This week the top story was the Unemployment Insurance Fund.  For the business owners of Wisconsin this may be the biggest story during the coming year.  Few organizations pay attention the Unemployment Insurance program.  Fewer still follow the numbers and understand them.  WIB does follow them and does understand them.  And we are seeing a scenario for a UI and employer disaster in 2009.

We warned business owners of the the significant UI tax increases that will be effective in January 2009.  The reason for the increases is an effort to stabilize the UI fund that has been paying out more than it takes in for several years.  The UI fund is paying out an average of about $125 million a month in benefits while tax collections are significantly less.  And this week, officials within the Division of Unemployment Insurance warned that, if the economy continues to falter, the UI fund could be essentially broke in 2009!  This would be a disaster for the business owners of Wisconsin the likes of which we have not seen since 1993.

WIB understands that a business owner’s eyes can glaze over when trying to comprehend all of these complex issues.  The bottom line remains the same:  today, more than ever,  independent business owners in Wisconsin need to be unified and working with WIB to stand up for the smaller business in 2008 and 2009.  We will continue to educate our members on this issue during the coming scary months!

In other news, or non-news, this week, the talks on the budget repair bill continue.  All sides say progress is being made.  All sides are hoping for an early solution.  But so far there has been no announcement of that solution.  Here are the basic proposals offered by Governor Doyle, the Senate Democrats and the Assembly Republicans:

Governor Doyle wants to cut $87 million in spending, transfer $293 million from the transportation fund and add $125 million through a new tax on hospital revenue.  That tax will bring in federal dollars that will in turn be paid to hospitals that provide a large amount of deeply discounted care to poor and uninsured people through the Medicaid program. 

Senate majority Democrats support the hospital tax, want $50 million transferred from the transportation fund, cut $40 million in spending and close some corporate tax loopholes.  They would delay a $125 million school aid payment with a bookkeeping maneuver that delays recording the payment until the next fiscal biennium.

Assembly majority Republicans would cut $361 million in spending and delay the school aid payment. All three proposals take money from the state’s very limited financial reserves. 

All proposals create a larger “structural deficit.”  That’s the amount of money the state projects spending in the 2009-2011 biennium for which there is no projected revenue.  The governor’s plan leaves a $1.416 billion hole.  The Senate has a $1.370 deficit and the Assembly plan has the largest gap at $1.649 billion according to the Legislative Fiscal Bureau.  These are amounts that MUST be covered to balance the budget next time – in the 2009-2011 biennium.  There is NO projected revenue to cover these sums.  That means the budget crisis and tax threats will continue even after this year’s crisis is resolved.  The crisis cannot possibly be fixed by revenue growth in a recession.

Look at those numbers again and remember, this is spending for which the state is already committed in 2009-2011.  It is not NEW spending but represents the cost just to continue existing programs.  Those programs include schools, prisons, shared revenue for local communities and the University of Wisconsin & Wisconsin Technical College systems.

ASSEMBLY               $1,649,000,000
GOVERNOR               1,416,000,000
 SENATE                      1,370,000,000 

These numbers are very bad news.  All of them are significantly over the $1 billion mark.  All of them – or any combination of them – will leave a terrible budget hole that the governor and legislators must fix in 2009.  And these numbers are why WIB will be watching very closely on how the Legislature plans on getting the money.  One of the big ways would be to expand the sales tax base.  This would put tax on essential business and farm services and products that are now tax-exempt.  WIB  has fought this before and will continue to fight this form of unfair taxation.

WIB has shared some of our preliminary health insurance survey data with several legislators who are working for solutions to the health insurance crisis.  During the upcoming months more and more discussions will take place and our member's voices will be heard through the survey data.  If you have not already filled out a survey, click on  Health Insurance Survey, print it out, fill it in and fax it to us at 608-255-6600. 

And always remember, on these and any other issues affecting your business or farm, we are your eyes and ears at the Capitol.