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Wisconsin’s upcoming biennial budget could be $3 billion or more in the red due to the downward spiral of the national economy, Gov. Jim Doyle said Wednesday.

The announcement came with the release of the Department of Administration’s annual report of the state’s economic situation at the end of the fiscal year, which ended June 30, 2008. The report gave Wisconsin a glowing report.

“If that were the whole story, we’d be sitting here with some pretty good news, because as of June of 2008, it showed a much stronger balance than was an anticipated of $130 million,” Doyle said.

But with the stock market crash and downward-spiraling national economy, Wisconsin’s economy is not looking as good as it appears on paper.

“The national economy has now taken a much more serious and negative turn since August, and what has happened in this country has affected Wisconsin dramatically,” Doyle said.

The stock market plunged 18 percent, which is 40 percent less than it was a year ago. Credit companies are reporting nationwide shutdowns, and 159,000 jobs were lost nationally in September 2008.

According Doyle, Wisconsin is still far ahead of other states like California and Massachusetts that have expressed concern “they simply may run out of cash” and have already gone to the federal government to ask for money.

“Washington had a surplus earlier this year, and is now $3.5 billion in debt. California has gone beyond numbers you can even mention,” Doyle said. “Wisconsin is not immune to these serious downturns in the national economy.”

Historically speaking, Doyle said, Wisconsin has faced budget shortfalls of more than 10 percent every time the country has gone into a recession.

In September 2008, Wisconsin sales tax collection fell 10 percent, job figures have fallen 13,000 from last year and unemployment claims have increased 26 percent. Unfortunately, the future doesn’t look any more promising, he added.

“We have really expected the country to come out of the recession because that’s what most forecasters were saying,” Doyle said. “Now, most prognosticators say we will be in a recession through all of 2009 into 2010 before start turning around.”

As a result of this upcoming recession, Wisconsin is expected to be at least $3 billion in debt for the next biennial budget. As a result, Doyle is requiring state agencies to make cuts by 10 percent.

“We’re going to ask state agencies to tighten the belt and look at every single state program, go through every part of the budget to find inefficiencies and duplications, and make cuts, saving wherever we can,” said Rep. Scott Suder, R-Abbotsford, a member of the state Finance Committee.

Doyle vowed to continue to balance the budget without tax cuts to relieve burden from Wisconsin families and said education will also be a top priority when handling cuts.

“We simply cannot take steps now to harm our schools and backtrack on higher education that will hurt us for another generation,” Doyle said.

Suder said Wisconsin has historically increased the budget for K-12 education, and the question is not whether they will get more money in the upcoming budget, but how much that increase will be.

Overall, nothing is set in stone, and taxpayers will not know the extent of the damage until November, when the Department of Administration will have solid numbers for the upcoming budget.

“We’re going to have to do a lot of things that aren’t pleasant,” Doyle said. “I strongly believe we’ll get through this as a state in a way that we maintain our basic priorities, and we will move forward.”