State sales tax collections in Wisconsin were down ten percent in the month of September, and income and corporate tax collections are down for the year. Governor Jim Doyle said that means the state could be facing a three billion dollar deficit in the next two year budget cycle. "Since September collections reflect August economic activity, we are I think justifiably concerned, that the full impact of the credit and stock market crisis is yet to be felt in tax collections," Doyle said during a press conference Wednesday in his state Capitol office. "We are certainly looking at more than three billion dollars in deficit, and it could grow well beyond that, if the nation's economy continues to spiral downward."
With that in mind, Doyle will ask all state agencies for across the board spending cuts of ten percent, in their budget requests which are due on November 17th. Doyle, noting that the state has gone through the exercise of making ten percent cuts in the past, said "this time, I think everybody really understands that we mean it."
"Retraction of economic activity will have long term consequences for families, and for government at all levels in the state of Wisconsin," Doyle said. "I really thought we should have this conversation today," Doyle told reporters. "Because the report that came out ( Fiscal Year 2008 Revenue Collections from the Wisconsin Department of Revenue), if you look at it, says as of June 30th, we're kind of doing okay. The fact is, what happened in August and September has rocked us back, just like it has the entire country."
Doyle said state government will have to remain "very focused on what our priorities are," which in his case means education. "We simply cannot take steps now that harm our schools." Still, Doyle said nothing will be off limits. "It's going to get tougher to do, because we have made very deep cuts in state government over the past couple of years. It gets harder to do . . . but I can't say anything's off limits."
Given the drop in sales tax collections in September, Doyle was asked whether he expects to see a similar decrease next year. "I don't want to say that . . . I don't want to help make that happen," said Doyle. "People are not out buying. I would hope that ends quickly, but your prediction on that is as good as mine, I think. It's probably unlikely that people are going to be feeling more secure these days, and going out and making bigger purchases."
