fedgazette

Peeking under Wisconsin's deficit blanket

Wisconsin State Roundup

Published January 1, 2002  |  January 2002 issue

Wisconsin is facing a budget deficit that could hit more than $1 billion (see related article). In such a context, it's interesting to note some new and proposed spending measures and the general level of government spending.

Both the Democratic-controlled Senate and Republican-controlled Assembly pushed separate economic stimulus bills. The Senate's package included $158 million in accelerated bonding for the University of Wisconsin's Biostar project, which is a series of building projects to increase the university's presence in biological fields.

The Assembly's package sought tax credits for insurance company contributions to a $100 million venture capital fund designed to seed entrepreneurial efforts in the state. The Assembly proposed moving to a single-sales factor in calculating state business taxes. This move would bring in $80 million less a year in taxes than the current tax model, which is based on sales, property and payroll.

In October, the state raised the tax on a pack of cigarettes from 59 cents to 77 cents, and added a nickel to the 20-cent tax on cigars and pipe tobacco. The increased tax is expected to bring in $130 million over two years, with most of that money used to provide cash-strapped seniors relief from rising prescription drug costs. Dubbed SeniorCare, the program is set to start in September, and will shave an estimated 40 percent off the annual drug costs for income-eligible seniors.

Local governments also face budget dilemmas and have contributed to the state's financial pinch. An October report from the Wisconsin Taxpayers Alliance found that local government spending increased by 54 percent from 1990 to 1999—double the inflation rate, but a bit below personal income growth over this period. That's a problem for the state because it sends need- and formula-based aid to local governments; as local government budgets increase, so does state aid. Last year, such aid topped $1 billion.

The cost of state government itself is also spiraling. A review by the Milwaukee Journal Sentinel shows that the cost of lawmaking in Wisconsin has tripled since 1980-twice the rate of inflation to about $470,000 for each of the state's 132 lawmakers.

Ronald A. Wirtz

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