Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald


Budget Crunch ’09

With no clear solution to the nation’s economic crisis in sight, Gov. Jim Doyle has joined other state governors in calling for a $1 trillion stimulus package from the federal government to help states get through the tough times.

Meanwhile, Madison and the University of Wisconsin community wait to see how federal assistance may affect life on and off campus.

Doyle’s Stimulus Request


Unemployment rates are on the rise across the country, with the national rate climbing to 7.2 percent in December, up from 6.8 percent in November.

Wisconsin, however, is faring better than the nation as a whole. While the December rate has not been released yet by the Office of Economic Advisors, the November rate for the state was 5.3 percent.

This number is up from 4.8 percent the previous year and, according to Mike Mikalsen, spokesperson for Rep. Steve Nass, R-Whitewater, Wisconsin’s rate may be misleading about the state’s economic standing.

“Wisconsin is a state that always goes into recessions late and comes out late,” Mikalsen said.

Last month, just before Christmas, the General Motors manufacturing plant in Janesville closed, leaving about 1,200 people out of work and causing hundreds more who worked for complementary industries to lose their jobs.

Jobs across all industries are being lost as companies looking for ways to stay afloat cut spending.

According to Doyle’s spokesperson, Lee Sensenbrenner, the governor believes stimulus money from the federal government would allow the state to fund “basic infrastructure” projects that would create jobs and spark the economy.

Sensenbrenner added the federal funds would also allow the state to protect the services the governor believes essential to Wisconsin’s residents, like education, while maintaining a balanced budget.

However, any federal stimulus will not solve all the state’s economic problems. The next budget will include some difficult cuts, according to Sensenbrenner.

“And finding a way to keep our core priorities intact in a national crisis is the toughest part about this,” Sensenbrenner said.

Doyle has not received any promises from Congress or incoming President Barack Obama about the stimulus package or how far-reaching it may be. However, the decision of the federal government will affect the governor’s budget proposal, due out in mid-February.

According to Mikalsen, though, the stimulus proposal would hurt the economy even more in the long run and create fewer jobs than necessary.

He said many of the projects are for road construction, for which many of the newly unemployed do not have the training.

He added projects like that “do not create jobs. Those go to unions.” He also said the government needs to evaluate the best way to use its resources before rushing into a large stimulus plan.

“Once you exhaust this trillion, you can’t get it back,” Mikalsen said. “We really only have one chance of getting this right.”

According to Mikalsen, there is a real threat of a “horrible round of inflation” in 2010 after the initial funds are spent.

Madison faring well

Madison Mayor Dave Cieslewicz has already released a “wish list” to Doyle, naming projects he would like to fund with stimulus money.

The list of possible projects would cost more than $243 million and create more than 1,800 jobs, mostly in construction.

Mayoral spokesperson Rachel Strauch-Nelson said the list was an attempt at “painting a picture” of things that could be funded with extra money. The mayor is hoping to get the money in the form of a community block grant that would allow residents to have input into how the money is spent.

Cieslewicz hopes the city can prioritize its needs effectively while fulfilling its basic responsibilities, according to Strauch-Nelson. She added the city has already been challenged by the recession, and the problem might get worse before it gets better with or without the stimulus.

“For us, it’s hard to say now. The 2009 budget was the hardest since the mayor came into office,” Strauch-Nelson said. “We expect 2010 will be just as hard, if not worse.”

According to Strauch-Nelson, the mayor had to “roll back” the projections for the city’s investment income by $500,000 when he created the 2009 budget. But aside from that, Madison has fared well compared to other cities.

“Everyone’s facing challenges, but it seems like Madison is a pretty good place to weather the storm,” Strauch-Nelson said.

Madison has been listed as the top city in the nation for job growth in Forbes Magazine, and the unemployment rate was only 3.5 percent in November, nearly two points lower than the state average.

UW waits and sees

Officials throughout the UW System are bracing for some serious cuts from the state, possibly some of the biggest of the past several years of budget shortfalls.

At the request of UW System President Kevin Reilly, UW-Madison, along with the other campuses, has reduced travel and slowed non-essential hiring, according to Vice Chancellor Darrell Bazzell.

“We’ve recently been very focused on doing some scenario planning in anticipating of a budget cut,” Bazzell said. “We’re just trying to figure out what we’d do with fewer resources — the days have been very active with thinking about this issue.”

UW System spokesperson David Giroux said these changes were just “common sense” given the state’s economic uncertainty. He added each campus is looking at other ways for short-term savings.

Sandy Wilcox, president of the UW Foundation, said UW-Madison’s endowment was down 22 percent in 2008, as alumni and donors are becoming more reluctant to give back to UW given the economic conditions.

“We’re maintaining contacts with our donors and prospects, but they are squeezed also,” Wilcox said.

However, direct payouts from the endowments have not been drastically affected by the downturn in markets, Wilcox said, since payouts are determined on a three-year average, and the economy did quite well in 2007.

With limited funding from outside sources, UW campuses may have to look at raising tuition. It is typical for tuition to have a “modest” increase every year or two, said Board of Regents Vice President Chuck Pruitt.

UW Chancellor Biddy Martin has been relatively candid about the fact that tuition will probably rise at a higher rate than in recent years.

In an October meeting with local business leaders, Martin said with lower state funding, it will be “very difficult to maintain and enhance” UW’s reputation.

“I think it’s unrealistic to imagine that tuition won’t rise,” Martin said. “There’s just no way around it, especially at a moment like this.”

However, Giroux said the key is to maintain a balance between price and quality of a UW education.

“Value is function of both price and quality. We could freeze the price and cut into the quality,” Giroux said. “But we want to offer students a high value education at a fair price, and that’s just about finding the right balance.”

Through increased access to student loans and other forms of financial aid, Martin has said she hopes to keep UW affordable, despite the prospect of rising tuition.

Pruitt echoed Martin’s sentiments.

“We are really committed to make sure UW-Madison and all the other UW institutions continue to be affordable options for students and their families,” Pruitt said.

However, Bazzell said UW won’t know its exact actions until Doyle’s budget is released next month and until then is playing the “waiting game.”

“We’re going to look at great interest with what happens at the state level in terms of funding and how the budget gets together,” Pruitt said.

Leave a Comment
Donate to The Badger Herald

Your donation will support the student journalists of University of Wisconsin-Madison. Your contribution will allow us to purchase equipment and cover our annual website hosting costs.

More to Discover
Donate to The Badger Herald

Comments (0)

All The Badger Herald Picks Reader Picks Sort: Newest

Your email address will not be published. Required fields are marked *