This balance will also protect us from any further downturns in the economy. My budget proposal wisely included the option of up to $350 million in savings by structural refinancing of the state's debt in the event of revenue shortfalls during the biennium. Unfortunately, the Legislature rejected this option, leaving the state unprotected in case of future economic downturns. Given the softness of recent state sales tax receipts, and the weakness of the national economy, I believe increasing the size of the balance is a fiscally responsible measure to help minimize the chances that we will need a budget repair bill later in the biennium.
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From general purpose revenue, net spending will be $10.7 billion in fiscal year 2003-04 and $11.7 billion in fiscal year 2004-05, for a biennial total of $22.4 billion. These figures represent a spending decrease of 2.4 percent in fiscal year 2003-04 and an increase of 9.2 percent in fiscal year 2004-05, primarily due to increases in spending for Medical Assistance costs for our low-income citizens. Compared to the previous biennium, spending in the 2003-05 biennium will be less than one percent higher – a record in fiscal restraint. Total spending under the 2003-05 budget, will be $24.0 billion in fiscal year 2003-04 and $24.6 billion in fiscal year
2004-05, for a biennial total of $48.6 billion.
I am signing this budget with a total of 131 vetoes. Many of these vetoes were needed to reduce spending by a total of $315 million. These vetoes will also reduce the structural deficit confronting the state in the next biennium. A number of these vetoes are technical in nature and were required to make provisions workable. Many of the vetoes curb attempts by the Legislature to micromanage the day-to-day operations of state agencies by eliminating burdensome new reporting requirements. The Legislature has a legitimate interest in knowing how state programs are working, but at a time when we are trying to streamline state government and make it work more efficiently and cost effectively, it is counterproductive to impose unnecessary new reporting requirements.
The budget I introduced in February was balanced without tax increases. The Legislature's partisan budget raises taxes, increases the structural deficit, blames schools and local governments for the state's budget mess, threatens environmental protection efforts, and leaves Wisconsin seniors at risk. The budget I am signing puts Wisconsin back on the right track – no tax increases, continuing educational excellence, support for key local services, a better environment and economic prosperity for all of Wisconsin.
Restoring Fiscal Discipline
No increase in income, sales or corporate taxes. No change in exemptions or deductions.
Erases the $3.2 billion deficit and leaves a $205 million balance in fiscal year 2004-05.
Restores fairness to the shared revenue program by removing provisions which would have forced many of the state's poorest communities to absorb disproportionately large reductions in state aid.
Economic Development and Transportation
Improves highway safety and enhances economic development by providing almost $1.6 billion of state and federal funding for highway rehabilitation and construction projects over the biennium. Despite the record state budget deficit, highway rehabilitation and construction spending will be $77 million higher in this biennium than in the previous one.
Enumerates four new major highway projects: USH 14 in Vernon County, USH 18 in Crawford County, USH 41 in Winnebago County and USH 41 in Brown County.
Provides $244 million over the biennium for the reconstruction of the Marquette Interchange in the city of Milwaukee and ensures sufficient funding for critical projects on the Southeast Wisconsin freeway system.
Provides $400,000 for grants to local units of government, including regional transportation authorities and transit commissions, for the development of commuter rail transit systems.
Provides $94,000,000 of revenue bonding authority for the petroleum environmental cleanup fund award (PECFA) program to meet projected claims over the biennium.
Provides $9,200,000 SEG annually for brownfields assessment, remediation and green space grants.
Sets-aside $1 million to help fund economic development initiatives in communities affected
by plant closings.
Environmental Protection and Resource Management
Ensures continued protection of Wisconsin's abundant natural resources by maintaining the current law bonding authorization level for the Warren Knowles-Gaylord Nelson Stewardship 2000 Program.
Provides more than $3.5 million over the biennium to monitor and control chronic wasting disease (CWD) in wild and captive deer populations, including five critical animal health positions at the Department of Agriculture, Trade and Consumer Protection to help combat CWD in Wisconsin's game farms.
Increases funding by approximately $1.6 million over the biennium to expand efforts to control and prevent the spread of invasive aquatic species that are damaging our state's lakes and rivers.
Transfers an additional $500,000 in each year from tribal gaming revenues to the fish and wildlife account of the conservation fund to support wildlife and fisheries management activities.
Creates new junior conservation patron and sports licenses to encourage the participation of Wisconsin's youth in outdoor recreation.
Transfers $650,000 in each fiscal year of the biennium from tribal gaming revenues to the parks account of the conservation fund to support operations at Wisconsin's state parks and trails.
