The state would cut almost $670 million from state agencies, shared revenue and other aids, pull more money from the hospital assessment and use money from a cell phone surcharge to help fix an additional $1.6 billion budget hole the state faces, under a proposal the governor announced late this afternoon.

The proposal calls for an additional $165 million from the hospital assessment and $100 million from the cell phone surcharge, which is intended to help fund a statewide 911 system.

The other changes include:
-furloughs and rollbacks of a 2 percent raise for state employees, generating $224 million
-debt restructuring, generating $285 million
-maintaining current levels of tax credits/improved tax collections/IRC update modifications, generating $185.2 million.

See the release.

Doyle said during a late afternoon news conference that the cuts would result in at least 1,000 layoffs of state employees and that number could reach up to 400 more if employee unions don't agree to pay cuts.

With Doyle at the press conference were Joint Finance Committee co-chairs Sen. Mark Miller and Rep. Mark Pocan. Doyle thanked them for their hard work on the agreement, and said the "finer details" of the plan will be worked out during the legislative budget process.

State funding to schools will be reduced by about 2.5 percent under the plan, Doyle said, or about $290 million.

"I know that this will be very hard on school districts, on teachers, on students and on families. But we don't have any other acceptable options for closing this budget gap," Doyle said. "I would not take this route unless I was sure that we could keep our basic educational structure in place."

Doyle said that discussions are ongoing on his budget proposal to eliminate the qualified economic offer for teachers, but said there could be modifications to his proposal.

"We understand that at this particular time we may have to do something to make sure that we maintain a limit," he said. "I personally believe, as you all know, it should come off. I never understood why teachers are any different than other public employees, but we're dealing with a reality. I feel quite confident we're going to find a way to eliminate the QEO but also keep some kind of limit in place while this economic crisis is in place."

Doyle said that "disastrous cuts" to education will be avoided because the state will receive $877 million in federal stabilization money for education through the American Recovery and Reinvestment Act. Counting that and all source of revenue, school spending in Wisconsin will increase over the biennium by as much as 5 percent, Doyle said.

The impact to local property taxpayers from the state cut in school funding will be offset by a reduction in the per pupil increase, Doyle said, but he didn't have specific detail for how much the level will be adjusted.

State shared revenue to local governments will also be reduced by 2.5 percent, Doyle said. But Doyle said the "redeployment" of the cell phone 911 charge will be directed to local communities to maintain fire and police funding.

The governor made a point of telling reporters that state general purpose revenue spending will be lower by 3.4 percent, or about $1 billion, than in the previous budget with this latest round of cuts.

"I'd like to repeat this point because there are people who just put out a false statement about this over and over again," Doyle said. "The fact is the budget I presented in February reduced general tax spending in this state and the budget proposal that we are putting forward today brings it down even further ... For those who have disingenuously said we are spending more that is obviously because we are getting stimulus money. And perhaps those people would like to reject the stimulus money but in my judgment we should be working with the federal government in any way we can to help get through this difficult time."

Doyle also pointed out that they are closing the budget hole without raising income or sales taxes.

"This is what I said I would do, and this is what we have done," Doyle said.

Tax deduction increases planned over the next two years for health care premiums and child care costs will be put off, Doyle said.

"We have decided given the situation we are in that we will maintain those -- we are not going to roll back the current level of those deductions but we will not be able to move forward with our accelerated schedule," he said.

Doyle said the adjustment to hospital rate payments under the hospital assessment will allow for the planned expansion of the BadgerCare Plus program to provide health care coverage for uninsured, low income childless adults.

"It has often been called the hidden tax that all of us have to pay when there are high levels of uninsured people coming in to our medical facilities," Doyle said. "We have worked hard in Wisconsin to do away with that hidden tax by making sure people do have health insurance coverage so we are not paying for that through our own premiums and other ways."

Doyle also said that about 7 percent of the deficit reduction plan will involve taking advantage of "historically low" interest rates to restructure debt and to help finance transportation projects at lower costs.

Listen to the press conference here.

Listen to Doyle's response to media questions here.

-- By Greg Bump