State Faces $1.6 Billion Deficit in Next Budget
The state faces a $1.6 billion deficit for the 2007-09 budget after agency requests outstripped expected revenue growth, according to a Department of Administration report released today.
DOA estimates revenue growth of 3.6 percent in the first year of the 2007-09 budget and 4 percent in the second year, producing new GPR of $1.42 billion. In August, DOA had predicted revenue growth of $1.9 billion for the biennium based on historical growth of 5 percent annually.
State budget director Dave Schmiedicke said revenue projections were lowered to account for new tax cuts that take effect over the biennium, including eliminating the state tax on Social Security income and the single factor sales apportionment for corporate income taxes.
The report does not include a rate increase to medical assistance providers, as well as increased costs for debt service, fuel and utilities, state employee compensation and fringe benefits, and UW faculty pay.
Schmiedicke said he could not estimate how much that would add to the state's deficit.
A spokesman for Gov. Jim Doyle said he would find a way to balance the budget through cuts while finding enough money to cover a series of proposals he made during the campaign, including new deductions for health insurance premiums and child care costs.
"We're still seeing the kind of revenue growth that will pay for the governor's priorities," Doyle spokesman Matt Canter said, adding it was premature to identify potential cuts.
"When the governor submits his budget in January, it will be a balanced budget."
*See the full DOA report
*See the DOA statement
*See the DOR statement
Sen. Scott Fitzgerald, who served as Joint Finance Committee co-chair during the last budget and was elected Senate minority leader last week, said in a statement the DOA "waited until after the election to confirm what everyone but the administration had admitted all along - four years of spending increases, raiding segregated funds and massive borrowing hasn't solved our fiscal problems"
Assembly Speaker-elect Mike Huebsch, R-West Salem, said in a statement that Republicans were willing to work with "to fix the deficit without raising taxes."
"As long as the needs of the taxpayers are the top priority this legislative session, there is no limit what we can accomplish together," he said.
*See the Huebsch statement
*See the Fitzgerald statement
