Scott Walker greets Republicans prior to the budget address

Republicans cheered and Democrats sat on their hands as Gov. Scott Walker unveiled his 2011-2013 biennial budget Tuesday afternoon. It would reduce state spending by $4.2 billion over the next two years with cuts in education and health care programs, while increasing funding for economic development

Many of the items included in Walker’s first full budget are dependent on passage of the Budget Repair Bill, which is currently sitting in the Senate awaiting one of the Wisconsin 14 to return to produce a fiscal quorum. That bill contains the “tool” that municipalities and school districts would need to make Walker’s cuts work: the end of collective bargaining on all issues except base income. Without that “tool,” Walker claims, the cuts to schools and municipalities will have to be made up by cuts to programming and classrooms, instead of the benefits and work rules Walker desires.

Walker described his budget as a return to frugality, which will lead to economic freedom for millions of Wisconsin residents.

“I have often repeated references to our state’s constitutional lesson,” Walker said, “that it is only through frugality and moderation in government that we will see freedom and prosperity for our people.”

“This deficit did not appear overnight,” he stated. “Wisconsin got here through a reliance on one-time fixes, accounting gimmicks and tax increases. Previous governors and legislatures from both parties took money from our tobacco settlement. They raided more than a billion dollars from the Transportation Fund and $200 million from the Patients’ Compensation fund. They increased taxes on the sick and set up shell games to draw down additional federal funds.”

Walker was broad in his speech, only touching on a few of the items on the chopping block, such as $1.4 billion in state aid to K12 school districts and local governments, the elimination of enrollment and income caps for school choice and charter enrollment, and the elimination of the Prisoner Early Release guidelines instituted by Gov. Jim Doyle. He added that rescinding early release would improve public safety.

The budget adds some new programs, such as a third-grade literacy mandate to ensure all the state’s third-graders are reading at a basic proficiency level; an expansion in the creation of charter schools to all UW system campuses and accelerated reconstruction of the Zoo Interchange. He promised to continue the Veterans Tuition Reimbursement program, but plans to eliminate the Department of Commerce in favor the brand new public/private Wisconsin Economic Development Corporation. His bill also promises additional funding to the State Crime Lab for DNA testing and Internet predator investigations.

“We will do the heavy lifting to protect our children and grandchildren from having to make the hard decisions that were once avoided,” Walker said. “I know that things will get better.”

But there is much more lurking in the body of the bill, which will now go to the Joint Finance Committee for public hearings and debate in the Assembly and Senate.

Education 

WI Assembly Democrats prior to the budget address

In addition to $834 million in state aid cuts to K12 schools, Walker will change the structure under which schools operate.  Gone will be residency requirements, the 180 day school year rule (though the number of instructional hours remains the same) and categorical aid to fund some educational programs.

The programs lost will hurt gifted students as Advanced Placement funding is cut. The most vulnerable students will lose part of their safety net as well, with programming for alcohol and drug abuse prevention eliminated and alternative education and at-risk programs deleted. Other potential programming cuts include English education for Southeast Asians, academic achievement programs and supplemental science, technology, engineering and math programs.

While Walker wants to improve third-grade literacy proficiency, he would end mandates calling for reading specialists in K12 schools. The budget bill also calls for the extension of revenue limit restrictions on spending for school nurses, transportation, safety equipment and security officers. Currently costs for those services are not restricted under the property tax limits.

Finally, revenue limits per pupil would be reduced by 5.5 percent, or approximately $500 per student in the first year of the budget.

Senator Alberta Darling (R-River Hills) said the school choice and charter proposals fit perfectly with her and Milwaukee City Council President Willie Hines’ plans for unused MPS schools.

“I think it will help it because it shows we want to offer choices to our families and we need to use the unused buildings for those opportunities.”

But Rep. Corey Mason (D-Racine) disagrees. “If we want to grow the economy, we don’t do that by cutting away at the UW System and K12 education,” he said. “I’m deeply concerned about big cuts to K12,  which is not what Racine and other communities need right now.  We’ve got hundreds of thousands of kids in (public) school districts and you can’t take away resources from those kids and give it to others.  It’s not a productive way to run the state.”

As for higher education, Walker supports a measure to remove UW-Madison from state control and allow it to become its own public authority.  This move would eliminate over 17,000 employees from the state rolls, since all professors, staff and administration workers would be employed by the authority. The authority would have the ability to set its own tuition rates and pay, seek private funding and operate under a private board of trustees. Eleven members of the 21-person board would be appointed by the governor.

The rest of the system will see a significant reduction in resources as well, with a $250 million cut in general revenue funding to the UW System and UW-Madison under this proposal. Walker proposes to maintain current levels of state financial aid to students.

The University of Wisconsin-Milwaukee would receive $250,000 for a study to determine if that campus should follow in the public authority path of UW-Madison.

The budget doesn’t forget the technical college system, cutting $71.6 million from the schools which are used by many to upgrade job skills, retool after layoffs or learn trade skills. Undocumented students would no longer receive out-of-state tuition or fee exemptions.

Health and Human Services

Walker spoke little on this subject in his speech, saying only that participants would be required to pay “modest” co-pays and premiums. However a large portion of the bill deals with cuts to and the realignment of Medicaid programs, which are used by 1.6 million Wisconsin residents.

