In the wake of the Sept. 11 terrorist attacks, businesses from local shops to multinational corporations are feeling the effects of the calamity. In response, Gov. Scott McCallum introduced a “Buy Wisconsin” initiative to help the slowing state economy.
A previously slumping national economy entered a further downward spiral when the pace of economic activity slowed to a crawl following the attacks.
?Buy Wisconsin and buy now,? McCallum said Monday in an announcement to individuals and firms across the state.
In order to provide stimulus to Wisconsin businesses and stave off potential layoffs, McCallum?s ?Buy Wisconsin? initiative directed many state-controlled agencies to accelerate the purchase of supplies from Wisconsin vendors.
He also waived an existing $125 fee for Wisconsin businesses to access VendorNet, a service through which they can bid for state contracts to provide goods and services.
Each year, state agencies and the UW System buy more than $1 billion worth of goods and services.
State administration secretary George Lightbourne announced Monday that there is a possibility of a hiring freeze on state positions, as well as other steps to curb expenditures.
Most state revenue is generated through income and sales tax. When consumers spend less, both sources are adversely affected.
McCallum may have to return to the legislature to amend the state budget he signed in August.
State budget director Dave Schmiedicke said the effects of the Sept. 11 attacks are still only beginning to surface, but a budget adjustment may be necessary to remedy the situation.
“We are monitoring the revenue situation daily. It does take some time for the events of the last month to play out in terms of collections of state revenue,” Schmiedicke said. “We were seeing that the Wisconsin economy had been in a recession in August. We were starting to see a turnaround [before the attacks], but all that has been thrown into turmoil. Depending on the magnitude of change in revenue estimates, there may be some need to adjust the budget.”
McCallum’s office was equally skeptical of what the future may bring.
?Given the situation after September 11, the state budget has not done the same things we anticipated,? said Debbie Monterrey-Millet, McCallum’s press secretary. ?If new spending plans are continually initiated by the legislature, the possibility of revision remains strong.?
On a national scale, Congress already approved $40 billion in emergency spending. A stimulus package worth $100 billion over the next year also passed the House of Representatives Ways and Means Committee Friday.
Faced with a sharp economic slowdown, the Federal Reserve has cut interest rates nine times this year, including two half-percentage points since Sept. 11. UW Economics Professor Don Nichols said although the events of Sept. 11 were certainly shattering in the short run, we will see a return to normalcy in the months to come.
?Wisconsin has a common stake with the rest of the nation,? Nichols said. ?Consumers were somewhat frozen by the tragedy, but they?re getting back to things like buying cars and houses again, and these are the long-term investments that stimulate growth. However, problems with specific industries, such as the airlines, may prove troublesome well into the future.”