merely pushing the tough decisions off to another day.
Now that day has arrived. We are $454 million in the hole this year and we face a $3.2 billion shortfall over the next two.
And make no mistake: The choices are tough indeed -- among the toughest any of us will ever have to make. This budget eliminates 2,900 state jobs. It reduces funding for the University system by $250 million. It slashes one in every 10 dollars in state operating costs.
As we proceed, let's never forget this: On the other end of these cuts are real people who will feel real pain. We'll do what we have to do. But we should do it with respect and understanding towards those who bear the burden.
And let's remember this too: Budgets are about choices.
We have to choose between less spending and more taxes -- and my budget chooses less spending.
We have to choose between unfairly burdening a few or all sharing a measure of pain -- and my budget says we're all in this together.
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We have to choose between slashing thoughtlessly and setting priorities, -- and my budget protects what matters most.
No matter how you believe we should balance the budget, you must choose. If you disagree with a cut I've proposed, suggest an alternative -- not an abstract idea or a political one liner, but equal dollars in a particular program you believe is less important. It's my job to present a balanced budget, and it's your job to pass one.
Because this crisis demands immediate action, I have agreed with Speaker Gard and Majority Leader Panzer to base this budget on the revenue estimates of the Legislative Fiscal Bureau. In years past, governors have appeared at this podium armed with their own budget numbers, and legislators have replied with theirs, and we have wasted days and weeks and months arguing about whose were more accurate. I want this to be a debate about priorities, not projections. So let's use your numbers.
And I want it to be a debate about the budget, not extraneous side issues. We've done our best to stick to the work at hand and eliminate unrelated matters. I challenge you to do the same.
This budget is comprehensive, but it is not perfect. I've asked you for an open mind, and I promise that your suggestions will get the same hearing. You deserve no less.
As I have developed the budget blueprint, I have established five priorities:
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Not to raise taxes -- because Wisconsin taxpayers already pay their fair share.
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To distribute budget cuts fairly -- because we're all in this together.
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To protect education, health care, key local services and the environment -- because no matter how deep this crisis is, we have to protect what's most important.
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To reduce spending and make government more efficient -- because if we're going to ask the people of Wisconsin to accept less, we have to do more with less.
5. To do it once and do it right -- because we need to get on with Wisconsin's future, not return again and again to the problems of the past.
This budget meets all of these goals. But it hasn't been easy.
Under this plan, state government will eliminate the shortfall and run a surplus in both 2004 and 2005. We will do so by cutting deeply into current spending, setting priorities for the money we have, and fighting for every federal dollar that's owed to us. Specifically:
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We have four months left in the budget I inherited from the prior administration. We can't postpone the hard decisions and I have recommended reducing this current year's deficit by $161 million. We need immediate action, and I've proposed it. Now it's time for the Legislature to pass it.
This $161 million represents a beginning, not the end. We're reviewing every state building project -- cutting back on out-of-state travel for state workers -- reducing the bureaucracy -- scrutinizing every open position to see whether it really needs to be filled -- stopping the purchase of new state cars -- and more.
Our effort has been massive:
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We have cut nearly $1.5 billion in state spending -- Wisconsin's first two-year spending cut in 30 years. Let me say that again – Wisconsin's first two-year spending cut in 30 years. Never before has a budget so thoroughly reformed and reduced state government. We have cut as no administration has ever cut before. We have eliminated jobs. We have slashed overhead. We have abolished agencies. And we have done much more. The depth of these cuts matches the depth of this crisis.
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We transferred $500 million from the transportation fund to schools and shared revenue -- protecting education and essential services like police officers and firefighters.
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We transferred $200 million from the Patients Compensation Fund to more urgent health care priorities.
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We'll save a total of $408 million by going after all the federal Medicaid funds that are owed to us.
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We're confident that we'll successfully negotiate historic agreements that will result in a minimum of $237 million in additional Tribal Gaming Revenues. All the people of Wisconsin should join me in acknowledging the important effort the tribes of Wisconsin are making toward helping the state in this difficult time.
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And because I believe in leading by example, I've cut the Governor's office budget by 19 percent – and returned my pay raise. And I've asked my cabinet secretaries to follow my lead and give back any pay increases above what their predecessors received.
Those measures, combined with $275 million in other actions, will eliminate our $3.2 billion shortfall and actually create a surplus of $40 million at the end of 2005.
We'll add to our reserve too -- not as much as I'd like, but a considerable improvement over not having one at all.
Just as important, my budget solves this problem once and solves it right. For more than 20 years, we've started every state budget with spending promises that increase faster than revenue. Accountants call it a "structural deficit." I call it irresponsible … and it stops tonight.
At the end of this budget, we'll be spending less than what we take in, not more. The next time we write a budget, it will be on a clean slate.
Despite these historic reductions, some people will say this budget doesn't cut enough. If they have suggestions for where to cut more, I'm ready to listen. But a year ago, if state government had done a fraction of what I'm proposing tonight, we wouldn't be in nearly the mess we're in. My cuts are steep, they are serious, and let's not kid ourselves: They vastly exceed anything state government has been willing to consider in recent years.
Before I talk about spending items in this budget, let's discuss where the money will come from.