The biggest cut could come on July 1, 2012 if Walker is unable to receive a waiver from the federal government on eligibility requirements. He wants the latitude to remove people from Medicaid programs if they are deemed ineligible within 10 days, as opposed to the end of the month date. (For example, if someone is found ineligible on the 4th, they would loss benefits by the 14th, not the last day of the month, possibly saving 14-17 days of costs.

However, if the feds do not grant the waiver by Jan. 1, 2012, this budget would follow a federal rule that allows states with budget deficits to remove all non-disabled adults with incomes over 133 percent of the federal poverty level ($14,500 for an individual) from Medicaid programs. Figures released by the Governor’s office estimate that would trim the rolls by 700,000 participants, or nearly half. Those most directly affected would be low-income, working families.

Women who receive family planning services funded with state money would be out of luck , as Walker is proposing to eliminate this funding from the 2011-2013 budget.

In addition, the budget would require all SeniorCare participants to enroll in Medicare Part D for prescriptions as a condition of eligibility; increase the use of managed care by all Medicaid program participants and implement an audit of the FamilyCare program, which has not been reviewed since its implementation in 2006.

W-2 recipients would be required to complete 28-30 hours of work each week to maintain eligibility; to instill a sense that W-2 is a path to unsubsidized employment, checks will be reduced by $20.

Legal immigrants who do not meet federal guidelines for food programming will be removed from the state’s FoodShare program, saving the Wisconsin $3 million dollars over two years.

But the budget also includes increases in some HHS areas, including the construction of a new veterans’ home in Chippewa Falls, more staff and maintenance funding for Wisconsin Veteran’s Memorial Cemeteries to meet increased demand, and resources for the state Veteran’s Museum to redevelop space for a temporary Civil War exhibit and move materials to new preservation facilities.

Public Safety

While rescinding Doyle’s early release policies, Walker’s budget also closes two of the state’s juvenile detention centers. Ethan Allen School for Boys in Waukesha County and Southern Oaks School for Girls in Racine County will be closed, and all the residents moved to Lincoln Hills and Copper Lake School in Irma, 20 miles north of Wausau.  The closure will also eliminate 269 full-time equivalent state positions.

$394,000 will be used to fund additional DNA analysts at the state crime lab and another $497,000 will allow for more staff to investigate Internet crimes against children.  $41,000 will be used to create digital copies of archived court decisions at the State Law Library to save space and improve online access.

The Department of Corrections will see across-the-board cuts, with $52.6 million removed from correctional facilities, reflecting a dip in prison populations over the past few years, even though Truth in Sentencing will be re-activated.

Job creation

Working towards his goal of creating 250,000 jobs, Walker has budgeted $200 million over two years toward the creation of the Wisconsin Economic Development Corporation and the establishment of seven regional development corporations. He is also calling for the creation of the Department of Safety and Professional Services, which will combine the departments of Commerce and Regulation and Licensing to streamline business licensing and regulatory processes.

Capital gains taxes will be eliminated on long-term investment in Wisconsin businesses, and while he campaigned against the practice, Walker will retain combined reporting of corporate income for Wisconsin-based business, but with some streamlining.  Plus, businesses will be allowed to carry over losses for 20 years, up from the current 15-year policy.

The budget also adds $15 million to tourism to encourage economic growth. Plus, the state Arts Board would move under the auspices of Tourism to oversee film credits and the development of arts-related industries.

Transportation

Walker explained the importance of transportation for job creation and has increased funding for roads, harbors and freight trains by $5.7 billion. The Zoo Interchange has $225 million earmarked for its reconstruction and $195 million will go toward the continued improvements of the I-94 corridor south of the Mitchell Interchange.

This budget will provide funds for harbor improvements and freight rail lines, but doesn’t mention any funding for passenger rail service on the Hiawatha or Empire Builder lines.

In response to the previous raids on the segregated Transportation Fund, Walker proposed diverting sales taxes raised from motor vehicle sales to the fund.

Other items 

Protesters in the Capitol rotunda. All photos by Patti Wenzel

Walker’s budget would eliminate 3,808 full-time equivalent jobs, counting the elimination of position that have been unfilled for 12 months or more: 269 positions at the closed juvenile detention facilities; 59 positions by shifting violent sexual offenders from the Wisconsin Resource Center to the Sand Hill Treatment Facility and 2,745 positions from the elimination of the Department of Commerce and the Wisconsin Hospital and Clinics Board.

That number could be even higher, if UW-Madison is allowed to move off the state employee rolls.

In another move that directly affects the working poor, taxpayers who receive the Federal Earned Income Tax Credit will see a reduction in their state credit, as Walker proposes to reduce the percentage of the federal credit allowed on state returns. A fiscal review of the proposal claims this move will save $41.3 million in lost revenues over two years.

Walker is proposing 10 percent cuts to all non-segregated funds and programming, removing recycling mandates from municipalities, allowing the merger of local police and fire departments to improve efficiencies and holding hunting and fishing fees at their current levels.

Finally, to keep municipalities, school districts, counties or technical college districts from passing state aid cuts on to taxpayers through increased property taxes, Walker proposes freezing levy increases or limiting them to the rate of growth in a community. For many communities across the state, this means property tax revenues would be frozen at current levels.

In concluding his speech, Walker likened the state’s current fiscal position to the economy of the early 1980s.

“We were in a tough economy 25 years ago. Tommy Thompson came in with strong ideas and in the end, he created 258,000 jobs. We did it a generation ago; we can do it again today.”

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