Tax Revenues Drop as Need for Services Grows

Last week the Governor announced projected budget deficits could be as high as $3 billion when lawmakers return to consider the state’s two year budget.

“What hit this country in September is now cutting deeply in Wisconsin,” said Governor Doyle at a Capitol news conference. “There’s no doubt it is going to be very, very severe in the state.”

The hard news came at a time when mid-year state sales tax revenues are down almost ten percent. The numbers will likely be lower when September and October sales tax revenues are reported.

These numbers are only a pale reflection of people’s real world challenges.  Every day people share with me their challenges.  And I learn about problems not easily solved: the man who called early Saturday morning with the news his job is being shipped to Mexico; the disabled woman who grabbed my hand in Eau Claire and pleaded for the services she needed to keep her job; the farmer in northern Jackson County paying way too much for very poor health insurance; families in Monroe County who expressed concerns about nursing homes including Medicaid payments and problems with the state inspection program; a woman in Buffalo County who shared worries about her propane bill and the home care worker who can’t afford the price of gas on $7.50 an hour.

Just at a time when state dollars are short, people’s needs are greatest.

Wisconsin is not alone in its budget struggles. The Center on Budget and Policy Priorities reported at least twenty-one states are facing budget deficits now -- including more than half of the twenty-nine states that acted mid year (including Wisconsin) to fix their budgets.

The effect of the states’ financial problems translates directly to increasing problems in people’s lives.

Fourteen states cut or are considering dropping people from Medicaid and child health insurance. At least eleven states are cutting programs for the disabled and elderly including rehab services, medical and home care. Thirteen states cut or are proposing cuts to K – 12 and early education and at least seventeen states have proposed or cut support to public universities and colleges.

Many underestimate the difficulties faced by leaders making budget decisions. Wisconsin has not cut health care programs for those with low income. Our governor worked hard to maintain funding for economic development, education and important environmental and human service programs.

He implemented new ways to deliver services to the disabled and elderly through the Family Care program. The program is not without snags, but it is an important and creative effort to cut costs and provide high quality services.

Last week, however, Governor Doyle asked all state agencies to cut their budgets for the coming budget year by another ten percent. This comes on top of a ten percent cut already made in state agency budget proposals submitted to the Governor in September.

These cuts will affect the services state government provides.

One bright spot among glum economic news is the state’s bond rating was recently upgraded. News sources reported that Standard and Poor upgraded the rating to AA and praised state leaders for “making mid-budget corrections that maintained fiscal balance with low but adequate general fund reserves”.  

The bond rating is important because, similar to a credit rating, it reflects the state’s ability to repay debt. A lower bond rating will increase the cost of borrowing money and the more money spent on interest, the less is available for services.

As I meet with people across our Senate district, my message is the same.  As your senator, I am a partner with all constituents. The decisions will be difficult. I can best advocate for Western Wisconsin when I know the details of how state decisions affect you.

It is important we stay in touch as we grapple with the coming difficult decisions. Please feel free to contact me at Senator Kathleen Vinehout, State Capitol P.O. Box 7882, Madison, Wisconsin. 53707-7882 or 877-786-6636 (toll free). Or you can email me at Sen.Vinehout@legis.wisconsin.gov .