As the state prepares for a budget shortfall, Gov. Scott McCallum is ordering state agencies to cut their budgets by 3.5 percent, effective Jan. 1.
This move will save the state $60 million in the last 18 months of the 2001-2003 fiscal period.
“Our economic landscape has plunged into a terrorist economy,” McCallum said Tuesday morning.
The Wisconsin economy is facing a predicted $1.3 billion revenue shortfall because of reduced tax collection since the implementation of the state budget on Aug. 30. The economy has plunged since the terrorist attacks, and McCallum said he has every indication the revenue will not grow or recover.
Although McCallum and economists have attributed the falling economy to the attacks of Sept. 11, Department of Administration Sec. George Lightbourn said there was foreshadowing that the economy would suffer.
“We saw the downturns coming as the budget was being constructed,” he said.
Lightbourn said he is responsible for working with agencies to ensure cuts are made and that the cuts do not affect the service the agency offers.
McCallum said the priorities he established in the finalization of the budget, including school aid and senior prescription drug plans, remain priorities and will be exempt from the budget cuts. The hiring freeze exempted the UW System, and the budget cuts exempt both research and instruction at the UW System. Public health and safety will also be exempt. Despite the exemption of research and instruction for the UW System, cuts will still be made to the UW budget. Reductions were already required in the governor’s request that the university find between $2.5 million and $3 million in savings in lieu of the hiring freeze. Before UW can decide on specific cuts, more information will be necessary, Chancellor John Wiley said.
“At 9:30 a.m. [McCallum] announced where he thinks we are in terms of the state budget and indicated that there will probably be budget cuts for the agencies, including the university,” Wiley said. “We?ll have to see how that plays out, so there will be further discussions about tuition, about the appropriate split between state funding of higher education, and student funding of it.”
Tuesday morning, McCallum met with Assembly Speaker Scott Jensen, R-Waukesha, Assembly Minority Leader Spencer Black, D-Madison, Senate Majority Leader Chuck Chvala, D-Madion, and Senate Minority Leader Mary Panzer, R-West Bend, and agreed a special session was necessary.
Despite McCallum?s previous refusal to call a special session of the legislature without agreement between parties and statistics from the Fiscal Bureau, he said a special session of legislature will be called.
“We have now agreed to the fact that there will need to be a special session,” McCallum said.
The legislators and the governor concluded that a special session was necessary.
“The governor is tackling our budget challenge in a wise fashion by focusing first on savings in bureaucracy,” Jensen said in a statement.
McCallum also stressed bipartisanship for a successful special session and economic plan.
“I am confident we can address this shortfall if we leave partisanship aside,” McCallum said.
Sixty million dollars is a drop in the bucket of the $1.3 billion shortfall, but McCallum said this was a step and he was doing everything legally possible.
“It?s a start. We?ve got first the hiring freeze; this is the next step,” McCallum said. “I am being as aggressive as I possibly can; beyond this I need legislative action.”
