How to close a five billion dollar deficit? Governor Jim Doyle announced this week that the state's budget deficit is now projected to be that large. Look back to the early nineteen eighties and you'll find state government faced a similar deficit, and Dale Knapp, Research Director for the Wisconsin Taxpayers Alliance , says a couple of solutions were found. "One was a 'temporary' increase in the sales tax from four percent to five percent." That temporary increase became permanent. "We're still paying the five percent. The other thing that did was a one year, ten percent surcharge on both corporate and personal income taxes." Neither solution was popular, contributing to then Governor Tony Earl's loss to Tommy Thompson.
So what's left? Forty to forty five percent of the state budget is aid to school districts. "If policy makers decide to keep those the same, or even cut them, effectively what that's going to result in is a large property tax increase," Knapp says. "That won't be popular." The second largest state program, Medicaid, appears to off the table, at least as far as Governor Doyle is concerned. Knapp says that leaves legislators and the governor with few options.
