WisPolitics Budget Blog

A proposal to combine the Great Lakes Compact and budget adjustment into one bill has drawn criticism from both Dem and GOP lawmakers today. But a spokesman for Assembly Speaker Mike Huebsch's office said "no final decisions have been made."

"It's an idea that was discussed, and we appreciate the input of all our legislative colleagues," said John Murray. "A number of things are still being discussed."

GOP Sens. Robert Cowles and Mike Ellis, Dem Assembly Minority Leader Jim Kreuser, and GOP Rep. Steve Nass all issued statements today denouncing the possibility of combining the bills.

"The Great Lakes Compact is a crucial piece of legislation that has broad bipartisan support across the legislature," Kreuser said. "I am adamantly opposed to combining these two bills and I have made my position clear to both the Speaker and the Senate Majority Leader."

Carrie Lynch, spokeswoman for Senate Majority Leader Russ Decker said the leaders "are discussing every option out there so we can get this done," but said "it's more likely that it's not (going to be combined) than it is."

The bills will be voted on in the same day, she said.

Murray said Huebsch and Decker have met or talked on the phone every day this week to reach a final agreement, and the two "remain optimistic we will have something fairly soon."

Gov. Jim Doyle said today that time is ticking for the Legislature to get the budget and Great Lakes Water Compact signed.

"My view of this is we have to get a budget repair done and we have to get it done very quickly. Time is ticking. Consequences of this are going to start piling up if they don't get it done," Doyle said while in Milwaukee.

Doyle also expressed his displeasure with some avenues lawmakers are exploring to help fill the budget hole, including pushing off a school aid payment to the next budget and selling future tobacco payments. He said he didn't think most lawmakers would support pushing off the payment until the next biennium or taking future tobacco settlement payments to fill a one-time budget hole.

When asked whether the budget and the compact would be packaged together in one bill, Doyle said that it would be up to the Legislature to decide.

Doyle touched upon the General Motors announcement it would be cutting 750 jobs come July and said that the government will be working with the affected families to make sure they all land on their feet.

See Kreuser's statement here.


See the Cowles and Ellis statement here.

See Nass' statement here.

Labels: Budget_Repair_Bill

Department of Transportation Secretary Frank Busalacchi's message this week to contractors that May and June project lets "could be negatively impacted" without swift budget action has caused alarm by the Transportation Development Association of Wisconsin.

Busalacchi said in a letter posted Wednesday on the DOT's Highway Construction Contact Information Web site that contractors should be aware of the state's projected revenue shortfall and its possible impact on future road projects. He said the allocations for May and June lets "could be reduced dramatically" if action is not taken shortly on a budget adjustment bill.

The state faces a revenue shortfall over $650 million in this biennium, according to LFB estimates. The Doyle administration has cut the defict to $525 million with administrative maneuvers, but an agreement on how to address the balance has been mired in discussions between Doyle and legislative leaders.

Doyle had proposed transferring $257 million from the transportation fund and backfilling the borrowing with bonds to help plug the budget hole.

In a press release today, TDA executive director Craig Thompson praised legislative leaders for rejecting the Doyle proposal, but said Busalacchi's letter shows the Doyle administration is not willing to give up the proposal.

"What the secretary is talking about is redirecting hundreds of millions of dollars from road projects resulting in the loss of thousands of Wisconsin jobs," Thompson said.

UPDATE: The Wisconsin Transportation Builders Association has also weighed in with a letter to legislators urging them to quickly pass a budget repair bill that does not include a transportation fund transfer.

"As you know, the Administration has indicated it will transfer a significant amount of revenue from the transportation fund if there is not a budget agreement in the next ten days. According to the Wisconsin Department of Transportation, this transfer would result in a significant portion or all of the May and June lettings to be indefinitely postponed. That action would result in the potential loss of $261 million in projects, which would lead to the loss of 2,000 construction jobs in Wisconsin," reads the letter.

See the Busalacchi letter here.

See the press release from the TDA here.

See the WTBA letter here.

The WTBA letter also includes a list of road projects that may be impacted. See it here.

Labels: Budget_Repair_Bill, Transportation

The budget repair bill could be taken up next week in conjunction with the Great Lakes Compact during a special legislative floor session, aides to legislative leaders said.

Talks continued this week as Senate Majority Leader Russ Decker, D-Weston, and Assembly Speaker Mike Huebsch, R-West Salem, and top aides met yesterday in the speaker's office to negotiate an agreement to fill the state's $525 million budget deficit. The leaders are also expected to talk today as they try to find a combination of budget-cutting initiatives that fits the agenda of the Senate, Assembly and Gov. Jim Doyle.

