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Wednesday, June 10, 2009

State Budget Closes $6.6 Billion Deficit

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Despite the public efforts by the Republican minority in the Wisconsin Legislature to attack the state budget, privately they must admit that the Democratic budget has taken away all of their usual arguments. The Democrats created a balanced budget despite the fact that the governor and the state Legislature were facing a $6.6 billion deficit—and they balanced the budget without raising the sales tax, the payroll tax or the income tax except for the richest 1%. The Democrats also reduced the amount of tax dollars spent in this budget by $643 million, a 3.4% reduction from the last budget.

As we all know, when the economy goes into recession and people lose jobs and businesses lose revenues, the primary sources of state tax revenues, income taxes and sales taxes decline. These tax revenues have dipped significantly during this recession, which is why virtually every state government is facing a deficit. Fortunately, the state budget is built on more than state tax revenues. For example, the state receives billions of dollars each year from the federal government. This year the federal stimulus money has also helped with a number of direct job-producing projects, especially transportation projects.

So How Does the Budget Directly Affect Us?

What does the budget actually do, and how does it affect us as Wisconsin residents and, more specifically, those of us living in southeastern Wisconsin? Despite all the talk of budget cutting, these were not simply across-the-board cuts. The governor and the Joint Finance Committee had to make some very tough decisions with limited money. The Democrats, who have control of both houses of the Legislature and the governor’s office for the first time in 22 years, set their priorities and made many cuts, but they also supported a number of provisions that will have a big impact on our lives.

Building the Wisconsin Economy and Creating Jobs

  • The budget expanded the angel financing and venture capital tax credits to help create and expand small and midsized businesses, which are the businesses that create the vast majority of jobs.
  • It increased financial aid to students in the UW system and the technical colleges.
  • The budget provided funding for UW-Milwaukee’s School of Public Health and School of Freshwater Sciences.
  • Additional monies were provided to the technical colleges to focus on retraining laid-off workers.
  • The budget authorized the creation of a three-county (Kenosha, Racine and Milwaukee) regional transportation authority to build the commuter rail line, the KRM, that will link with the Chicago to Kenosha commuter rail system.

Protecting the Environment

  • After years of negotiations, the eight Great Lakes states and two Canadian provinces signed the Great Lakes Compact to protect our freshwater treasures, and this budget provided the state DNR with the necessary resources to fulfill Wisconsin’s obligations in the compact.
  • This budget restored monies for local communities to create or continue their Clean Sweep programs, which collections of hazardous materials from responsible citizens who clean out their basements and garages and want to dispose of these hazardous materials in a safe way.

Supporting Our Children, Families and Quality of Life

  • The budget expanded the program that provides much-needed assistance for families with disabled children.
  • It provided money to begin to come close to providing a fair rate for expenses incurred by families that open their homes to children in need of foster care.
  • The budget also increased the aid to local communities to fund homeless shelters and transitional housing efforts.
  • It increased the funding for the veterans’ property tax credit.
  • It increased the low-income utility assistance program and the homestead tax credit.
  • The budget provided some monies for civil legal services for those who cannot afford an attorney.
  • It also increased the first dollar credit for property tax relief by $55 million, helping to lower the property tax bill for homeowners.

 

Providing Better Health Care

  • The budget expanded health insurance coverage to include the costs of treating a child with autism.
  • It restored funding for respite care that provides support for caregivers who are providing care to a family member suffering from a very serious illness like Alzheimer’s disease or a severe disability.
  • The budget expanded health care coverage to those suffering from mental illness, alcoholism or drug dependency.
  • The budget also provided incentives to medical students to practice in underserved areas after graduation and also restored funding for the community health centers that serve thousands of lower-income residents.

Taxes

Nothing comes without some pain, so what happened with taxes?

  • For 99% of income earners, there is no income tax increase, but there will be a new marginal tax bracket of 7.75% for the top 1% of salary earners.
  • There are no new payroll taxes or statewide increases in the sales tax, but following the advisory referendum passed by Milwaukee County voters last fall, the budget authorized the creation of a regional transit authority (RTA) for Milwaukee County. This RTA will be funded with a 1% county sales tax that will lower property taxes by taking the entire costs of the transit system, the parks, the Milwaukee County cultural institutions and the emergency medical services off of the property tax.
  • The budget closed the loophole in the state tax code that allowed multi-state corporations to avoid paying their fair share of Wisconsin taxes.
  • The budget also increased some specific taxes or fees such as a 75-cent per pack increase in the cigarette tax, an increase in the gun background check fee from $8 to $13 when purchasing a gun and a reduction in the capital gains tax exclusion from 60% to 40%.

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