While Wisconsin continued to face its largest budget hole ever, last night Gov. Jim Doyle delivered his State of the State address to the combined houses of the state Legislature.

Doyle painted a bleak picture of the current budget situation but remained optimistic based on the positive spirit of the state.

“The state of our government is profoundly troubled,” Doyle said. “The state of Wisconsin is as vibrant as ever.”

Doyle said solving the next two years’ $3.2 billion deficit will be complicated by a $900 million decrease in revenue, a miniscule state “rainy-day” fund and the selling of the state’s tobacco settlement. Doyle said the sale of the tobacco settlement was “especially heartbreaking for me” since he brought the litigation while serving as attorney general.

Doyle asked last week that a special session of Legislature be called to consider his proposed emergency budget bill, which would freeze a significant amount of state spending in an attempt to keeping $161 million from leaking out of the state budget this fiscal year.

Yesterday, on the advice of the non-partisan Legislative Council, Assembly Speaker John Gard, R-Peshtigo, and Senate Majority Leader Mary Panzer, R-West Bend, denied Doyle’s request in a letter, saying that in order to warrant a special session this year’s entire deficit of $452 million must be addressed.

“I fully expect those from different parties to espouse different principles,” Doyle said.

“Let’s not forget that Republicans and Democrats got into this fix together, and that’s the only way we’ll get out.”

Aside from addressing the monstrous budget hole, Doyle set priorities for improving educational standards. Doyle said education was a key for economic stimulus.

“If we slash education, we risk undermining the asset that makes our state most attractive,” Doyle said. “Over the last 10 years, we’ve lost more than 50,000 college graduates to other states.”

Doyle said he would direct the Legislature to make the purchasing power of the state available to small businesses and farmers buying health-care coverage for their employees and families.

Doyle also commented on the efforts of Sen. Jon Erpenbach, D-Middleton, and Sen. Michael Ellis, R-Neenah, who are working across party lines to push campaign-finance reform legislation. The governor commended their efforts and asked for the passing of the Impartial Justice Bill to keep Supreme Court campaigns from being funded by special interests.

“One of the key things to do in solving the budget is campaign-finance reform,” said Sen. Dave Hansen, D-Green Bay, in support. Hansen said campaign reform would ensure legislators would be able to make budget cuts without fear of how it will affect the funding of their reelection campaigns.

Doyle continued to affirm his campaign pledge of no new taxes.

“There is nothing we can do to help economic growth more than to balance this budget without raising taxes,” Doyle said.

Doyle said he would not follow the lead of other states that are raising taxes because solving such a massive deficit with tax increases would require a 37 percent income-tax increase or a 51 percent increase in the sales tax.

“Obviously, raising taxes is not the answer,” Doyle said. “We’re spending too much, and we have been for a long, long time.”

Doyle has said no area of state spending would be exempt from funding cuts, including the University of Wisconsin.

“He didn’t leave education out of it,” said Rep. Jeff Fitzgerald, R-Beaver Dam. “What he did say was that everything was on the table, everything would see cuts.”

Doyle said he expected UW to be instrumental in economic recovery.

“Here in Madison, the university has always been an engine for economic growth,” Doyle said. “For example, the cutting-edge research in biotechnology at the university will provide not only dramatic medical breakthroughs but also millions of dollars in new investment, new jobs and new opportunities for our people.”

Doyle also mentioned UW when he was talking about Wisconsin’s determination.

“He walked onto the UW football squad rather than accept a scholarship out of state. His name is Jim Leonhard,” Doyle said.

“If you stand next to him you see how — excuse me, sir — small he is. But when you shake his hand you realize what those wide receivers went through.”