This budget does not raise taxes. It does not raise
income taxes, sales taxes or corporate taxes. It leaves exemptions in place. And we allocate nearly a billion dollars for property tax relief.
Fees are increased only if they have not been raised recently, they do not currently cover the costs of the program they are supposed to finance, and the increases are modest.
This budget, like all, relies on some one-time revenue sources. Because one-time sources helped create the current mess, we used them sparingly.
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But unlike in years past, this limited use of one-time revenues won't endanger our future. We are using them as part of a long-term plan that results in long-term balance, not a one-time fix that just delays hard decisions. We've used several hundred million dollars in one-time revenues to pay off the budget deficit we inherited this year. Most of the other one-time revenues are used in the first year of this budget to get us through the worst of the problem. We begin to phase them out in the second year. And by the end of this budget, we will have cut state spending enough that we won't have to rely on these revenues any more.
Now, let's look at some specific spending areas.
I begin tonight where our first priority should be.
This time of extraordinary financial distress demands that we cut nearly everywhere in our budget. But just as urgently, every bit as passionately, I believe there is one area which calls for more investment.
That is why we searched hard, and searched deep, and made room in this budget for a $100 million increase for our schools.
Some will ask how I can justify spending more on schools when so many other programs are being cut. To them I reply: Education is my top priority because it points the way out of this crisis. Education is the key to our economic future. And no matter your party or point of view, we should all be able to agree on this: Our kids shouldn't have to pay for Madison's mistakes with their futures.
On top of this additional spending on schools, low-spending districts -- 98 in all -- will be allowed to spend more on education, and therefore receive more aid.
The budget leaves existing revenue caps in place. Within those limits, school districts should be able to decide what they spend based on what their kids and their communities need. That's something on which everyone should be able to agree. If you believe Madison doesn't always know best, then let our communities decide.
And speaking of giving school districts the freedom to make their own choices, it's time to repeal the QEO. The QEO isn't working. It's making it harder to attract and retain the best teachers for our kids at a time when record numbers of educators are leaving the profession. And it's wrong to single teachers out and treat them differently from other public employees.
I'm going to fight for every penny we've proposed for our schools. But we must also confront a hard reality: State government can no longer afford to finance two-thirds of funding for public schools. The money just isn't there. So I call on school districts to join state government in taking a close look at every penny -- preserving what's most important, but also clamping down on what's not. The money needs to go to classrooms and kids, not the bureaucracy.
Next, my budget protects shared revenue.
Shared revenue will be fully funded next year -- even though doing so required us to find $600 million in each year of the budget -- a total of $1.2 billion -- to replace the one-time use of the tobacco settlement. In Fiscal Year 2005, we'll spend at least $931 million on shared revenue -- amounting to a total cut of less than 4 percent over the course of the budget.
Year in and year out, local governments depend on shared revenue to fund essential services like police and fire protection. When I talk to people about they want out of government, they tell me they want us to protect the services that matter most in their lives, and that's what shared revenue does.
Yet local governments have been derided as Wisconsin's big spenders. Well, I've spent the last six weeks searching high and low for the big spenders. I've found them, and they're right here in Madison. State government is the big spender in Wisconsin, not communities around our state.
If we don't restore shared revenue -- if we leave in place what the Legislature did last session -- local services like police and fire protection will be devastated and our citizens will be socked with the biggest property tax increase in the history of our state. That's not acceptable to me, and it shouldn't be acceptable to you either -- but that is exactly what will happen if the Legislature tries to solve this crisis on the back of shared revenue.
There are four things a governor can do to keep property taxes low. The first is restoring shared revenue. We did. The second is providing adequate funding for education. We did that as well. The third is leaving revenue caps in place. We did that too. The fourth is providing property tax relief by fully funding the levy credit. We've allocated $938 million to do just that.
But we also need help from school boards and local officials. In the past, Madison has called on them to do more with less without doing any of the heavy lifting ourselves.
Tonight, we are leading by example, and I ask school boards and local officials to join together with us -- because Wisconsin's families can't afford more property taxes any more than they can handle more income or sales taxes.
Over the last few weeks, I've talked with school leaders and local officials across Wisconsin. They're committed to holding the line on property taxes -- and we're committed to doing all we can to help.
The budget also reduces funding for the university system by $250 million. These choices were especially difficult for me. I know how important our universities are to individual opportunity and economic development alike. But everyone must share in the sacrifice needed to clean up the budget mess -- and the university system can't be an exception.
The budget limits tuition increases to $250 a semester at most campuses and to $350 in Madison and Milwaukee. I hope the university and the Board of Regents won't increase tuition even that much, but under no circumstances may they go higher.
For a working family, $250 or $350 is a lot of money. But we still have the second-lowest tuition of any Big Ten school. And the only state behind us -- Iowa -- has already announced tuition increases of 19 percent.
Still, no matter how dire the budget crisis may be, we must not close the gates of opportunity to working families. That's why this budget boosts financial aid by 56 percent -- the biggest increase in Wisconsin history.
Wisconsin's budget crisis is intertwined with America's health care crisis. Health care costs are soaring, the number of people who need help is climbing, and we need national leadership to help solve the problem.
