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Governor Proposes Balanced Budget
by Michael Theo
Governor Jim Doyle has released his long-awaited fiscal blueprint for the next two years-fulfilling his campaign promise to balance the state's $3.2 billion deficit without raising state taxes. However, the details of the governor's biennial budget proposal will soon arrive at the Republican-controlled Legislature where a lively debate, and significant changes, are certain.
Highlights
- No state tax increases-income, sales or corporate taxes-and no changes to exemptions or deductions.
- Eliminates the budget deficit and leaves a $40 million balance at the end of the biennium.
- Cuts state spending by an average of 10 percent each year, saving $1.5 billion in state tax-supported spending, including the elimination of nearly 3,000 state jobs.
- Eliminates eight state agencies, offices, boards and commissions and consolidated other functions to gain efficiencies.
Real Estate Issues
- No transfer tax increases; no sales tax on commissions or commercial leases; no license fee increases.
- Provides $1.13 billion in shared revenue funds to fill the hole created by the last budget, which used one-time tobacco money to fund this program. While shared revenues are cut by $70 million in the second year of the biennium, this is far less than expected and helps ease potential pressure on local municipal and county property taxes.
- Effectively repeals the state's commitment to fund two-thirds of K-12 schools, by providing $100 million in new state school aids (but $500 million was needed to maintain the two-thirds funding mandate). The state's share of school costs will fall to 64 percent in 2004 and 62 percent in 2005.
- Repeals the QEO (Qualified Economic Offer) for teacher salaries and benefits, but maintains the revenue controls on schools.
- Transfers the Division of Housing from the Dept. of Administration to the Dept. of Commerce and transfers all consumer protection functions (including landlord-tenant regulations), from the Dept. of Agriculture, Trade and Consumer Protection to the Dept. of Justice. Also transfers the brownfield grant program from the Dept. of Commerce to the Dept. of Natural Resources.
- Maintains funding for local comprehensive planning grants under the Smart Growth law and retains both the Land Information Board and state Land Council.
- Streamlines the brownfield grant program and provides an additional $1 million in funding, and minimizes claim backlogs in the petroleum storage tank cleanup (PECFA) program by appropriating an additional $115 million in bonding authority.
Potential Problems on the Horizon
Republican legislative leaders have praised Doyle for keeping his pledge not to raise state taxes, but they have raised concerns that some of his proposals rely far too heavily on uncertain funding, including hundreds of millions of dollars from new Indian gaming compacts, intergovernmental transfers of certain federal funds and the transfer of funds from the segregated transportation fund to the general fund. According to Republicans, the total of these programs call into question nearly $1 billion of the governor's total budget revenue estimates. Moreover, they raise concerns that the proposal's changes in school financing and repeal of the QEO could lead to higher local property taxes. (See similar concerns raised by the WRA in the statement on page 1) One fiscal expert, Todd Barry of the Wisconsin Taxpayers Alliance predicts property taxes could increase an average of eight percent next year, and in some areas where the governor proposes to relax the revenue caps for certain school districts, property taxes could go up 10-12 percent.
These revenue issues are important to REALTORSŪ because if they are not realistic, the legislature will have to find other revenues (i.e. tax increases) or additional spending cuts to balance the budget.
Estimated Timetable
The governor's budget proposal now goes to the Joint Committee on Finance, the Legislature's budget-writing committee which has authority for all taxing and appropriations bills. The committee is made up of eight state senators and eight Assembly representatives-a total of 12 Republicans and four Democrats.
If you have questions regarding the state budget or require additional information, contact
Michael Theo.
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WRA Statement on the Governor's Budget
The WRA released the following statement immediately after the governor's budget speech on Feb. 18:
We commend Governor Doyle for introducing a budget bill that addresses the state's substantial budget deficit without raising state taxes. The difficult spending reductions and reforms he proposes are even more laudable when one considers his administration has had only six weeks to produce this fiscal blueprint for the state.
However, we are concerned with the potential impact this proposal could have on local property taxes. If county and municipal governments and school districts simply increase property taxes to make up for cuts in state aid, taxpayers will be hurt, not helped by this plan. We urge local government to follow the governor's lead and address these difficult budget times by reducing spending and not raising taxes. Wisconsin's future budget health and quality of life are strengthened by tax and spending policies that promote economic development, housing affordability, jobs and growth. Increasing Wisconsin's already high property tax burden impairs all of these.
This budget provides an excellent opportunity to better align Wisconsin's tax and spending policies with our taxpayers' ability to pay. We look forward to working with the legislature and the governor toward a balanced, bipartisan and meaningful final budget package.
If you have questions regarding the WRA's reaction to the governor's budget or other budget related issues, contact
Michael Theo.
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Nominating Committee Seeks Candidates
Are you interested in serving in a leadership role for your state association? The WRA Nominating Committee is seeking candidates for the positions of Executive Committee Vice President, WRA Board of Directors Regional-representative Director (one opening each in regions two, three, four and six), and NAR Director.
The application for the Executive Committee positions is available on the WRA Web site at:
www.wra.org/pdf/inside_wra/nomappl.pdf.
If you are interested in serving as a Regional-Representative on the Board of Directors please contact
Sandy Bolgrihn. Deadline is March 31, 2003.
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