"They're working well together," said Carrie Lynch, spokeswoman for Decker. "They're working on a few details yet."

Lynch and John Murray, a spokesman for Huebsch, said a floor session appears unlikely this week as the Great Lakes Compact is still in drafting and budget talks aren't yet finished. The compact draft is expected to be finished by the end of this week. Lynch and Murray said it would be preferable to take up both the water compact and the budget adjustment bill on the same day.

"That would be ideal, but it all depends on getting a budget agreement," Murray said. "We're getting close to having all the amendments drafted on the Great Lakes Compact. If we have an agreement in the next week, it's foreseeable we could do that (in one session)."

Labels: Budget_Repair_Bill

Gov. Jim Doyle once again urged swift legislative action on repairing the budget, and said he hopes the hospital assessment can still be salvaged as part of the adjustment bill.

Speaking with reporters following his address this morning at the second annual Nelson Institute Earth Day conference at the Monona Terrace in Madison, Doyle said that the debate over fixing the deficit should not result in a prolonged fight similar to the biennial budget battle last summer.

"I will be introducing a new biennial budget next January," said Doyle. "And (legislators) can have all those fights then."

Doyle said despite Republicans' denouncement of the hospital assessment plan, he hopes the idea still has a chance because Assembly Republicans are "the only people in the world who are against it."

"I think it has become very obvious to people that if there is $450 million of federal money that is sitting there that the federal government is saying 'here, come and take' it seems pretty hard to understand why anyone would say we shouldn't do it," said Doyle.

--By Matt Steingraber

Labels: Budget_Repair_Bill

Numbers released by the state Department of Revenue today show the state collected $838.4 million in revenue in March, a gain of more than 18 percent over the same month last year.

The DOR report showed that individual income collections jumped from about $143 million in March '07 to nearly $282 million in March '08, a 97 percent increase. The spike was due to the payment timing of the March '07 collection. In '07, March 31 fell on a weekend, so the payment was not recorded until April, leaving the March '07 artificially low, according to the DOR memo.

"Adjusting for the late posting, individual income taxes increased 8.0 percent in March, and the year-to-date increase is 3.0 percent. Total GPR collections, after the adjustment, are 1.3 percent for March and 2.3 percent YTD," the memo explains.

Overall, tax collections rose 18.2 percent over last year despite a 21 percent decrease in corporation franchise and income tax collections.

See the DOR summary here.

Labels: state_tax_collections

The Wisconsin Hospital Association today launched a statewide radio campaign highlighting a proposal to assess hospitals and capture more federal funding for Medicaid reimbursement.

"Wisconsin is not getting back its fair share of federal tax dollars, and our health care costs are rising because of it," a female narrator says.

The spot says that the assessment proposal could return an additional $410 million in federal funds, and that the plan has wide support from a bipartisan group of legislators, business groups, and the governor.

"But some politicians in Madison are standing in the way," says the narrator.

The ad will run for at least a week, according to WHA senior vice president Eric Borgerding.

The assessment has support from Dem Gov. Jim Doyle and the Democrats who control the state Senate, but is opposed by the Republicans majority in the Assembly. Speculation from budget watchers as the negotiations on a compromise have dragged on is that the assessment will not be part of the final package.

Borgerding called the hospital assessment a "win-win" for the state, and he said the WHA will advocate for the assessment over the long haul if necessary.

"If unfortunately it's not included in the budget repair, there's a biennial budget bill right around the corner and we are committed to talking about Medicaid reform on a statewide level," he said.

Listen to the ad here.

See the WHA press release here.

Labels: Budget_Repair_Bill, Hospital_Assessment

Gov. Jim Doyle urged action soon on a budget deficit fix to avoid "dire" consequences.

"Everybody is talking, but now it really has to get done," said Doyle yesterday.

Doyle said he didn't want to set a deadline or predict when a compromise would be reached on filling a projected deficit of $525 million.

"You're talking about the next week or 10 days we have to get this done, otherwise there are a lot of serious things that begin to start happening," Doyle cautioned.

Aides for Senate Majority Leader Russ Decker, D-Weston, and Assembly Speaker Mike Huebsch, R-West Salem, said the leaders spoke yesterday, but haven't offered details on the negotiations except to say that the talks are positive and ongoing.

Doyle said he's working with legislative leaders every day on the budget deficit and he believes legislators are "acting in good faith" to reach an agreement. Doyle added that he hopes to avoid cuts to essential programs, but recognizes the necessity of reaching a compromise everyone can support.