Agriculture
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Prevents, through veto, a $23 million tax increase on more than 20,000 Wisconsin family farmers by restoring the Farmland Preservation Tax Credit Program. This program provides income tax relief for many lower income farmers in Wisconsin, helps support soil conservation and water quality efforts, and serves as an incentive for communities to protect their agricultural lands through land use planning.
Expands property tax relief for farmers by reducing property tax assessments on agricultural woodlands and wetlands. This property tax relief is focused, through veto, to ensure that the agricultural woodlands provision is not abused by non-farmers.
Provides nearly $2 million annually for ethanol production supports to encourage the growth of the ethanol industry in our state.
Education and Training
Recognizes the priority of Wisconsin's great school system by providing $189 million over the biennium to increase general school aid to Wisconsin's elementary and secondary schools and relieve pressure on local property taxes.
Provides additional revenue limit authority to the state's lowest spending school districts to help reduce inequality in educational opportunity.
Maintains the existing level of state support for four-year-old kindergarten programs in public and choice schools.
Preserves the School Age Guarantee in Education (SAGE) small class size initiative.
Removes a requirement that would have increased teacher license fees by 50 percent.
Increases special education aid by $5,875,700 GPR over the biennium.
Retains the current law Chapter 220 Interdistrict Integration Program, which provides educational and cultural opportunities between city of Milwaukee and suburban district students.
Maintains funding for most GPR-funded categorical school aids, including bilingual-bicultural education, school nutrition programs, alternative education grants, and pupil transportation.
Provides the largest increase in state history, $23.6 million over the biennium, for state-funded financial aid programs available to University of Wisconsin students, representing a 55.7 percent jump over the previous budget.
Increases the number of graduates in nursing and other health profession programs by creating a new grant program at the Wisconsin Technical College System.
Authorizes the Department of Workforce Development to continue its implementation, under Wisconsin Works, of a transitional wage-paying jobs option, a program which has been demonstrated to help participants transition more quickly to permanent private-sector employment and will increase the overall skill level of Wisconsin's work force.
Human Services
Preserves Medical Assistance benefits for the elderly, disabled and low-income families, with no reductions to either eligibility standards or services.
Preserves the BadgerCare program to ensure health care access for working families.
Preserves SeniorCare to ensure affordable prescription drug coverage for the elderly and vetoes legislative increases to copayments paid by participants.
Controls prescription drug costs by adopting more prudent purchasing processes, expanding the use of prior authorization and creating mechanisms to implement preferred drug lists and purchasing pools.
Provides funding to pilot a comprehensive reform of long-term care services for children.
Increases funding for Milwaukee County child welfare services and for statewide foster care and adoption assistance for children with special needs.
Provides funding to complete implementation of the Wisconsin Statewide Automated Child Welfare Information System and vetoes an increase in the county share of this cost.
Reduces excess institutional capacity for intermediate care facilities for the mentally retarded by creating incentives for facilities to downsize and place residents into the community.
Increases the number of community placements for patients currently residing at Northern Wisconsin Center and significantly downsizes the center. This downsizing will also decrease the number of state positions.
Public Safety
Slows the growth in prison spending by eliminating nearly 200 primarily middle management, office and administrative positions in the Department of Corrections.
Improves the reentry of inmates into the community by providing funding and staff to open two minimum security workhouses, one in Winnebago and one in Sturtevant. The workhouses will provide a variety of employment-focused programming and increase offender employability after release.
Increases state prison capacity and reduces reliance on out-of-state contract beds by opening the medium security New Lisbon Correctional Institution and the minimum security Highview Correctional Institution. Expands Wisconsin's much-needed capacity for alcohol and drug treatment options for offenders by opening the Highview Correctional Facility as an intensive drug and alcohol treatment facility.
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Reduces prison costs by expanding the capacity for alternatives to revocation in state prisons and by opening the probation and parole hold facility in Sturtevant. Alternatives to revocation programs will enhance efforts to reform offenders and offer a cost-effective alternative to prison placement.
Reduces prison costs by creating an earned release program for certain graduates of the intensive Drug Abuse Correctional Center, by providing staff and funding to create a felony drug offender alternative to prison program in Milwaukee County for female offenders, and by providing staff and funding to convert the Black River Correctional Center into a boot camp under the Challenge Incarceration Program.
Protects the vital operations of the state crime laboratory by removing, through veto, the Legislature's proposed lapse of funds needed to employ forensic scientists at the lab.
