State may be staring down a $300-$400 million budget hole
Although it is a preliminary report by the non-partisan Legislative Fiscal Bureau, the state may be facing a deficit of $300 - $400 million in the current budget.
Bob Lang, LFB director, told the co-chairs of the Legislature's budget committee of his bureau's findings in a letter released late Thursday afternoon.
The primary reason for the shortfall is lower than expected tax collections, according to Lang's letter.
Each January the LFB prepares revenue estimates for the state and in his letter Lang noted that in 2007 the economy performed better than expected than was predicted in last January's report.
However, since then the economy has slowed and estimated growth in production, consumption, income and profits is lower than last January's forecast.
The state's revenues were going along with estimates until the December tax collection report. That report showed what he termed "considerable weakness in the three major taxes."
Those taxes are individual income, corporate income and sales tax collections.
Lang cautioned that this is just a preliminary report.
"We believe it would be prudent to wait until early February before issuing formal estimates," Lang wrote.
Although Gov. Jim Doyle mentioned the downward estimates in his State of the State speech Thursday night he gave no specifics of his plans to deal with the shortfall, however he said cuts will have to be made.
"We will have to make deep cuts and hard sacrifices," said Doyle during his speech.
Both, Sen. Russ Decker, D-Weston and Rep. Kitty Rhoades, R-Hudson, who co-chair the budget committee immediately called for bi-partisanship to help deal with the problem.
"The potential revenue shortfall for the state is very troubling and we will all need to work together to make sure we can keep Wisconsin's economy going strong," Decker said in a statement.
He also called for ideas from across the aisle.
"I challenge all of the Republicans cheerfully calling for reducing government spending to start offering ideas if that is the only direction they want to go," Decker said.
Decker cautioned that he didn't want to make cuts that would impact those less able to absorb them.
"We need to be careful that any cuts made to state programs do not fall on the backs of the most vulnerable of our state," Decker added.
Immediately following Doyle's Thursday night speech Rhoades told a RiverTown reporter that she was glad to hear that Doyle was not calling for new taxes to solve the problem, but was calling for a reining in of government.
Following the release of Lang's letter Rhoades issued a statement saying that all areas of state government have to be examined.
"We must identify efficiencies in state operations and service reductions that maintain our commitment to providing the critically core functions of government service, while living within the means of our taxpayers," she said.
Doyle's Director of Administration, Michael Morgan, said that they'll have to wait until final estimates are in before they know exactly what their next steps will be. Those estimates are expected during the week of Feb. 10.
"There is much work ahead," Moore concluded in his issued statement.