Madison - Democratic Gov. Jim Doyle and legislative leaders said Thursday that state aid for local governments and public schools will be cut 2.5%, and more than 1,400 state workers might have to be laid off to offset a recent $1.6 billion drop in tax collections.
"We have made responsible choices, ones that protect the middle class and have a lesser impact on our priorities, which are education and public safety," Doyle said late Thursday.
Although the governor and two Democratic legislators said it was a no-new-taxes solution to the latest shortfall in tax collections, Republicans disagreed.
Republican Rep. Robin Vos of Caledonia said the governor for the first time endorsed a new 75-cent monthly surcharge on phones and other devices used to dial 911 for emergency services. Vos said that fee will feel like a tax increase to consumers who will pay $100 million over the next two years.
The package recommended Thursday will raise taxes, Vos warned.
"Increasing the hospital tax, increasing the cell phone tax, saying that people who were planning on getting a deduction will no longer receive it, those to me are increases in taxes and that's something Wisconsin can't afford," Vos said.
But Doyle said that $100 million from the phone surcharge will go to police and fire departments statewide to protect public safety and to partially offset the 2.5% cut in shared-revenue aid to local governments.
Last week, Doyle had warned of potential 5% cuts in aid to public schools and local governments. State aid to public schools is $5.1 billion a year; aid to local governments, $974 million.
Doyle said he reluctantly agreed to the first cut in state aid to public schools in his seven years in office.
"We don't have any acceptable options," he said.
But he said because of $877 million in additional federal stimulus funds for Wisconsin's schools, total spending on public schools will rise by about 5% over the next two years.
To control December property tax bills, Doyle said the new plan will lower the allowable growth in per-pupil spending. In February, Doyle recommended growth of $275 per pupil; no estimate of the new, lower number was available Thursday.
Joined by the Joint Finance Committee co-chairs, Sen. Mark Miller (D-Monona) and Rep. Mark Pocan (D-Madison), the governor said the $1.6 billion shortfall would be eliminated this way:
• $669.7 million by cutting state agency spending by 5%, cutting aid to public schools by $290 million over two years, and cutting aid to local governments by $21.5 million in 2010.
• $224 million by furloughing state workers eight days a year and rescinding 2% pay raises nonunion workers were to get in June. Unionized workers must decide to give back the 2% raise, or 400 of them will be laid off, Doyle said.
• Laying off more than 1,000 other workers - 300 more than the governor had announced last week - by further squeezing spending by state agencies.
• $165 million by adjusting an assessment on hospital revenues passed in February.
• $100 million from the new 75-cent monthly surcharge on phone line and telecommunication lines.
• $185.2 million by stopping the phase-in of health and child care tax breaks, and improving tax collections in ways that were not explained Thursday.
• $285 million from refinancing debt to take advantage of low interest rates.
Doyle warned that the cuts will be painful for consumers and the state employees who provide services.
Thursday's tentative deal cleared the way for the Legislature's Joint Finance Committee to resume voting on the 2009-'11 budget the governor submitted in February.
Legislative leaders and aides to Doyle had been meeting privately for days, trying to figure out a way to fix the new tax-collection shortfall. In February, Doyle recommended using federal stimulus funds and $1.7 billion in tax and fee increases to overcome a three-year deficit projected at that point to be $5 billion. That deficit has grown to $6.6 billion because tax revenue has lagged far below projections.
In February, Doyle also signed into law an additional $1.2 billion in tax and fee increases.
Earlier Thursday, Miller said the 16-member committee hopes to recommend a budget to the full Legislature by May 31.
The Joint Finance Committee panel will meet at 11 a.m. Friday and 9 a.m. Saturday to vote on major items such as aid to local governments and transportation and health care spending. The committee has not met since May 12.
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