Makes additional investments in youth diversion programs, truancy abatement, and youth mentoring programs through the Office of Justice Assistance.
Continues to fund Wisconsin's restorative justice efforts including restorative justice coordinators in the Milwaukee and Outagamie county district attorney offices, and promotes drug-free communities by continuing funding for an anti-drug prosecutor in both the Milwaukee and Dane county district attorney offices.
State Government Operations
Reduces the size of state government by eliminating almost 2,300 positions.
Modifies vesting procedures for post-retirement sick leave conversion to health insurance, thereby enabling active employees to leave the work force earlier and help state agencies manage position reductions.
Streamlines statewide information technology management by eliminating the Department of Electronic Government.
Introduces the principle that all state employees will pay for a share of their health insurance costs and should pay more to join more costly, less effective, health care plans.
Creates a pharmacy purchasing pool that will enable every state resident to save money when purchasing prescription drugs.
Fully funds National Guard Educational Tuition Reimbursement program.
Recognizes the sacrifices made by Wisconsin's veterans by increasing, rather than decreasing as proposed by the Legislature, reimbursement levels for the Veterans Educational Tuition Grant Program.
Provides health care aid grant increases of $300,000 annually for veterans' dentures, eye care and hearing aids.
Increases Veterans Service Organization grants by $120,000 biennially.
Authorizes staffing for a new 120-bed skilled nursing facility at the Southeast Wisconsin Veterans Home.
There are also several budget provisions I did not or could not veto that warrant discussion.
1. Qualified Economic Offer – The budget I introduced in February included a repeal of the qualified economic offer provisions under the collective bargaining law for teachers. This provision was removed from the budget by the Legislature as a "nonfiscal policy item." The Legislature's refusal to address this issue is regrettable. The removal of this provision is a further example of this Legislature's lack of support for the dedicated individuals who teach our children. I remain steadfast in my commitment to end the unfair treatment of teachers
and will continue to seek a repeal of this unnecessary law.
2. Specific Position Reductions – Through several legislative motions, not directly included as part of the budget bill, the Legislature (through Joint Committee on Finance actions) has attempted to dictate specific positions for deletion in this bill. It is my intent to give discretion to executive branch agencies to determine which positions will be deleted. This means that the Department of Health and Family Services will have the flexibility to substitute other positions in place of the assistant area administrator positions deleted in a Joint Committee on Finance motion. Similarly, the Department of Corrections will have the same latitude to substitute other positions in place of the correctional unit supervisors and assistant unit supervisor positions deleted by another Joint Committee on Finance motion. Retaining these positions will improve the departments' ability to effectively manage program costs and corrections populations.
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3. Reductions to Tribal Gaming Programs –
Senate Bill 44 reduces or eliminates funding for several important programs funded from tribal gaming revenues. Examples of these reductions include grants to alternative schools for Native Americans, investments in the aquaculture industry, county-tribal law enforcement grants, upgrades to wastewater treatment facilities and support for businesses located in areas near casinos. While I cannot use my veto authority to restore funding to these programs, I believe these reductions are unnecessary and counterproductive. The tribes have provided considerable revenues to the state. Investing a portion of these revenues in education, law enforcement, business development and clean water benefits all of Wisconsin.
4. Energy Conservation Efforts under the Public Benefits Program – The Legislature unwisely transferred an additional $20 million from the public benefits energy conservation program into shared revenue payments in fiscal year 2003-04 beyond what I had proposed in my budget. As Wisconsin enters a period with significant construction of new power plants, we need to make significant and sustained investments to encourage the use of renewable energy and energy conservation. For every dollar spent on conservation, over $3.50 is realized in energy savings. This is a great return, and a good investment for Wisconsin.
Despite facing a $3.2 billion deficit, the budget that I proposed to the Legislature in February recommended spending more than $94 million on energy conservation in the 2003-05 biennium. That amount would be even higher were it not for the fiscal crisis I inherited. The reductions in my initial budget were scheduled for the second year of the biennium in order to adequately prepare for fewer resources while maintaining an effective energy conservation program. Unfortunately, the Legislature took funds in the first year of the budget which will have an immediate and dramatic effect on our valuable energy conservation program. We cannot have a responsible energy policy without a sustained investment in conservation. Because of the Legislature's short-sighted action, a considerable reassessment our energy conservation efforts will be necessary.
