The State's Budget Debate Takes Center Stage

The State of Wisconsin’s financial situation is bleak. Projected expenses exceed available tax revenues by more than $3.6 billion and this gap must be closed by July, 2011. 

Unsustainable spending, excessive taxing and borrowing, short-term fixes, delayed payments, trust account raids and reliance on one-time money over the last decade have contributed to the problem. The actions of our elected officials in Washington and Madison over the last two years remind us that government cannot spend its way into prosperity nor can it tax its way out of a budget deficit.

In his State of the State address, Governor Walker laid out the challenge ahead:

“States, like Wisconsin, are left with two choices: one is to raise taxes; continue to hinder our people with burdensome regulations, and kick the difficult choices down the road for our children and grandchildren; the other is to do the heavy lifting now and transform the way government works in Wisconsin.”

Governor Walker has pledged to make the tough decisions that will lead us to balance the budget in a way that “creates a permanent, structurally sound state budget.”

Governor Walker has opted to close the state’s ongoing budget deficit in two steps.

Step 1 - “Budget Repair” to Address Current Year Deficit

The key elements include:

-- restructuring state government debt; and

-- requiring state employees to pay about 5.8% of their salary towards their pension and 12% for their health insurance benefits,  

While there is an immediate fiscal benefit to the state of these initiatives, they also represent structural reforms which will make it easier to close the larger deficit. The Republican-led Legislature is expected to approve the Governor’s budget repair bill.

Step 2 – 2011-2013 State Budget to Address $3.6 Shortfall

Shortly, Governor Walker will present to the Legislature his recommendations for the state’s next two-year budget. Legislators will spend the next four months or so, working through the Governor’s plan to close the $3.6 billion budget shortfall.

Thousands of difficult budget decisions lie ahead. The choices Governor Walker and legislators make will affect us all.