The state revenue shortfall initially estimated to be in range of $400 million dollars is actually considerably greater, according to the latest numbers. The Legislative Fiscal Bureau released projections Wednesday which indicate that Wisconsin faces a projected $652.3 million shortfall for the biennial budget period. LFB Director Bob Lang said in a letter to the co-chairs of the legislature's Joint Committee on Finance that the January tax collections and February forecast "both point to further weakness in general fund tax collections."
"Today's condition statement requires that we prioritize our spending across all areas of state government to provide the core functions of government while living within the taxpayers' means," said JFC co-chair, Rep. Kitty Rhoades (R-Hudson). "One thing is for certain, with per capita income down and sales tax collections decreasing, now is not the time to raise taxes. The only solution is to stop spending more than we earn."
A statement from Assembly Speaker Mike Huebsch (R-West Salem) stated that "there are some in Madison who view this shortfall as an opportunity to raise taxes. This is not an option. Wisconsin already has some of the highest-taxed people in the country; the reason the state is facing this shortfall isn't because taxes are too low, it's because spending is too high. The government digging even deeper into our pockets isn't going to solve that problem, and it certainly isn't going to help families and businesses already struggling with the economic slowdown."
Governor Jim Doyle also addressed the effect on the state of the economic slowdown at the national level. "What we are facing is a serious consequence of a national economic downturn," said a statement from Doyle's office. "States across the country – from Florida to California to Minnesota and Arizona – are all facing budget deficits. We are put in a squeeze: at the same time revenue like sales tax falls, the demand for government services begins to rise." Doyle said he has directed state agencies to take immediate action that will save $111 million over the biennium. That's in addition to $200 million the state budget already saved in government spending. Doyle also warned that the state "will have other tough choices ahead."