5. Hunting and Fishing Fees – Senate Bill 44, as passed by the Legislature, did not include the modest hunting and fishing license fee increases that I included in my proposed budget. As a result of their refusal to include these modest fee increases, conservation programs in our state will suffer and citizens and visitors who enjoy our natural resources will take notice. It has been seven years since license fees were last raised and all major conservation groups in the state supported the modest fee package that was included in my budget proposal. Unfortunately, the Legislature played politics with our natural resources and refused to listen to the users and conservation leaders who recognized the need for continued investment in our critical conservation programs. While I am unable to use my veto authority to restore the modest fee increases included in my budget proposal, I believe that we must provide additional resources for our fish and wildlife programs. Our citizens demand robust conservation programs; our recreation industry cannot succeed without them.
6. Department of Public Instruction Budget Reductions – In their assault against public education, the Legislature also unfairly targeted the Department of Public Instruction (DPI) for cuts well beyond those recommended in my original budget. While no part of state government can expect to be exempt from the reductions needed to balance this budget, the Legislature's cuts needlessly target DPI. This is especially true in light of the importance of the department's mission and its treatment by the Legislature in recent years. At a time when the department must implement far-reaching new federal requirements, and often without the promised money from Washington to do the work, these are unwise cuts. Unfortunately, I cannot restore the Legislature's cuts through my veto power.
7. Technical Correction of Existing Bonding Authorization for Grant to HR Academy – The 2001-03 biennial budget included the enumeration of $1.5 million in general obligation bonds to help support the construction of a youth and family center at the HR Academy in Milwaukee. This public-private partnership is seeking to improve educational opportunities for underprivileged students and their families. Senate Bill 44 includes a technical correction to the bonding authorization so that it complies with the State Constitution. Unfortunately, this technical correction was included in a much larger amendment that was introduced and passed by the Senate in the middle of the night without bipartisan debate or review.
If not for the fact that this provision is technical in nature and modifies an item already in law, I would have vetoed this change. I cannot condone the way this amendment was brought to the floor and adopted. It is backroom deals like this that led to the fiscal mess we are trying to solve in this budget. I look forward to the Legislature promoting more open and bipartisan debate on budget and policy matters in the future.
8. State Operations Spending Limit – The Legislature's budget includes a requirement that the 2005-07 biennial budget spend $100 million less annually than this budget will on state operations. This provision was included in a last minute amendment to the budget in order to give the appearance that the Legislature had addressed the state's structural deficit. Instead of making difficult decisions themselves, they deferred those decisions to the next biennium and to the Governor to propose.
Limits such as this one serve little useful purpose. My budget made deep and difficult cuts in state operations – it cut $250 million of state support from the University of Wisconsin System, it eliminated 200 middle management positions at the Department of Corrections and over 100 positions at the Department of Administration. On average, I cut state agencies by 10 percent. I made these cuts because I was committed to balancing this budget without tax increases.
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The Legislature simply took credit for most of my cuts to state operations. In some cases, they actually reversed a few of those cuts, spending more GPR in the process. They chose to avoid making tough decisions by taking ill-conceived swipes at state operations – including a mandate that the lowest paid, but most sorely needed, workers in state government – health care workers and other part-time employees – pay 50 percent of the cost of health insurance.
While I believe that this limit is simply another example of the Legislature shirking its responsibilities, the Legislative Fiscal Bureau has relied on this provision to calculate that the Legislature's budget will have a structural deficit of $923 million going into the 2005-07 biennium. That figure has been used extensively in describing the impact of this budget on the next.
I have carefully reviewed the budget sent to my desk. I have sought to ensure that Wisconsin has the resources it needs to avoid future deficits. I have used my veto power to address the Legislature's excesses and set some money aside in these uncertain economic times. My vetoes reduce the Legislature's structural deficit by over $258 million – a reduction of almost 30 percent. My actions ensure that the future commitments in this budget are well below the amount that can be expected in reasonable revenue growth in the next biennium.
If I were to veto the Legislature's $200 million future reduction in state operations, the Legislature's gimmick would erase the effect of my difficult cuts. I will not have those efforts undercut by this artificial limit and the calculation that has been based on it.
Therefore, I have retained the state operations spending limit. Because the $200 million number was picked out of a hat without any real analysis of our needs and resources in the next biennium, agreeing to this provision is not an endorsement of this specific number. If our economy does not turn around, we may need to make even deeper cuts. If prosperity returns, we may be able to make fewer cuts and protect more of our vital programs. In either event, I pledge that I will take the same fiscally responsible approach to the next budget that I have to this one.