"Obviously, it is the Legislature that has to pass a budget repair," said Doyle. "And they have to be working not only to make a compromise but a compromise that will pass both houses in the Legislature."

Doyle said state agencies are working to put together plans in case a repair bill isn't agreed on soon.

"We're working all the time on what the contingencies are," Doyle said. "If we don't have an agreement, we have to plan to somehow get by with about $650 million less over the next 16 months."

Asked to list some contingencies, Doyle mentioned prorating payments to some state service providers and cutting non-essential services.

The scrapping of a payroll and accounting computer system won't have an impact on this biennium's budget.

State budget director Dave Schmiedicke said the $150 million project was budgeted over several years, and the decision to put it on hold doesn't free up any new cash.

About $11 million had been spent so far on the Integrated Business Information System, which will now be shelved until at least next year.

Labels: Budget_Repair_Bill

Budget watchers and lobbyists speculate budget negotiators have set aside big revenue uppers like combined reporting and a new hospital tax to focus more on bonding moves and pushing a school payment forward as a short-term, election-year fix to the state's projected $525 million budget hole. Also likely out, observers speculated, would be Gov. Jim Doyle's plan to borrow $243 million from the transportation fund and backfill it with bonding.

While some budget pessimists say the Dem Senate and GOP Assembly still are far apart, others see coming floor sessions on the Great Lakes Compact compromise as a pressure point to finalize a budget deal and get legislative approval while leggies are in the Capitol.

If the transpo diversion and controversial revenue uppers are off the table, some believe budget negotiators could agree to get the necessary dollars from refinancing tobacco securitization bonds and a combination of other bonding schemes. A plan to refinance the state's tobacco bonds, for example, could net the state as much as $68 million a year through 2017, according to the Legislative Fiscal Bureau. LFB says the budget passed last year accounted for some $50 million a year from a refinancing plan; Doyle's repair bill would add another $15 million annually to that.

The original tobacco settlement securitization, done in 2002 under then-Gov. Scott McCallum, got the state almost $1.6 billion to help fill a budget hole. According to LFB, the bond issued then was set to be paid off in 2032, but the state is now expected to retire that bond issue in 2018. The state is expected to receive tobacco settlement money, which is awarded to states in perpetuity, starting in 2019. Doyle's refinancing plan would extend the payoff date to 2027, giving the state cash immediately, instead of starting in 2019. LFB says the net effect of the refinancing would be $94 million less in revenue between now and 2028.

The Legislative Fiscal Bureau explained this in a March 12 memo (see pages 20-22).

See more about what budget watchers are saying in the Friday, April 11 WisPolitics REPORT.

Labels: Budget_Repair_Bill

Half of the likely voters surveyed in a new WisPolitics/Checkpoint poll opposed increasing business taxes on companies with out-of-state operations to help close the $500 million projected state budget deficit.

Senate Dems included the proposal in their plan to fix the shortfall. Combined reporting requires businesses to take into account their out-of-state holdings in calculating their Wisconsin taxes.

Thirty-six percent of those surveyed said they supported the proposal, while 50 percent were opposed. Thirteen percent weren't sure.

The telephone survey of 400 randomly selected likely voters was conducted March 27-April 2. It had a margin of error of plus or minus 5 percentage points.

See more in the Friday, April 11 WisPolitics REPORT.

Labels: Budget_Repair_Bill, combined_reporting

A poll of 400 Wisconsin residents shows 64 percent oppose using transportation funds for non-transportation spending.

Gov. Jim Doyle has proposed taking $243 million from the transportation fund to help plug a $525 million budget deficit the state faces this biennium. Doyle's plan wold backfill the borrowing with bonding. The Assembly and Senate budget adjustment plans did not include the transportation fund transfer.

Thirty-one percent of those polled responded that taking money from the fund was OK, as long as it was repaid.

The poll, commissioned by the Wisconsin Transportation Builders Association, was conducted March 27 through April 2.

See the press release and poll question here.

Labels: Budget_Repair_Bill

State cigarette tax collections jumped by more than 200 percent in February, but state revenue from cigarette sales could still fall short of projections for the full fiscal year if trends continue, according to the Legislative Fiscal Bureau.

According to collection numbers provided by the Department of Revenue, collections on cigarette taxes increased from $22.2 million in February 2007 to more than $67 million in February of this year. February is the first month where the impact of the $1-per-pack cigarette tax increase shows up in revenue numbers because retailers are given a month delay before they have to file returns and pay the tax, said Rob Reinhardt, a program supervisor with the LFB.

