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Doyle not happy with state budget deal

Steven Elbow  —  5/12/2008 4:55 pm

Gov. Jim Doyle hinted today that a budget repair compromise proposed by legislative leaders may be a target for his veto pen, which despite a recently enacted constitutional amendment scaling back his veto powers, is nonetheless a force to be reckoned with.

"I think I'll have plenty of veto power left," he said.

Assembly Speaker Mike Huebsch and Senate Majority Leader Russ Decker earlier in the day announced a budget repair compromise to fix the state's $527 budget deficit. The plan would add $69 million in budget cuts, refinance the state's tobacco settlement to the tune of $209 million, delay school aid payments by $125 million and close two corporate tax loopholes, among other measures.

"I applaud the fact that they've come to an agreement and are ready to move forward, but I don't think it should surprise anybody that there are some very significant problems with this plan, at least as it was announced today," Doyle said.

The governor sent a clear message that two parts of the plan are unacceptable to him.

He said the plan to take $209 million in cash up front by refinancing tobacco securities from the state's 1998 settlement with tobacco companies is "beyond what I think is a responsible level," by sacrificing payments in years to come.

Doyle had originally proposed the refinancing of the tobacco securities for $30 million, which he said takes advantage of current interest rates and protects future payouts.

He said the final number would likely come somewhere in between, but declined to give a specific amount.

And he rejected outright the proposal to delay $125 million in school aid payments for a month to push the obligation into the next fiscal year.

"That just means that in the next biennium, we face a huge problem paying next biennium's school bills but also this biennium's school bills," he said.

But Doyle expressed hope that the legislative compromise announced Monday would lead to a final repair bill.

Negotiations to fill the $527 million budget hole have intensified over the past week as Doyle announced that May road construction funds, due to be issued on Tuesday, could be held back because of the impasse, slowing major projects and possibly putting some off until next year.

Doyle said if the Legislature can come up with the votes to pass it, he'll continue with the road construction bidding process,

Doyle would not comment on specific veto prospects.

"I'll wait to see exactly what comes to my desk to see what I might do with it," he said. "There are no veto assurances at all."

The legislative proposal announced Monday came after weeks of intense negotiations. It includes:

* $209 million in savings by refinancing the state's tobacco settlement bonds and $50 million in borrowing from the state's transportation fund.

* $69 million in cuts on top of $200 million written into the 2008-09 budget; Doyle has proposed $87 million, and Assembly Republicans had proposed $361 million in cuts.

* $125 million in delaying school aid payments by a month to push the payment into the next fiscal year, which would increase the state's budget gap.

* $97 million from the state's $122 million "rainy day" fund.

* $22 million held in reserve for the federal Real ID initiative, a security measure that negotiators said should be funded by the federal government.

That part of the plan angered U.S. Rep. Jim Sensenbrenner, who authored the law that is designed to create a more secure identification card in all 50 states.

He told the Associated Press that taking money out of the Real ID reserve is a breach of faith with those who have been paying the fee. He urged the Legislature to reject the plan, calling it a "fiscal shell game."

* $15 million from a two-pronged attack on corporate tax loopholes pushed by Senate Democrats: an interest income loophole and the so-called Wal-Mart loophole, which allows tax savings by big-box stores when they buy properties and then lease them back from themselves.

* Republicans scored a win in the negotiations by keeping a hospital tax off the table, despite support for the tax by the Wisconsin Hospital Association, which would have brought in $125 million for the budget.

The Democratic-controlled Senate is expected to take up the plan on Tuesday, and the Republican-controlled Assembly has scheduled a Wednesday floor hearing.

Not included in the deal is the multi-state Great Lakes Compact, which will be taken up separately later in the week instead of as a ride-along to the budget deal, which was proposed earlier.

"Both sides had to give," said Decker. "We didn't have a lot of options before us."

Negotiations on the budget repair deal have been taking place since February, when the state announced it would be taking in more than $600 million less in revenues because of the sour economy.

"None of us wanted to be here," Huebsch said. "This is a situation because of the slowdown in the economy here in Wisconsin and across the nation; states are facing this all over."

Despite Huebsch's support of the deal, it brought swift criticism from some Republican legislators, who issued press releases lambasting it.

"Sen. Decker has criticized big business for using accounting gimmicks, but his fake morality regarding economics doesn't apply to state government," fumed Rep. Steve Nass, R-Whitewater, in a press release. "However, I am more shocked that Speaker Mike Huebsch would again sell out the Republican principles on taxation and government spending."

Rep. Don Pridemore, R-Hartford, said negotiators "resorted to accounting tricks with tobacco settlements, corporate tax hikes, raids on reserve funds, and delayed school payments."

And Rep. Neal Kedzie, R-Elkhorn, called the deal "high and outside."

"Most legislators and the public have been anxiously standing in the batter's box waiting to see if they'd be served a fastball, curve, or the dreaded screwball," he said.

Steven Elbow  —  5/12/2008 4:55 pm