The state Senate voted Tuesday to allow local governments to keep the $1 billion in shared revenue outlined by the Senate’s plan to repair the state’s $1.1 billion deficit. The state funding is used by cities to pay for services such as police and fire protection and garbage disposal.

Under Gov. Scott McCallum’s budget proposal, shared revenue would be phased out by 2004 to help balance the budget. But the governor’s plan drew sharp criticism from some local officials who claimed the state was cutting from local governments to make up for money spent by the state.

Senate Majority Leader Chuck Chvala, D-Madison, said the Senate’s actions provide for “options and opportunities” for local governments by preserving critical services.

“State government in partnership has for almost 100 years ensured that wherever you live in Wisconsin you can expect to receive critical community services like police, firefighters and others,” Chvala said. “That partnership has been under unprecedented attacks by the governor and Assembly Republicans, with disastrous results for the people of Wisconsin.”

Chvala said the new budget package would improve city’s options and incentives to prevent local government from overlapping services and as a result reduce property taxes.

The Democratic Party of Wisconsin applauded the Senate’s decision.

“We are proud of the efforts of our Democratic Senators to restore funding to vital programs, the University of Wisconsin, public libraries and Smart Growth,” Linda Honold, party chair said.

State Sen. Dave Hansen, D-Green Bay, said he is proud the state has renewed its partnership with county and local governments.

McCallum has said he will not raise taxes to make up the budget shortfall.

The Republican-controlled Assembly passed its version of the budget proposal, which would maintain the shared revenue program but reduce the payments in 2003 and 2004.

Rep. John Gard, R-Peshtigo, co-chairman of the Legislature’ s budget committee, told the Minneapolis Star Tribune the action by Democrats who control the Senate was ” just breathtaking.”

“They have one basic instinct, and that’ s to spend other people’ s money as often as possible, and I think local governments deserve more honest answers than that,” Gard said.

Senate Democrats voted Tuesday to cut $20 million from the UW System over the two-year budget. Assembly Republicans had previously approved $108 million in cuts to the UW System. McCallum proposed about $50 million in cuts, in his proposal.

Both the Senate and Assembly must pass the same version of the budget repair bill before it can be signed by the governor. To smooth out differences between the two versions of the bills, lawmakers expect the creation of a conference committee.

The state’ s budget shortfall was caused by falling revenues that were exacerbated by the Sept. 11 attacks.