Wisconsin may be operating up to $400 million in the red as a result of decreased tax revenues and a looming national recession, according to a report released Thursday by the state?s fiscal bureau.
According to Legislative Financial Bureau Director Bob Lang, national economic conditions, the slowdown in the housing market and the price of oil are probably the biggest contributing factors to the estimated budget shortfall.
Projections for tax collections over the past few years have consistently shown an annual increase of 3 percent, even with the rate of inflation. This rate slowed to 0.8 percent during the latter half of 2007.
That may be an anomaly, but Lang worries it is a trend. Before making official projections and recommending that the Legislature reexamine the budget, Lang and the LFB plan on examining the numbers from January.
?The January collections will reflect the holiday season sales, and we?ll get a better opportunity to look at the national forecast,? Lang said.
A recommendation will be made by mid-February when the Legislature returns to session.
Response to the letter was quick and strong. Assembly Speaker Mike Huebsch, R-West Salem, promptly came out against raising taxes to balance the budget.
?Tightening our belts, cutting spending and growing the economy will get Wisconsin through these uncertain times and put us in a stronger economic position in the future,? Huebsch said in a statement. ?In short, we cannot tax our way out of a recession.?
Senate Majority Leader Russ Decker, D-Weston, is hoping the state can use its resources to find jobs for Wisconsinites. His spokesperson, Carrie Lynch, said ?everything is on the table,? from cuts to raising taxes.
?Sen. Decker thinks we should start investing our infrastructure so Wisconsin businesses can put more people to work immediately,? Lynch said. ?And he just wants to make sure any cuts don?t fall on the shoulders of the vulnerable people of Wisconsin.?
According to a Friday Wisconsin Department of Administration statement, in the last biennial budget, the state was able to stay in the black and deposited $50 million in a rainy day fund ? a first in Wisconsin history.
That $50 million could be used to curb a possible shortfall, according to Linda Barth, DOA spokesperson.
In his State of the State address last week, Gov. Jim Doyle seemed proud of the surplus, but puts the blame for a slowing state economy on Washington.
?For nearly a decade, our national government has failed to address major economic problems like loss of manufacturing jobs, spiraling health care costs and our reliance on fossil fuels,? Doyle said. ?Today, we are reaping the consequences of Washington?s failures.?
Sen. Alberta Darling, R-River Hills, a member of the Joint Finance Committee, said the state budget Doyle signed last fall increased state spending by 6 percent, ?significantly above the rate of inflation.?
?I am calling on Gov. Doyle to take tax increases off the table as he considers how to solve the state?s fiscal crisis,? Darling added.
The governor plans to continue to manage Wisconsin?s finances without increasing general sales, income or corporate taxes, according to a statement released the day after his State of the State.
Doyle?s office did not return a phone call seeking comment Friday.
