Facing a Budget Deficit

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Dec 3, 2008 No Comments ›› admin

December 3, 2008

“This is going to be a difficult time for us,” said Governor Doyle at a Capitol press conference. The Governor announced an estimated $5.4 billion shortfall for the next budget cycle due to a faltering national economy and a downturn in tax revenue.

The Governor said he will do “everything possible” to protect schools, public safety, infrastructure (like bridges and roads), basic health care for children and help local government find a way to cope.

In addition, Secretary of Administration, Michael Morgan, announced the state faces a $346 million shortfall in this year’s budget. Under Wisconsin law, the Governor must submit a plan to deal with the shortfall. Details of the plan will come when the Legislature returns in January, but Governor Doyle acted immediately to order reductions in state spending.

The Governor will:

  • Order state agencies to trim spending for this fiscal year by 2.5%.
  • Cut state grants that are not absolutely necessary.
  • Leave 3,500 state jobs unfilled.
  • Sell 500 state fleet vehicles.
  • Stop all employee bonuses.

Wisconsin is not alone in the state’s economic challenges. In their mid-November report, the Center on Budget and Policy Priorities found that at least 41 states are facing shortfalls. States are dealing with the situation in several ways:

Health Care – seventeen states decreased eligibility for state health insurance programs or cut payments to doctors and hospitals. In Maine, people pay a new Medicaid application fee and in Arizona they must reapply more often. (Research shows this practice results in eligible people becoming uninsured.) Medicaid rates to hospitals, nursing homes and other providers have been cut in many states. Illinois is delaying payment to health providers. The result may be patients without access to care.

Elderly and Disabled – fifteen states cut services to the elderly and disabled. Ohio plans to close two mental health facilities and Alabama is ending homemaker services for over a thousand older adults.

Education – sixteen states cut K-12 education including breakfast programs, math and science initiatives, adult literacy, gifted programs and kindergarten. Twenty-one states cut higher education or added large tuition increases. Florida, Kentucky, New Jersey and Arizona laid-off faculty. California is raising in-state tuition up to ten percent.

Other Cuts – Vermont ordered courts to close for a half day a week. Maryland cut dollars to those who care for abused and neglected children. Delaware, New Jersey, Rhode Island and Virginia cut funding to local government.

State Jobs – twenty-one states, including Wisconsin, eliminated or are not filling state jobs. Tennessee announced the elimination of 5% of its workforce. Kentucky is cutting about 10 percent of its public defenders and will decline public defender representation for certain cases.  In Wisconsin, more than one in ten jobs are vacant in key agencies. One in nine jobs are vacant at the Department of Revenue – the state agency responsible for collecting taxes that fund state government.

Tax Increases – ten states passed tax increases. Alabama, Massachusetts, California and New York closed corporate loopholes. Several states delayed or capped tax credits or eliminated property tax relief.

In the private sectors people are cutting back and making tough choices. The public sector must do this too. 

But a shrinking economy results in a greater demand for some of the state’s most critical services.  Many more people are struggling to meet their basic needs and are seeking assistance from state and local government.  Struggling businesses need government investment in necessary infrastructure. 

We must keep the schools open.  We must provide for public safety. We must care for the elderly and the disabled. And, we must balance the budget.

In the coming months, the Governor and Legislature will be making difficult choices between many important priorities.  Those choices will require careful consideration of how we spend our money in the best way possible.  There are no easy answers.


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