The tax increased from 77 cents to $1.77 per pack, a 129 percent increase.

The spike in February collections is due to the "floor tax" the state imposes on inventories retailers have on hand, Reinhardt said.

Preliminary numbers for March indicate the revenue boom has slowed. According to Reinhardt, March collections were about $40 million, roughly a 77 percent jump from the $22.6 million collected in March '07.

Cigarette sales from October of 2007 through March have resulted in tax collections of about $207.2 million, compared to about $120.6 million for the same period in 2006-07, according to the Revenue numbers, including the preliminary March numbers for this year. Reinhardt said while it’s too early to call it a trend, if collections continue at this rate the revenue from the cigarette tax would fall some $10 million below the $448.9 million projection from the LFB. In the last fiscal year, cigarette tax collections came to $296.1 million, Reinhardt said.

The cig tax boost has reached one goal -- an increase in revenues for the state. Whether it has accomplished the second goal -- to deter more people from smoking -- may be harder to pin down.

Maureen Busalacchi, executive director of SmokeFree Wisconsin, points to increased calls to the Wisconsin Tobacco Quit Line since January as evidence it has worked to curb smoking. The line registered an unprecedented number of calls in January with 13,585. The number of calls fell considerably in February, to 2,101, but the more than 15,000 calls over the two months more than equal the traffic over the previous two years, Busalacchi said.

"To be honest with you it has been beyond our wildest dreams," she said. "The quit line calls are so much higher than we expected that it kind of blew us away."

Matt Hauser, president of the Wisconsin Petroleum Marketers & Convenience Stores Association, said his retailers, especially those on the state border, have seen sales declines up to 30 percent.

"Our guess is 30 percent of adult smokers in Wisconsin didn't quit smoking in the last few months," Hauser says. "Those sales are likely going out of state or to the Internet. The state is not getting any revenue from those sales."

Below are cigarette tax collection numbers provided by the Department of Revenue:

                 FY 2006-07       FY 2007-08      Percent change

October       $23,918,618     $21,930,716     -8.31%
November     $26,712,531     $29,959,403     12.15%
December     $24,793,968     $20,910,330     -15.66%
January       $23,001,093     $27,346,301     18.89%
February      $22,185,801     $67,078,195     202.35%
March          $22,570,000     $40,060,000 (est.)  77.5%

Labels: Cigarette_Tax

Talks continue between legislative leaders, their staff and Gov. Jim Doyle's administration in the effort to resolve the state's looming $500-plus million budget deficit.

Spokesmen for Assembly Republicans and Senate Dems remain optimistic that a compromise will be found soon. One option that does not seem likely to win support is to fix $75 million budget hole projected for the first year of the fiscal biennium and leave the larger deficit of the second year for a later time.

"It's an option, but I don't think it's one we're going to take," said Carrie Lynch, spokeswoman for Senate Majority Leader Russ Decker, D-Weston. "We haven't talked about it too much. We know it's a two-year problem, so we should look at it that way."

Jim Bender, spokesman for Assembly Majority Leader Jeff Fitzgerald, R-Horicon, said acting on only the first year problem was discussed "but never really got any traction."

"Mathematically it puts you at the end of that second year in a situation where there's no savings to be had," he said.

Labels: Budget_Repair_Bill

The Wisconsin Medical Society has posted a six-plus minute information video on YouTube that lays out the history of the Injured Patients and Families Compensation Fund, and assails lawmakers and Gov. Jim Doyle for transferring $200 million from it to balance the budget. The video was posted to YouTube March 26.

WMS' senior vice president of government relations Mark Grapentine says in the video that earlier attempts to take cash from the fund failed, but last year a deal was struck as budget negotiations dragged on for months.

"Different sides say different things about why that happened," Grapentine says. "What's important now is that money has been taken from this fund that is important to patients and it has thrown the state's medical liability climate into uncertainty. And that is not doing anything to help patient health care in the state."

Ruth Heitz, general counsel for WMS, says of the lawsuit filed to stop the transfer and ensure the money "is returned to injured patients."

"It wasn't the state's money to take," she says. "It was money that was put into the fund by physicians for patients."

Grapentine says, "The Wisconsin Medical Society will do everything in its power to prevail in this case. To do otherwise would shortchange the deserving patients and families of Wisconsin."

UPDATE: Grapentine said the video was a work in progress and has been removed from the YouTube site. It was posted on YouTube as the group worked with Big Wild Productions on changes.

"We're still putting some tweaks on it so it's as attractive as possible," Grapentine said this morning. He said the video may end up on the group's Web site.

Labels: Patients_Compensation_Fund